An Analytical Framework for the Relationship between Environmental Measures and Economic Growth Based on the Regulation Theory: Key Concepts and a Simple Model

This paper proposes an analytical framework using the regulation approach and consisting of explanations of some concepts and a simple way of modeling; the concepts and modeling are developed by focusing on the distributive aspect of environmental issues and using environmental costs as key indices. As a basis for the framework, we refer to the ideas of Polanyi and the surplus approach, and we recognize the socio-economic system as interlinked triple reproductions of the economy, humans, and the environment. This recognition is formalized as an equation of three-dimensional distributions among profits, wages and rents. The economy-environment nexus, which represents the relationship between the natural environment's reproduction and economic reproduction, is analyzed as one of the institutional forms. The dynamics of institutional coordination are specified with attention to distributive conflicts between relevant actors, leading to the idea of spatial and temporal gaps of coordination. Environmental costs are identified and incorporated into the equation of distribution as key information to characterize specific forms of the economy-environment nexus. The economy-environment nexus influences growth regimes through multiple routes, including investment, trade, and productivities. In order to analyze the aggregate effects, we propose a variant of the Kaleckian growth model incorporating environmental costs as key variables. Using this model, we specify conditions for the paradox of costs for environmental measures, where environmental measures raise the profit rate. This framework is expected to be used in historical or comparative analyses of particular economies, including those using periodized specification of the economy-environment nexus.