Economic Degrowth and the Collapse of Institutional Order: Theory and Propositions

Abstract

Integrating insights from new institutional  economics and studies on the collapse of past empires, we sketch a process model that links economic degrowth to the collapse of institutional orders. Our thought experiment starts from emphasizing the importance of institutions and enforcement mechanisms in maintaining a sufficient level of economic activity to sustain public costs. We flip this established logic and elucidate the negative role of economic degrowth in the weakening of the public sector’s ability to enforce institutional rules. Internal and external shocks further shake the stability of the institutional order and, at some point, individuals’ belief in institutional rules and norms weakens, resulting in system-wide collapse of the institutional order. We use historical literature on the collapse of Roman Empire as an “experimental prototype” (Meyer, Gaba, & Colwell, 2005: 471) to inspire and illustrate our thought experiment.