An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
The belief in the West is that capitalism requires democracy and that by adopting the market system, China will eventually have to become increasingly democratic.
This is not borne out by the history of capitalism, however. Nineteenth century England was economically liberal and far from democratic in any meaningful sense. Workers, who comprised the majority of the population, were severely disadvantaged. See Engels, The Condition of the Working Class in England, and the US was still operating under slave labor in the agricultural sector.
Capitalism is compatible with privilege but not egalitarianism and democracy presupposes egalitarianism rather than privilege. The US Constitution ended hereditary privilege of aristocracy, that some are better than other by birth, but enshrined it as privilege of ownership and social status, that is, some are better than others by "merit".
Meritocracy is not compatible with egalitarian democracy. A representative democracy that bestows privilege on ownership and status is not a democracy but a republic.
In a republic the ruling class eventually become established by birth through hereditary wealth. The Waltons nor the Koch bros inherited their fortunes and joined the cohort of the privileged, along with "old money."
BTW, notice that Libertarians as the fiercest proponents of economic liberalism recognize that economic liberalism is not compatible with genuine democracy because workers are in the majority and if permitted, will vote their own interests. The founding fathers recognized this, they debated it, and decided to found a republic. Economics liberalism is politically conservative, holding that some are better than others and are more qualified to rule and enjoy privileged status as a class.
Right, but justice means that "capitalism" conceived as economic liberalism and an absolute property right has to give way to social reality and political liberalism. Capitalism as economic liberalism with an absolute property right is incompatible with democracy as government of, for and by the people, because it results in a state of affairs that is perceived by the majority as unfair. The only way such a system is politically sustainable is through force, and I don't think it is accidental that were witnessing the potential to use force to control the rabble if they get out of hand.
Steps have already been taken to subvert constitutional liberties in both the US and UK, which are supposedly the bastions of constitutional liberalism, Britain tracing the history of liberalization back to the Magna Carta (1215).
The compromise has to be something like social democracy, which is a mixture of the market state and welfare state that is neither capitalist in the sense of economic liberalism nor socialist in the sense of public ownership of the means of production. It's also called the Scandinavian or Nordic model. Rather than either capitalist or socialist, it is a mixed economy, with features of both.
It's similar to the model that China is aiming for as "market socialism". Interestingly, China has to pay closer attention to justice and fairness than the West since it is based on socialistic ideals and it has a huge population that is difficult to control if it perceives that it is being taken advantage of. It's also closer to its revolution, so it's more difficult to bullshit its people. Moreover, the Chinese people are less individualistic and more communal then Western people. So keep your eye on China as they continue to grow and become the world's largest economy, likely sooner than later.
I like the guy but hear a lot of contradictory rhetoric regarding MMT: Sovereign (currency-issuing) nations dont need to seek capital funding from capitalists Rich dont need to pay more in order to make society more equitable
Those two contradictions alone make me question his understanding of how the system works
to clarify, Paul says he's ok with paying more taxes to re-dist nat'l income
he also said that the state needs to, in effect, solicit capital from the owners of capital. MMT informs me that they simply need to tax/coerce it into action
Sometimes people who understand MMt but are not terminologically in paradigm use terminology that others understand in a way that conforms to MMT principles. Watch for economists like Krugman to do this to avoid having to admit where they got their ideas.
The Treasury has to have reserves sufficient to clear and it cannot get them directly from the Fed in the US and that's not viable in many other countries, too. So it's tax in order to get a reserve credit, or else, "borrow," i.e., issue tsys.
So this sense the government does "solicit" capital through the private sector, although not "from" the private sector, in that $NFA as rb remains the same and the amount of $NFA (net financial assets as equity) increases by the amount of tsy issuance.
Government can increase investment through tax credits or lowering interest rates. Warren recommends setting r to zero in part to favor capital investment.
15 comments:
He isn't Bill Gross.
Bill Gross should have retired when McCulley did. McCulley was only in his mid-fifties and Gross in his late sixties.
McCulley is still a young guy. There's still a lot of time for him to continue contributing. Good to have him as an MMT ally.
Gross is now almost 70. He still needs to make his mark beyond amassing a mountain of money, although he has been very generous philanthropically.
I'm not sure that capitalism needs democracy?
Doesn't the rise of China challenge this notion?
The belief in the West is that capitalism requires democracy and that by adopting the market system, China will eventually have to become increasingly democratic.
This is not borne out by the history of capitalism, however. Nineteenth century England was economically liberal and far from democratic in any meaningful sense. Workers, who comprised the majority of the population, were severely disadvantaged. See Engels, The Condition of the Working Class in England, and the US was still operating under slave labor in the agricultural sector.
Capitalism is compatible with privilege but not egalitarianism and democracy presupposes egalitarianism rather than privilege. The US Constitution ended hereditary privilege of aristocracy, that some are better than other by birth, but enshrined it as privilege of ownership and social status, that is, some are better than others by "merit".
Meritocracy is not compatible with egalitarian democracy. A representative democracy that bestows privilege on ownership and status is not a democracy but a republic.
In a republic the ruling class eventually become established by birth through hereditary wealth. The Waltons nor the Koch bros inherited their fortunes and joined the cohort of the privileged, along with "old money."
"although he has been very generous philanthropically."
They always are Tom... rsp,
BTW, notice that Libertarians as the fiercest proponents of economic liberalism recognize that economic liberalism is not compatible with genuine democracy because workers are in the majority and if permitted, will vote their own interests. The founding fathers recognized this, they debated it, and decided to found a republic. Economics liberalism is politically conservative, holding that some are better than others and are more qualified to rule and enjoy privileged status as a class.
McCulley went beatnik. The hair?
McCulley went beatnik. The hair?
It's a statement.
I like the statement.
At minimum it's saying, I'm not a suit.
Actually, that's not what he says. He says they are polar opposites, but need each other. In the end he says justice must triumph.
Right, but justice means that "capitalism" conceived as economic liberalism and an absolute property right has to give way to social reality and political liberalism. Capitalism as economic liberalism with an absolute property right is incompatible with democracy as government of, for and by the people, because it results in a state of affairs that is perceived by the majority as unfair. The only way such a system is politically sustainable is through force, and I don't think it is accidental that were witnessing the potential to use force to control the rabble if they get out of hand.
Steps have already been taken to subvert constitutional liberties in both the US and UK, which are supposedly the bastions of constitutional liberalism, Britain tracing the history of liberalization back to the Magna Carta (1215).
The compromise has to be something like social democracy, which is a mixture of the market state and welfare state that is neither capitalist in the sense of economic liberalism nor socialist in the sense of public ownership of the means of production. It's also called the Scandinavian or Nordic model. Rather than either capitalist or socialist, it is a mixed economy, with features of both.
It's similar to the model that China is aiming for as "market socialism". Interestingly, China has to pay closer attention to justice and fairness than the West since it is based on socialistic ideals and it has a huge population that is difficult to control if it perceives that it is being taken advantage of. It's also closer to its revolution, so it's more difficult to bullshit its people. Moreover, the Chinese people are less individualistic and more communal then Western people. So keep your eye on China as they continue to grow and become the world's largest economy, likely sooner than later.
I like the guy but hear a lot of contradictory rhetoric regarding MMT: Sovereign (currency-issuing) nations dont need to seek capital funding from capitalists
Rich dont need to pay more in order to make society more equitable
Those two contradictions alone make me question his understanding of how the system works
to clarify, Paul says he's ok with paying more taxes to re-dist nat'l income
he also said that the state needs to, in effect, solicit capital from the owners of capital. MMT informs me that they simply need to tax/coerce it into action
Sometimes people who understand MMt but are not terminologically in paradigm use terminology that others understand in a way that conforms to MMT principles. Watch for economists like Krugman to do this to avoid having to admit where they got their ideas.
The Treasury has to have reserves sufficient to clear and it cannot get them directly from the Fed in the US and that's not viable in many other countries, too. So it's tax in order to get a reserve credit, or else, "borrow," i.e., issue tsys.
So this sense the government does "solicit" capital through the private sector, although not "from" the private sector, in that $NFA as rb remains the same and the amount of $NFA (net financial assets as equity) increases by the amount of tsy issuance.
Government can increase investment through tax credits or lowering interest rates. Warren recommends setting r to zero in part to favor capital investment.
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