Nothing I have presented here should be a surprise since it is the conclusion of both labor theory and Keynesian theory together. For instance, according to the bourgeois simpleton economist, Hyman Minsky, aggregate profits of capital must equal aggregate investment of capital plus the deficit spending of the fascist state:...
[quote]
Peter Jones, a Marxist writer, has come to a similar conclusion regarding how fascist state deficit spending increases the wealth of the capitalists:....
[quote]
Thus, both labor theory of value and Keynesian theory suggest capitalism cannot survive without the deficit spending of the fascist state, although each school employs this conclusion for their own ends.
You have to understand what a complete scam the federal deficit is: First, the rich are given a tax cut by fascist state politicians; then, the tax cuts is borrowed back by the fascist state; Finally, the fascist state issues a bond that entitles the rich to claim a portion of future fascist state tax revenues. And then, to top it all off, MMT comes along and dresses this scam up as “the cumulative financial assets” of the private sector....It was Keynes's project after all to save capitalism from socialism. Keynes believed that capitalism would transform itself into a benign liberalism and distributed prosperity. See Economic Possibilities for our Grandchildren (1930).
But unfortunately the transformation has been in the opposite direction toward neoliberal globalism, a euphemism for transnational corporatism and oligarchic "democracy."
The Real Movement
Deficit reduction is not austerity; it kills capitalism
Jehu
Background.
MMT and the heresy of the self-financing fascist state
More MMT boilerplate on how to fix capitalism without really trying
Follow up.
Even 80 years later the Left has learned nothing: A reply to Rschard1
Older posts
MMT and the United States as the international monetary sovereign
44 comments:
No stoic sage this fellow.
"bourgeois simpleton economist, Hyman Minsky" Har har har, he had me at that sentence.
It's not an economic argument as much as a political one. He understands the economics from the Keynesian, Post Keynesian, and MMT points of view quite well and he identifies those who promote such arguments as the capitalist "left" that can never prevail politically because it is merely a compromise with TPTB for some more crumbs.
His political argument is that this is a sell-out for the left that will postpone the politically necessary indefinitely. It's not a stupid argument at all. It's a choice that I have been presenting for some time and have admitted that MMT is a compromise rather than a solution. Michael Hudson is quite clear about this, too.
An actual solutions requires radical revision of institutional arrangements away from the dominant bourgeois and remnant feudal to a new order that is socially conscious.
A Marxian solution is not the only alternative but I think that key elements in Marxian analysis would need to be incorporated, which is why Marx is off the table in the bourgeois world where the assumptions are loaded, the propaganda is thick, and security forces are strong.
I agree with that sentiment. The most pressing problem we face is political -- the world is run by the 1%, for the 1%. Until we seize power away from them, it's personally empowering for us serfs to be familiar with alternative economics, but us serfs don't have the power to do anything about it. The best we can hope for is to be tossed the occasional crumb, like Bush's temporary FICA reduction.
I believe this guys fails into the accelerationist camp and I believe that the idea you should create a massive government surplus to destroy the capitalist class more of a path to Fascism than democratic socialism. You'll starve the working classes before you'll starve the rich.
Personally, I believe MMT has some work to do on framing credit money and why taxation as force and redistribution are misnomers under the MMT framework. Bill Mitchell had a post on this but I can't seem find it.
We need a set of educational youtube videos to debunk most of Econ 101 nonsense like crowding out, lending of deposits, printing is inflation, government social programs redistribute wealth to the undeserving, we are all in hock to China, minimum wages destroy jobs etc...
I'm getting real tired of dealing with this shit in 2015. There is nothing hard about understanding MMT. Is is dual entry accounting applied to macro with using buffer stocks and counter cyclical spending like story of Joseph in the Bible for stability during the lean times. The problem is disinformation that capitalism= "just deserts" narrative and until people learn crediting the poor's bank account don't take anything away from anyone else we will never fix this problem.
What is sad is the fascist narrative that the "weak" are stealing from "strong" merely for existing seems to be taking off thanks to market as justice framing that everyone seems to accept.
"An actual solution requires radical revision of institutional arrangements away from the dominant bourgeois and remnant feudal to a new order that is socially conscious."
Some practical examples of "radically revised institutions" that you consider feasible please Tom.
There were three radical revisions in the past, from tribal society to agricultural society. This resulted in class structure, division of labor, credit, slavery, property, law in place of custom, etc. The next transition was within the agricultural period to feudalism, e.g., slavery was largely replaced domestically with seldom and tenancy and the rise of rent as a portion of real output as a way of dividing the surplus rather than expropriation by fait. Then with the industrial revolution came capitalism and wage labor, with the surplus being divided by rent and money wages.
The political structure of tribal society was custom and consensus. The political structure of early agricultural society was autocracy. The political structure of feudalism was oligarchy based on fealty, The political structure of capitalism is oligarchic democracy in plutocratic republics.
While these changes were indeed radical, they happened more or less gradually other than in cases that revolutions occurred. Then the task of the revolutionaries was to construct a new order. The Magna Carta is a key document of the transition from autocracy to oligarchy in feudal times, for example. The American and French Revolutions produced liberal constitutions that set the standard for the liberal order that the world is still exploring.
Now we stand on the cusp of the transition from the Industrial Age, characterized by economically by capitalism and politically by republicanism to the Information Age, whose institutions are only beginning to emerge. The outlines are not yet visible. Rather the pot is stirring as many perceive the opportunity and challenge resulting from changing times.
I have no special insight into the future so it would just guessing now how this might unfold. But several patterns seem to be emerging.
First, networks are going to be big and replace current modes of organization based on hierarchy, which is basically a military model historically. The organizational model of the tribe was the circle of the tribal council. The succeeding organizational model was the temple, palace and army. That hirarchical model has remained largely in place. Under capitalism, industrial and commercial acquisitors came to power but retained most of the previous organizational model. As Ravi Batra observes, power has alternated among the warrior, intelligentsia, and acquisitor classes, never passing to the worker class. As the temple, palace, army model gives way to the network model in the Information Age it is possible to re-integrate the lost lessons of the tribal consensus model into a new organization model. Some firms are experimenting with this already, for instance.
Secondly, energy and information are going to be much more important than material stuff. Huge innovation can be expected here. Humanity is just scratching the surface of this new dimension now. Contemporary entrepreneurs get this.
Thirdly, outer space is going to be a new frontier, initially for exploration, then for military and then for mining. Colonization will likely follow.
continued
continuation
Fourth, and perhaps most significantly, traditional religion is going to be replaced by spirituality. Inner space is going to be a new frontier also. Spirituality will become "scientific" under an expanded view of scientific method that includes observation and is naturalistic. This will transform individuals conception of themselves and humanity, and as a result raise the level of collective consciousness to the degree needed to bring about radical social, political and economic transformation.
Al this is already happening and the transition is underway. It's going to proceed differently in different locales, countries, regions and environments based on path dependence, resources, ingenuity, foresight, and luck.
My considered view is that the safer way is by evolution rather than revolution, but revolutions may be required in certain areas and circumstances. But that will become obvious as circumstances unfold. No need to provoke them. It's impossible to stand in the way of time and a shifting Zeitgeist.
Presently, institutions arrangements are determined based on bourgeois relationships. The previous stage was based on feudal relationships and some vestiges of this remain. The stage previous to that was dominated by priests and rulers. The initial tribal state was characterized by egalitarian interpersonal relationships.
Future relationships seem to be heading back toward emphasis on interpersonal relationships more than official titles and organizational charts. This will be a primary determinant of future institutional arrangements.
This will have an effect on education. A chief reason that workers have been largely excluded from power previously is lack of leisure for education and universal education. That has already changed since the advent of the Industrial Age, increased productivity, and greater leisure. It will increase exponentially around the world.
This will have a strong impact on the development of the concept of rights. This will transform politics, law and justice, as well as organization across the board, hence, institutional arrangements.
The future looks bright but the transition looks to be jarring. It's going to look like we are going backward at times, when we are just tacking with the wind. There are going to be crosscurrents, too, owing to path dependence and resistance to change on the part of the status quo.
end
Tom Hickey: He understands the economics from the Keynesian, Post Keynesian, and MMT points of view quite well and he identifies those who promote such arguments as the capitalist "left" that can never prevail politically because it is merely a compromise with TPTB for some more crumbs.
Can't agree with that. He doesn't understand those POVs at all. Look at his later
"And that [Keynesian] program was simple: the state borrows the excess capital of society and employs it for its own unproductive ends." I'd agree with that - if I were out of my mind. Trapped in the internally inconsistent mainstream/neoclassicism POV Jehu apparently cannot conceive the idea that the state could possibly employ capital for productive ends. In reality such employment is a necessary condition for the bare existence of the state and capitalism. I was just reading a nearly identical quote from Eisenhower's Treasury Secretary George Humphrey!
His political argument is that this is a sell-out for the left that will postpone the politically necessary indefinitely. It's not a stupid argument at all. It's a choice that I have been presenting for some time and have admitted that MMT is a compromise rather than a solution. Michael Hudson is quite clear about this, too.
MMT is not "a compromise", but true knowledge, true (worldly) philosophy. Like any fully developed science, (mathematics, philosophy) it can be considered as completely trivial, pure form, content-free. But "trivial" is not at all "obvious". The "trivial", the "tautological" is the aim of science and can take millennia to attain to.
An actual solutions requires radical revision of institutional arrangements away from the dominant bourgeois and remnant feudal to a new order that is socially conscious. Such "actual solutions", "new consciousness", "radical revision" are basically BS. At best, empty. At worst, good intentions that pave the road to hell.
Understanding trivial accounting is the real "new consciousness", the real revolution. The plutocrats have always understood that MMT, the JG is not a sell-out, but a dagger to their heart. Few others do.
It is very mistaken to think, to admit as you or Jehu or Hudson (I hope not) do. To discard a real revolution, deride it as a compromise, a sell-out postponing "the politically necessary" - a chimerical .. what?
Brings up the following old rule of thumb:
"Revolutions are always justified, but rebellions are always betrayed."
It doesn't usually help to blindly rush. Ask any military guy.
It's far better to painstakingly make outcomes inevitable. More analysis, less action.
Didn't Sun Tzu say something to that effect, over 2000 yrs ago?
http://en.wikipedia.org/wiki/Sun_Tzu
@ Calgacus.
I don't see capitalism or modern political liberalism as the end of history. My guess is that it is stage, as Marx held. But Marx did believe in an end of history, which would be socialism replacing capitalism. I don't believe in an end of history, or even that history is necessarily linear. More likely cyclical in the long run although I accept cultural "evolution" in the shorter run.
I'm for making capitalism as livable as possible in the very short run. but hopefully it will be very short. As long as capital is the dominant factor, it's not fixable. Change it leaving the structure in place, and they will just work incessantly to change it back by any means necessary.
This is not about economics. Its about power.
@ Roger
I don't think that Jehu or the radical left are talking about a revolution. They are talking about "consciousness raising" of the working class that Marx held to be a prerequisite. They see Keynesianism getting in the way of that.
Now we are getting down to strategy. The radical left strategy is put workers in a position that they be receptive consciousness raising and then using the new consciousness to effectively work to bring about their aims. Some people on the radical left believe that a revolution is required since it's the only way to dislodge TPTB who are ruthless and unprincipled. Other think that it can be done through the ballot box and selecting the appropriate candidates to run for office.
@ Roger
This is strategy and tactics. Often operations are dictated by changing circumstances and one has to adapt to conditions rather than the conditions one would like.
If Greece is a prelude of what's coming, the strategy and tactics will be dictated by that depending on policy. If the policy is to just surrender, then there is no fight. But if not, then the question of strategy and tactics arises, as we see in Greece now.
Hi
Glad to read the discussion. I'm wondering where Knightian uncertainty fits in. It's part of economics, so must therefore be part of 'the social' in general. Economics is not a special domain as we know from our critique of the neocon weird world of impossible actors and conditions. So we should look at this when talking about our expectations about the future. I don't think the idea of 'unintended consequences' for example, cuts the mustard. But exploring the concept of history certainly does.
I'm not expecting an answer btw. Just pegging the question within my own line of thinking and sharing the thought.
Jim
BTW, Bernie Sanders is following Michael Hudson's playbook of taxing away the economic rent rather than Kelton's MMT playbook. May be in the background, but it's not what Sanders is hammering on.
Syriza has tried using the "maybe the TPTB will give us nice things out of the goodness of their heart if only we explain to them how the economics could work" approach and we see how that is working out.
Our discussion here sets aside the issue of climate change. If you believe, as I do, that reversing climate change would require a WWII-type command economy with substantial hardship and substantial changes in lifestyle, it's hard to see how to pull that off. A populist revolution/evolution that promises greater prosperity for the 99% is tough enough, it's even tougher to make a revolution/evolution that promises hardship and sacrifice. And the clock is ticking ..... :'(
It's far better to painstakingly make outcomes inevitable. More analysis, less action.
Didn't Sun Tzu say something to that effect, over 2000 yrs ago?
http://en.wikipedia.org/wiki/Sun_Tzu
I think that this is what many on the radical left are saying. Just leave capitalism to itself and on the present course it is headed for self-destruction. In the meantime raise the consciousness of workers and then we can pick up the pieces. No worker revolution needed.
These people see Keynesianism and MMT as ways of trying to save capitalism that will just prolong the misery and fail to solve the problem, which is economic power and rent extraction
This strategy is similar to the opposite view of the radical right to liquidate excess for the quickest and most soundly based recovery. They oppose Keynesianism and MMT on similar grounds.
I see Keynesianism and MMT as a middle course which if augmented with institutional correction of power and rent could eventually transform the system. I disagree that MMT alone is set up to do this, even with the JG. Without going after asymmetries specifically and changing institutions, lasting change will not happen without an eventual system breakdown either internally or externally.
Moreover, now humanity if faced with the uncertainty of global warming and a new arms race, both of which threaten extinction or a least significant culling. Up until fairly recently, I didn't think I would live to see this, being in my mid-seventies, but now I am not so sure. The pace is picking up.
I don't see MMT as a "strategy" at all. More fundamentally, MMT just points out unused methods already available in the tool kit.
That's why I prefer the neutral term "fiat currency operations"
Yes, the various original proponents of MMT too quickly & haphazardly stray into policy advice.
Personally, I think people from all strategic ideologies would be more favorable to considering available "fiat currency operations" if it were just presented on purely operational terms. "Did you know that it's possible to do ____ regardless of ____ ."
Always describe available operations first .... and shape policy later?
Hi Tom
I'm mid 60s, so was too young to appreciate the full blooded UK welfare state in my 20s, but old enough to experience historical uncertainty in the form of Thatcher. I realise from reading Minsky and other writers and researchers influenced and appreciative of him, that he signalled the first financial crisis at the end of the 60s. I view the pretend history of the 'generations' e.g. baby boomers and such like as an a-historical nonsense but not surprising given the rest of the self serving neocon stuff that emerged (maybe unexpectedly) during the 70s in academia, flowing out elsewhere. Uncertainty in history was alive and well undermining the political certainties of even the welfare state and the hopes of Bevan and such people.
Jim
Tom, for example look at this @nickdearden75: There is such a thing as society. We're it. #Ukuncut #austerity http://t.co/SZwTy7TaxG Unthinkable in the UK of the 70s. Forty years on...
Tom, Jim,
"Just leave capitalism to itself and on the present course it is headed for self-destruction."
At what time course? In the time courses discussed in evolutionary biology, this involves a blip in time - similar to what happens when parasites or mutant cells or recalcitrant gangs try to leave or overthrow an aggregate (of cells, or an existing human tribe) .....
but to us living through this in real time, the perspective is different.
What we do during this transient instance may well change the course of human cultural evolution.
We always have need to operate on at least 2 time courses simultaneously, based on the view that social species execute a 2-stage optimization strategy, Sum(A+B); NOT [Sum(A) + Sum(B)];
1) keep the components alive and optimally functioning (as many as possible)
AND
2) grow the system
Our goal is to see how much more we can be other than the algebraic sum of our parts. Our "options gap" is infinite, as far as we know.
Everything else is boring, in comparison.
@ Jim
Of course, there is no such "thing" as society, which is why that meme gets traction. Terms used at higher levels of abstraction and in higher order logic are not concrete and first-order. Wow, What a discovery! The implication is that higher levels of abstraction and higher order logic are nonsensical. That is, of course, a nonsensical position that no intelligent person would take. Only a sophist, a politician (a subset of sophists) and rubes would take it.
It is also clueless about systems. For example, the unit of society is the family rather than the individual. Economics recognizes this implicitly in the different between households and firms, for instance. Historically, societies were comprised of families, clans, tribes and nations, that is, kinship relationships, wit the rules being customs. Now, societies are structured more in terms of institutions, with the rules being institutional arrangements and positive law (including precedent in English law).
History is "his story," that is made up by the historian out of some level of actual evidence, hearsay, so-called expert opinion and ideological bias. One of the great problems affecting history is that the context no longer exists and must be reconstructed by estimation at best or imagination at worst.
There is no such "thing" as science either. It is a Positivist term with an ideological bias, too. There is a loosely defined scientific method and people employing it a various ways for various purposes. There are no precise boundary conditions agreed upon.
The way I would put it is that there is analytic philosophy, which is critical, speculative philosophy that is based on creation of models of possible worlds, and scientific philosophy that is based on creation of models as general descriptions of the real world of facts and events that serve as criteria for evaluating the representational characteristics of the model. These three all have rules, some tight (logic and math) and some loose, like what counts as evidence. Rules applicable to historical evidence and forensic evidence are different from evidence in lab experiments, for instance.
Other than some tightly defined areas such as logic and math where logical certainty apply, human "certainty" is only an approximation. That includes almost everything interesting. The quest for certainty outside of logic and math is doomed to be disappointing to the degree that precision and accuracy are criteria. For example, a typical error is to state precision beyond the level of accuracy, , for example, in decimal places greater than the accuracy of the measuring instrument. We fool ourselves this way much of the time by overestimating the instrument of knowledge. Why. Human have a cognitive bias toward certainty in order to avoid the discomfort that acknowledging uncertainty brings.
Look at the response of conventional economists to criticism of their models as inadequate. They retort that without a better (more precise and accurate model, again confusing precision and accuracy), we would have no model at all, meaning we would have to admit we are at sea without a reliable compass. that's just to horrible a prospect for many to admit so they remain in denial, comforting themselves with models that aren't reliable guides to reality.
At least financial issues the disclaimer, "Past performance may not be indicative of future results."
"Just leave capitalism to itself and on the present course it is headed for self-destruction."
At what time course?
I'm suggesting that transition from the Industrial Age, with capitalism as the dominant economic system. to the Information Age may be the catalyst for a system overhaul based on innovation and emergence of a new system. Could capitalism have been predicted from feudalism? Was capitalism produced by feudalism, or did it result from it as a significant factor. Actually, history shows it to be an obstacle that was removed by liberal philosophy and the social and political revolutions it brought, which installed the bourgeoisie acquisitors in power socially, politically and economically. and it happened relatively quickly on the timeline of history as major transitions go.
It ain't over till the fatheads quit singing. :)
There will always be Luddites, progressives & cultural parasites ... maybe in roughly stable proportions
I'm hoping that with the advent of the Information Age eduction will be transformed to the degree that the level of collective consciousness supports a new system that empowers ordinary people aka "workers." But in the Information Age aka Digital Age, there can be less work and more distributed leisure because increased productivity due to technological innovation like robotics. Participatory popular democracy would also become a real possibility with tech innovation, too. I was listening to an NPR program interviewing first time young voters in the UK and the predominant reaction was WTF, why are you making go to a poling station to wait to vote when I could do this a few seconds on my smartphone.
You are more optimistic than me, Tom. :)
The information age has served to concentrate power and wealth. More workers use the internet to post cat pictures than to raise their level of "consciousness." :-)
Increases in productivity have gone largely to the upper classes. Instead of enjoying more leisure time, salary workers are modern days slaves, working 50 - 60 hour a week without overtime pay or else they'll be the first to be let go in the next round of layoffs. Even hourly workers are often pressured to work off the clock, or else.
What is technically feasible and what is politically feasible are two different things. Within the current political system, the best we can hope for is a "good oligarch" along the lines of FDR, TR, or TJ, who has a sense of noblesse oblige. Otherwise TPTB are not going to give us more leisure time and participatory democracy out of the goodness of their heart. They're just not.
Dan, we are in the very early initial stage of the Information Age, about where the Industrial Age was in the late 18th century.
The Industrial Age is a period of history that encompasses the changes in economic and social organization that began around 1760 in Great Britain and later in other countries, characterized chiefly by the replacement of hand tools with power-driven machines such as the power loom and the steam engine, and by the concentration of industry in large establishments.[1][2]
While it's commonly believed that the Industrial Age was supplanted by the Information Age in the late 20th century,[3] a view that's become common since the Revolutions of 1989, as of 2013 electric power generation is still based mostly on fossil fuels and much of the Third World economy is still based on manufacturing. Thus it is debatable whether we have left the Industrial Age already or are still in it and in the process of reaching the Information Age.
Wikipedia
We are already seeing that capitalism driven by demand from income from wage labor is faltering. Everyone is asking where the demand is going to come from as automation and robotics take over production. Look at what happened to agriculture, which went from employing over 95% of the workforce using traditional methods to under 5% under agribusiness.
Moreover, the speed of transition is going to accelerate forcibly as the world confronts global warming through tech innovation and the emerging arms race becomes largely digital (cyberwarfare, surveillance, command and control system, and robotic weapons). It's going to be viewed as do or die.
The Information Age won't really hit until AI takes off. Google intends to be on the cutting edge of the and is committing its considerable resources, for example. Obviously, it's going to get a lot of military funding, too.
Frankly, there isn't much for me to disagree in Jehu's "Deficit reduction is not austerity; it kills capitalism" post (except that he doesn't consider the immediate costs it would have to let capitalism fail catastrophically, or whether Marxists have any effective say in that; a commentator, rschard1 made also the same observation). But let me comment on this:
"And then, to top it all off, MMT comes along and dresses this scam up as 'the cumulative financial assets' of the private sector."
He is right that MMT calls that "cumulative financial assets of the private sector". And, to my knowledge, that's all MMT says about it.
But there is one question MMTers' usually don't ask (if someone has, apologies: I haven't seen it): who exactly, within the "private sector", owns those financial assets?
If you guys remember the rather acrimonious debate between Paul Krugman and Steve Keen a few years back. One of the many things Krugman said (and I think I've seen him repeating later) is that debt (private or public) does not really matter: what we owe, we owe to ourselves. Which, strictly speaking, is true: a bank's loan is someone else's debt within the economy (i.e. either the government or the public). The bank is part of the "we", so are the public (and within the public, the classes) and the government: they all are the we Krugman speaks about.
If memory serves, Keen acknowledged that, but he wondered about the distribution both of assets and of liabilities among the we.
Among other things, Jehu seems to be asking the same question.
That's not a silly question.
Prodigious input/output cycle there for mid seventies Tom – hope I am as active mentally when I get there!
When I look out to the world from my little viewport, the difference between the animals and (wo)man is the 'I'. The higher order animals have personality, emotions and a physical response apparatus, and (instinctive) mind: horses enough intellection to understand circles, squares, diamonds; enough personality development to feel pride etc. - but not the ahamakara principle that allows humans to say 'I am'. Animals can suffer and enjoy, but they cannot say who is suffering or enjoying. Individualism is one of the great evolutionary initiations. As the 'I' evolves, it is finally ushered in to a place within Itself, where for the first time it sees itself in the mirror of Life and can say, 'I am That', which again is known as the first of our real initiations.
History, for me, is the story of the evolution of the 'I' and its response apparatus, its vehicle - the human persona. As the history unfolds on the outside, the 'I' pursues this and that goal for itself. There are 'I's in this world who control whole countries, armies, and global resources. Then there are 'I's who live in simple tribal villages - and everywhere in between. Everything that is created in this world is the result of an 'I' or 'I's, trying to achieve some goal. Everything that the 'I' achieves in this world eventually turns to dust, or death draws a line through its pursuits. In the process the 'I' has subjugated all of its physical, emotional and mental energies, honed them, and applied them to its illusory goals – a profound dissatisfaction is the inevitable result. But the vehicle has been prepared. What the 'I' seeks, what it is really looking for, unconsciously at first, is hidden deep within.
Eventually, the 'I' tries satisfaction of other 'I's in order to try and fulil itself – thus the great humanitarians and philanthropists are born, and great workers in the human sciences. The world become a better place, the law of the jungle, replaced by the law of individualism finally breaking down. Then comes the 'wandering in the desert' phase as the seeker looks for himself, serving others every step of the way, asking for nothing for the 'I' (a wave in the mindstuff) and nothing for the mind; but asking only, this time for truth, for the heart. The heart is singular, and wants to know. It has always been there, walking in parallel. Not very scientific I know, but that is what I see. Of course, nobody should believe it just because it is said, or written down. I think we all understand that. I'm just presenting another pov.
For me, it is only when the human being comes face to face with its true nature, does the word 'humanity' begin to really mean something. We are but candles, and we need to be lit. After finding the Self, the ascent to the 'father in heaven' as the Christians express it, proceeds apace. Things are quite simple from this viewpoint. And Life a far far bigger place.
Again, this stage we have built for ourselves, or lila of the 'I' and this earth, is something like a school, passage through which is a life bearing the lesson it needs to learn (which is why we all like to learn) .... I agree love is very important to everyone. It is a beautiful, uplifting and healing energy potential in every heart. It is a golden rope to truth. It is always interesting to talk to an 'I' and ask them what life has taught them, and what they want …?.! Most people are very capable with getting on with it, if others don't interfere. People's inner compass doesn't actually waver, reigning in the 'I' when it goes too loco; but I guess today there is a lot of stress and fear (we create for ourselves).
Happiness would make a huge difference.
Many thanks for your "institutional change thoughts" Tom. It would seem that simply getting a better understanding of money creation including a sociological one is not going to be enough unless we understand the purpose of the "choosing software" embedded in Nature is always ultimately that of seeking balance or symbiosis the origin of which you I think call "spirituality," others might call Gaia, but seems to be the prime source of optimism.
"That's why I prefer the neutral term "fiat currency operations" Roger Erickson.
I like your use of this term Roger. What strikes me very strongly about the prevailing right-wing Libertarian arguments about the need for Austerity programmes is much ado about balancing books is made but only one book is ever seriously considered for accounting that of the government sector. The other two sectors making up an economy may as well not exist as far as having books to account.
Clearly there are sociological power relationships involved in such a choice. To argue with such people that you have your "fiat currency operations model" all screwed up seems to be a better way of inducing doubt in their minds and that they could better "feather their own nests" by changing it. At least as Michael Hudson never tires of pointing out there is a serious conflict of interest between Production Capitalism and Financial Capitalism with the latter being the fight back of the Feudal Aristocracy.
Magpie, I vaguely recall some studies on who owns and benefits from government bonds, and not surprisingly, it's mostly the rich. Bill Mitchell calls the practice of issue interest paying bonds a subsidy for the banks. And of course MMT advocates zero interest rates (not sure that I agree with that).
It's a good point Dan. I remember Warren Mosler advocating no bond issuance and zero rates 5 years ago. Now he prefers issuing short term government debt and rates close to zero. I haven't found anything in MMT that explains liquidity preference for example, yet Randy has written about It regarding bond rates.
Magpie-
Who owns TSY securities is no secret, its very easy to find out. And it should be no surprise that the wealthy and foreigners own the most TSYies. TSY securities are term savings accounts, people that buy them are saving by definition;foreign trade surplus countries and the wealthy have money to save, lower income people have much less money to save. If you want a higher base interest rate, then the Govt has no choice but to pay interest to somebody, there is no other way for the system to work. So you can either pay interest only to financial institutions with reserve accounts at the CB in a reserve only system (no "debt" issuance) on the one end or you can issue TSY securities and let the market decide who wants to save in the form of TSYies savings deposits.
IOW the Govt can either pay interest on reserves only to banks (mostly)
or the Govt can issue TSYies and allow anyone to have access to the interest spending.
Personally, I dont want the Govt paying interest to anyone for any reason, its a useless subsidy.
@ Magpie
Exactly. It comes down to distribution.
Taking about distribution is off the table in conventional economics, and doing so is a career killer, so most leave it alone.
Marxists, Marxians, economic sociologists an and economists influenced by sociology are the only ones that dare mention it.
As David Ruccio and Richard Wolf, Marxians both, keep saying, economics is about distribution of the surplus, and it has been since surpluses were first produced.
It's right in the textbook definition of economics, too, as "allocation of scarce resources." The debate is really not so much about money, as it seems on the surface, but rather on the distribution of real resources in terms of use and control. Naturally, in a feudal system the rationale will be to justify the rents that landlords (yes, they are "lords" under feudalism) extract from land ownership. In a capitalist system, the economic rationale will be about justifying the rents that owners of capital including land extract from the system. The answer is competitive markets, marginalism and just deserts, which as we know is sophistry based on selection of specious assumptions designed to produce a desired outcome.
Time to shift the framing of the debate to what's really happening, which is using power to extract rents. Taxing aways the rents is a way to address the issue within the existing system, but the more effective, efficient and permanent fix is to adopt a system that isn't based on rents, as the previous systems of dividing the surplus have been. In aid of that it may be helpful to revisit so-called primitive system before surpluses were produced to see how distribution was addressed in terms of available resources and needs.
One of the problems with capitalism and the economics is rests on is the lack of distinction between wants and needs by rolling everything into utility and revealed preference. As a result social dysfunction arises out of basic needs not being adequately addressed by the distribution system based on markets. as presently configured.
The question then becomes how to get from here to there most effectively and efficiently, and with minimum social disruption. That rules out consideration of revolution as the first option.
Speaking of distribution .... this article on the subsidies that libertarian Elon Musk enjoys may be of possible interest to MNE.
While MMT understands that the subsidies to Tesla don't really "cost" the Federal government anything (tho state subsidies do have a real cost) the distributional effects still make you wonder.
Many thanks for your "institutional change thoughts" Tom. It would seem that simply getting a better understanding of money creation including a sociological one is not going to be enough unless we understand the purpose of the "choosing software" embedded in Nature is always ultimately that of seeking balance or symbiosis the origin of which you I think call "spirituality," others might call Gaia, but seems to be the prime source of optimism.
Right. Humanity is either going to rise to the challenge and do it voluntarily, or Mother Nature will do it involuntarily. In case any one hasn't noticed, Mother is already getting pissed.
Schofield "much ado about balancing books is made but only one book is ever seriously considered for accounting that of the government sector. The other two sectors making up an economy may as well not exist as far as having books to account."
Exatly. Double-Entry Accounting can't account for CREATION ... of order, wealth or organization ... without acknowledging the sectors currently excluded from the ownership equation of capitalism
Sharecropping can't exist if honest flow of resources among sectors is acknowledged.
Tom Hickey: I don't see capitalism or modern political liberalism as the end of history. My guess is that it is stage, as Marx held. But Marx did believe in an end of history, which would be socialism replacing capitalism.
The "end of history" foolishness is usually directed at Hegel, but is not true of Marx either.
I'm for making capitalism as livable as possible in the very short run. but hopefully it will be very short. As long as capital is the dominant factor, it's not fixable. Change it leaving the structure in place, and they will just work incessantly to change it back by any means necessary.
MMT - the JG in particular directly and immediately removes "capital as the dominant factor". It directly changes the structure of the economy, in the most lasting and drastic way, by making it more truly what it always was. If one doesn't understand that, one doesn't understand, MMT, Keynes, Lerner, Kalecki, Marx etc. Unfortunately, even though the elite, the 1% or 0.1% is tiny in numbers - they are the absolute majority of people who actually understand this basic economics. An awful lot of MMT enthusiasts, critics and observers could do with more understanding of such basics. If people cannot see or understand MMT writings - since Keynes & Lerner & before - on distributional issues, it is not the fault of the writers, but the non-readers. With equal "justice", one might as well accuse Marx - and the philosophers of whom he was the pupil - of the same.
The elite rule because they know the basics. The ruled are ruled because they don't, and many (or most?) "Marxists" help the rulers by mindlessly following the stupidest things Marx said (e.g. mischaracterizing the JG) & carefully ignore insightful things (e.g. praising the JG). Also, Marx did not say "abolition of wage-labor". He said "Aufhebung des Lohnsystems" - something rather different.
This is not about economics. Its about power.
Knowledge is power. The most potent weapon in the hands of the oppressor is the mind of the oppressed. It is hard to stop human sacrifice if sacrificial victims genuinely do not believe they are being sacrificed. But once people somehow do wake up before it is too late, before the dagger plunges into their heart, once they do shake off the drug of ignorance, do see what is and always was there - the crazy priest at the top of the pyramid - human sacrifice ends, permanently. It was a close run thing, the redrugging of the victims (& priests!) that succeeded 40 years ago.
It's right in the textbook definition of economics, too, as "allocation of scarce resources." This bad definition is due to Dennis Robertson & is of quite recent origin. (Post-)Keynesians & MMTers do not accept it. Geoffrey Hodgson has a good paper on its history and defects.
Count me skeptical of a JG accomplishing that within the existing system even if it could be made to stick, which I don't think it could. The only way it could be made to stick is making it workfare.
Without addressing power and ending rent extraction permanently, they be baaaack!
There was something like a JG during the Great Depression.The CCC and the WPA were basically substitutes for a safety net that didn't exist then. No indication that relief programs like the WPA and CCC had any effect on capitalism, and the New Deal is now mostly history, with history being rewritten to say that the New Deal didn't actually work anyway. Keynes is the new Marx as far as being blacklisted from conventional economics, although Samuelson pretty much did that with his bastardization of Keynes.
Neoliberalism isn't going to roll over. In fact, there is no viable candidate opposing it other than Bernie and as I pointed out above he is tacking Hudson's tack rather than Kelton's.
I don't see progressives ever lilting up behind MMT as a real game-changer but rather viewing it as another limousine liberal palliative measure.
Hudson has put his finger in the real issue. The neoliberal plan is to make all workers debt slaves, all of whose income goes to paying down debt that can never be paid off because it is always needed for the next must-have purchase. Everything that is bought is to be financed. Homes, vehicles, and durables are already financed, and much consumer spending is too. Much of the new housing is rental units as the country becomes a nation of renters with younger people unable to qualify for mortgages. FIRE accounts for over 20% of US GDP.
The military accounts for another ~ 4%, and I count the military as a protection service for capital. Much of domestic security is, too. So about a quarter of the US GDP is being extracted for capital without adding anything. That's about 4 trillion USD per year. No way TPTB are going to walk away from this.
Social democracy is being dismantled in Europe, too, as the populations of the developed world are now being "colonized," giving imperialism new significance. The direction of progress is being reversed.
Moreover, there is a very dark underbelly to all this, with TPTB not shying way from WWIII in order to further their aim at global dominance and wealth extraction.
An MMT Jg is going to fix this? Really?
Also, Marx did not say "abolition of wage-labor". He said "Aufhebung des Lohnsystems" - something rather different.
Marx discusses the wage system and wage labor in ch. 2 of the Communist Manifesto and Critique of the Golgotha Program. His analysis is nuanced.
Marx focuses on the abolition of the bourgeoise state and private property, and the establishment of a classless society, which he thinks that capitalism leads toward in the historical dialectic. He argued that abolishing wage-labor or the wage system was a misunderstanding of what he was talking about — the abolition of wage-labor and the wage system is a result rather than a cause.
He emphasized that he was talking about abolishing the conditions that underlie wage labor and the wage system rather than abolishing the wage system and wage labor, which he dismisses as being a helpful strategy. If private property is abolished, then the bourgeois system is abolished with it and along with it, its laws and class structure, as well as the state as an entity separate from society.
This puts an end to rent extraction, which wages involve. Wage labor amounts to slavery, that is, working (part of the day) for nothing, so it cannot be part of free society populated by free people. So communism.
On the other hand, what I said was, We are already seeing that capitalism driven by demand from income from wage labor is faltering. Everyone is asking where the demand is going to come from as automation and robotics take over production. Look at what happened to agriculture, which went from employing over 95% of the workforce using traditional methods to under 5% under agribusiness.. That's a long way from what Marx was talking about and I wasn't thinking of Marx when I wrote IIRC. It's reference to increasing capital/labor share with the result that demand is lagging. The demand in the system is in high-end goods and services and this is being paid for with income from rents rather than work, that is, "finance capitalism."
Thanks Dan, Kristjan, Auburn, and Tom, for the leads. I couldn't thank before, as Mondays are really bad days for me.
Auburn,
"If you want a higher base interest rate, then the Govt has no choice but to pay interest to somebody, there is no other way for the system to work. So you can either pay interest only to financial institutions with reserve accounts at the CB in a reserve only system (no "debt" issuance) on the one end or you can issue TSY securities and let the market decide who wants to save in the form of TSYies savings deposits."
I'm sure you are right. But those assets, which are created by government deficit spending, represent claims over real resources. So, in practice, MMT contributes -- even if that's not the intention -- to a transfer of resources to those who already control them.
True, this may probably be somewhat countered by a JG, or a BIG, or taxation. But those are separate issues.
True, this may probably be somewhat countered by a JG, or a BIG, or taxation. But those are separate issues.
I think that the basic issue is whether to recapture and redistribute rents to prevent rent extraction. My view is that the latter should be the aim and the former the interim until the aim is accomplished institutionally. That can only be accomplished successfully by shifting power relationships from class to society as a whole. One can call this a Marxian position if one likes but I think it is just obvious socio-ecoomically. It is not Marxist in that Marx proposed a particular way of doing that. My view is that there may be many ways and different societies will adopt appropriate ones when the time arrives or eventually hit on one that works through trial and error.
But I don't think that taxing away rent is more than a stopgap measure that those left in power will inevitably work around eventually. This way the basic structure of capitalism has to be changed in order to address the power issue in terms of popular sovereignty. Hey, if a country chooses to be run by narcissistic greedy assholes, that's their right. But they shouldn't be forced into it through asymmetries of class, status, power, and privilege in the name of "democracy" and "liberalism."
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