On June 3, 1951, the Socialist International association was formed in London. It is still going. It is “a worldwide association of political parties, most of which seek to establish democratic socialism”. Its roots date back to the C19th (to the First International formed in 1864) when it was considered beneficial to unite national working class movements into a global force to overthrow Capitalism. Internal bickering among various factions led to various dissolutions and reformations over the last 150 odd years. In 2013, the membership split when the German SPD decided to set up an competing group, the Progressive Alliance, which saw a host of so-called social democratic parties (including the Australian Labor Party) join and desert the SI. Both bodies are dogged by internecine conflict and members who have fallen for the neo-liberal macroeconomic myths. More recently, DIEM25 has emerged to pursue a Pan-European vision of Left-wing politics. The more recent dynamics of these movements deny power of the nation state in a globalised economy and global financial flows. They are all failing because of this denial.
There was an interesting article in the Financial Times (July 4, 2017) – Sovereignty still makes sense, even in a globalised world – by Robert Tombs, who is a British academic specialising in French history, which bears on this topic.
The claim that the nation state is dead is also a major theme of my upcoming book (with Thomas Fazi) – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – which will be released by Pluto Press (UK) on September 20, 2017.
We will be launching the book in London on September 26, 2017 and then doing a 10-day lecture and promotional tour throughout Europe following that. All the details of where and when events will occur will be published soon but at the end of this blog is an indicative guide.
Applied MMT in a socialist context.
Reclaiming the State
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
10 comments:
I just finished reading Lawrence Goodwyn's "The Populist Moment," which covers the same ground that Bill Mitchell is re-inventing.
The 19th century Populists advocated what we would now call MMT, along with the idea that the monetary system should be democratically controlled for the "public purpose," as MMT likes to put it. That was a revolutionary proposal at the time.
Of course the Populists were ridiculed and demonized by both mainstream parties, and by the press. Corporate money backed the gold standard, and later the Federal Reserve system. The Populists never had a chance.
Goodwyn's book is a must read because nothing has changed.
It will take a major war or revolution to force major changes.
Weren't the populists just silver people?
"The Populist platform during the 1892 election campaign advocated free silver and other reforms with the intent, Sanders writes, “not to turn the clock back on industrial development but to harness the new technological power for social good,"
The Populists were silver people...
So Dan how can you say:
"Goodwyn's book is a must read because nothing has changed"
Nothing has changed?
We're not under the metals anymore what are you talking about???
@Matt, that was what most of us were taught when we spent 10 minutes covering the material in high school history class. It is still widely believed today. Goodwyn's book explains that fiat money and public banking were the backbone of Populist ideology.
The original Populists were Greenbackers. They supported fiat money and a type of public banking, where the government would finance farmers directly at low interest, which they referred to as the sub-treasury plan. It was absolutely essential to their ideology.
But ... in an attempt to win votes in Western mining states, the Populist platform called for silver coins in addition to fiat money. Many of the core populists bitterly opposed silver, seeing it as just another type of hard money. Nonetheless silver coins would have been harmless as long as fiat dollars were the basis of the monetary system.
Over the years, the silver faction gained political power due to a well financed propaganda and lobbying campaign by the silver industry. In 1896 the pro-silver faction succeeded in gaining control of the Populist party, endorsed the pro-silver Democratic candidate, William Jennings Bryan, and dropped the "sub-treasury plan" from the Populist platform. The Greenback faction of the party was furious and the Populist party quickly disintegrated because they no longer stood for anything.
It is true that we no longer have a metallic currency, however the currency is still controlled by private banks, and government is still controlled by corporations. The MMT view that the Fed and private banks are benign institutions that serve the public is wishful thinking.
The Populists failed because they ran up against identity politics and corporate power. In that sense "nothing has changed."
Even with silver, this relieved the scarcity of money imposed by only gold rather than bi-metalism. So it was not a complete misunderstanding.
BTW, we are likely to see a similar situation with MMT as Dan reports about 19th c. US agrarian populism.
It is unlikely that the establishment will every credit heterodoxy for the ideas that it will eventually have to appropriate, oops, I mean "discover." But when this happens the establishment will shape these ideas in its own interest.
This is just the nature of capitalism based on "rational utility maximization."
Dan Lynch, thanks for suggesting the book.
MMT, fake science
Comment on Bill Mitchell on ‘Reclaiming the State’
In the beginning, there was Political Economy. J. S. Mill defined it clearly as a social science: “The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.”
Clearly, from the very beginning the two issues ‘how society works’ and ‘how the economy works’ were not properly kept apart.
Then, there is the political sphere and there is the scientific sphere. It is quite obvious that both are ontologically different and because of this, it is of utmost importance to keep them apart.
Politics is about the realization of the Good Society. This presupposes an idea what the Good Society is and the practical capacity to make things happen. In very general terms, the political sphere is about values and action, and the crucial distinction is between good/bad or better/worse. Science is about knowledge and the crucial distinction is between true/false with truth unequivocally defined by material and formal consistency.
Scientific knowledge is embodied in the true theory. The true theory is the best possible mental representation of reality. Scientific knowledge satisfies two criteria: material and formal consistency. The economist needs the true theory: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
So, how does MMT fit into the grand scheme?#1 The first thing to realize is that economics is still a hodgepodge of social science and political agenda pushing. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong. With the pluralism of provably false theories economics sits squarely at the proto-scientific level. Economics has NO truth value, merely some political use value.#2
Bill Mitchell’s post ‘Reclaiming the State’ argues for more national/regional sovereignty. Sovereignty, clearly, is a political issue and NOT an economic issue even though it has economic implications.
Bill Mitchell is out of economics and obviously pushing a political agenda. Of course, this is what most economists#3 do but this does not make it any better. Economists could know from John Stuart Mill that they are NOT entitled to dabble in politics. What is worse, though, is that Bill Mitchell underpins his political arguments with MMT which claims to be an economic theory. As such, MMT is supposed to explain how the actual economy works. Unfortunately, MMT is materially and formally inconsistent, that is, scientifically worthless.#4
Economics always claimed to be a science but never rose above the level of a proto-science. What MMTers fail to understand is that economics (i) is NOT a social science, and (ii), does NOT scientifically support any political program. Both right-wing and left-wing economists commit a crime against science by weaponizing it in a political confrontation.
MMT is materially/formally inconsistent, does not deserve the title of a science, but is politics in a bluff package, just like Walrasianism, Keynesianism, Marxianism, and Austrianism.
Egmont Kakarot-Handtke
#1 Wikimedia, Positioning of economics
https://commons.wikimedia.org/wiki/File:AXEC105.png
#2 Economics: 200+ years of scientific incompetence and fraud
https://axecorg.blogspot.de/2017/06/economics-200-years-of-scientific.html
#3 Krugman is not an economist
http://axecorg.blogspot.de/2016/09/krugman-is-not-economist.html
#4 For the full-spectrum refutation of MMT see cross-references
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
"Clearly, from the very beginning the two issues ‘how society works’ and ‘how the economy works’ were not properly kept apart."
You can see this week where Trump (material sytems guy) goes down to Houston and the SJWs are claiming that "he didn't show enough empathy!!!!"... They can't separate the material from the non-material...
Reading about the populists is required in UMKC econ classes, e.g. This article by Carruthers & Babb. Wishful thinking is not prominent in MMT. Neither is fearful thinking, that fantasizes that the establishment or corporate power or other countries are omnipotent.
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