MMT itself is just a description of how the monetary system works in the UK, US, Canada, Australia, the EMU – everywhere there is a monetary economy.I dislike quibbling, but MMT is prefaced by an operational description of how monetary systems work, paying particular attention to the existing monetary system. This analysis reveals the policy space associated with policy choice regarding the monetary system and monetary operations.
MMT is based on this analysis of policy space.
Secondly, MMT is also an macroeconomic theory based on a specific method for approaching macroeconomics that differs from other method owing to the operational analysis and other factors, such as attention to sectoral balances and stock-flow consistency. MMT is a theory in that there is attribution of causality that goes beyond simply stating accounting identities.
Thirdly, MMT makes policy recommendations within the Keynesian framework of the assumption that full employment is not the equilibrium state of a modern monetary production economy, e.g., owing to the non-neutrality of money not only in the short run but also the long run.
According to MMT economists, MMT is only viable solution on the table for harmoniously reconciling of the trilemma of growth, employment and price stability that most economists view as non-reconcilable, that is, at most two factors can be reconciled while the other factor must function as a tool, e.g., addressing price stability through monetary policy based on NAIRU and a buffer stock of unemployed. The harmonious resolution of this trilemma is considered to be the holy grail of macroeconomics, in particular with respect to policy.
MMT is apolitical in the sense that all economists and policy makers prefer the harmonious reconciliation of growth, employment, and price stability. Politics is about how to accomplish this in terms of ideological assumptions involving favoring some factors over others.
MMT shows that this tradeoff is not necessary given the deeper understanding that MMT analysis provides and using the potential policy space of currency sovereign under the existing monetary system. And this does involve political choices since it involves fiscal policy.
Ellis Winningham — MMT and Modern Macroeconomics
MMT and Politics: A Brief Explanation
Ellis Winningham
MMT and Politics: A Brief Explanation
Ellis Winningham
16 comments:
I don't think the embedded link is working at the moment, Tom.
Ooops. Link fixed in post.
Here it is.
http://elliswinningham.net/index.php/2017/09/10/mmt-politics-brief-explanation/
Thanks, Tom.
MMT: for the record
Comment on Ellis Winningham on ‘MMT and Politics: A Brief Explanation’
You say: “I dislike quibbling, but MMT is prefaced by an operational description of how monetary systems work, paying particular attention to the existing monetary system. This analysis reveals the policy space associated with policy choice regarding the monetary system and monetary operations.
MMT is based on this analysis of policy space.
Secondly, MMT is also a macroeconomic theory based on a specific method for approaching macroeconomics that differs from other method owing to the operational analysis and other factors, such as attention to sectoral balances and stock-flow consistency.”
Fact is, the macroeconomic theory MMT policy proposals are based upon is false and has been refuted.#1 MMTers do NOT understand how the price- and profit mechanism of the monetary economy works. For the general public, the essential points are:
• MMT has NO sound scientific foundations,#2
• MMT’s sectoral balances equations are mathematically false,
• MMTers violate scientific standards on a daily basis,
• MMT is political agenda pushing in a scientific bluff package.
Egmont Kakarot-Handtke
#1 See cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
#2 For details of the bigger picture see cross-references Keynesianism
http://axecorg.blogspot.de/2016/09/keynesianism-cross-references.html
Egmont,
MMT’s sectoral balances equations are mathematically false.
This is false: http://s7.postimg.org/7bhqgf6tn/Sector_Financial_Balances.jpg ???
Egmont,
MMTers violate scientific standards on a daily basis
What “scientific standards” are those?
MRW
(i) You doubt that “MMT’s sectoral balances equations are mathematically false.”
For the proof see ‘Rectification of MMT macro accounting’
https://axecorg.blogspot.de/2017/09/rectification-of-mmt-macro-accounting.html
(ii) I said “MMTers violate scientific standards on a daily basis”. You ask “What ‘scientific standards’ are those?”
• Scientific standards are well-defined: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)
• MMT is axiomatically false, materially/formally inconsistent, and profit/income is ill-defined (see i).
• Because of material/formal inconsistency MMT policy guidance has no sound scientific foundation.
Egmont Kakarot-Handtke
"MMT’s sectoral balances equations are mathematically false."
Please explain, sans self-references.
Egmont,
Scientific standards are well-defined.
What are they? You’re not answering my question. You should be able to state them clearly, briefly, and plainly.
Egmont,
You write: “Time to make economics a science.”
You can’t. Physics is a science, not economics. Astronomy is a science, not economics. You can accurately calculate the precession of the earth 4,000 years ago, the movement of the stars, and tell what they’re going to be 300 years hence. It’s axiomatic.
You can’t do that with economics. You can’t compute the uncertainty. You can’t accurately estimate the price of food, commodities (oil, gold, rare earths, etc), for example, in 10 years. You can’t predict war. You can’t predict national political policies, or even who the president is going to be (witness US 2016). You do not have the basis to know. There is no calculable probability with a scientific basis. The future simply cannot be predicted on the probability distribution of the past.
You can calculate risk, using variables that are measurable, like a deck of cards or the house odds. But that isn’t science. And it’s not economics. It’s risk management and it’s limited to a finite set of variables. It’s not axiomatic.
Then there is the issue of scientific honesty — the need to clearly state all the reasons to doubt your own conclusions, the places where your argument is uncertain, the places where there is no real evidence to support them. I don’t see any of that from you; instead you're a haughty spear-chucker.
[On the scientific method] Feynman said, "In general we look for a new law by the following process. First we guess it. Then we compute the consequences of the guess to see what would be implied if this law that we guessed is right. Then we compare the result of the computation to nature, with experiment or experience, compare it directly with observation, to see if it works. If it disagrees with experiment it is wrong. In that simple statement is the key to science. It does not make any difference how beautiful your guess is. It does not make any difference how smart you are, who made the guess, or what his name is – if it disagrees with experiment it is wrong. That is all there is to it."
Respond to Six's request.
Feynman saying the same thing during one of his famous lectures at CalTech. Short and sweet, and funny…just the first minute.
Richard Feynman on Scientific Method (1964)
https://www.youtube.com/watch?v=0KmimDq4cSU
Of course, what Feynman means by "guess" is "educated guess" as a combination of "book learning" and experience. The technical term is abduction in the sense of C. S. Peirce.
In the philosophical literature, the term “abduction” is used in two related but different senses. In both senses, the term refers to some form of explanatory reasoning. However, in the historically first sense, it refers to the place of explanatory reasoning in generating hypotheses, while in the sense in which it is used most frequently in the modern literature it refers to the place of explanatory reasoning in justifying hypotheses. In the latter sense, abduction is also often called “Inference to the Best Explanation.”
This entry is exclusively concerned with abduction in the modern sense, although there is a supplement on abduction in the historical sense, which had its origin in the work of Charles Sanders Peirce. — Stanford Encyclopedia of Philosophy-Abduction
Karl Popper wrote a book on it called The Logic of Scientific Discovery (PDF).
MRW
(i) The fact that you ask me what the scientific standards are proves that you have NO idea of what science is. Let us fix this point first: you are a stupid and scientifically incompetent person.
(ii) The criterion of science is true/false with NOTHING in between. Truth, in turn, is well-defined by material and formal consistency. All this is known since 2000+ years: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle)
(iii) Scientific knowledge takes the form of the true theory. All the rest of human communication is blather, storytelling, the-sun-goes-up common sense, wish-wash, gossip, ALL of which can be refuted either as logically inconsistent or factually inconsistent or both.
(iv) MMT has been logically refuted, that is, the mathematical proof has been given that the MMT balances equations are false.#1 Because the formal foundations of MMT are false the WHOLE analytical superstructure is false. MMT is scientifically unacceptable.
(v) You maintain that economics is not a science. You are obviously NOT acquainted with the history of economic thought. Since Adam Smith/Karl Marx economics is explicitly defined as science. The general public is year after year reminded of this fact with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.#2 And every economist learns in Econ 101: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins)
(vi) Economics claims to be a science but is not. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal economic concept profit wrong. MMT, too, is provably false and therefore scientifically worthless. Needless to emphasize that economists have come up with a virtually endless list of excuses for their manifest failure.#3
(vii) MMTers are in the state of incorrigible self-delusion/idiocy/corruption. They do not, to begin with, know what science is, or if they know, they ignore or even actively suppress refutation.#4
(viii) Because MMTers are substandard in all intellectual and ethical dimensions they have to be thrown out of science.
Egmont Kakarot-Handtke
#1 For the full-spectrum refutation of MMT see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
#2 The real problem with the economics Nobel
http://axecorg.blogspot.de/2016/09/the-real-problem-with-economics-nobel.html
#3 Failed economics: The losers’ long list of lame excuses
http://axecorg.blogspot.de/2017/01/failed-economics-losers-long-list-of.html
#4 Peter Cooper, Bill Mitchell, Dirk Ehnts and other MMTers delete or block critique/refutation from their blogs. From this tip of the iceberg, one can safely conclude that MMTers are definitively NOT committed to science. MMT is, like all political economics since Adam Smith, intentionally/unintentionally corrupting science, that is, undermining the integrity of the institution that is explicitly committed to provable truth.
Egmont was looking for a fastball, and he swung at a cutter in the dirt. Strike three! (Ironically, pitching is science. Economics, not so much).
Tom Hickey
The social sciences in general and economics, in particular, is what Feynman called cargo cult science and he characterized it thus: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science, because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”
What is missing is the true theory. Scientific truth is well-defined by material and formal consistency. Economics lacks this consistency: “So we really ought to look into theories that don’t work, and science that isn’t science. (Feynman)#1
When one looks at MMT one finds that it has been logically refuted, that is, the mathematical proof has been given that the MMT balances equations are false.#2 Because the formal foundations of MMT are false the WHOLE analytical superstructure is false. MMT is scientifically unacceptable.
And this is what Feynman said about the “educated guesses” of MMTers: “… the inexperienced students, make guesses that are very complicated, and it sort of looks as if it is all right, but I know it is not true because the truth always turns out to be simpler than you thought.”#3
You can be sure that Feynman would have flushed MMT down the toilet without further ado because of manifest inconsistency.
Egmont Kakarot-Handtke
#1 See also Tavares, E. (2014). The Farce That Is Economics: Richard Feynman On The Social Sciences. Zerohedge blog post.
http://www.zerohedge.com/news/2014-10-18/farce-economics-richard-feynman-social-sciences
#2 For the full-spectrum refutation of MMT see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
#3 First Lecture in New Economic Thinking
http://axecorg.blogspot.de/2017/05/first-lecture-in-new-economic-thinking.html
Egmont, your entire compliant of MMT specifically, and economics in generally,is based on a fundamental misunderstanding of the scientific method. The scientific method does NOT seek truth, it instead seeks the best explanation that has the least counter set of observable phenomena. By its nature, it is a dynamic consensus constantly bombarded by heretics with "better explanations" as well as revealing new observable phenomena. Not yet a consensus, but MMT has provided "better explanations" to a host of observable phenomena. You would contribute more by seeking and stating better explanations and supporting observable phenomena than the reams of ad homien laced conjecture you spew out - all based on your fundamental misunderstanding of the scientific method. I might call you a "stupid and scientifically incompetent person" but it's probable more about you being stuck in some intellectual masturbation do-loop to boast your sense of self and not knowing how to quite. I suggest a re-read of Plato's Cave and maybe a run at "Zen and the Art of Motorcycle Maintenance" to lighten up a bit. Maybe a girlfriend?
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