Sunday, July 1, 2018

Sam Williams — Modern Money

MMT economists advocate that the central government – the federal government in the U.S. – can and should employ every person who desires to work but cannot find work in the private sector at a living wage. This living wage, the MMT supporters point out, would function as a minimum wage, since no person would work for a private employer who offers a wage lower than the wage the government offers. Assuming such a reform could be implemented under the capitalist system, if your search for private employment comes up empty you would simply go to the nearest government employment office and choose among useful governments jobs. All these jobs would pay you a wage adequate to meet your basic needs for food, housing, education and so on.
If you desired more, as the supporters of MMT assume would be the case for most people, you would seek employment in the private sector. If you didn’t find it, you would still have your government job. Such a reform if it could be won under the capitalist system would be highly desirable, to say the least, from the viewpoint of the working class.
It is important to realize that the supporters of MMT do not see such a demand as part of a transitional program pointing towards a socialist society. Marxists have long raised this demand but see it not as a reform within capitalism but as way of building a movement that would establish a workers’ government that along with other profound changes would transform capitalism into socialism.
Marxists will in the years ahead engage in united-front movements and actions demanding that the government provide jobs for everybody who needs one at union scale wages – while MMT supporters are satisfied with a living wage. The difference between the Marxist and MMT perspectives on the demand that government act as the employer of last resort will be explored in coming posts.
Next month, I will examine Modern Money Theory in depth and contrast it to the Marxist theory of money.
A Critique of Crisis Theory
Modern Money
Sam Williams

8 comments:

Andrew Anderson said...

– while MMT supporters are satisfied with a living wage. Sam Williams

If a JG is not to contribute* toward price inflation then:

1) The JG jobs must compete with the private sector in producing needed or desired goods and services. How long do you think the private sector, en masse, will tolerate that? Unfair competition subsidized by their own government?

OR

2) The JG jobs would be work that only government may properly do such as law enforcement, the military, tending the National Parks, some infrastructure building and maintenance, etc. and THAT IS CURRENTLY UNDERFUNDED.

So, beyond needed increases in government jobs, JG jobs will:
1) Unfairly compete with the private sector
and/or
2) Bloat government with unneeded workers which shall waste the JG worker's time and thus contribute* toward price inflation.

*Not to say "cause price inflation" since a JG or just giving citizens cash (e.g. a Citizen's Dividend) need not cause price inflation if there is unused capacity in the economy.

Schofield said...

"However, the MMT economists imply that the U.S. government can continue with its tax cuts for the rich and huge war programs and still have no problem finding the money that would be necessary to shift toward a “green economy.”

Marxist ad hominem casually thrown into pie! How dreary!

andy blatchford said...

A bit of quote mining there Schofiekd as he also goes on to say "But the supporters of MMT suggest that these are not financial barriers for doing so." We do and it isn't so fair enough I think.

ISTM (will have wait for the next blog) he is sympathetic so don't jumpindown his throat at this point.

Andrew Anderson said...

So what is it to be, JG proponents? Compete with the private sector or, for example, explain to working Moms why their childcare costs have gone up due to increased demand but without increased supply?

Ralph Musgrave said...

Andrew, It's possible to get JG people into private sector work without their "competing with the private sector" simply by creating short term subsidised jobs for them with existing private sector employers. That has been done on the UK and Switzerland. For Switzerland, see:
https://ideas.repec.org/p/iza/izadps/dp606.html

Of course a problem there is the extent to which such employees displace those who relevant employers would have employed anyway. That was certainly a problem with CETA in the US in the 1970s. But the displacement problem can be kept within bounds then temporary private sector jobs are a possibility.

As for the public sector, that can be treated in much the same way. The public sector is not very good at employing unskilled people, but it should be possible to create a few temporary and not desperately skilled jobs in that sector.

Andrew Anderson said...

The goal should be to eliminate wage-slavery, not subsidize it, Ralph.

And the way to do that is with a Citizen's Dividend which as it increases over time, and with other measures to reduce or eliminate economic rent taking, shall eventually eliminate anyone's NEED to work for someone else for wages.

Ralph Musgrave said...

Andrew, "eliminate wage slavery"?? That's a very emotive phrase which will appeal to every leftard, but what does it mean? You can classify those on minimum wages AT THE MOMENT as "slaves" (and some people do).

The minimum wage is the widely accepted minimum socially acceptable wage for a job. Thus as long as JG pays that wage, then it's socially acceptable, at least according to the conventional wisdom. But I'm not even sure the conventional wisdom is right there because the five happiest countries in the world do not have a minimum wage. See:

https://www.forbes.com/sites/timworstall/2017/03/20/the-worlds-5-happiest-countries-do-not-have-a-national-minimum-wage/#5c2eb8062317

Andrew Anderson said...

Five developed nations that have no legal minimum wage are Sweden, Denmark, Iceland, Norway and Switzerland. via Ralph Musgrave

A wage-slave is someone who must work for someone else in order to have adequate food, clothing and shelter. I'm almost certain that no citizen in the above countries is EVER in danger of being without adequate food, clothing and shelter and it's probably true of non-citizens too. Thus, I'd bet, there's no wage slavery in those countries and thus no need for a minimum wage.

So if Scandinavian welfare states and/or rich Switzerland can be free of wage-slavery, at least for citizens, then why in the US should wage-slavery be considered the norm for working age citizens?