Saturday, February 9, 2019

Peter Cooper — MMT is Politically Open and Applicable to Both Capitalism and Socialism

Modern Monetary Theory (MMT) offers an understanding of sovereign (and non-sovereign) currencies that is applicable to a wide range of economic systems, including capitalist and socialist ones. Irrespective of the personal political preferences of its proponents, the theoretical framework in itself is neutral on the appropriate balance between public sector and private sector activity, or the relative merits of capitalism and socialism. In contrast to neoclassical theory, which starts from a general presumption in favor of private market-based activity except where the existence of market failure in excess of government failure can be explicitly established, MMT as a theory characterizes the appropriate mix of public and private activity as a social (or political) choice....
This is important because the substantive and procedural assumptions of an approach to inquiry, coupled with presumptions that are often unstated assumptions, determine the framework and therefore bias the outcome of analysis toward the assumptions, both stated and unstated. If assumptions and presumptions contain a normative element in addition to a positive (descriptive) one, then the approach is values-based, which in scientific terms implies subjective rather than objective.

It is difficult to impossible to formulate a theory involving social, political or economic data that is not normative to some degree owing to cultural and subcultural bias in that cognitive biases are endemic. For example, cognitive science reveals that reason cannot be completely disentangled from feeling in brain. Scientists recognize that attempt to minimize the subjective factors in the interest of approaching objectivity as closely as possible.

heteconomist
MMT is Politically Open and Applicable to Both Capitalism and Socialism
Peter Cooper

4 comments:

Ryan Harris said...
This comment has been removed by the author.
André said...

"Modern Monetary Theory (MMT) offers an understanding of sovereign (and non-sovereign) currencies that is applicable to a wide range of economic systems, including capitalist and socialist ones"

I would say that the prospective part is indeed "political neutral", but the prescriptive is not.

In my opinion, that is why it is so important to separate between those two parts.

AXEC / E.K-H said...

Links on Peter Cooper’s ‘MMT is Politically Open and Applicable to Both Capitalism and Socialism’

Peter Cooper asserts: “Modern Monetary Theory (MMT) offers an understanding of sovereign (and non-sovereign) currencies that is applicable to a wide range of economic systems, including capitalist and socialist ones. Irrespective of the personal political preferences of its proponents, the theoretical framework in itself is neutral on the appropriate balance between public sector and private sector activity, or the relative merits of capitalism and socialism.”

This is not the case.

In the course of an enumeration of MMT’s essential features, Peter Cooper mentions “Government deficit equals non-government surplus.” and explains “Basic accounting relationships apply irrespective of a society’s politics. Funds created through government spending that have not been taxed back are held as financial assets by non-government.”

It is methodologically true, of course, that “Basic accounting relationships apply irrespective of a society’s politics”, however, MMT’s fundamental accounting relationship, i.e. the sectoral balances equation, is logically/mathematically false. Because of this fundamental blunder, the rest of MMT is scientifically worthless and neither applicable to capitalism or socialism.

The correct accounting relationship states Public Deficit = Private Profit.

For the proof see

Rectification of MMT macro accounting
https://axecorg.blogspot.com/2017/09/rectification-of-mmt-macro-accounting.html

What and where is profit?
https://axecorg.blogspot.com/2019/02/what-and-where-is-profit.html

“But economics is not pure mathematics or logic” No, it is pure blather
https://axecorg.blogspot.com/2019/01/but-economics-is-not-pure-mathematics.html

Stephanie Kelton’s legendary Plain-Sight-Ink-Trick
https://axecorg.blogspot.com/2019/01/stephanie-keltons-legendary-plain-sight.html

Egmont Kakarot-Handtke

Noah Way said...

Don't feed the troll.