Tuesday, June 11, 2019

Another reason to know where money comes from — Peter May

Good pro-MMT article from Peter May contra the neoliberal left.

So I agree that distribution of power is important but I do think that knowing exactly where money comes can be mighty helpful in torpedoing that actual power, by better exposing its bogus ‘justification’.
That is why I imagine many consider MMT to be progressive; not because its understandings are inherently so in themselves. But simply because, in order to avoid a fair and logical left of centre conclusion, you have to lie about your intentions.
MMT helps to draw attention to the John Maynard Keynes dictum that, for a nation, it is wrong to say ‘we cannot spend more than we earn’. By contrast, as a nation ‘we cannot earn more than we spend’....
I have also criticized MMT for not addressing the power issue as key to political economy. But this criticism is quite different from that of the neoliberal left, including "neoliberal Marxists." A dominant position on this side is that the wealthy should be taxed both to "pay for" increased spending on welfare and also to redistribute wealth more equally. MMT denies the first is applicable, since it is based on a conflation of a currency issuer with users of the currency. At least some MMT economists agree with the second point, which is not inconsistent with MMT. However, it is a political issue. The MMT economists (in the US anyway) have made strategic choices about how to approach this.

The way economic science is now conceived in conventional thought, power lies beyond the scope of economics other than insofar as it involves economic power, aka "market power," and government intervention in "natural" economic processes, which it is assumed, will lead to optimal results if these forces are allowed to work "naturally."

My point is that from the systems POV economics deals with the material life-support system of a society as a larger social system. The society as social system, being overarching, is the whole in this case. The social system is an integral whole in which the social, political and economic factors cannot be disentangled without oversimplification in the sense of leaving out relevant matters. 

Presently, the unit in the global system is the nation state and only nation states are sovereign issuers of currency is the MMT sense based on institutional analysis and description. MMT institutional analysis reveals this in the chartalist assumption that the state is the key institution involved in the creation of "modern money." The currency issuer therefore bears responsibility for the entire range of outcomes that follow from use of currency sovereignty as a policy instrument. Excessively skewed distribution cannot occur absent the participation of the state as currency sovereign.

Progressive Pulse
Another reason to know where money comes from
Peter May

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