Comments On Chris Dillow's Review — Brian Romanchuk

Chris Dillow wrote a review of Stephanie Kelton's The Deficit Myth. It was a fairly positive review, but I wanted to discuss some of his commentary on MMT. In my view, the aspects of the book that Dillow questioned are probably the reasons why the look is a best seller.

I agree that the strategy is working and MMT is positioning itself to become the next big thing. If there is a global recession as a result of the pandemic and it looks like there will be one, then MMT stands ready with policy to address it.

If there is a global depression, which could also happen, then all alternatives would be on the table, and MMT could be the basis for a new New Deal. In this case, you would likely see MMT economists either in the administration or as advisors.

My deeper views is that systems analysis is the only way to go to get to a design solution that has a remote shot at providing a resolution within the currency framework, which is neoliberal capitalism including neoliberal globalization. 

Therefore, the chief economic factor to consider is economic rent, along with the attendant rent seeking and rent extraction, and institutional arrangements that incentivize them. Preempting this requires an overhaul of the system and redesign of key institutional arrangements. Absence a crisis, this would likely not be possible politically.

Since social, political and economic systems like national societies are complex adaptive systems, and the world community is also a complex adaptive system, no solution can be lasting unless it is dynamic. A satisfactory solution must be capable of handing reflexivity based on feed back from changing conditions, coupled with emergent  challenges that accompany opportunities. 

That is is say, a design solution has to be synergistic, meaning that key relations in the system must produce more than the parts (elements and subsystem) individually. Economics alone cannot meet this task since social and political factors also come into play.

What would such a solution look like? I would say ecological socialism that ends capitalism defined as favoring capital accumulation because growth, on the principle that "a rising tide lifts all boats." That principle is correct from one vantage and wildly wrong from another. And the latter conforms more closely with reality at present. Without addressing this conflict is ensured. 

The present trajectory is parlous, leading toward a culling of the species resulting from disease (pandemics), starvation (climate change), and war, especially over increasing scarce real resources,  including water. 

It doesn't have to be this way, but without concerted action, it will.

See Lars Syll, Keynes on microfoundations, for what Keynes thought about social systems. See also, AFP, Pandemic drives broadest economic collapse in 150 years: World Bank.

Bond Economics

Comments On Chris Dillow's Review
Brian Romanchuk