An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Saturday, July 11, 2020
The Deficit Myth: a review — Chris Dillow
Should-read.
Chris Dillow is a Marxian economist. Like Michael Roberts is moderately familiar with the MMT literature. Both offers critiques of MMT from the Marxian perspective. The critique of Roberts is more from the macro side and in my view has weaknesses although it is worth responding to as an intelligent and moderately informed criticism.
Chris Dillow's critique is from the side of political economy, which is different from contemporary macro. He socres points with respect to Stephanie's presentation of MMT in The Deficit Myth and also to the MMT literature in general based on its approach limited to the conventional approach to economics.
This conventional approach ignores that the subject matter of economics is embedded in a social, political and economic system as a whole and is strongly influenced by the structure and dynamics of the system. This system is often called a "socio-economic" system, but that ignores the political component and is therefore deficient.
The parts cannot be adequately analyzed independently of that whole and in isolation from it since social and political factors are causal factors in economics and especially macroeconomics since macro is oriented toward policy formulation. Of course, as Marx observed, economic infrastructure is also systemically foundational. These aspects of the system function like fingers of a hand.
I would say this critique applies to MMT presentation, with the notable exception of Bill Mitchell, who is outspoken as a political economist and is "impolitic." I think that the rest of the MMT economists look with both economists eyes and so the eyes of political strategists. They avoid being impolitic.
I would say further that I suspect that all the MMT economists get this critique— how could they not with outspoken Marxian economist Michael Hudson as an ally, at the very least. But they are certainly aware of Kalecki, too. So I doubt that the MMT economists overlook this. I would suspect instead that they would like to influence the political debate and being associated with "Marx" would be a disadvantage.
The MMT JG is especially vulnerable to attack by the ownership class as "socialism," if not closet Marxism. It addresses the issue that Kalecki raised about the political implications of unemployment without specifying him. Advertising this in the analysis that would just confirm it. I am somewhat surprised that Chris Dillow didn't pick up on that.
Anyway, I suggest you read the review "We" need to talk about class structure and networking, class power, in particular with respect to institutional arrangements, and networking based on class. Underlying is class heritage that results in an unequal structure across generations that undermines equal opportunity in life.
In my view it is time to be bold while not getting reckless. But I don't think I need to tell the MMT cohort in general to be bold. The activist base is pretty active.
Stumbling and Mumbling
The Deficit Myth: a review
Chris Dillow | Investors Chronicle
It will take a stupendous amount of boldness to resurrect Marxism from the dustbin of history. Fortunately the right wing is making the task easier by branding everything socialist. We will all be socialists and our reply will be a shrug.
ReplyDeleteI like the demolition of both Marx and Liberals from the "Capital as Power" people.
ReplyDeleteThis is quite a good overview: http://bnarchives.yorku.ca/640/
The MMT JG is especially vulnerable to attack by the ownership class as "socialism,"
ReplyDeleteThat's a laugh since increased privileges* for the government-enabled usury cartel with wage-slavery to government as "compensation" for their victims reeks of fascism.
But hey, it'll keep the dispossessed too busy, tired and demoralized to protest injustice, eh Neil? And off your lawn?
*e.g. unlimited deposit guarantees FOR FREE.
*e.g. unlimited, unsecured loans from the Central Bank at ZERO percent interest.
I’ve followed Dillow’s blog for years and often leave comments after his articles. He makes far too much of bizarre, convoluted side effects of important ideas – MMT and other ideas.
ReplyDeleteIn this case he claims the central ideas of Keynes and MMT were forgotten 20 or 30 years ago (which they certainly were) because full employment is not in the interests of wicked capitalist employers. So apparently those wicked employers somehow managed to persuade everyone to ignore Keynes / MMT. As Dillow puts it:
Capitalists “disliked what we now call MMT because it weakened their power. If governments can use fiscal policy to maintain full employment, they don't need to maintain business confidence and so this powerful controlling device loses its effectiveness".
In addition to the unrealistic idea that everyone was brainwashed by capitalist employers, Dillow is implicitly claiming that employers actually prefer relatively high unemployment and the consequent cut to their turnover to low unemployment and a higher turnover.
Conclusion: compared to Kelton, Dillow is irrelevant.
MMT – a Wall Street myth
ReplyDeleteComment on Chris Dillow on ‘The Deficit Myth: A Review’
Chris Dillow’s main point of critique is “For me, Kelton is – albeit very lucidly – reinventing the wheel.”
This is, in fact, a compliment because MMT is proto-scientific garbage and Kelton is an academic fraud.#1
MMT’s macroeconomics is provably false since Keynes, Kalecki, Lerner, etc. So, MMT policy guidance has no sound scientific foundations.
The macroeconomic profit Law implies Public Deficit = Private Profit. This means that the greater part of profit in the United States is actually produced by the state. The US economy hangs for a long time already on the state ventilator for its survival.
Among all that academic crap, MMT has the right message for Wall Street. Who is MMT’s first apostle? Right, Warren Mossler, ex-Wall Street. But Stephanie Kelton is, without doubt, the more attractive sales-person. Economics has become part of the entertainment industry long ago and the casting is done in Hollywood where they know best what sells.
The rest is marketing/PR routine. Interviews, book, media hype, No 1 on the best-seller list, and then, of course, trolling in the social media. This is where Chris Dillow comes in “Dr Kelton explain these ideas wonderfully clearly, so I recommend this book to all non-economists interested in government finances.”
MMT is itself a myth. MMT policy is NOT for the benefit of WeThePeople. MMT is the issuance of counterfeit currency in the form of deficit spending/money creation for the benefit of the one-percenters. Because PublicDeficit = PrivateProfit, MMT is the biggest redistribution program ever. MMT is a political fraud.
“Chris Dillow is a Marxian economist,” says Tom Hickey at Mike Norman Economics. There are historians who claim that already Marx was on the payroll of the financial Oligarchy.
Egmont Kakarot-Handtke
#1 More details
https://axecorg.blogspot.com/2017/07/mmt-cross-references.html
Andrew: On the subject of removing the subsidies and featherbedding that banks enjoy, you might like this 800 word article of mine:
ReplyDeletehttps://www.researchgate.net/publication/342877489_Once_bank_subsidies_are_removed_the_bank_system_automatically_becomes_a_full_reserve_system