Bill Mitchell — Spending equals income whether it comes from government or non-government

It is now clear that to most observers that the use of monetary policy to stimulate major changes in economic activity in either direction is fraught. Central bankers in many nations have been pulling all sorts of policy ‘rabbits’ out of the hat over the last decade or more and their targets have not moved as much or in many cases in the direction they had hoped. Not only has this shown up the lack of credibility of mainstream macroeconomics but it is now leading to a major shift in policy thinking, which will tear down the neoliberal shibboleths that the use of fiscal policy as a counter-stabilisation tool is undesirable and ineffective. In effect, there is a realignment going on between policy responsibility and democratic accountability, something that the neoliberal forces worked hard to breach by placing primary responsibility onto the decisions of unelected and unaccountable monetary policy committees. And this shift is bringing new players to the fore who are intent on denying that even fiscal policy can stave off major downturns in non-government spending. These sort of attacks from a mainstream are unsurprising given its credibility is in tatters. But they are also coming from the self-proclaimed Left, who seem opposed to a reliance on nation states, and in the British context, this debate is caught up in the Brexit matter, where the Europhile Left are pulling any argument they can write down quickly enough to try to prevent Britain leaving the EU, as it appears it now will (and that couldn’t come quickly enough).

Bill addresses the charge from the Left that MMT is not Marxian enough.

I would also say that my career in economics has been inspired by the basic insights about Capitalism provided by Karl Marx (and Friedrich Engels) and the writers that followed in that tradition.

But I would also be sure to disagree with Michael Roberts assertion that “MMTers deny the validity and relevance of Marx’s key contribution to understanding the capitalist system: that is it is a system of production for profit; and profits emerge from the exploitation of labour power – where value and surplus value arises” (Source).

As one of the developers of MMT, I have always made it explicit that Marx’s ideas on class and exploitation lie at the basis of Capitalist dynamics and should be the starting point for a progressive understanding.

So it is hard at times to know what being ‘Marxist’ means, which is especially the case when we consider the post-modern distractions that made ‘Marxism’ appear recondite, to say the least....

Longish and detailed, but one of Bill most significant posts on political economy. Necessary to understand nuances of MMT from a left perspective, and MMT is now being attacked from both right and left.

Bill Mitchell – billy blog
Spending equals income whether it comes from government or non-government
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Frank Li — What If Karl Marx Was Right, Mostly?

The image below summarizes Marx's works in a nutshell: his societal development model goes through several stages, from some early societies (e.g. slavery) to feudalism, to capitalism, to socialism, and finally to communism.

At a very high level, this model is correct.

Two "communists", Lenin and Mao, capitalized on this model more than anybody else. Both eventually failed for the same reason: They jumped from feudalism to socialism via a violent revolution that destroyed capitalism, albeit very primitive in their respective countries. As a result, the USSR was a total disaster, so was China under Mao (1949-1976)!

It's time for "capitalists" to accept this model as well, with a twist in details ...

4. The Loop Theory

The image below highlights my Loop Theory. It simply extends and truncates Marx's model as follows:

Capitalism and socialism are in a loop, requiring balancing from time to time. Socialism, if poorly managed, may set us back to feudalism. 

Communism is so far away that it should be ignored as irrelevant.

For more, read: Loop Theory - Capitalism vs. Socialism.…

1. Marx was a radical social critic of his time. Outstandingly, his analysis of capitalism, the most successful political and economic system of his time, remains most thorough and insightful to date.

2. On communism, ignore it, as it's irrelevant - Nobody has ever really had it (e.g. China under Mao was really feudalism, with Mao being the last Emperor, not communism per se), and nobody will, in the next 1,000 years, at least!...

I think that as a high level summary, Frank Li has this essentially correct. I agree with his assumption that communism is incompatible with with "human nature" as it presently exists and likely will continue to remain chiefly in this form for the foreseeable future. Yet, what we call "human nature" is malleable and transformable. 

Socialism and its higher form communism require a much higher level of collective consciousness than is presently the general case. Therefore, these forms do not scale under existing conditions, that is, in the absence of a transformation of collective consciousness. However, both are possible successively, communism being a higher form than socialism. But this is possible only given the requisite evolution of the general level of collective consciousness so that love prevails. 

To their credit, Marx and Engels were able to capture this in their thought, but they were unable to correctly assess the conditions requisite for historical unfolding. This had unfortunate consequences. But it would be even more unfortunate to conclude that they were absolutely wrong about this.

According to perennial wisdom, ideal society is achievable, and it is an ideal that true progressives should be envisioning based on the principle:  "Visualize and actualize." In a broad sense this involves raising the general level of education. 

Perennial wisdom teaches that in order to achieve human potential, education needs to be both horizontal, encompassing all aspects of the gross world as a system, and also vertical, integrating the gross, subtle, and causals worlds as relative manifestations of the absolute as that which does not change. This is the whole. Presently, this realization is dim to non-existent in the prevailing level of collective consciousness in this dark age.

Econintersect
What If Karl Marx Was Right, Mostly?
Frank Li | Chinese ex-pat, Founder and President of W.E.I. (West-East International), a Chicago-based import & export company, B.E. from Zhejiang University (China) in 1982, M.E. from the University of Tokyo in 1985, and Ph.D. from Vanderbilt University in 1988, all in Electrical Engineering

Brad DeLong — Friedrich Engels on invention as a factor of production

Engels quote.

Grasping Reality

Friedrich Engels on invention as a factor of production

Brad DeLong | Professor of Economics, UCAL Berkeley

Lars P. Syll — Marx predicted the present crisis – and points the way out

Self-identified "erratic Marxist" Yanis Varoufakis. He absolutely and totally understands Marx and Engels' fundamental assumption (freedom and happiness) and method (engagement).

Most either miss this or obscure it intentionally. 

Psychologist Erich Fromm got it in his Marx's Concept of Man (1961). He begins the work with a section entitled,  The Falsification of Marx's Concepts, which reveals the caricature of Marx that has been created as a straw man to attack.

Like the anarchists whom Marx opposed and debated with, he was a libertarian of the left that looked forward to humanity transcending oppression based on class structure and class rule. 

Between demonizing Marx and glorying him, the middle way is to see his work for what it is and the assumptions on which it is based. While the significance of Marx and Engels  is mostly historically now, they are also two of the giants on whose shoulders we stand, like it or not.

But bourgeois liberalism expressed through various forms of capitalism views that degree of honest inquiry as threatening, just as monarch and aristocracy correctly viewed advocates for bourgeois liberalism and their works as threatening to what is now the old order.

As with all that have gone before who have contributed to the endowment of knowledge, the intelligent approach is learn from Marx, both positive and negative, and to adapt this to contemporary conditions and the opportunities and challenges they present.

Lars P. Syll’s Blog
Marx predicted the present crisis — and points the way out
Lars P. Syll | Professor, Malmo University

See also

The tractability hoax in modern economics

macromon — Karl, The Comeback Kid?

Why do we think the world is about to see the resurrection of the “comrade culture club” over the next ten years? 

Make no mistake; there will be a visceral political reaction to the coming acceleration of labor disrupting technology. We got a little taste of it in the 2016 election.

Just wait until it hits the doctoring, lawyering, and accounting class....

Technology replaced the farmers. Now it is coming for the industrial workers and many types of service workers, too. Soldiers and sailors are also increasingly being replaced by robots and drones and that is set to take off.

What are the new redundant people going to do?

Global Macro Monitor
Karl, The Comeback Kid?
macromon

Jayati Ghosh — 150 years of ‘Das Kapital’: How relevant is Marx today?

Short summary of the  of Das Kapital's continuing relevance. Clear and succinct.

Real-World Economics Review Blog

150 years of ‘Das Kapital’: How relevant is Marx today?
Jayati Ghosh | Professor of Economics at the Centre for Economic Studies and Planning, School of Social Sciences, at the Jawaharlal Nehru University, in New Delhi

Chris Williams — Marx and Engels on ecology: A reply to radical critics

Chris Williams reviews Marx and the Earth: An Anti-Critique by Paul Burkett and John Bellamy Foster, Haymarket Books, 2017....

As shown by Foster and Burkett, Marx and Engels believed that to be truly free, humanity not only needed to overcome the alienation of labor but simultaneously our alienation from nature, both bestowed on us by capitalism

Capitalism privileges property ownership over people and the environment.

Marx and Engels go far beyond a mere utilitarian conception of nature and ascribe an appreciation of nature as a primary axis of human fulfillment and, furthermore, it is the duty of a socialist society to look after the air, water, and soil for the benefit of future generations of humans and other species. Marx’s tremendously important concept of the “metabolic rift” furnishes us with the analytical tools to understand why capitalism is inherently anti-ecological—and thereby anti-human—and furthermore, how a socialist society must operate to repair those rifts and overcome human alienation from nature....

Defend Democracy
Marx and Engels on ecology: A reply to radical critics

Chris Williams

Gareth Stedman Jones — In retrospect: Das Kapital

Short summary of Marx and his influence.

Nature
In retrospect: Das Kapital

Gareth Stedman Jones

ht Yves Smith at Naked Capitalism

Branko Milanovic — Is “neo-imperialism” the only path to development?

As is well-known (or should be well-known) Marxism has gradually developed two approaches to imperialism....

Global Inequality
Is “neo-imperialism” the only path to development?
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

Timothy Taylor — Engels Rebuts Malthus

Instructive for those unfamiliar Engels. He has the reputation as Marx's sidekick, financial benefactor, and sort of assistant in collaboration, definitely playing a secondary and subordinate role. But reading the Marx-Engels correspondence dispels that simplistic notion. While is true that Engels depends on Marx for his fame, he was a high-level thinker in his own right.

This also dispels the false rumor that Marx and Engels did not appreciate the contribution of science, technology and innovation to economics.

Tim Tayor does mention that Engels presumes that there is no necessity of monetary incentive based on competition for profit to bring forth investment and fund technological development.

It made me smile a bit to contemplate Engels offering a defense of rising output driven by technological progress (and apparently no need for market-based incentives to raise output) as a central part of his challenge to Malthus.

I have always wondered why economists believe that this assumption about the need for money incentive is self-evident, so that creative people need to bribed to create. This belies the evidence of "the starving artist" and "the mad inventor." Creative people create and many if not most want to share this bounty with others without great concern for monetary recompense beyond needs and basic wants. At the opposite end of the spectrum, many of the super-rich also continue to "work" until they are no longer able to do so. Does Warren Buffet need the money or even have any use for more of it?

Conversable Economist
Engels Rebuts Malthus
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

John Bellamy Foster — The Return of Engels

Engels has been eclipsed historically by Marx, but his genius is now being recognized. Marx and Engels were not only collaborators but foils for each others ideas, and Engels made significant contributions in his own right that are being acknowledged. Although they made significant theoretical contributions and are often considered as "ivory-tower" theorists, they were both au courant and engagé. They wished to understand to persuade in order to transform Dickensian social conditions they viewed as inhumane if not inhuman.

But the real shift that was to restore Engels’s reputation as a major classical Marxist theorist alongside Marx was to emanate not from historians and political economists, but from natural scientists. In 1975 Stephen Jay Gould, writing in Natural History, openly celebrated Engels’s theory of human evolution, which had emphasized the role of labor, describing it as the most advanced conception of human evolutionary development in the Victorian age — one which had anticipated the anthropological discovery in the twentieth century of Australopithecus africanus.

A few years later, in 1983, Gould extended his argument in the New York Review of Books, pointing out that all theories of human evolution were theories of “gene-culture coevolution,” and that “the best nineteenth-century case for gene-culture coevolution was made by Friedrich Engels in his remarkable essay of 1876 (posthumously published in The Dialectics of Nature), ‘The part played by labor in the transition from ape to man.’”

That same year, medical sociologist and MD Howard Waitzkin devoted much of his landmark The Second Sickness to Engels’s pioneering role as a social epidemiologist, showing how the twenty-four-year-old Engels, while writing The Condition of the Working Class in England in 1844, had explored the etiology of disease in ways that prefigured later discoveries within public health. Two years after this, in 1985, Richard Lewontin and Richard Levins came out with their now classic The Dialectical Biologist, with its pointed dedication: “To Frederick Engels, who got it wrong a lot of the time but who got it right where it counted.”

Jacobin
The Return of Engels
John Bellamy Foster | editor of Monthly Review and professor of sociology at the University of Oregon

William Hawes — Growing Up Insane

Why do democracies select insane people — psychopaths and sociopaths — to lead them. This is yet another paradox of liberalism.

In biology (and sociology), the dominant of a species discipline the sub-dominant and control the submissive. Is there any way for humans to get out of this cage imposed evolutionarily?

The current state of American politics must make us question whether any of our leaders in the Beltway can be described as “grown-ups”, i.e., fully mature and sane individuals. Between the endless war crimes, corporate corruption, lobbyists who bribe congressmen and write legislation, and the ineptitude of federal entities who are supposed to protect our health such as the FDA, EPA, and CDC, it would appear that leaders in all three branches of government, as well as the leaders of the corporate world, are either insane, suffer from various psychological disorders, as well as suffering from a type of collective hallucination, the common denominator being an utter lack of empathy for others humans, or respect for the Earth.

Further, we must at least question whether collectively, we the citizenry, are as susceptible to mass delusions as our psychopathic leaders are. Our society can be effectively generalized as forming what Paulo Freire calls a culture of silence, many of whom see no problems with exploiting and despoiling other countries, looting wealth, and killing millions; and many more that are simply afraid to speak out against the indignity of the US empire, in fear of socio-cultural reprisals. This culture of silence, which we are taught at a young age, indoctrinates and effectively eliminates the ability of people to form critiques of our rotten political and economic systems. This is who Richard Nixon was really referring to, when he spoke of the “Silent Majority”: citizens too naïve, dumb, childlike, and afraid to confront the injustices inherent to our system were exactly who Tricky Dick was appealing to.…

Counterpunch
Growing Up Insane

William Hawes

Nick Johnson — Marx and Engels on the dialectics of nature

I've left a couple of comment there.

The Political Economy of Development
Marx and Engels on the dialectics of nature
Nick Johnson

David F. Ruccio — Piketty and the principle of taxation

As it turns out, while working on a new research project (on “Utopia and the Marxian Critique of Political Economy,” for aconference in November), I chanced upon a much earlier discussion of wealth taxes: a speech given by Friedrich Engelson 8 February 1845 in Elberfeld. 

Engels argued that communists had no intention of introducing “common ownership overnight and against the will of the nation.” Still, it was possible to move in the direction of “practical communism” by adopting certain measures—such as “general education of all children without exception at the expense of the state” and “a complete reorganisation of the Poor Relief System.”

"Both these measures require money. In order to raise it and at the same time replace all the present, unjustly distributed taxes, the present reform plan proposes a general, progressive tax on capital, at a rate increasing with the size of the capital. In this way, the burden of public administration would be shared by everyone according to his ability and would no longer fall mainly on the shoulders of those least able to bear it, as has hitherto been the case in all countries. For the principle of taxation is, after all, a purely communist one, since the right to levy taxes is derived in all countries from so-called national property. For either private property is sacrosanct, in which case there is no such thing as national property and the state has no right to levy taxes, or the state has this right, in which case private property is not sacrosanct, national property stands above private property, and the state is the true owner. This latter principle is the one generally accepted — well then, gentlemen; for the present we demand only that this principle be taken seriously, that the state proclaim itself the common owner and, as such, administer public property for the public good, and that as the first step, it introduce a system of taxation based solely on each individual’s ability to pay taxes and on the real public good."

Occasional Links & Commentary
Piketty and the principle of taxation
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Daniel Little — Marx's thinking about technology

One interesting factoid: Capital's falling rate of profit was Engels editing rather than Marx. There's more.

Understanding Society
Marx's thinking about technology

Daniel Little | Chancellor, University of Michigan at Dearborn

P2P Debates: Arguments for and against central planning

For those interested.

P2P Foundation
P2P Debates: Arguments for and against central planning
Michel Bauwens

Thoughts On The New Red Scare

The essential condition for the existence, and for the sway of the bourgeois class, is the formation and augmentation of capital; the condition for capital is wage-labour. Wage-labour rests exclusively on competition between the laborers. The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the labourers, due to competition, by their revolutionary combination, due to association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, is its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.

The Communist Manifesto, Section 1

Karl Marx & Friedrich Engels

This is a central point of Marx and Engels. The bourgeoisie (ownership class) finds it to their advantage to treat the proletariat (workers) as a commodity and to arrange the economy institutionally so that workers compete for scarce jobs. This allows owners to ensure a supply of low wage workers through a competitive market in the same way as non-human resources are traded. Indeed, it has been compared with the way that slaves were traded, too. This "commoditization of labor" is an essential aspect of "the free market."

Part of the "free market" myth is the myth of Horatio Alger, that is, that anyone can raise himself or herself from the bottom to the top, although for women, this is largely presumed to be through marrying well. Thus, the potential for achieving freedom is social mobility. As a result, a great deal of attention is placed on promulgating this myth as a cultural meme. the corollary is that is one is not free, then it is one's own fault. Since social mobility is so low presently, it has been augmented with the lottery, which has been successfully incorporated into the myth.

What would act against this institutional arrangement is worker association through trade unions to increase the bargaining power of labor. Through their association to further their common goals, including increasing labor share as well as improving working conditions, individual competition for scarce jobs is reduced and the so-called free market is undermined in the estimation of owners of means of production aka capital.

In order to realize such goals through association, several things are necessary. First, workers must become aware of the potential for association and its possibilities. At the time Marx and Engels were writing, this was far some understood by workers, let alone a practical reality in the work place. This education of workers would take many decades.

Secondly, owners could not be expected to sit idly by and watch workers kill the goose that lays the golden eggs for them. They would respond with whatever it might take to prevent this from occurring, and that is just what happened historically.

It was not until the time of the Great Depression, when owners where actually afraid of socialism and even communism coming to the fore in the West as it had in Russia, that they relented their opposition to some extent. Moreover, favorable legislation was enacted under a more liberal political climate.

Since then, and especially after the fall of the Berlin Wall that signalled the end of the red threat, owners again mounted the fight against worker association. In addition, more conservative governments rescinded previous worker-friendly legislation and past new limits on organizing the workplace and restrictions on association.

That is where we are now, and given the economic situation, workers are again pushing back. The push back has been more forceful in europe than in the United States so far, but the situation is dire some countries there. However, the Arab spring in MENA was not only political but also economic, and it began for economic reasons rather than for political ones.

This is entirely consistent with the analysis of Marx and Engels, who reasoned that it is not ideas that lead history but external conditions, and the conditions that are most motivating are economic.

According to Marx & Engels, since workers so greatly outnumber owners worldwide, continued oppression of workers depends on a low level of collective consciousness of workers. Thus, it is to owners advantage to see that institutional arrangements, education in particular but also media, contribute to maintain the myth of the market.

I surmise that this may explain a lot of the otherwise "crazy talk" about the "Democrat Party" (sic) and President Obama being socialists and even communists.