Some years ago, I was a panel speaker at an event in Sydney covering the topic of wage developments. I shared the podium with a young woman who was something like NSW Youth of the Year. It was at a time that employer groups were lobbying the conservative government to abandon penalty rates for workers in low-wage industries (hospitality, tourism, etc) and strip powers from trade unions. I spoke about how that agenda was designed to advance their class interests and fitted squarely with the neoliberal intent to redistribute real income away from workers towards profits. The young woman followed and announced that class was dead and that there was no such thing as a worker anymore – she said “we are all entrepreneurs now!”. Prior to that, as our national government was privatising our public companies such as Qantas and Telstra, our prime minister announced “we are all capitalists now” referring to the idiocy of people buying shares in the companies that we collectively ‘owned’ anyway while they were in public hands. The more recent manifestation of this delusion that class is dead and we are all entrepreneurs is the so-called ‘gig economy’. It seems that we now have millions of people (first young but increasingly older) who think that entrepreneurship is about buying a cheap scooter and tearing around streets delivering pizzas in all weather to earn a few dollars while the companies that ’employ’ them (or rather contract them) walk away with millions. These workers, sorry, entrepreneurs, face a bleak future. When there are no pizzas being ordered they have no shifts. When they are sick they have no pay. When they go on holidays they have no pay. And when they get old they will have no superannuation. Sounds like a plan to make someone rich....Who says that "MMT" doesn't talk about class and power?
OK, I get that Marxists and Marxians that criticize MMT for ignoring class and power mean that MMT economist are working within the capitalist system, which cannot be reformed according to Marx, an observation with with I agree.
MMT economists are more in the institutionalist model in opposing neoclassical economics and its derivatives. Institutionalism (since Veblen) tends toward a non-Marxist approach to the paradoxes of liberalism generated by oppositions among economic liberalism, social liberalism and political liberalism owing to liberalism being bourgeois liberalism in which property and property accumulation and fundamental. This results in hierarchies of power.
Why do I say MMT is "institutionalist" rather than Post Keynesian or free standing? Because MMT begins with an analytical description of "money," and "money" is a social institution rather than a "natural"entity or process. MMT is descriptive of a "monetary production economy." Monetary production economies are not necessarily "capitalist" economies, depending on the definition of "capitalism." But developed economies since the beginning of the Industrial Age are capitalist-dominated.
Another reason that MMT can be classified as being institutionalist is that society is partly natural, insofar as it is a biological system, and partly institutional, also being historical and cultural, which are not accounted for by evolutionary theory. Neoclassical economics doesn't recognize this, holding that economics is based on natural laws, while Institutionalism does, following Marx here, who was prior in emphasizing this. While Marx and institutionalism views humanity as both individually embodied and socially embedded, neoclassical economics views humanity as an aggregate of homogenous individuals that can be treated as physics treats atoms.
Why is this important? Because there is a current debate running about MMT and class and power, so holding that MMT doesn't sufficiently deal with these. MMT economists claim that they are as as institutionalists that reject neoclassical assumptions, which is true.
However, the result of the different analyses, MMT and Marx-based, is that MMT policy is social democratic and Marx-based is democratic socialist. (Bernie Sanders is a social democrat rather than a democratic socialists, as he calls himself.) The difference is that socialism is a different economic system than capitalism, while social democracy as the term is presently used is a mixed economy.
(Note that some of the right reject this distinction, following Hayek to claim that a mixed economy is the beginning of the slide away from capitalism toward socialism as an inevitable consequence and therefore to be avoided at all costs.)
If society is a system involving social, political, and economic aspects, then sociology, political theory, and economics cannot be disentangled, as both Marx and institutionalism assume while neoclassical economics rejects.
This is the direction that the public debate is taking, occasioned by MMT going viral and becoming a political factor.
Bill Mitchell – billy blog
We are all entrepreneurs now marching towards a precarious and impoverished future
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
