IT’S become commonplace to criticize the “Occupy” movement for failing to offer an alternative vision. But the thousands of activists in the streets of New York and London aren’t the only ones lacking perspective: economists, to whom we might expect to turn for such vision, have long since given up thinking in terms of economic systems — and we are all the worse for it.
This wasn’t always the case. Course lists from economics departments used to be filled with offerings in “comparative economic systems,” contrasting capitalism and socialism or comparing the French, Scandinavian and Anglo-Saxon models of capitalism.
Such courses arose in the context of the cold war, when the battle with the Soviet Union was about showing that our system was better than theirs. But with the demise of the Soviet Union, that motivation disappeared. Globalization, so it is claimed, has created a single system of capitalism driven by international competition (ignoring the very real differences between, say, China and the United States). We now have an economics profession that hardly ever discusses its fundamental subject, “capitalism.”
Read the rest at The New York Times
Wanted: Worldly Philosophers
By Roger E. Backhouse and Bradley W. Bateman
(h/t Kasey Dufresne at Open Economics)
Expect such questions to come increasingly to the fore as fundamental assumptions as well as unstated presumptions are not only questioned but challenged. Moreover, the emerging non-Western countries will inevitably put new twists on the conception of economics as a consequence of their non-Western cultures, traditions, and institutions.
Does anyone see an opportunity for MMT here?
Backhouse and Bateman are quite correct to say that “economics departments” no longer produce original ideas. That’s because those departments are dominated by academic windbags like Backhouse and Bateman.
ReplyDeleteAs for the NYT and similar newspapers, they aren’t interested in original ideas either. If you walked into a newspaper office and announced the secrets of the universe, the assembled journalists’ eyes would glaze over.
However, we should carry on trying to get MMT and other decent ideas published. Getting these ideas into the heads of academic windbags and journalists is like drilling thru a 2 ft thick concrete wall. But you can’t stop trying, can you?
Yours, Worldly Philosopher.
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ReplyDeleteThere is an opportunity for MMT. But to fully exploit that opportunity, MMT-influenced writers need to do more to help develop a more comprehensive set of concrete policy proposals that articulate a vision of how current economic institutions and systems might be restructured. They need to focus just as much on, "What is to be done?" as they focus on "How do things work?"
ReplyDeleteFor a me a key battleground is the need to restore an understanding of the tremendous unactualized power of fiscal policies and the public sector. Both fiscal policy and the public sector have been subjected to a battery of intellectual and political attacks during the neoliberal era, and neoliberal policy makers have attempted to shift almost the entire macroeconomic policy responsibility over to the central bank, as they have worked to shrink the public sector and incapacitate government. We need a return to fiscalism and a re-expansion of the public role. Call the latter "public sector empowerment."
We also need to get people over the mental habit of thinking the word "stimulus" every time thy hear the word "fiscal". MMTers among others have stressed the need for a more permanent, active fiscal role by the government or public sector. I would recommend that we promote the broader concept of "fiscal engagement" as the name for the new fiscalism.
MMTers should continue to help develop some bold, concrete proposals for Fed and monetary policy reform - something the OWS movement is very keen to hear and consider. The debt ceiling debate and crisis, among other things, have showed that - however accurate the MMT model might be as a description of payment systems, monetary operations, and sectoral income flows, when the government is considered as a single unified system - the current institutional articulation of our monetary and payment systems seems designed to block and inhibit the effective deployment of the sovereign monetary authority of the public. My slogan here is "public money for public purposes." We need to liberate the potential of the public sector by building a new system that streamlines money-powered fiscal engagement.
MMTers should do everything possible to make sure that what they are promoting, in calling for fiscal engagement and public sector empowerment is a more democratic approach to macroeconomic policy. The OWS movement is a movement of freedom-loving Americans. Their thinking at present is a somewhat inchoate mix of democratic, progressive, libertarian and even anarchist ideas. They are suspicious of all elites and all forms of concentrated power. They will not support policy suggestions that seem, in their minds, only to shift economic domination from one undemocratic and unaccountable concentration on Wall Street to an equally unaccountable and centralized bureaucracy of elite technocrats in Washington. MMTers should help us all think more about how to put our monetary power in the people's hands.
Finally, MMTers need to continue to build on such ideas as the jobs guarantee to help us all think more clearly about economic equality and justice. There is a new egalitarian spirit emerging. I would suggest the MMTers re-address the issue of taxation from the standpoint of its role in promoting equality.
MMT is right to point out that, strictly speaking, taxes and borrowing do not "fund" spending. The government removes net financial assets from the economy through taxing, and inserts net financial assets into the economy by crediting accounts when it spends, in an operationally separate way. But MMTers do recognize along with others the role of taxation in modulating aggregate demand and promoting price stability. MMTers should add more to the mix about the policy role of taxation in promoting equality. The role of taxation is not just to regulate aggregate demand, but to help redistribute purchasing power in the context of price stability.
MMT can forensically show with facts how Clinton cratered the economy for Bush II and then how Bush II lied about Iraq so the US could nuzzle up their nozzles next to Iran for the next stint at war spending for the multinationals.
ReplyDeleteThis is where MMT can explain the Austrian school anxiety about Fiat money supporting war and actually put a stop to both of war and Austrian austerity.
This is where MMT can show how the Bush gang purposefully blew up the economy to wash out their tracks from the Iraq and Afghan wars, and then to have it all blamed on the Community Reinvestment Act and simple people whose lying loans were only a $300 to $400 billion dollar fiasco which could have been resolved by 18th century currency elastic theory processes ..
but could not be cleaned up because glorious financial engineers whose models racked up the loans in the form of global credit channels and amplifiers at minimum 10 x foreclosure market.
MMT can explain a lot.
What Googleheim said…+1
ReplyDeleteDan K. — There is an opportunity for MMT. But to fully exploit that opportunity, MMT-influenced writers need to do more to help develop a more comprehensive set of concrete policy proposals that articulate a vision of how current economic institutions and systems might be restructured. They need to focus just as much on, "What is to be done?" as they focus on "How do things work?"
ReplyDeleteYes, top priority.
MMT can explain how money was created to finance wars which were not productive (obviously, they actually destroyed a lot of capital) and were inflationary to the world economy.
ReplyDeleteMMT can explain why we do not need to have an ever-expanding parasitic FIRE sectors which objective is debt slavery, how we can change banking if we want to and how the neoliberal policies do not need to be the only way.
In addition how the only restraints to healthcare or full employment are real constraints and all energies (literally) have to be directed to reduce that problem.
Related to all this all efforts must go towards civil society and political and academic capture by and for the 1%, and how this must change if we do not want to end with civil unrest, war and poverty everywhere.
"IT’S become commonplace to criticize the “Occupy” movement for failing to offer an alternative vision."
ReplyDeleteTom, did they expect you all to come up with a detailed withdrawal plan for Gen. Westmoreland during the anti-war protests in the 60's? Or did you all just expect them to get the overall message to end the war and leave the details up to the generals...
Resp,
Good point, Matt. Protestors are usually good at articulating what is wrong, but they don't have the expertise to craft solution. It's not their job. They are just asking for a change in the way the country is doing its business and looking for people they think have reasonable solutions. Most importantly, they resent being ignored or worse, lied to and duped, and even suppressed.
ReplyDeleteI was at the local #Occupy today discussing economics. I didn't get as far as MMT since the group was relatively clueless about economics, had their minds made up about things like the Fed being a private corporation, and most of them were probably neither interested nor smart enough to get the MMT approach, if I had been able to get that far.
Moreover, the idea that the system could be tweaked instead of completely overhauled seemed to turn them off. Gradually, the already small group I was talking to dwindled pretty much away.
The cry is for real change but the solution is elusive. This is hardly surprising, since Ben,Tim, and the rest of them don't seem to be any better informed.
This is going to be really tough nut to crack.