Thinking about criteria in relation to MMT

Modern Monetary Theory (MMT) is a macroeconomic theory that is embedded in a revolutionary paradigm because of the contributions it makes to monetary theory.

1. Efficiency. As a macroeconomic theory, MMT must be evaluated in terms of efficiency. The traditional challenge for macroeconomics is to reconcile production, employment and price level so that the economy optimizes the use of its resources while maintaining price stability. Previous macroeconomics theories have been unable to promise full employment, optimal output wrt available resources, and price stability, so as to provide for present and future needs of the society.

2. Effectiveness. Economic theories do not generate goals but respond to them. In liberal democracies goals are set by the people based on the type of society that choose to create. At least this is the ideal that liberal democracy sets for itself and that lies in its potential. These goals are often made explicit with respect to public purpose in the establishing documents like the constitutions and in the laws.

For example, the preamble to the US Constitution states: "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." Promoting the general welfare of the populace is established as goal that is key to achieving public purpose. To the degree that macroeconomics is applied as a public policy instrument, it receives this goal exogenously and macroeconomists have no choice in the matter.

3. Morality and Ethics. The norms of individual and social behavior are set by morality and ethics, which are in part cultural and in part universal, to the degree that humanity subscribes to these norms, for example, as a basis for international law and justice. The United Nations Universal Declaration of Human Rights is a documentary presentation of what previously had largely been implicit. Article 23 states:

(1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. (2) Everyone, without any discrimination, has the right to equal pay for equal work. (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (4) Everyone has the right to form and to join trade unions for the protection of his interests.

This sets norms for economic institutions within various countries, which are free to manifest these norms as they wish. Macroeconomics as a policy instrument must conform to these norms, which are overarching criteria.