Saturday, February 25, 2012

John Carney aligns with MMR

It's a shame that a guy as brilliant as Wray doesn't quite understand that the "public sphere" is nearly always code for private interests expressed through political power.
This gap in understanding is one of the things that has given rise to the post-Modern Monetary Theory movement of Modern Monetary Realism.
Read it at CNBC | NetNet
David Brooks Does Modern Monetary Realism
by John Carney | Senior Editor

Well, I guess the battle lines are drawn, and it's neoliberals and Libertarian Austrian schoolers against Post Keynesians. What else is new, other than now both left and right understand monetary operations and monetary economics, thanks to the contributions of Post Keynesians, Circuitists, Warren Mosler's Soft Currency Economics, and MMT's operational analysis.

On the other hand, the debate can now be reality-based, where the major disagreement over arises from political persuasion concerning policy determined by right wing supply-side macro analysis and policy proposals, and left wing demand-side macro and policy proposals. That is, if both sides agree on operational analysis. I suspect it will turn out that they don't. As physicist J. A. Wheeler said in effect, values are determined by the questions we ask of reality. Different viewpoints are constructed from different norms and criteria, and result in different perceptions of the putative facts.

This is to be expected from financial professionals. The financial world was never going to buy in to MMT. They will simply adopt what is useful to their purposes.

BTW, following John's line of thinking that "the 'public sphere' is nearly always code for private interests expressed through political power," the recourse is to get the money out of politics with a constitutional amendment, lock the revolving door, and tax away economic rent.


Anonymous said...

The MMR guys don't seem to have arguments. What is carney's point? He is anti government, this much I can understand.

I admit I haven't read all the MMR arguments but from what I read, I can't see what the movement is all about.
It started as anti ELR but Cullen wrote later that he was for full employment and he knows you need a buffer and MMT JG program for that.

May be I am missing something but I cannot see what their point is.
Randy Wray has never said that MMT suggested big or small government. He always mentioned that he has his personal preferences regarding this.

What is It about MMR? That It suggests small government and MMT doesn't make any suggestions about this? Is that It.
I read CAPITALISM MAKES SOCIALISM ACCEPTABLE by Cullen Roche and I had the same question: what is the point?

Matt Franko said...

" the "public sphere" is nearly always code for private interests expressed through political power."

What is Carney saying that social security is a 'special interest'? Medicare/Medicaid is a special interest? DoD is just a special interest? NASA is just a special interest? No way John.

There are tax credits doled out thru special interests but they are pennies compared to the entire Treasury outlays...

I guess Carney is saying 'there is no such thing as public purpose, there are only special interests': wrong.

Randy was just pointing out how the accounting/banking entries end up doing the same thing, Randy was not justifying the public purpose of a fighter plane.


Chewitup said...

It is obvious Carney has not been following Randy's "Great Leap Forward" blog.

Anonymous said...
This comment has been removed by a blog administrator.
paul meli said...

It seems to me that some of the MMR bunch is attempting to make off with the "family jewels" of MMT in order to obfuscate it's insights, then turn it around and use the insights for their own ends in extracting wealth via the "peoples money".

Anonymous said...

hey Tom Hickey, can you plesse remove my last comment? thx.

Dan Kervick said...

The general public will find some of this to be a bit of a joke. They just discovered that there is such a thing as MMT. And now a couple of days latter they discover there is a "post-MMT" movement.

I hereby declare we are now in the neo-MMT era - which began last night. The defining characteristic of this new post-post-MMT era is that people disillusioned with the vagaries of MMR move back over into the better-developed body of thought that is MMT.

Dan Kervick said...

It's a shame that a guy as brilliant as Wray doesn't quite understand that the "public sphere" is nearly always code for private interests expressed through political power.

This cynical sentiment about government and the public sector is actually quite contrary to the sentiments that the MMR guys have expressed. For one thing, they have not presented themselves as opposed to public sector activism. It's primarily just the job guarantee they don't like. And if anything Cullen has a more idealistic view of government than MMters, and has insisted that the problem is that the government we actually live under is more voluntary, more cooperative and less coercive than the government as portrayed in some of the MMT metaphors he doesn't like.

Dan Kervick said...

Well, I guess the battle lines are drawn, and it's neoliberals and Libertarian Austrian schoolers against Post Keynesians.

I think that captures the distinction between Carney and MMT pretty well. But it also sparates Carney from MMR.

I've been trying to understand where the MMR guys think they fit it, and as far as I can tell they are just recreating some debates internal to post-Keynesian thought about the endogeneity of money. All post-Keynsians believe in some version of the view that money is created endogenously by the normal functioning of credit markets, and that the central bank does not direct the the pace of lending and economic activity. They put all the emphasis on the demand for credit rather than the supply of money.

MMT has emphasized that the government is the monopoly issuer of the currency, which exists mostly in the form of bank reserves. So while the credit markets and the demand for consumption and production drive the process of money creation, the government must continually supply additional reserves to accommodate this process and ensure the smooth functioning of the payments system as the pace of economic production and payments expands.

As far as I can tell, the MMR guys lean toward a more Steve Keen view of things, with the government playing no essential role. But otherwise the picture is similar. So this just seems like yet another internal post-Keynesian debate.

Carney is playing his own game, trying to come up with an Austrian version of MMT.

Tom Hickey said...

Anonymous, the management prefers that people remove their own comments to avoid perception of censorship. There's a trash can down at the bottom of your comment that you can use to delete it. Others use it frequently, and it is also useful to correct an error that slipped though preview.

Tom Hickey said...

@ Dan K

I don't think this is going to clear up until MMR offers its view of macro, which at the outset was taken off the table. Lacking that, it is just economically incoherent blog gassing and not going anywhere.

I keep encouraging them to work up their ideas and present them in a professional format as the MMT economists have done and as Warren did in "Soft Currency Economics." If they want to be taken seriously rather than just snipe at the margin, they are going to have to step into the debate with macroeconomic analysis and policy proposals based on it.

But maybe they just want to deal on the blogs with people in finance who are interested in making a buck on trading and are looking for useful analysis. Or putting out some suggestions that macro and policy types may pick up. I don't know at this point.

jeg3 said...

Carney sounds like a mouth for neoliberal malefactors.
There is plenty of government spending needed:
But the malefactors think if they own the public resources they can extract rent, but don' realize we will end up with a "Gridlock Economy" instead:
And you end up with Conservative Compassion:

Truth Squad said...

"So basically, MMR is ignorance plus ideology, pretending to be 'apolitical' because they don't even comprehend the nature of politics."

Yes, I've seen CR portrait this time and time again in his comments at PC. He also has a biased view of reality based on in social situation, like everybody you will say, yes but he prefers to ignore facts he is well aware on and cheer on 'american excepcionalism'. Apparently there are no more than 40 millions americans on foodstamps when you read what he has to say about the status of the economy/society or how great america is.

As much as I like some of his comments, the man just comes delusional plenty of times.

mike norman said...

Carney seems to believe that only the private sphere can create value and utility without distortion. Oh really? There's so much crap and waste produced in the private sphere, just check any landfill, which is filled with plastic junk that took resources and labor to produce. The private sphere produces far more crap and waste than the public sphere. Moreover, there's a whole, entire, industry called advertising designed to manipulate the decisions of consumers to the needs of corporations and a select few. Do we really need new I-Phones every three months?

Anonymous said...

FWIW, I believe Cullen was forced to take up MMR. MMTers told him that the JG is an inherent part of MMT and that without it, what he was promoting was not MMT but something else. He accepted the criticism and moved on.

Anonymous said...

MMT used to claim to be apolitical. This was clearly nonsense. These different versions of MMT (e.g. Monetary Sovereignty and MMR)reflect both different views of fiat currency and different politics.

Charles Hayden said...

I think Cullen must be experiencing some sort of moral/physical/financial/emotional trauma.

Charles Hayden said...

JG is central to prescriptive MMT.

Prescriptive MMT is up for debate.

Descriptive MMT...demonstrates paradox of full employment.

You can be an MMTer and be skeptical/critical of JG ideas.

I'm developing my own "Federalist" job guarantee proposal, with the goal of a.) minimizing Congress, b.) minimizing moral hazard, c.) decentralizing JG administration, and d.) giving states power they currently lack.

Utilizing non-profits, charities, impoverished local governments, and statewide programs....we can employ every American who wants a job, provide incomes to volunteers, and discourage voluntary unemployment.

Unforgiven said...

Yeah, it seems to me to be neolib's desperate last grasp as they see their raison d'etre fly open like a cheap suitcase.

Anonymous said...

My comment over there:

Carney's argument seems incomplete & really uncharitable to Wray.

I haven't seen anything from the MMR camp to suggest that they believe national defense is outside the responsibility of the public sector. Carney tweeted me last night that he is "more libertarian than the core MMR guys" & that, in his opinion, we have too many fighter planes. Fair enough, but I think Randy Wray probably shares that opinion.

The problem is this piece suggests that MMR has a superior understanding to MMT of the distortive effects of public spending on the economy. But if it's true that the "core MMR guys" aren't so libertarian & believe defense spending belongs in the public sector, do they offer a superior way to buy fighter planes that avoids distortion?

Is it really possible to believe that Randy Wray doesn't understand that real resources used to make fighter planes are resources that cant be used elsewhere?

It sounds like Carney believes the distortions caused by public spending aren't worth the benefits of having a military or safety net programs?

Andy said...

2 questions

Do Carney and Roche belong to the same country club or something?

What is the relationship between Cullen, Scott and Warren?


Warren Mosler said...

I've never met Cullen in person, first heard of him through his blog, spoke to him once on the phone.

Which Scott? Don't know Sumner at all.

Know Fullwiler very well!

So the dollar is a simple public monopoly, and the rest follows, and if you want to know coercion, try not paying your taxes.

And europe had entered a very bad place. Best to be in cash for the next month...

Warren Mosler

paul meli said...


Nice to know you're following these discussions wherever they may be…

Charles Hayden said...

I should say that a JG is central to a lot of people's views with regard to prescriptive MMT.

I think Warren has said that you can do a buffer stock...many different ways.

Many find that the benefits of a JG are superior to the options at our disposal.

Ryan Harris said...

When MMT threatens the status quo and policy is at stake, then the antagonists are going to make the MMR crowd seem like fuzzy little kittens with their timid snipes. Many an Economist has toiled on useless research. And many many many others are vehemently against a prosperous world that would result from MMT implementation.

Leverage said...

"The problem is this piece suggests that MMR has a superior understanding to MMT of the distortive effects of public spending on the economy."

I've yet to come with a serious study of how inefficient is the public sector versus the private sector.

No single proof! Is just rabble and ideological bias. Now, I'm not a fan of public spending and I agree that it must be very controlled and with good check 6 balances mechanism, but some of the biggest prosperity of the humankind has come from public spending or public-private partnerships, the problem is when things are abused (like damn banks tanking the economy and winning yet with the support of the public aka Treasury/Central bank, etc.).

I'm done with that bullshit, better they start to give PROOF and facts or shut up with the ideology.

And anyway, how the hell do you measure what was good or bad spending, is buying a damn iphone each 3 months good spending at all, or buying houses to speculate with price, building stuff no one will ever use7need!?!?!? Private sector produces even more malinvestment when it's allowed (reckless), crap and inefficient use of resources than the public sector!

(Though austrians will say all this happens because central banks exists, or that is necessary and then you have to liquidate etc. madness.)

Tom Hickey said...

What people seem to have a difficult time getting is the aspects of MMT, which include Mosler's soft currency economics that has been elaborated by MMT economists, incorporating and expanding on Circuitism, the debt heory of money, e.g., Innes and Chartalism stemming from Knapp, Godley's sectoral balance approach and stock-flow consistent modeling, Post Keynesian macro, especially Minsky, and Abba Lerner's functional finance.

MMT is not and never was simply a description of monetary operations, as many erroneously think. It is a macro theory that sets as its goal achieving full employment and price stability, something that other macro theories have falled at producing other than by redefining unemployment.

The MMT JG is not arbitrarily prescriptive. It is an essential element in a comprehensive macro theory. Macro economics is both descriptive and normative in that macro deals with issues relevant to policy formulation.

Macro theories have to account for many things, and in particular they have to resolve the trifecta of production, employment and price stability in a way that is as efficient and effective as possible. A major purpose of doing macro is not merely to provide understanding of how a national economy works, but also to provide policy options based on the theory that are effective at meeting policy objectives efficiently. In this sense, macro cannot be arbitrarily separated into descriptive and prescriptive, factual and normative.

As a macro theory MMT throws down the gauntlet to economists to show where it is mistaken in its claims, or to come up with a more effective and efficient macro solution.

MMT economists have made clear that in their view the choice is between a buffer stock of employed to reach "loose" full employment, or else a buffer stock of unemployed, which necessarily involves the inefficiency, waste, and therefore unnecessary cost of idling resources to achieve an inflation target. MMT solves this issue in macro theory with a floor wage as price price anchor.

MMT macro theory then can be used to fashion specific policy proposals that fill in the details of implementation. Here different political choices may be largely normative, that is, based on ideological norms.

MMT economists are still waiting for papers either rigorously showing where their theory is inadequate or else providing a superior path to resolving the basic macro issues.

Tom Hickey said...

Public and private expenditure are for entirely different purposes. Public expenditure is supposed to be for the common good, by definition, and what is not is corrupt, plain and simple. Private expenditure by firms (investment) is to increase equity holder benefit by definition. Comparing the two as if they are the same is like adding apples and oranges.

There may be something said for private administration rather than public administration when actually competition is involved. That's fairly rare.

Privatization generally does not result in a increased competition, but rather the purpose shift from increasing the common good to increasing equity hold benefits.

There is a reason that the US instituted a civil service program for public administration. It was to put an end to the spoils system.

beowulf said...

"FWIW, I believe Cullen was forced to take up MMR. MMTers told him that the JG is an inherent part of MMT and that without it, what he was promoting was not MMT but something else. He accepted the criticism and moved on."

That's about the sum of it, instead of simply hijacking the term Modern Monetary Theory (as I suggested to him), Cullen thought it best to come up with a new term for what.... he had thought already was MMT. As it happened, he wasn't the only person surprised to learn the Job Guarantee was a mandatory part of MMT (I'll leave it to the reader to guess which person or persons mentioned in the Washington Post story told Cullen privately they agreed with him on this point).

So Cullen came up with another name to describe what he (and we) had thought was MMT. It was an email from a reader that provided "MMR".
And then for his efforts, he has Randy Wray call him a retard (well me too I guess but its no insult because I AM a retard). Anyway just goes to show, no good deed goes unpunished.

If it would smooth over the waters, its probably not too late for Cullen to hijack the name. I'll drop Cullen a line and suggest he tell that publisher, yes he WILL write a book for them, and its title will be...
"MMT and Me: Cullen Roche explains how he invented Modern Monetary Theory and how it can make you money".
I'd buy that book! :o)

Chewitup said...

And you can put a picture of a $1 trillion coin on the cover. Now who's silhouette shall grace it? Hmmmmm

Anonymous said...

Government spending is not just fighter planes and infrastructure. With the legal system on its side it also spends on war (not just "defense" folks) the drug war (have you been following the story of the agents planted in high schools lately), the war on alternative medicine, the TSA, condemnation etc. Provide the government with truly unlimited funds and you enable completely unlimited intrusion and power.

Tom Hickey said...

@ beowulf

Didn't you guys read Randy's book, published in 1998, shortly after Warren's "Soft Currency Economics," which appeared in 1994. It's set out pretty clearly there as I recall. The objective is right in the title, Understanding Modern Money: The Key to Full Employment and Price Stability.

Randy explains there how the MMT is needed to mop up the residual since functional finance is not capable of ensuring constant FE. Moreover, there is the inflation issue wrt full employment. Randy shows how the MMT solution is a buffer stock of employed (replacing the buffer stock of unemployed) and also functions as a price anchor.

OK, if one just read the blogs and selective ones at that, or didn't read the blog archives, then one might conceivably miss important points of MMT. If one didn't read the full MMT professional literature, one could miss it also. But I don't think that MMT economists could reasonably be blamed for that.

I can see an argument being made that the MMT economists should have alerted Cullen to his partial understanding of MMT based on his Understanding MMT post at Prag Cap. That would have nipped this in the bud. But that's history now.

From the way things unfolded, I get the impression that Cullen expected Warren to side with him on this and was surprised to find that Warren and the MMT economists had worked through this together early on, and that this had consistently been their position.

Also, I don't think that Cullen and many others understood that MMT is chiefly a macro theory within the context of a Post Keynesian dynamic. In fact, it seems to me that a lot of people interested in MMT for its description of monetary operations don't get this point, which is crucial to understanding the overall dynamic of MMT and its context within macro.

Anyway, now we have competing views based on more or less the same the monetary description and that is a positive step, in that it broadens the debate in a context where there is substantial contextual agreement. Hopefully, some interesting things will emerge from it.

I'llHaveADouble said...

Moreover, there's a whole, entire, industry called advertising designed to manipulate the decisions of consumers to the needs of corporations and a select few.

Seriously, this. This represents real resources that are burned to convince people to pick one product among analogues. Rationality-worshipping economists will write it off as providing useful information, but when's the last time your saw objective assessment of a car in a car ad?

geerussell said...


I think you're giving a big free pass for all the "authoritarian" cheap shots taken at MMT from the beginning of the JG debate at Pragcap on into the present at MMR.

It's one thing to critique the JG or even oppose it entirely. Quite another to dodge engaging that debate with non-sensical attempts to frame MMT as the enemy of freedom and liberty.

Wray's comment was unbecoming... unfortunate... but not unprovoked.

Tom Hickey said...

I agree with all of that, Anonymous, except the causality. It's not the funding. It's the American people that are electing people that acting in this mode. The corporate media, allied with corporate interest outside the media, have propagandized the American people into accepting a tyrannical government as their savior from drugs, terrorism, you name it. The public is on board with this for the most part and if voters didn't want it, it would go away.

The problem is not money going to government. It is the money going into legalized bribery and a good deal of illegal bribery, as well. The ONLY solution is to get the money out of politics, lock the revolving door, outlaw lobbying, and pass anti-trust laws to break up the oligarchy.

Anonymous said...

There are several countries where they have gotten the money out of political campaigns and the government does use the JG. Paradise? If you like Cuba and Venezuela, absolutely.

Chewitup said...

40% of GDP is FIRE. Moving money from one pile to another and charging a fee to do so. And FIRE contributes generously to the campaigns of the representatives of our democracy to do so. Randy has suggested recently that as much as 30% of GDP go to government spending. If we stipulate that intense manufacturing is not coming back any time soon, that may be a fair trade off.
That just may allow us to leverage our time productively.

Tom Hickey said...

Anonymous, take a look at Noam Chomsky, Profit over people: neoliberalism and global order, and Michael Hudson, Super imperialism: the origin and fundamentals of U.S. world dominance (1972, 2nd edition 2003). The US government and US military is the front for a ruling class bent on global hegemony. It is US policy that no one will be permitted to challenge US economic and political hegemony, or military superiority.

Tom Hickey said...

40% of GDP is FIRE = at least 40% of GDP derives from economic rent rather than productive contribution.

Cullen Roche said...

Hi everyone.

I don't think I need to address the largely baseless attacks on MMR and me personally, but I do think we all need to remember a few things as time goes on.

Yes, MMR is different from MMT. Even more different than I initially thought. And yes, we will develop ideas over time that will be different from those that MMT has developed. But despite our differences, we have many more similarities. I like to think of ourselves as Mosler Monetary Theorists.

I don't like that there has been a split. But it's clear that we disagree with MMT on some points that are irreconcilable. That's fine. Disagreement is healthy. But in our disagreements let's not lose sight of our goal.

When I first talked to Warren I told him that what he was discussing was the most important message in the world today . And I've made an enormous effort to get that message out there because I really believe in it (most of it I guess!). Neoliberalism needs to be attacked and destroyed. And MMR and MMT are together in that fight. So yes, we disagree on some things. But we agree on much much more. So let's not forget that.

I know a lot of regrettable things have been said. I regret much of what I've said at times and I regret not coming to the defense of people who I have deep respect for. That's been my personal failing in all of this. And I am sorry for it. But we need to remember who the real bad guys are. And they need to be defeated. So let's get to it.

beowulf said...

And you can put a picture of a $1 trillion coin on the cover. Now who's silhouette shall grace it? Hmmmmm
That will depend on if Cullen can work in a Downton Abbey connection as a marketing gimmick.
"What's Downton Abbey? Basically its about a bunch of honkies who live in a church..."

I think you're giving a big free pass for all the "authoritarian" cheap shots taken at MMT...
Its hardly a cheap shot when even some JG supporters are uncomfortable with "workfare" programs that require the unemployed to work for their benefits. There's no practical difference between a JG and workfare except liberals tend to like one and conservatives the other. As it happens, The Guardian had a story about a workfare program yesterday.
Jobseekers forced to clean private homes and offices for nothing: Concern over unpaid workers taking overtime from staff as some placements last more than a month
Sounds pretty authoritarian!.

Tom Hickey said...

Completely agree, Cullen. Ad hominem arguments and personal attacks are out of place. It's just venting. Hopefully, we can all shrug that off and move to the high ground.

The debate needs to over issues, and the important thing is that we agree on more than we disagree. Most significantly, we agree on the framing in which the debate should take place, which is a huge advance over debates involving incompatible foundations, where basic assumptions, principles and norms clash and the debate stalls out.

I welcome John Carney to the debate, too. He seems to be more Libertarian than the MMR developers, and that is a feature rather than a bug in my view. In a liberal democracy there are going to be competing viewpoints regarding policy, and macro is joined at the hip with policy, so it is not surprising than people disagree over approaches.

"Let a hundred flowers bloom," to quote from Mao's Little Red Book. Speaking of Mao, it is certain that many Chinese economist are familiar with MMT's views, since the MMT economists visited thee and explained it to them some time ago. And it appears that they may have used this knowledge to avoid the severity of the downturn that the West experienced.

There's room for a lot of different approach that are built on a correct operational understanding of monetary economics, as well as accounting practice and stock-flow modeling. Let's not get hung up in personality allegiances and conflicts.

Charles Hayden said...

Hey Tom....

about the JG and its centrality to MMT:
JG ideas are up for debate...not over the should but the how.

I think a JG is a superior alternative to unemployment.

I think the monetary system is 'incomplete' without an ELR.

But just because I have good reason to conclude these things....I can still be critical of specific JG proposals. I can worry about moral hazard. I can worry about Congressional micromanagement.

I think what's central to descriptive MMT is that unemployment sucks and actually costs us more than any headline MMTer is actually proposing to spend on a JG.

Mosler's first and second lead proposals...are pretty cost specific and straightforward: stop doing this, give the states that. It's a final, regulatory specific prescriptive MMT proposal to Give us Aggregate Demand! We all agree government should do that. But some of the New Deal 2.0 MMT people might advocate more 'central' spending (i.e., books, bombs, bridges) by the federal government. That's a matter of extended debate.

Furthermore, the job guarantee is more intricate, it requires extended thought, new agency rules, and the democratic process to work in an exploratory environment. A lot of pivot points here are up for debate. It's not can or should, but how.

Descriptive MMT understanding should be used to help improve people's lives.

Andy said...

I know at one point the MMR jab was thought to lead to Autism here in the UK but that has now largely been discredited so perhaps Randy's remark was not 100 per cent accurate.

Can I just add that trying to gain recognition yourself for other peoples' work is pretty sad.

Have these guys got no self-respect?

Chewitup said...

I don't see Cullen as a glory seeker. He's done very nicely for himself and PragCap is a superb website. Exchanging ideas is what makes the world go 'round.

Implementing ideas is where all the friction is. But without the friction you get things like Mao's Great Leap Forward. He could have used an exchange of ideas before he told his people to fabricate their own steel in their back yard instead of growing rice.

FDO15 said...

There's nothing unique about MMT or MMR. It's all someone else's ideas. That's how economics works. It's a progression of ideas. MMT was formed by people combining Knapp's state theory, Godley's sectoral balances, Lerner's functional finance and Minsky's employer of last resort. The MMT economists just applied these concepts to a modern monetary system and then rebranded it. To anyone with a basic economics education, none of this is new or even that original. I don't know why anyone thinks MMT/MMR is all that "modern". It's a bunch of old ideas by people trying to claim other people's work.

Tom Hickey said...

@ Charles Hayden

Agree. Macro simply gives the outline from which specific policy proposal can be developed to meet the macro requirement, here a buffer of employed and a price anchor for price stability. There may be different ways to implement these requirements through specific policy, and those ways become policy options to be decided based on political choice.

I personally do not like the JG because it commoditizes labor, although I admit that it is better than a buffer of unemployed. As long as capitalism is the prevailing system, in which capital is the essential factor and labor is treated as a commodity like other commodities, then it is necessary to make the best of a bad situation and that is how I view proposals like the JG that compromise with the existing system.

But it should still be pointed out that the present system sucks for workers, who are not recognized as an equal or superior factor of production and, indeed, are not recognized in economic theory as human begins but rather are considered to be like other commodities in economic models in which distribution is based on market price. That is simply absurd on the face of it, and and it doesn't take a Marx to see it, either. Moreover, the situation has changed drastically since the time of Marx due to technological innovation that has vastly improved productivity and resulted a new era in history.

The national and global economies are sorely in need of new political and economic order based on the understanding that policy serves all the people rather than a few, and that economics is only the material life support system of humanity, where materiality is subordinate to spirituality, spirituality being the province of the whole rather than merely a part, as is the material. Life is not mechanistic but organic and purposeful. Therefore, economic models need to be based on the life sciences rather than on the physical sciences. Moreover, life science models need to be updated to state of the art knowledge instead of relying on outmoded models like a narrow conception of Darwinian "survival of the fittest" based on competition, which completely ignores what is now known about the adaptability rate in the face of environmental challenge and the role of coordination as superior to competition in complex systems.

LIke tribalism and feudalism, capitalism is merely a stage in the development of humanity and it will be transcended. Time to be thinking about what that can look like, now that humanity is entering the digital age and the global age. Humanity is still stuck in 18th century thinking owing to the drag of the status quo. Fresh ideas are out there, and many have already been tested. Time to start seriously considering them.

MMT is not going to make in road with the up and coming generations if it compromises with the status quo. Realization of the power of monetary economics wrt policy makes many options possible that have not be considered previously other than by visionaries. Now it is time to visualize and actualize.

Anonymous said...

Tom Hickey, there is no trash can on my screen under my comment I can't see a trash can anywhere. Where is it? Can you please remove my earlier comment as I can't do it.

Tom Hickey said...

@ Anonymous


Tom Hickey said...

FDO15, the MMT economists acknowledge the shoulders they stand on and say their claim to originality is in the combination of these ideas into a macro theory that is different from previous Post Keynesian macro theory.

They also point out that the MMT JG is substantially different from Minsky's suggestion.

MMT grew out of Warren's grasp of monetary operations as a fix income fund and his elaboration of government as monopolist. Bill Mitchell expanded the insight about the use of buffer stocks by govt to a buffer of employed.

Randy Wray fleshed out the package in his 1998 book, Understanding Modern Money: The Key to Full Employment and Price Stability.

MMT economists acknowledge their sources and they build on them. Some of that building involves things that has not been shown before directly or have largely been overlooked. For example, Scott Fullwiler's paper, "Interest Rates and Fiscal Sustainability," showing the irrelevance of the IGBC is an example.

FDO15 said...

Tom, you're right. I don't understand why some people here seem to think MMT is something totally new and unique. It's been around in some form for a long time. MMT economists deserve a lot of credit for reviving it and applying it, but they don't deserve credit for creating the ideas. There's very little in MMT or MMR that is unique. I think this is why mainstream economists shrug it off. They recognize that none of these ideas are new.

Ben said...


Great comment, although I don't think that ethos is reflected in the new blog yet. Most of the posts so far seem to be questioning the validity of some element of MMT. While this is interesting for those of us following MMT/MMR, for people not familiar with it, it's all a bit so what? The MMT blogs focus on attacking neoliberal ideas and it would be good to see more of that from an MMT/MMR perspective.

Ben said...


re "work experience" in the UK, I have been following this story closely, and I think a comparison with a JG is unfair. The whole ethos is different. This work experience programme is an unpaid 2-8 week job placement, generally in an unskilled job like supermarket worker. The idea is that it is the unemployed person's fault that they are unemployed and they just need a better 'attitude', which apparently working 30 hours a week unpaid will sort out.

Andy said...

I love Cullens comment about 'Lets go get the neo-liberals'.
I presume he means the ones that don't think 'Unemployment works'
Its a funny old world.

Carney and Roche seem to have what we in the UK would call a right wing agenda. In the States it may be viewed as liberal. No idea. Like our conservative party they want to reduce the size of the state. Fair enough but Carney can't be taken seriously on economics if he allows his agenda to cloud his reporting. I think the fact that he has adopted Measles, Mumps and Rubella says it all. He's a busted flush.

Time to move on.

Matt Franko said...

Ben good observation...

I remember reading a while back where I think in Copenhagen or somewhere over there where there is a legal so-called "sex" industry of some sort, the females who were receiving unemployment benefits were scouted by the operators of these "sex" businesses and females fitting certain physical profiles were made offers of employment in this "sex" industry whereby if they refused this employment, it put their continued receipt of their unemployment benefits at risk.

This is where these types of moron Govt employment schemes that fall short of a true Job or Income Guaranty can lead: to the most base forms of human mistreatment and chaos.


beowulf said...

"This work experience programme is an unpaid 2-8 week job placement..."

No,they are being paid their employment benefits. If payment is conditioned on the recipient working in a workfare program, how is that different from payment conditioned on a recipient working in a JG program...other than that one is in the mental category of Good and the other in the less pleasant category of Bad?

Ben said...


A few differences I would say.

First up the treatment is completely different. The former treats unemployment as the fault of the individual, while the whole idea of a JG is that unemployment is a macro issue. This might sound trivial, but I think it's a huge psychological difference.

Second is that a JG could be run alongside unemployment benefits (I think some MMT'ers differ on this), so the individual can choose.

Third, more choice of jobs, training options, etc, so much more desirable for the participants generally (going back to my first point).

Matt Franko said...

To Ben's point here, you often hear the phraseology: "he/she lost his/her job" and this is most often a bullshit statement.

ie "lost" implies that the person had their job but somehow "lost" it as though they treated it carelessly and misplaced it.

No, the phraseology I use exclusively is the more appropriate: "he got thrown out of his job" or "she got thrown out of her job" as this more accurately describes these events...


Charles Hayden said...

Hey Tom,

Principles of a "Federalist" JG:
- JG certification should not extend into private sector for-profit positions.

This nips a lot of moral hazard issues in the butt. Treasury paid JG workers should not take hours/jobs from private sector-paid employees.

-a JG does not have to nullify basic income guarantees, i.e. replace welfare entirely with workfare.

-cooperative capitalism....worker and consumer owned a big part of our future, and a JG extending into non-profits and charities would appear to offer a chance to experiment with cooperative ownership models...via private non-profit initiatives.

-Requirement that operating entities and employers acquire resources and operational funding independently of JG labor funding is another component of limiting moral hazard. However, JG certification will require new intergovernmental agency oversight responsibility...and likely require additional Treasury funding beyond the costs of JG paychecks. Best to have Congress establish principles or guidelines for JG certification programs worked out between US States and FED district level banks (per new JG FED mandate), and provide oversight, but get away from micromanaged spending initiatives to support job guarantee employers. We should be about giving flexibility to US States and localities to design JG programs that are specific to local conditions.

-We need MMT JG Federalism. I don't think any of this is inconsistent with headline MMT proposals. Still can't figure out MMR.

Anonymous said...

What I find most amusing about Cullen Roche is that he thinks standing up for the status quo makes him 'apolitical'. In reality he's as political as anyone else, and his politics are conservative.

Tom Hickey said...

@ Charles Hayden

This is pretty much the way that MMT economists see it, as I understand them anyway.

The MMT JG buffer stock of employed that doesn't compete with the private sector and which the private sector draws from.

I also agree that the future lies in the direction of more non-profits and coops (worker and consumer owned non-profits). There's a lot that needs that the private sector is either unwilling to undertake the risk of or unable to do profitably.

Matt Franko said...


One thing I wish they would see is that when they say "the way the system works leaving out the policy", I wish they could see that "the way the system works" IS a policy.

For instance when we decide to have a "free floating" currency as part of a monetary economy, this IS A POLICY. This policy of "free floating" logically means we are choosing to pursue a policy of mercantilism or neo-mercantilism, either forms of mercantilism are A POLICY.

So perhaps the MMRs can re-phrase it to say something like "the way the current policy operates, without passing judgement about any policy changes", this I could see would be useful in fact in shedding light on current policy, and then folks who would be better informed could determine if they would like to see the current policy changed...


John Carney said...

Just for the record, I wasn't dissing Wray.

I think he really is brilliant and I owe him a debt for improving my understanding of the way the world works.

I'm just skeptical about the benevolence of government spending. And, yes, this makes my version of MMR more libertarian than that of Roche, et al. Maybe I'll start calling myself Neo-MMR.

Tom Hickey said...

@ John Carney

Fair enough. I took that part of the title down.