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Saturday, May 2, 2015

David Fields — New Working Paper by John Smithin on Endogenous Money, Fiscal Policy, Interest & Exchange Rates


Link to a working paper discussing the debate between Thomas Palley, and 
at

3 comments:

  1. Jose GuilhermeMay 3, 2015 at 12:29 AM

    Great (and readable, concise) paper by Smithin.

    Many important points, but this description of the complete circuit, profits and "capitalism" is particularly impressive:

    The essence of what is at stake is contained in a question that sociologists do sometimes ask, but economists almost never: "where do profits come from?"
    (...)
    A simplified and stylized version of the complete circuit...can be written as:
    M - C - C' - M'
    The entrepreneurs start with a sum of money (dollars), M. Then they buy some commodities (including raw materials PLUS labour time). Next, they engage in production, using C, to make more (that is, "more valuable") commodities C'. The term (C - C') therefore corresponds to real value-added in the economy. Entrepreneurs then sell the enhanced commodities, C', for more money M', and the difference (M' - M) is what we call the realized money profit. So, this is capitalism according to Marx, not dissimilar to the views of Weber, Schumpeter, Keynes and others.

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  2. geerussellMay 3, 2015 at 2:08 AM

    I don't know why this made me laugh, but it did...

    Palley is right, of course, that this is not new and also that MMT authors regularly fail to give credit to the many others who have expressed similar views.4

    So... skipping down to note number 4 to see who Smithin feels are the many others so overlooked...

    4. I am bound to mention such writings as Smithin (1991), Smithin and Wolf (1993), and Smithin and Smithin (1998). Granted, one of these was written in Czech, and meant as a warning for readers in the Czech Republic and diaspora about the perils of the Euro-zone.

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  3. Jose GuilhermeMay 3, 2015 at 10:02 AM

    Perhaps among the "others so overlooked" one could find Joan Robinson, who - according to Marc Lavoie - can be seen an an "honorific developer of modern monetary theory"?

    See page 14 of this paper:

    http://www.boeckler.de/pdf/v_2011_10_27_lavoie.pdf

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