Tuesday, September 11, 2018

Bill Mitchell — The divide between mainstream macro and MMT is irreconcilable – Part 3

This is Part 3 (and final) of my series responding to an iNET claim that Modern Monetary Theory (MMT) and mainstream macroeconomics were essentially at one in the way they understand the economy but differ on matters of which policy instrument (fiscal or monetary) to assign to counter stabilisation duties. In Part 1, I demonstrated how the core mainstream macroeconomic concepts bear no correspondence with the core MMT concepts, so it was surprising that someone would try to run an argument that the practical differences were really about policy assignment. In Part 2, we saw how the iNET authors created a stylised version of mainstream macroeconomics that ignored the fundamental building blocks (how they reach their conclusions about the real world), which means that they ignore important differences in the way MMT economists and mainstream macroeconomists interpret a given economic state. I will elaborate on that in this final part. Further, by reducing the body of work now known as MMT to be just ‘functional finance’, the iNET authors also, effectively, abandon any valid comparison between MMT and the mainstream, although they do not acknowledge that sleight of hand....
Bill Mitchell – billy blog
The divide between mainstream macro and MMT is irreconcilable – Part 3
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Ramanan said...

Agree with this. Mainstream economics is just the ultimate form of post-truth.

Btw, why iNET and not INET?

AXEC / E.K-H said...

Both, Mainstreamer and MMTer are either stupid or corrupt or both
Comment on Bill Mitchell on ‘The divide between mainstream macro and MMT is irreconcilable ― Part 3’

In order to clarify the specifics of MMT, Bill Mitchell refers back to functional finance: “So his classic statement of functional finance: Government should adjust its rates of expenditure and taxation such that total spending in the economy is neither more nor less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is a deficit, greater borrowing, ‘printing money,’ etc., then these things in themselves are neither good nor bad, they are simply the means to the desired ends of full employment and price stability …” and “But we do consider fiscal policy should be directed to advancing public purpose and the particular levels of resulting aggregates (for example, fiscal deficits/surpluses) are immaterial.”

This, clearly, is a statement about the objectives of economic policy. What everybody overlooks is that the economist as scientist is NOT entitled to policy agenda pushing. His sole task is to figure out how the actual economy works. So, economists are comparable to the physicists and engineers who figure out how a piece of metal can be made to defy gravity and to get off the ground and to safely land at the desired destination.

Economists as scientists have NO say about the destination. The destination is determined in the political process by the Legitimate Sovereign. So, political economics is a contradiction in itself.#1

Economists are NOT the Legitimate Sovereign as already J. S. Mill made abundantly clear: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

For 200+ years economists overstep their competence. They have taken on the role as clowns and useful idiots in the political Circus Maximus and they have failed thoroughly as scientists. The four main approaches ― Walrasianism, Keynesianism/MMT, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. With this pluralism of provably false theories, economists have not achieved anything of scientific value.

See part 2

AXEC / E.K-H said...

Part 2

Bill Mitchell is right in pointing out that mainstream economics is but one big Fallacy of Composition.#2 But he fails to address the proven fact, that MMT is based upon provably false macrofoundations. With regard to economic policy he fails to address the fact that deficit-spending in the intellectual tradition of Keynes/Lerner has produced the insoluble distributional problems everybody has clearly before his eyes today.#3

So, with regard to scientific failure/corruption, there is NO difference between the mainstream and MMT.#4, #5 With regard to policy there seems to be a real difference. Mainstream economics is traditionally the mouthpiece of the one-percenters. MMT claims to be morally superior and to promote the cause of the ninety-nine-percenters.

This is an optical illusion. There is no real political difference either. Both Mainstreamer and MMTer are agenda-pusher for the oligarchy.#6, #7 The meager academic to-and-fro between Bill Mitchell and Jayadev/Mason has nothing at all to do with science but is a smokescreen for the ongoing joint political fraud which is the economist’s business since Adam Smith/Karl Marx.

Egmont Kakarot-Handtke

#1 The end of political economics

#2 Reference to Arjun Jayadev/J. W. Mason ‘Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?’

#3 Keynes, Lerner, MMT, Trump and exploding profit

#4 MMT, Bill Mitchell, and the lack of basic scientific integrity

#5 For the full-spectrum refutation of MMT see cross-references MMT

#6 MMT: How WeTheOligarchy communicates with WeThePeople

#7 MMT and grassroots movements