Tuesday, February 5, 2019

Michael Roberts — MMT 3 – a backstop to capitalism

After two long and possibly turgid posts analysing Modern Monetary Theory, in this third post, I’m going to look at the practicalities – in other words, what are the policy proposals that MMTers put forward for the government to do in order to get more jobs at better wages and without provoking inflation?
Michael Roberts does a decent job of stating the MMT position with quotes from MMT economists. He concludes:
In this way, MMT acts as a backstop to capitalism – the state is the employer of last resort but not the main employer. It aims to compensate (patch up) the failures of capitalist production, not replace it.
OK. Well, MMT didn't set out to replace capitalism. So, the MMT economists are not calling for revolution. As if that is most serious charge that can be mounted against MMT?

But what Michael Roberts apparently fails to notice, or at least doesn't mention, is that the buffer stock of employed that the MMT JG creates replaces the present buffer stock of unemployed that forms "a reserve army of the destitute" to control wages. That is a step forward in increasing labor bargaining power.

The MMT JG is a guaranteed job offer at or above the living wage (compensation package including benefits). This sets a floor for the labor market against which employers must compete. If funded by the currency issuer, as MMT recommends, the program is self-funding and balances fiscal injection with increased productivity over transfers.

The JG hourly wage also anchors the currency to a unit of labor time, which serves as a price anchor. The currency issue function as the monopoly provider of the currency is a price setter.

Marxian economists can find some things to like with MMT, although Marxists will argue that MMT backs up capitalism and forestalls socialist revolution.

Michael Roberts Blog
MMT 3 – a backstop to capitalism
Michael Roberts


Anonymous said...

MMT Fan...here is my question which no one will attempt to answer. Scenario...Bernie Sanders wins the Presidency in 2020. Here is the reality...the JG and many other things are simply not going to happen unless his party controls both the Congress and Senate...not going to happen, plus he wouldn't even be able to get the majority of Dems on board,,,,so again staying in reality what can/could Bernie do from an MMT perspective...the only thing I see is load up the FOMC with MMT'rs ???

Ralph Musgrave said...

Not the smartest article on JG I've seen. I left a comment, which may or may not get published.

AXEC / E.K-H said...

MMT ― backstop or advanced life support for the Oligarchy?
Comment on Tom Hickey on ‘Michael Roberts ― MMT 3 ― a backstop to capitalism’

Michael Roberts, card-carrying Marxist economist, evaluates MMT: “MMT only offers a backstop to capitalist investment and employment, not an alternative.”

This does not excite the MMT philosopher Tom Hickey: “OK. Well, MMT didn’t set out to replace capitalism. So, the MMT economists are not calling for revolution. As if that is most serious charge that can be mounted against MMT?”

No, the most serious charge against MMT is that it claims to benefit WeThePeople but instead benefits the Oligarchy. To pay for social benefits with deficit-spending/money-creation is simply a political fraud. This is because of the macroeconomic Profit Law which boils down to Public Deficit = Private Profit. So, MMT offers a permanent free lunch to the Oligarchy which is beefed up with interest on a permanently rolled over growing public debt. This amounts to reversed taxation of WeThePeople by the IRS on behalf of the Oligarchy.

Fabulous wealth in the USA is the mirror image of fabulous public debt ($21.5 trillion) ― NOT of productivity, innovation, monopoly, free markets, or exploitation.

Because the Marxist economist Michael Roberts does not know what profit is, he swallows MMT as an employment program and does not realize that it is a profit program that keeps the Oligarchy alive and well until the growth of public debt hits a wall.

Two hundred years ago, Marx did not understand how capitalism works but things have not improved in the meantime among Marxist and non-Marxist economists.

Egmont Kakarot-Handtke

Noah Way said...

Don't feed the link-spamming troll.