Friday, March 22, 2019

Ramanan — Gerald Epstein’s Critique Of Neochartalism

Gerald Epstein and V. Ramanan bring up potential objections to the MMT position based on the international financial situation, an issue that Wynne Godley had pointed out previously.

Ramanan has brought up questions around balance of payments issues in the past as well.
Now this may sound as a pessimistic view for any individual nation or the world as a whole. The real problem is free trade – the most sacred tenet of the economics profession.
Another paradox of (bourgeois) liberalism, where economic liberalism implies "free markets, free trade, and free capital flows"as foundational to contemporary capitalism as the global socio-economic system?

The broader question is whether MMT successfully addresses the shortcomings of capitalism to the point of making bourgeois liberalism workable satisfactorily without resulting in social, political or economic dysfunction owing to its structural and functional dynamics as a system.

There are always tradeoffs with choices. Crafting a perfect systems is likely beyond human capacity, especially owing to emergence in complex adaptive systems. But we should be vigilant about the potential for things going wrong. In addition, economics is only an aspect of a highly complex system that involves much more than economics and finance. Economic issues are not the only important ones, or even the most important ones.

The Case for Concerted Action
Gerald Epstein’s Critique Of Neochartalism

V. Ramanan

See also from Ramanan

Are the countries that benefit from the institutional construction of the system using their power and influence to prevent reform of the system so as to make it more balanced for countries not favored?

WikiLeaks Leak On Reforming The World Economic System


Brian Romanchuk said...

To say that Ramanan has brought up the balance of payments issues in the past is a slight understatement. 😀

One of the subthemes of MMT is that it is a discussion of the policy space opened up by a freely-floating currency (and an analysis of what policy space is lost if you peg). Arguing that free floats are in some sense impssible (except for the alleged exception of the US) relies on completely ignoring Canada - which has had a freely-floating currency for almost the entire post-1950 period. But given the reality that this is a core part of MMT, it’s hard to view this as an area that is being overlooked.

Calgacus said...

I think Canada has been floating even longer. What would you expect of a country that is actually smaller than the USA in land area, but says it is bigger because it has a lot of big (frozen) lakes and inland bays?

Senexx said...

It is one of the stronger criticisms of the work and is found in other Post Keynesian work, I saw something the other day by Peter Kriesler from the 80s making similar suggestions to Ramanan.

I've attempted to address the Balance of Payments issue here: