Sunday, June 16, 2019

Bill Mitchell – Seize the Means of Production of Currency – Part 3

The week before last, Thomas Fazi and I had a response to a recent British attack on Modern Monetary Theory (MMT) published in The Tribune magazine (June 5, 2019) – For MMT. In effect, there were two quite separate topics that needed to be discussed: (a) the misrepresentation of MMT; and (b) the issues pertaining to British Labour Party policy proposals. The article we were responding to – Against MMT – written by a former Labour Party advisor, was not really about MMT at all, as you will see. Instead, it appeared to be an attempt to defend a policy approach, that I have previously criticised as giving to much back to the neoliberals. Whenever, progressives use neoliberal frames, language or concepts, it turns out badly for them. Anyway, the published article only allowed 3,000 words, which made it difficult to cover the two topics in any depth. In this three-part series, you can read a longer version of our reply to the ‘Against MMT’ article, and, criticisms from the elements on the Left, generally, who think it is a smart tactic to talk like neoliberals and express fear of global capital markets. In this final Part, we focus explicitly on Labour Party’s Fiscal Credibility Rule – which uses these neoliberal frames – and we show that it would fail in a deep recession, causing grief to a Labour government should it be in office at that time....
Bill Mitchell – billy blog
Seize the Means of Production of Currency – Part 3
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Ralph Musgrave said...

I left a comment - which may take some time to appear becase Bill for some strange reason always wants to "moderate" my comments...:-)

Ralph Musgrave said...

It's a bit strange for Bill to write a three part series of articles allegedly about "Seizing the means of production of currency" when he is flatly opposed to full reserve banking: i.e. banning money creation by private banks and having just central banks create money.

I'm not saying that's a flagrant self-contradiction, but is getting a bit near to a self-contradiction.

Kaivey said...

I would love to see the money supply creation being taken over by the state.

Richard Werner says that small private banks, many of which would be non - profit, is a good idea too.

I'm ready to compromise, whatever is best.

AXEC / E.K-H said...

MMT has an offer that Labour cannot refuse
Comment on Bill Mitchell/Thomas Fazi on ‘Seize the Means of Production of Currency ― Part 3’

The MMT policy of deficit-spending/money-creation clearly benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law which entails Public Deficit = Private Profit. Thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep.

The first communicative task of MMT is, therefore, to obfuscate its true purpose and “… to get citizens and workers to accept ― demand even ― policies that are not in their class interest.”#1, #2

So, Bill Mitchell/Thomas Fazi start with presenting themselves as the good guys: “It should be clear by now that MMT has absolutely nothing in common with mainstream economics.”

After this framing as real Progressives, Bill Mitchell/Thomas Fazi come to business. What the MMT deficit-spenders/money-creators cannot tolerate are balanced budgets much less a reduction of public debt. But this is exactly what the Labour leadership with their Fiscal Credibility Rule (FCR) plans: “But more importantly, and leaving aside the aspect of the rule where recurrent spending and taxes will balance over some rolling 5-year window, the FCR requires that ‘at the end of every Parliament, Government debt as a proportion of trend GDP is lower than it was at the start’.”

Nothing could be more antithetical to MMT.

The first thing Labour needs is an MMT lesson about how the economy works: “Further, there is no finite pool of saving that government debt issuance soaks up, and, in doing so, forces increased competition for the funds and higher interest rates. Fiscal deficits increase income which, in turn, expands the pool of saving.”

This is the core scientific blunder/fraud of MMT: fiscal deficits expand the pool of PROFITS and NOT the pool of saving as one can directly glean from the macroeconomic Profit Law, i.e. from Q=Yd+(I−S)+(G−T)+(X−M).#3, #4

The political agenda of MMT is to discredit the Labour leadership and to brainwash members and supporters. To this end, MMTers unmask the false neoliberal consciousness of the Labour leadership: “It is the fact that by embracing the macroeconomic neoliberal framing about ‘fiscal responsibility’, Labour is setting up a deadly trap for itself.” and “This is the language of neoliberals ― ‘fiscal health’ as if there is a ‘patient’ involved that can become sick; ‘should not be borrowing for day-to-day spending’ ― why not?; and the implication that without such a rule ‘investment’ will be damaged and along with it ‘future growth’.” Get it, Labour: balanced budgets are bad, deficits are good, the greater the public debt, the better for you and your grandchildren.

But to brainwash the Labour Party into deficit-spending/money-creation is only the first step of MMT’s communicative assault. The ultimate goal of the Oligarchy is to get the Central Bank, i.e. the Means of Production of Currency, into their hands. And this coup they have reserved for nobody else than the working class: “If there’s anything the establishment fears more than the working classes seizing the means of production, it’s the working classes seizing the means of production of currency. You would think that socialists would understand that.”

From Adam Smith to Marx to Hayek to Keynes to Friedman to MMT, the fake scientists of the failed science economics have done nothing else than to wind up WeThePeople.#5

Bill Mitchell/Thomas Fazi are quite relaxed: “The bottom line … is that MMT is here to stay. The UK Labour Party can choose to stick to the old neoliberal fiscal paradigm ― or it can join the revolution.” That’s how they talk in their Oligarchy meetings: “I’m gonna make him an offer he can’t refuse.”

Egmont Kakarot-Handtke