Wednesday, June 12, 2019

Lars P. Syll — Wren-Lewis vs MMT

Simon Wren-Lewis is obviously upset because some MMTers have called his economic policy proposals (providing the theoretical foundation for Labour’s Fiscal Credibility Rule) “neoliberal”. Neoliberal or not, what he does have to say about MMT and his own mainstream economics makes it clear what the debate really comes down to:
Monetary policy, except at the lower bound (to which Labour affixes a rule), versus fiscal policy in accordance with functional finance.

What this boils down to is "market forces" dictating to government (neoliberal) or political discretion in fiscal policy using government appropriations in a representative democracy to achieve public purpose (social democracy).

Lars P. Syll’s Blog
Wren-Lewis vs MMT
Lars P. Syll | Professor, Malmo University

See also

Progressive Pulse
Sticking to Neoliberaslism
Peter May

1 comment:

AXEC / E.K-H said...

Are economics professors really that incompetent? Yes!
Comment on Lars Syll on ‘Wren-Lewis vs MMT’

With regard to the ongoing Neoliberalism vs MMT slapstick#1 Lars Syll maintains: “In Wren-Lewis world we don’t need fiscal policy other than when interest rates hit their lower bound (ZLB). In normal times monetary policy suffices. … What Wren-Lewis and other mainstream economists have in mind when they argue this way, is nothing but a version of Say’s law, basically saying that savings have to equal investments and that if the state increases investments, then private investments have to come down (‘crowding out’). As an accounting identity, there is, of course, nothing to say about the law, but as such, it is also totally uninteresting from an economic point of view. What happens when ex-ante savings and investments differ, is that we basically get output adjustments. GDP changes and so makes saving and investments equal ex-post. And this, nota bene, says nothing at all about the success or failure of fiscal policies!”

There is NO such thing as an accounting identity of savings and investments. This erroneous notion is simply due to the fact that economists are too stupid for the elementary mathematics that underlies macroeconomic accounting.#2, #3 Accordingly, neither the Swedish professor, nor Post-Keynesians, nor New Keynesians, nor MMTers, not Anti-Keynesians has realized it to this day.#4, #5

The scientific incompetence can be traced back to the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This two-liner is conceptually and logically defective because Keynes NEVER came to grips with profit.

“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

Let this sink in, the economist Keynes NEVER understood profit, i.e. the fundamental concept of economics. So, Keynes’ I=S is false and by consequence the multiplier and all I=S/IS-LM models. Instead, Q=I−S is true with Q as macroeconomic profit. The ex-ante/ex-post blather is absolutely beside the point.

Because the profit theory is false the whole analytical superstructure of economics is false. Because economics is proto-scientific garbage, economic policy guidance of both Neoliberals and MMTers is nothing but brain-dead agenda pushing.#6, #7

Egmont Kakarot-Handtke

#1 The not so funny MMT vs Neoliberalism slapstick

#2 Wikipedia and the promotion of economists’ idiotism (I)

#3 Wikipedia and the promotion of economists’ idiotism (II)

#4 Keynesians ― terminally stupid or worse?

#5 I is never equal S and even Nick Rowe will eventually grasp it

#6 MMT’s true program

#7 Economics as a cover for agenda pushing