Modern monetary theory: a short guide for a world that now realises that it’s an explanation of what’s now happening — Richard Murphy

There is now a great deal of discussion of modern monetary theory going on, precisely because it appears that the UK government (and others around the world) are now behaving in the way that it suggests is, and has always been, possible. What MMT says, as far as I am concerned, is as follows....

Richard Murphy has a slightly different understanding of MMT than the MMT economists, but he is essentially correct. The glaring difference is his position on the non-necessity of a job guarantee. While he and Bill Mitchell have tangled over this, it should not minimize Richard Murphy's value as an ally. And controversy is actually good from the angle of publicity. 

From the point of view of the institutional descriptive aspect of MMT, this is correct. MMT describes the modern money system, showing its potential and limitations, based on both the general case and special cases in the current monetary regime. It also provides for analysis of other monetary regimes, e.g., historically.

Richard Murphy is wrong however that this institutional description constitutes the whole of MMT, or even the essence of MMT, so that MMT is inappropriately named. MMT is indeed a macroeconomic theory and in the model, a job guarantee is a key piece in ensuring actual full employment less transitional. As a model is serves the task of political economy is advising on policy formulation where the holy grail of economics is full employment, growth commensurate with population growth and rising living standard, and price stability needed for planning and contracts.

Tax Research UK
Modern monetary theory: a short guide for a world that now realises that it’s an explanation of what’s now happening
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum