MMT is a theory of empire. This is not to say that its advocates are imperialists. Rather, they are observers who note a reality that the post-colonial thinker has long understood – imperialists can run the world on whims and fictions.
The question is ultimately, what are the merits of the whims. Should the US spend a trillion dollars invading a country of herdsmen, or should it build better hospitals, airports, and highways? MMT does not take a position on this; it merely states that the US can pursue either path indefinitely.
As it is a technical assessment of empire, it does not offer the substance for the wretched of the earth, the citizens of the third world, to liberate themselves from the shackles of an unfair economic system. They must still borrow in the world’s reserve currencies, and are therefore bound by the whims of their creditors....
Currency sovereignty implies that a nation issues its own state currency on which it has a monopoly and does not diminish or forfeit this monopoly by taking on obligations other than in its currency.
But many if not most nations do not enjoy currency sovereignty other than theoretically, since the world's business is conducted in reserve currencies, chiefly the USD. Moreover, oil is traded in USD.
Most countries are are neither autarkic nor self-sufficient in resources. They need to obtain vital resources from trade. Therefore, They have to either generate enough foreign currency through trade or else they must borrow in a foreign currency to settle in international markets. Only countries that are rich in natural resources are able to avoid the debt trap involved in the balance of payments. This results in neo-imperialism and neocolonialism as the concomitants of neoliberalism. "Liberal globalization" contains a contradiction.
The author is not condemning MMT for either creating this situation, or even abetting it. MMT analysis simply lays bare how the system works to create debt slaves internationally.
A further investigation of MMT analysis would show that this is also the case domestically in countries with reserve currencies owing to debt-based rentierism. Again, MMT is just describing the current system and its implications.
MMT analysis also shows, however, that it doesn't have to be be this way. Money is a legal construct rather than a natural object. Institutional arrangements are malleable.
Coronavirus and Modern Monetary Theory
Usman W. Chohan | Director for Economics and National Affairs at the Centre for Aerospace and Security Studies (CASS)
“ MMT is a theory of empire. This is not to say that its advocates are imperialists. Rather, they are observers who note a reality that the post-colonial thinker has long understood – imperialists can run the world on whims and fictions.”
ReplyDeleteWhaaaaaaaaaaaaaaatttttttttttt??????
You have to be a particular type of dog to hear that whistle.
ReplyDeleteBut many if not most nations do not enjoy currency sovereignty other than theoretically, since the world's business is conducted in reserve currencies, chiefly the USD. Moreover, oil is traded in USD.
ReplyDeleteThis of course, doesn't matter. It makes it easier on the reserve currency issuing countries, of course, but it does not render the currency sovereignty of other country's "theoretical". The resistance to this simple point is amazing, a non sequitur always presented with no argument whatsoever.
I suspect that the real resistance point is to simple, logical and irrefutable arguments whatsoever. People absolutely love making things more complicated and obscure than they really are, especially after they have entered a guild of knowers of such baroque ritual knowledge. The real problem is if the guild secrets do have some truth and serviceability in them, obscured by all the crap, but lending credence to it.
@ Calgacus
ReplyDeleteWe apparently disagree on this important point. I conceded that you are correct about currency sovereignty. but only theoretically.
The practical fact, as Bill Mitchell admits, is that such countries have to live within their means if they want to retain monetary sovereignty. For most of these countries, this implies accepting what amount to colonial status.
(Of course, practically speaking this is not only a matter of economics but military. No country lacking a developed industrial economy and high tech can compete with the hegemon, and most of those that could compete are allies of the hegemon. That leaves the rest as colonies to one degree or another. Those that don't toe the line or resist are targeted with hybrid warfare, beginning with economic warfare. Presently, China and Russia are the chief target of the Empire as the only actual competitors.)
There are further issues with limitations on "currency sovereigns," since living within one's means also implies "not having nice things" — unless one is a member of the elite. No problem in places were the elite is solidly in control (through political repression). But then the elite are simply imperial compradors and part of the global elite that get cut in on the spoils.
But where an elite is not totally in control and there are choices, many voters will choose candidates that promise "nice things" that involve foreign borrowing, and all that entails when things go south.
Michael Hudson explains this in Super Imperialism (free download), and John Perkins tells how it works in Confessions of an Economic HitmanConfessions of an Economic Hitman (free download). This link is to the first edition (2004). The book has been updated to New Confessions of an Economic Hitman (2016).
This is actually the underlying reason for "spreading freedom and democracy," where "democracy" means monopoly capitalism and "freedom" means being able to cast a vote in an election where voting is essentially meaningless, since elites select the candidates and foreign states have a major input, too. It's a sham that just puts a veneer on the harsher imperialism of the past by conquest and enslavement. But the effect is similar and just as harsh on many.
I fully support MMT's analysis of both currency sovereignty and the job guarantee. However, in my view while they show viable steps to improve a bad situation, these step would not remedy the situation entirely and furthermore cannot.
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ReplyDeleteIn my view, this will require revising the design of the system with regard to government as the organ not only of governance but also of public purpose in a modern society. The role of governance is 1. security, 2. order, 3. welfare, 4. distributed prosperity, and 5. culture, in that order of priority.
Achieving a good society that is conducive to living a good live requires jettisoning neoliberal presumptions, functioning as no so hidden foundational assumptions, such as, "there is no such thing as society," "the money government uses is taxpayer money", and "government is the problem." But much more is required — most importantly. raising the level of collective consciousness.
In the end, overhauling the present system will not work as long as the right to private property is interpreted as being absolute. The public (demos) has to have control of the commanding heights of the economy rather than an oligarchy like today's plutocracy. The present condition is neo-feudalism. As such, it is incompatible with genuine democracy as governance of, by, and for the people.
MMT is not going to get us this, even its potential is fully understood by all and implemented, since this is a political issue involving political choice. The basic institutional structure of the state needs to be changed. There is no state that is there yet, or even close to it. So it remains "utopia" as an ideal. But the purpose of ideals is to aim at.
I am more a Fabian incrementalist than a revolutionary in this. Practically speaking, radical change that is sudden is risky. Safer to adopt a more gradual approach. The underlying level of consciousness is determinative. Usually this is a gradual unfolding through culture, but there have been quite radical "spiritual awakenings," too. I don't think that radical change will occur in the US until the boomers pass into history, so that would put the earliest change through the electoral process ahead to 2032 at least.
In the meanwhile, the best hope economically is the spreading of education about MMT. This doesn't mean that issues concerning neoliberalism, neo-imperialism, and neocolonialism have to be relegated to nations "living within their means," either. There are other avenues available. Similarly. while the adoption of a MMT JG would be great step forward, it is not the solution to all issues in employment either. We can do more and should do more, given the resources available.
The bottom line of MMT is whether all resources are being used effectively and efficiently to optimize life. If not, it is a management and organizational issue rather than a financial or economic one.
Inasmuch as MMT rests on the authority of the state, and thus on Government, which is that power within a polity that has a monopoly over the means of coercion, MMT is explicitly an explanation of the true nature of power within a monetary economy. It applies to dictatorships and totalitarian regimes as much as to all types of democracy.
ReplyDeleteBecause it is theory of power, it pointa out both the nature of monetary relations in an economy, and the importance of the real economy.
It is absolutely, therefore, a proper lens on the nature of inter-national power, and therefore shows how empires and imperialists can dominate other countries, continents and spheres of influence. It also shows that only a robust loyalty to and sense of adherence to a government of a country can hope to ward off imperialist incursions from outside. That is all part of the authority of the state. It is therefore as much a theory of national resistance as a theory of empire, but it IS both.