Another reason to know where money comes from — Peter May

Good pro-MMT article from Peter May contra the neoliberal left.

Take-away:

So I agree that distribution of power is important but I do think that knowing exactly where money comes can be mighty helpful in torpedoing that actual power, by better exposing its bogus ‘justification’.

That is why I imagine many consider MMT to be progressive; not because its understandings are inherently so in themselves. But simply because, in order to avoid a fair and logical left of centre conclusion, you have to lie about your intentions.

MMT helps to draw attention to the John Maynard Keynes dictum that, for a nation, it is wrong to say ‘we cannot spend more than we earn’. By contrast, as a nation ‘we cannot earn more than we spend’....

I have also criticized MMT for not addressing the power issue as key to political economy. But this criticism is quite different from that of the neoliberal left, including "neoliberal Marxists." A dominant position on this side is that the wealthy should be taxed both to "pay for" increased spending on welfare and also to redistribute wealth more equally. MMT denies the first is applicable, since it is based on a conflation of a currency issuer with users of the currency. At least some MMT economists agree with the second point, which is not inconsistent with MMT. However, it is a political issue. The MMT economists (in the US anyway) have made strategic choices about how to approach this.

The way economic science is now conceived in conventional thought, power lies beyond the scope of economics other than insofar as it involves economic power, aka "market power," and government intervention in "natural" economic processes, which it is assumed, will lead to optimal results if these forces are allowed to work "naturally."

My point is that from the systems POV economics deals with the material life-support system of a society as a larger social system. The society as social system, being overarching, is the whole in this case. The social system is an integral whole in which the social, political and economic factors cannot be disentangled without oversimplification in the sense of leaving out relevant matters. 

Presently, the unit in the global system is the nation state and only nation states are sovereign issuers of currency is the MMT sense based on institutional analysis and description. MMT institutional analysis reveals this in the chartalist assumption that the state is the key institution involved in the creation of "modern money." The currency issuer therefore bears responsibility for the entire range of outcomes that follow from use of currency sovereignty as a policy instrument. Excessively skewed distribution cannot occur absent the participation of the state as currency sovereign.

Progressive Pulse
Another reason to know where money comes from

Peter May

For MMT — Thomas Fazi and Bill Mitchell

Leading proponents of Modern Monetary Theory respond to Tribune's recent article on the topic, arguing that socialists should not be afraid to "seize the means of production of money."

Tribune
For MMT

Thomas Fazi and Bill Mitchell

Fixing Out-Of-Control Banking Systems? — Brian Romanchuk

This is just a short post-script to some points in the James Meadway article I discussed yesterday. What is to be done about financial sectors that are out-of-control, and endangering economic stability?...

I would add one important thing that MMT contirubtes to this debate that Brian doesn't mention here. Warren Mosler has pounded on the need to regulate banks' asset side rather than their liability side as is current practice.

Brian does mention that MMT economists have criticized current banking practice and have offered recommendations for reform based on Minsky. Warren, who formerly owned a small bank, has been out front on this with his recommendations, including proposals at his place.

Bond Economics
Fixing Out-Of-Control Banking Systems?
Brian Romanchuk

Richard Murphy — For MMT (long and wonkish)

Contra Ian Stewart and James Meadway.

Aside: If this is considered wonkish in the UK, the country has a problem.

Tax Research UK
For MMT (long and wonkish)
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

Bill Mitchell — MMT is just plain old bad economics – Part 1

On August 6, 2018, British tax expert Richard Murphy who is becoming increasingly sympathetic to the principles of Modern Monetary Theory (MMT) published a blog post, which recorded an exchange with one James Meadway, who is the economics advisor to the Shadow Chancellor John McDonnell in Britain. The exchange took place on the social media page of a Labour Party insider who has long advocated a Land Tax, which McDonnell is on the public record as saying will “raise the funds we need” to help local government. He called it a “radical solution” (Source). An aside, but not an irrelevant one. It reflects the mindset of the inner economics camp in the British Labour Party, a mindset that is essentially in lockstep with the neoliberal narrative about fiscal policy. Anyway, his chief advisor evidently openly attacked MMT as “just plain old bad economics” and called it a “regression in left economic thinking” which would ultimately render the currency “entirely worthless” if applied. He also mused that any application of MMT would be “catastrophic” for Britain. Apparently, only the US can apply MMT principles. Well, the exchange was illustrative. First, the advisor, and which I guess means the person being advised, do not really understand what MMT is. Second, the Labour Party are claiming to be a “radical and transformative” force in British politics, yet hang on basic neoliberal myths about the monetary system, which is at the core of government policy implementation. Astounding really. This is Part 1 of a two-part series on this topic, most of it will be summarising past analysis. The focus here is on conceptual issues. Part 2 will focus more specifically on Balance of Payments issues.

Bill Mitchell – billy blog
MMT is just plain old bad economics – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia