Not all "automatic stabilisers" in the economy are due to government policy; there are patterns of private sector behaviour that tend to act in a counter-cyclical fashion. The role of the external sector is an important stabiliser (at least most of the time). This article is a basic primer on the subject....Bond Economics
MMT is a description of the existing monetary system and its interaction with the production mechanisms. It takes a unique viewpoint that highlights opportunities that remain out of sight to traditional methods.
From this viewpoint comes a number of suggested policy proposals. So how do those proposals help keep things running smoothly?Modern Money Matters
One of the more arcane arguments that has resurfaced in recent years is the distinction between monetary and fiscal policy. This is in reference to various unorthodox policy prescriptions that have recently arisen -- helicopter drops, QE, etc. Eric Lonergan has written a fairly concise breakdown of the distinction - "The distinction between monetary and fiscal policy." I have not had much time to think about his article -- too many charts to prepare -- but I do know whether my preferred definition is covered by his distinction.
Government Policy Matters
This is a debate that is solely for intellectual entertainment; the true answer is what matters is government policy. In the same way we should consolidate the central bank with the Treasury, we need to look at government policies as a coherent whole.…Bond Economics
Michel Bauwens is the founder of the P2P Foundation and former advisor to the goverment of Ecuador for a project to “remake the roots of Ecuador’s economy, setting off a transition into a society of free and open knowledge.” With a team of researchers and through a partipatory process involving local civic actors and global commoners, the FLOK project produced a generic transition plan to a commons society with more than 15 specific policy and legislative plans.
Mira Luna culled from Bauwens his top recommendations of government policies to encourage open source development and the commons. While government policy usually sides with proprietary knowledge in the public sector, there is a huge opportunity to use goverments as a ally, supporter and guardian of the commons. To learn more and get involved, check out the P2P Foundation, OpenSource.com, Open Mind and the Open Source Initiative.…Shareable
…the economy is itself just a large government program. Through its laws and the police, the government has put in place a vast array of economic institutions that collectively determine who gets what at any moment in time. To assess the effectiveness of the institutional design choices the government has made, we need to know who is benefiting from them and to what degree. That means, among other things, knowing how rich the rich are.Policy Shop
A common misconception is that if everybody was prepared to take awful enough jobs, unemployment would be eradicated automatically, at least eventually, irrespective of the government's fiscal stance. Embedded in this argument is a misconception that unemployment, overall, can be eliminated through lower wages or deteriorating working conditions. In a capitalist monetary economy, this is not true. To think otherwise is to succumb to a fallacy of composition.
Neoclassical economists made this claim prior to the contributions of Keynes and Kalecki, but it was shown to be unfounded in the capital debates as well as in later work by neoclassical general equilibrium theorists themselves.
Even intuitively there is little reason to expect that an inverse relationship between wages and aggregate employment would hold. A reduction in the price of anything always means two things simultaneously. It means: (i) somebody has to pay less for something they want; and (ii) somebody else is receiving less for providing that thing. At the aggregate level, it means: (i) all of us, taken as a whole, are paying less for the stuff we want; and (ii) all of us, taken as a whole, are receiving less for providing the same stuff. Why would this have any systematic effect on how much stuff will be produced in the economy? It doesn't, as has been demonstrated formally in the capital debates and later work.
Unemployment is a government policy choice. It occurs when the government fails to maintain demand at a level sufficient to sustain full employment.
