Some Remarks on MMT & Marxism in Light of David Harvey’s “Marx, Capital, and the Madness of Economic Reason”

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By Scott Ferguson, who holds a Ph.D. in Rhetoric and Film Studies from UC Berkeley and is presently co-director of the Film & New Media Studies Track in the Department of Humanities & Cultural Studies at the University of South Florida. He is also a Research Scholar at the Binzagr Institute for Sustainable Prosperity and Director of Humanities Research for the Modern Money Network. His current research and pedagogy focus on Modern Monetary Theory and critiques of neoliberalism; aesthetic theory; the history of digital animation and visual effects; and essayistic writing across media platforms. Originally published at Radical Political Economy

Epicurus supposed that even in the midst of the void the atoms declined slightly from the straight line, and from this, he said, arose freedom.

-Pierre Bayle, quoted by Karl Marx

Money is no object.

-Stephanie Kelton

Viewed from afar, Modern Monetary Theory (MMT) and Marxism appear opposed. Contemporary Marxists such as Anwar Shaikh reject MMT and, typically, MMT is disassociated from Marxism when presented to the public. In truth, however, MMT and Marxism share an entangled history that thwarts neat distinctions and oppositions.

For one, Karl Marx’s intervention stands at the origin of critical political economy. Insisting that the modern money systems that mainstream economics deem natural and self-correcting are in truth politically constructed and destabilizing, Marxism functions as a philosophical torchbearer for the heterodox post-Keynesian tradition from which MMT arises. What is more, post-Keynesianism itself comprises a kaleidoscopic conflagration of Keynesian and Marxist impulses, which cannot be sharply dis-articulated.

In terms of direct influence, MMT owes many specific insights to the history of Marxist thought. MMT relies heavily on post-Keynesian theories of effective demand andstock-flow consistency, both of which are traceable to the second and third volumes of Marx’s Capital. Moreover, MMTers such as Bill Mitchell, Mathew Forstater, and Peter Cooper regularly draw upon Marxist concepts and arguments in their writings, paying express heed to Marxism’s ongoing relevance for MMT.

Meanwhile, post-Keynesian circuitist theory has increasingly prioritized state credit money in their analyses of the monetary circuit (M-C-M’) outlined in the first volume of Capital. Especially interesting in this regard are European Marxist circuitists likeRiccardo Bellofiore who overtly mobilize MMT’s insights. Forging novel connections between Marxism, post-Keynesianism, and MMT, Bellofiore and his followers continue to uncover important genealogical and theoretical linkages among these projects.

One might say far more about the linkages and discordances that riddle heterodox economics. Here, I merely wish to demonstrate the folly of treating MMT and Marxism as unrelated or categorically opposed. To do so is to overlook post-Keynesianism’s paramount role within the history of heterodox economics and to repress the contested field of inquiry to which both MMT and Marxism belong.

Still, when it comes to questions of social ontology, it becomes necessary to reckon with what genuinely distinguishes MMT from Marxism and thus cuts through the genealogical entwinements sketched above. Generally speaking, scholarly and public debates skirt around MMT’s and Marxism’s competing ontological commitments. Instead, they argue over the technical operations of political economy and the political responses various crises necessitate. Upon closer inspection, however, it turns out that tacit ontological divisions structure such contests from start to finish.

Ontology is embarrassing. It is embarrassing because it announces plainly what is uncouth to admit in ordinary discourse. Yet it is especially embarrassing because it means exposing the unexamined desires that drive everyday discursive struggles. For these reasons, ontological claims are often met with skepticism, disavowal, or scorn.

Nonetheless, I wish to risk articulating outright the underlying rift that cleaves MMT and Marxism. Marxism attributes the greatest degree of being to immediate material relations and imagines monetary abstraction as a necessary diminishment and volatilization of said relations. By contrast, MMT treats remote obligations to a centralized currency issuer as ontologically prior to any decentered association and sees monetary abstraction as a means to at once socialize and enlarge relations of production and distribution. Hence Marxism assumes that money is a private, alienating, and crisis-ridden exchange relationship that ought to be overcome. Yet MMT holds money to be a boundless public utility that, while by no means untroubled, is well-equipped to actualize radical collectivist ends.

This ontological cleavage becomes clearest in the ways that Marxism and MMT explain employment and unemployment. For the Marxist, employment comes into being through private wage contracts between firms and workers. Unemployment is then understood principally as a negative relation, functioning as a constitutive excess that reciprocally shapes capitalist production and exchange from the outside. For the MMTer, however, unemployment is a positive relation that results from the tax obligation. No unemployed person sits outside this public obligation and government is ultimately responsible for determining the employment level.

As I have already noted, some Marxists embrace chartalism’s grounding of money in centralized governance and a handful of MMTers work in a Marxist idiom. Yet beneath this exchange of ideas looms an irreconcilable split over political economy’s center of gravity. That is, despite their shared histories and convergences, Marxism and MMT offer us two very different Gestalts of the macro-economic order.

Perhaps the best way to make sense these contrasting pictures is to take seriously the turn of phrase center of gravity. For all its dubiousness, Marxism has adopted a literal and curiously pious relation to physical gravitation. Strewn with gravitropic metaphors, Marxist literature tends to subordinate the macro-economic reality to material gravity, whereby far-flung abstractions always come down to material interactions between particular individuals. Hence Marx’s characterization of communism as the impulse to gather abstractly dispersed social activities back to their immediate earthly origins. As Marx writes in The German Ideology, “The reality that communism creates is precisely the true basis for rendering it impossible that anything should exist independently of individuals, insofar as reality is nevertheless only the product of the preceding intercourse of individuals.” In Marxism, then, the fulcrum of social reality is that place where physical gravitation brings bodies into immediate contact and revolutionary praxis aims at expelling non-immediate or “ideal” influences from these direct relations.

Eschewing Marxism’s gravitropic metaphysics, MMT locates the center of macro-economic activity in an abstract legal rapport between the currency issuing center and the body politic that depends upon the currency to physically survive and thrive. On this model, the totality hangs on money’s governing center and unfolds as an interlocking cascade of mediation that conditions economic life as a whole. “[T]he hierarchy of money can be thought of as a multitiered pyramid where the tiers represent promises with differing degrees of acceptability,” explains Stephanie Kelton(née Bell). “As the most acceptable money in the hierarchy, the state’s debts serve as both a means of payment and a medium of exchange in private transactions.” Despite its “ideal” status, however, money’s topological hierarchy is no second-order phenomenon, according to MMT. Money is not a mere “expression” or “representation” of aggregate private value creation. Instead, MMT supposes that money’s fiscal backbone and macro-economic cascade together actualize a shared material horizon of production and distribution.

There is no treatise on physical gravitation in the MMT corpus. The term “gravity” appears nowhere in MMT’s myriad publications, as far as I have seen. Yet a careful reading of MMT’s texts reveals a subtle inversion in the topological relationship between the ideal and the real that not-so-subtly downgrades gravity’s metaphysical import for critical political economy.

Like Marxism, MMT grounds value in the construction and maintenance of a collective material reality. It accordingly rejects Neoclassical utility theory, which roots value in the play of individual preferences. Only, in contrast to Marxism, MMT argues that the production of value is conditioned by money’s abstract fiscal capacity and the hierarchy of mediation it supports. MMT hardly dismisses the pull of physical gravitation on human reality. Rather, it implicitly de-prioritizes gravity’s causality in political and economic processes, showing how the ideal conditions the real via money’s distributed pyramidal structure.

As a consequence of this inversion, MMT lends greater acuity to economic analysis. Still more important, it radically expands the political horizon concerning what is possible under a modern money economy. Indeed, by eschewing physical gravitation as the origin and telos of politics, MMT keys the struggle for political power to a commodious public abstraction, while refusing one-sided denunciations of money as some inevitable fall from grace.

At last, this brings me to the Marxist work referenced in my title: David Harvey’s, “Marx, Capital, and the Madness of Economic Reason,” a talk based on his forthcoming book of the same title. I have no doubt that MMT and Marxism will have much to offer one another for years to come. What worries me about Harvey’s latest project, however, is that it doubles-down the Liberal monetary imagination. In so doing, it blocks the capacious macro-economic Gestalt that MMT makes perceptible, along with the radical political possibilities this Gestalt makes immediately actionable.

Rather than affirming state spending as the macroeconomic backbone of production and distribution and a powerful weapon for political transformation, Professor Harvey deems private exchange the threshold of value’s realization and public money as mere “anti-value” and “fictitious capital.” The result renders government money just as flimsy and reckless as private speculation.

A number of passing claims flow forth from these faulty macro-economic premises:

  • Harvey characterize debt as lack of money or owing money rather than money itself.
  • He says fiscal policy is operationally dependent on bond sales, abetting neoliberal fear mongers who claim governments are beholden to bondholders.
  • He describes Quantitative Easing as a process whereby federal government inflates the so-called “money supply” instead of as a straight asset swap.
  • He collapses the difference between the monetary powers of sovereign governments and international financial institutions such as the IMF and the Word Bank.
  • He remarks that minimum wage raises and Universal Basic Income policies are equally inflationary.
  • He reduces Keynesianism to a narrow Neoclassical synthesis that begins with Paul Samuelson’s popular domestication of Keynes under John Hick’s IS/LM model and culminates with Paul Krugman’s deficit dovery in The New York Times.

Worst of all is the central metaphor that anchors Harvey’s forthcoming publication: the water cycle. Appealing to a punishingly gravitropic image, Harvey at once metaphorizes and diagrams the monetary circuit as a water cycle that is spiraling out of control. Drawing on G. W. F. Hegel’s terminology, he brands money’s endless unraveling a “bad infinity,” an infinite regress that leads nowhere but into further crisis. With this, Harvey surmises that our collective future becomes like so many homes during the aftermath of the 2007 – 08 financial crash: foreclosed.

In a sense Harvey is correct: contemporary neoliberalism is grim. Seen through the eyes of MMT, however, the future hardly looks foreclosed. Private debt can become a “bad infinity.” But public money is the best kind of infinity and it constitutes the center around which this forsaken system turns.

Marxism is a rich, heterogeneous project that continues to bear fruit. Yet unless critical political economy begins to relinquish its gravitropic attachments to a finite Liberal money form, Harvey’s bleak diagnosis will almost certainly turn into a self-fulfilling prophesy.

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91 comments

  1. horostam

    been waiting for this sort of comparison for a while…

    I didn’t realize that marxists where still such materialists. that seems dumb to me, since “base” and “superstructure” go hand in hand, like two sides of a coin. material/ideal, economics/politics, distribution of resources/expression of culture…

    this is dialectics, isnt it?

    all this gravity stuff seems old-fashioned, and individualistic. i thought marxism emphasised the prority of the collective over the individual.

    i just dont recognize marxism at all in the way its described above. Also, mmt is not a “Gestalt,” its just describing the system emperically, isnt it?

    1. bob mcmanus

      “i just dont recognize marxism at all in the way its described above.”

      That’s because Ferguson is caricaturing and straw-manning Marxism. With all due respect, I do approve of the critique and interdisciplinarity, hell I love it, hinted at in this piece, but his stance is pretty obvious. He might be more useful in really developing a self-reflective ontology (critique) for Post-Keynesian Economics and other non-Marxian Schools.

      horostam: “this is dialectics, isnt it?”

      Well, that seems to be part of what Ferguson is missing.

      Ferguson: “Marxism attributes the greatest degree of being to immediate material relations and imagines monetary abstraction as a necessary diminishment and volatilization of said relations.”

      Monetary abstraction (not a common Marxian phrasing) is simultaneously and necessarily an enhancement and stabilization of material relations. This is the dialectic and contradiction, both/and, neither.nor all at once. Material relations for Marxians in Late Capitalism including almost all social relations. Money is a store of *value* which means it also carries, transfers and communicates value and thus, as a book by Christian Marazzi I recommend says “Capital is Language.”

      MMT is so obviously reformist and statist that a radical economic ontology which by definition contains its own refutation by making social revolution possible and inevitable seems unlikely, but I wish the author luck. For all my criticism, I admired and enjoyed the piece, and will look for other work by this author. Thanks..

  2. DJG

    Yes: Thanks, Yves Smith. Much food for thought here, especially if we throw in Hannah Arendt’s close readings and astute critique of Marx.

  3. digi_owl

    If only Marx had not gotten himself confused with his “labor theory of value” gymnastics.

    That said, i wonder how much of that came from him not being an engineer by trade. In particular any kind of electrical engineer.

    Because frankly, industrial machines fit nicely into a production circuit if one think of them as labor amplifiers rather than simple stores of value.

    Meaning that for each unit of labor put in, the machine spits out X units of labor. And no, that is not simply taken from the stored labor from its initial creation.

    But then Marx had a social agenda, that of putting the plight of the factory worker on the map.

  4. Paper Mac

    You could have just put the Harvey bodyslam up front and stowed the story about the supposed hard ontological bifurcation. Harvey doesn’t know how money works, he also doesn’t subscribe to central Marxist dogmatisms like the tendency of the rate of profit to fall (see Kliman on Harvey here: http://www.newleftproject.org/index.php/site/article_comments/harvey_versus_marx_on_capitalisms_crises_part_1_getting_marx_wrong – notably Harvey’s response contains gravity metaphors), so it’s not clear to what extent he’s a particularly good representative of orthodox Marxist thinking.

    In any case, stuff like this:
    “Instead, MMT supposes that money’s fiscal backbone and macro-economic cascade together actualize a shared material horizon of production and distribution” seem like bizarre distinctions to draw with “Marxist ontology” given that the term “capital” subsumes money and its macroeconomic cascade in a very similar shared material horizon.

  5. PKMKII

    Even though he doesn’t name it outright, Schwieckart’s market socialism variant of economic democracy merges a lot of Marxist and MMT/Post-Keynesian theory.

  6. Aleric

    I read Marx’s Capital over the winter and remember thinking that while much of it was as vital and inspiring as when it was written, the chapters on money smelled gold-buggy. David Harvey’s book sounds like he’s doubling down on those parts.

    That said, though I also agree with MMT, my vulgar Marxist (perhaps Anarcho-Syndicalist tinged) critique would be class-based: How do you keep the technocrats who manage the money supply from colluding with the people who control production against the providers of labor?

    Perhaps the answer is along the lines of extending, “monetary abstraction as a means to at once socialize and enlarge relations of production and distribution”, into a decentralized currency or currencies or currency-like systems.

    1. Lambert Strether

      > How do you keep the technocrats who manage the money supply from colluding with the people who control production against the providers of labor?

      Put control of the money supply under democratic control. We’ve tried an “independent” Fed for awhile, and here we are.

      > Perhaps the answer is along the lines of extending, “monetary abstraction as a means to at once socialize and enlarge relations of production and distribution”, into a decentralized currency or currencies or currency-like systems.

      Lots of currency issues, none with state power? Hmm….

      1. ChrisAtRU

        OK … gonna share my dream here:

        Keynes’ Bancor idea was a good initial articulation IMO. He never got it going, but in true #KyloRen style, I would like to finish what he started … somehow.

        We already have a global currency (of sorts). Sadly, it’s called #BitCoin, and it’s the worst of everything, save for the algorithmic-prime-number gymnastics of the blockchain – which to me solves a problem that exists only in the paranoid Libertarian mind: that of the 3rd party involvement in money as a medium of exchange. I am non so nonplussed – I’m fine with State money.

        (BTW Lambert, I found this really nice article from LinkedIn – Blockchain For n00bs (like me) essentially)

        But back to my dream – a global community currency [1] backed by a (hitherto undefined in nature) virtual state, and complete with means of production harnessed by worker collectives.

        Well that’s a mouthful, but I’d like to try this before I exit stage left … ;-)

        [1] This may be an oxymoron – or something to reassess later as global seems to fall outside the definition of most if not all community currencies (i.e. local).

    2. Synoia

      Max did not contemplate Fiat money.

      In Marx’s day money was tied to Gold, and absolutely limited by gold in the vault, or deposits in the Bank.

      It took Nixon to invent the basis of MMT, to break the Gold linkage and create the Fiat Currency, (A Republican, no less), and Regan to launch it into reality (Another Republican).

      Bill Clipon never understood what he was doing, well not with Money, he certainly did with interns.

    3. Wandering Mind

      The “gold-buggy” comment seems right to me as well. Marx was able to see the potential for fiat systems when he analyzed national systems. But he seemed to want to squeeze money into his commodity analysis, which doesn’t work, as became obvious in our civil war as well as the first and second world war.

      On the other hand I think Harvey has a point when he says that “bondholders” are in charge of what various countries can do. That may not apply to the United States, but it certainly does apply to Argentina, for example.

      The general flaw I see with MMT is that it ignores the power relations which Marx so brilliantly lays out in Capital. Those antagonisms of class which he describes there persist and the “Master Class” has control over the money form.

      So, debt may be money from the creditor/master class point of view, but it is a claim on the future of the debtor and thus Harvey’s use of “foreclosed” to describe the limited future of debtors is accurate.

      There is merit in trying to analyze MMT from a Marxist point of view, but I don’t think that the author has given David Harvey enough credit.

      1. skippy

        I think its a factor of MMT not being philosophical about the currant soverign currency architecture, where as post Keynesian analysis considers distribution vectors. Marx on the other hand is a bit of a mix bag, whilst Marxists’ can be just as verbose and intense as say fundie Austrians.

        The bond holder issue is political imo and not intrinsic to the soverign currency architecture, same as the tax argument rodeo required by some quarters [see FDR].

        disheveled…. one foot in antiquity [tradition] and one in reality…. so the question is… is it a feature or a bug – ????

        1. Wandering Mind

          I think its a factor of MMT not being philosophical about the currant soverign currency architecture, where as post Keynesian analysis considers distribution vectors.

          Can you explain a bit more what you meant by this?

          Thanks.

          1. skippy

            It might help if you ask for specifics wrt to your quire.

            Aside, MMT does not demand any specific policy outcome, only denotes the potential for policy formation. On the other hand post Keynesian views the social outcomes of distribution beyond simple GDP metrics wrt the monetarist perspective [money quantity as a numerical whole] vs the MMT [money is not to be confused with a commodity].

            disheveled…. sorry I have to have more concise inquire to respond more accurately….

            1. Wandering Mind

              Ok. I think I understand what you’re saying now. And I agree. Although I also think the neutrality of MMT proponents is superficial.

              I don’t know of any MMT academic who is using those ideas to push for more defense spending, for example.

              There is always a focus on employment and the goal of full employment.

      2. Neil Wilson

        “That may not apply to the United States, but it certainly does apply to Argentina, for example.”

        It applies to Argentina only because they choose to issue public Bonds in a currency they do not control.

        So don’t do that and then holders of bonds have no power at all.

        There is no need to issue public bonds at all in any sovereign nation. Just stick to your own currency and offset the desire to save in that currency.

        The currency and the tax system is the means by which the public body commands resources for the public use. Think tally sticks.

  7. Disturbed Voter

    In traditional economy, there are three flows. The real economy is agricultural, along with what is required to prosper agriculture. To prosper agriculture there has to be labor specialists, usually in villages or cities, that provide non-agricultural products and services. The monetary flow is bifurcated, between a liquidity flow and a money-as-commodity flow. The liquidity needs to be sufficient to cover all transactions, no more, no less. Originally money-as-commodity flow was based on the currency as physical asset with some market value. Metal money for instance; gold, silver or bronze. Eventually with the rise of banking, paper money became viable as commodity money, with the paper money being commoditized by … interest (implicit or explicit) and money markets. We left the traditional economy behind, when we dropped all connection of the paper money with metal money, so that the government/commercial combine was free to expand liquidity and financial asset at will. We have yet to see what will come of the non-traditional economy … which minimizes agriculture, minimizes metal money, maximizes non-agriculture products and services, and financializes everything (making everything into paper money or the equivalent).

    1. Grebo

      Originally money-as-commodity flow was based on the currency as physical asset with some market value. Metal money for instance;

      Not so. Credit was money long before anyone attempted to make metal money. Every attempt to make all money metal has failed. The day they finally give up will be one to celebrate.

  8. John

    Very pleased to see this post as much more attention here needs to be devoted to Marxian economics. Would love to comment at length but am traveling on vacation.

  9. relstprof

    Thanks Yves. This is very helpful. I’m not sure I’m buying a hard ontological cleavage between the two, but the dialogue is critical.

  10. Fred

    “Marxism is a rich, heterogeneous project that continues to bear fruit.”
    Yep, from the Kulaks to the Killing Fields the rich history of Marxism continues to bear fruit. Venezuela is soon going to be enjoying a bumper crop.

    1. PKMKII

      Show me an economic philosophy that hasn’t resulted in a genocide or two and I’ll show you one that’s only existed on paper.

      1. Lambert Strether

        Lord Peter Wimsy in Gaudy Night:

        It’s getting uncommonly easy to kill people in large numbers, and the first thing a principle does — if it really is a principle — is to kill somebody.

      2. HotFlash

        Show me an economic philosophy that hasn’t resulted in a genocide or two and I’ll show you one that’s only existed on paper.

        Show me any, *any*, idea that hasn’t been used as a reason to kill? Lessee — God(/ess/s) or lack thereof, love, hate, sex, family, nation, weather, food, sport, water, dirt, hairstyles, totemic/pet animals, number of children, skin colour, eye colour, hand position while praying, bacon …

        We humans are just so good at abusing anything, including every good thing.

        1. Yves Smith Post author

          Ad hominem, which is a violation of site rules. And your starting argument was unpersuasive, since capitalism hath wrong a huge decline in male lifespans in post Soviet Russia, slavery, debtcropperdom, skull-breaking and hangings of early union organizers, and now an AIDS-level epidemic of opioid-related deaths in the US.

    2. HBE

      Maybe provide a constructive critique rather than string together a bunch of atrocities committed by dictators.

      Look I can do the same thing.

      Yep, from Vietnam to the Killing fields of iraq the rich history of capitalism continues to bear fruit. The United States is soon going to be enjoying a bumper crop.

      Helps me rationalize my own view to myself (just like yours), but doesn’t provide a whole lot of value as a comment, does it.

      Try this.
      Today, Capitalisms (it’s not actually capitalism) reliance on continuous growth has, and continues to lead to the further consolidation capital into fewer and fewer hands.

      This mindless pursuit of growth also leads to stagnant wages, inequality, and unemployment, as organizations exploit their workers (the very consumers underpinning their existence), to achieve short term growth.

      The result is they are in effect eating themselves alive in the medium term (who will they sell goods or services to when no one can afford them?), while causing immeasurable suffering in the present.

      This is one reason why our current system (corporate socialism) must be dismantled and replaced, and why it’s important alternatives be explored.

      Now you try Fred.

  11. bdy

    A welcome primer for a dialog that gets too little attention. The wrap-up is kinda unfair to Harvey. He notoriously keeps up with the structural challenges to his critique (such as his adherence to the labor theory of value) and manages them best by consistently returning to the critical and humanitarian roots of his position. These, I would argue, constitute an ontological core to MMT and Marxism that brokers a better discourse than the labor/capital struggle or endogenous money (which btw, Harvey has acknowledged in passing — furious search for the recent lecture where he admits in effect that sovereigns can spend without threat to solvency. I know it happened – called the wife to celebrate).

    To pull an example from the text, sometimes increasing sovereign deficits reduces unemployment and sometimes reducing wages reduces unemployment. See the current state of affairs. Bigger deficits kicked in by automatic stabilizers, stimulus and tax cuts; and shock-doctrine techno-jury-rigged job crapification, have worked together to claw workforce participation back to semi-sub-dignity. The key term here (for me, Harvey and Bill Mitchell, I prefer to assume) is “dignity.”

    Work and money are critical to any economic argument. That one might ontologically precede the other is the kind of chicken-egg pie fight that buries social movements at the source. Economics works when it focuses on outcomes and well being. Harvey has never ever lost that focus. Better to give him a “yes and…” “Yes, but…” might be warranted here (still listening). “No, and furthermore…” not so much.

  12. Andrew Watts

    Yet beneath this exchange of ideas looms an irreconcilable split over political economy’s center of gravity.

    Absolutely right. Behind the economic theories of Keynesianism was a carefully thought out political compromise which united liberal elements with the egalitarian left. This political consensus was just as important as any economic theory. This differs greatly from the focus of both Marxism and MMTers.

    As a consequence of this inversion, MMT lends greater acuity to economic analysis. Still more important, it radically expands the political horizon concerning what is possible under a modern money economy. Indeed, by eschewing physical gravitation as the origin and telos of politics, MMT keys the struggle for political power to a commodious public abstraction, while refusing one-sided denunciations of money as some inevitable fall from grace.

    This isn’t the biggest shortcoming among MMT thinkers. Although the belief in the neutrality of political power and economic theory is incredibly disturbing. They ignore the likely consequences of their theory when applied against any historical norm. Every government suffering from a political or economic crisis will seek to print* their way out of it. The extreme result of this action is to cause a liquidity crisis which brings about the destruction of the currency. (ie; continental dollars, confederate money, and the reichsmark.) It begs the question at what point will we simply be debasing our currency in efforts to grow the economy?

    It’s not that I am necessarily opposed to this course of action, nor do I have any ideological bias concerning it, but the negative effects this could have on the distribution of wealth is a source of trepidation.

    *You can argue that MMT doesn’t advocate printing money but I wouldn’t agree. In any given situation where the US Treasury starts issuing T-Bills that have to be purchased by the Fed is a compelling example of money printing.

    1. HotFlash

      This isn’t the biggest shortcoming among MMT thinkers. Although the belief in the neutrality of political power and economic theory is incredibly disturbing. They ignore the likely consequences of their theory when applied against any historical norm. Every government suffering from a political or economic crisis will seek to print* their way out of it.

      Well, you see, this is the really scary thing about MMT. It does not have a moral pinning; it, like gravity (sorry), just is. I have often feared how it would be if the critters in Congress, for instance, were to figure out that it really, really doesn’t matter how much money you spend, you can always print whatever more you want. Oh, wait! $$$billions for the military (congressional/industrial) complex. Trillions for the bank bailouts. Maybe they *have* figured it out? So, who is going to ride herd on this if the General Public is still thinking we need to raise taxes to fund stuff and believes all this deficit baloney?

      1. Rosario

        Sorry but how? You mean to say capital has no political and social dimension? I may be misreading, but that is what I’m seeing when you say it operates like gravity and beyond morals. I completely disagree with both statements.

        How does capital and its ability to operate as an economic metric have anything whatsoever to do with natural law? Sure we can create as much money as we want to do “things” but how those things happen via capital has nothing to do with any natural law that is properly understood. Also what motivates that money creation is sometimes political, sometimes quasi-rational/irrational, and often a combination of the two. Conflating the iron laws of nature to economics is a perennial problem with economists that often creates more issues then it can ever hope to solve. I have plenty of good things to say about MMT and largely agree with its application in our society to create practical solutions here and now, but it, like all other economic theories, including Marxism, is a 100% political and ideological machine that runs on the tools provided by science and natural law. It is not a product of it.

        1. HotFlash

          No, no, I mean *MMT* has no moral bias. I mean that adopting MMT will not lead automatically to prosperity, sustainability and dignity for all. It just works, like electricity, and you can make an electric light or you can make an electric chair. The electrons just don’t care what use you put them to, as long as you complete the circuit.

          In fact, I do believe that MMT is already well understood by the top 1% and .01% and in use by them for most immoral purposes. The money thus created is being used to enrich the them, while we are fed austerity, and they tell us that there is no alternative because taxes. Well, and markets.

          I’m pretty sure They know how money really works, they are like those Egyptian priests of old who came in after the temple closed and appropriated the offerings while solemnly assuring the faithful that the Gods required the food to keep ensuring the harvest.

          1. washunate

            Well said, I wonder if any MMT advocate will dispute this? The power structure not only knows about MMT, it has used it to implement extreme concentration of wealth and power for decades.

              1. washunate

                I’m a little confused if your comment is in response to mine. The “they” in your comment was not referring to politicians knowing that governments can print currency units. Of course politicians know that; their budgets depend upon it, especially in the US context.

                Rather, I was talking about MMT advocates claiming that politicians don’t know they can print currency units when the evidence suggests such a claim is bollocks. MMT advocacy has created this fantasy world where if people only knew how money works, things would be different.

                Whether said out of ignorance or purposeful obfuscation doesn’t really matter. It’s an untrue claim, plain and simple, and the unwillingness of MMT to address even the most basic challenges suggests a weak intellectual framework, perhaps even an embarrassment that they have been called out on their claim and don’t know how to acknowledge that while saving face.

                Or to say it differently, taxing the rich and ending the drug war and implementing universal healthcare and closing down global military bases and so forth aren’t actions of austerity. They are perfectly sensible things to do – things about which MMT is irrelevant in addressing.

      2. vteodorescu

        There is always the resources constraint. You can print money to bring on resources up to capacity (at the moment around 65-70% utilized). Once you hit 100%, no amount of printing will allow you to do any extra work, and inflation and possibly hyperinflation will occur.

        All the erroneous discussions about printing and inflation are analogous to someone who says: do not touch the gas pedal in a car, otherwise it will hit 100 miles per hour. The obvious answer is: press the gas pedal only until the speedo gets to 50, then do not press any more. To money printing, this says: print money until the resources are fully employed (labour and machinery) and then do not print anymore. Simple.

        1. different clue

          Your comment reminds me of this quote from Thomas Edison over the matter of the Federal Government deciding to sell bonds to raise money to pay for building a hydroelectric dam at Mussel Shoals. Here is what Edison said.

          “It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency.
          Both are promises to pay but one fattens the usurers and the other helps the people.”

          If the MMT idea of Issuing The Money to pay for a particular thing were handled with the directed focus and precision here implied by Thomas Edison, then the MMTists could be trusted to use the Sovereign Money Issuing Power to just within, and never beyond, the limits of the potentially usable but currently unused potential of the thing-making stuff-doing economy.

          But if the MMTists decide that the Power to Issue the Sovereign Currency is a magic money machine, then they will degrade their Modern Monetary Theory to so much Magical Monetary Thinking. They will emit an infinite number of Sovereign Money Units, leading each Sovereign Money Unit to approach infinitely close to zero in value. The MMTists will destroy everything their infinitely issued money touches and the dollar will become the next zimbuck.

          Can the MMTists be trusted to have better sense?

        2. Neil Wilson

          It always helps if you look at the horse from the right end.

          Let’s stop worrying about settlement. That just happens by a wave of the hand. The state can always settle.

          What you need to start worrying about is what there is to *buy* and what price you’re prepared to pay for it.

          Once you run out of things worth buying at a price worth paying, the spending automatically stops.

          The political debate then moves onto actual stuff, what it is currently being used for, what the proposed use is, and what the alternatives are.

          At that point it is obvious that taxing the rich will not improve, say, medical care because there is a supply shortage of medical staff – so you can’t buy any more anyway.

          Then you have to start asking if it is right that rich people can reserve scarce medical staff for their own purposes just because they have money, or if medical staff should be allocated based upon need, not ability to pay.

      3. vteodorescu

        And taxes do fund the machinery of government. Taxes do not fund government spending into the economy.

    2. David Barrera

      Andrew Watts,

      You raise some very good points. Under the contemporary political and power conjuncture MMT would be disastrous. MMT possess many virtues though . One of them is its potential for banks and bankers curtailment, which is a good thing in terms of “financial costs” reduction and ethical grounds. MMT has very good things

      1. Andrew Watts

        I’m not discounting any of the virtues of MMT. I view this kind of monetary policy as a means of supporting fiscal policy without contracting the money supply.

        Although I’d be fairly happy to see increased corporate taxation, a wealth tax, increased capital gains taxes, and/or other means of imposing high levels of confiscatory taxation on the rich. For no other reason than to be a vicious socialist and to curtail market speculation.

    3. bob

      “Every government suffering from a political or economic crisis will seek to print* their way out of it.”

      Print what? Politics and economics?

      That sentence, it’s follow on *reasoning*, lack of proof and complete hand wave is boilerplate straw. Right wing radio reasoning*.

      “yes, some people believe that the world is round. These people will always and everywhere fall off the earth if the theory is ever tested.”

      *there is no reasoning, which you may or may not agree with, but the earth is flat.

  13. Lambert Strether

    I think this is the heart of the matter*:

    Nonetheless, I wish to risk articulating outright the underlying rift that cleaves MMT and Marxism. Marxism attributes the greatest degree of being to immediate material relations and imagines monetary abstraction as a necessary diminishment and volatilization of said relations.** By contrast, MMT treats remote obligations to a centralized currency issuer as ontologically prior to any decentered association and sees monetary abstraction as a means to at once socialize and enlarge relations of production and distribution. Hence [A] Marxism assumes that money is a private, alienating, and crisis-ridden exchange relationship that ought to be overcome. Yet [B] MMT holds money to be a boundless public utility that, while by no means untroubled, is well-equipped to actualize radical collectivist ends.

    I find myself agreeing with the MMTers ([B]) on this one, though would not a Hegelian-inflected MMTer — surely there is one? — regard [B] as the negation/subsumption of [A]? These claims can, after all, be simultaneously opposed and deeply intertwingled…

    * And while “gravity” is the kind of bullshit tell I love, I’m not sure whether making that tell central clarifies or confuses.

    ** But if you look at the, er, material reality of people’s lives, like buying a coffee at MacDonalds (vague hat tip in Chris Arnade’s direction) you see that material reality and monetary “abstraction” are intimately related in time and space. And then we can have a discussion about why McDonald’s coffee is material and money is abstract.

    1. hemeantwell

      I think that you’ve found a good focus, Lambert.

      Marxism assumes that money is a private, alienating, and crisis-ridden exchange relationship that ought to be overcome.

      I think this is going very wrong. Money in itself is not alienating. The writer has missed the overwhelming stress in Marxist theory on historical context, i.e. that money in feudal economy functions differently than in a capitalist economy. Alienation under capitalism has its locus in production, wherein surplus value is extracted. Alienation cannot be boiled down to the sale of labor power for a wage. The sale only confirms a prior alienation that is based in the laborer having to sell their agency to the capitalist who then, as things develop, turn them into an appendage to a machine. When Adorno would attack the exchange principle, he wasn’t just talking about money, he was talking about an imposed system of abstraction that had expropriated labor at its core. I don’t know if MMT has much to say about this. And, what this means is that the McDonald’s problem isn’t the real problem. People can come up with a system of exchange involving money that has nothing to do with alienated labor.

      What MMT does have much to say about is determining what drives production. From what I’ve seen, or at least chosen to highlight in what I’ve seen, MMT is very input-output oriented in a material, what stuff do we need to produce stuff kind of way. I’ve liked that emphasis, it reminds me of the Soviet interest in linear programming and seems very compatible with getting vampires out of the way. But instead of saying we need 10 x + 10 y to produce 10z so let’s make that happen by “command,” MMT wants to have a state that uses money flows to bring this about. It seems that MMT is quite compatible with a redistributionist, state-organized capitalism in which surplus extraction — aka labor getting squeezed as much as possible — occurs.

      The gravity metaphor is obscurantist here.

      1. cnchal

        . . . Alienation under capitalism has its locus in production, wherein surplus value is extracted.

        That’s where value is created. It’s the unbalanced sharing of the surplus value that is alienating.

    2. Left in Wisconsin

      Nonetheless, I wish to risk articulating outright the underlying rift that cleaves MMT and Marxism. Marxism attributes the greatest degree of being to immediate material relations and imagines monetary abstraction as a necessary diminishment and volatilization of said relations. By contrast, MMT treats remote obligations to a centralized currency issuer as ontologically prior to any decentered association and sees monetary abstraction as a means to at once socialize and enlarge relations of production and distribution. Hence Marxism assumes that money is a private, alienating, and crisis-ridden exchange relationship that ought to be overcome. Yet MMT holds money to be a boundless public utility that, while by no means untroubled, is well-equipped to actualize radical collectivist ends.

      I guess this is the key paragraph but I’m not sure I buy the fundamental premise that this is some deep conflict.

      I would argue that Marxism at this point is primarily a set of principles (including about material relations being what matters) that continue to prove useful in understanding various aspects of capitalism. On the other hand, MMT (again, to me) is basically three relatively recent economic discoveries that contravene conventional economic thinking (fiat currency issuers can’t go broke, money is created mostly by banks, taxes don’t fund government spending), the implications of which we are only barely beginning to understand. The author seems to think that because money in some sense precedes production, that invalidates the primacy of materiality? It seems to me all MMT is saying is that it turns out money has real properties that were previously obscured and it makes sense to take advantage of those in constructing a better society. It doesn’t (I hope) say that therefore money is all that matters. (I think Marx knew a little about the money properties of capital.)

      I guess to the extent there is some fundamental disagreement, it would be over decommodification, which to an MMT’er would foreclose possible socially useful governing policies. But I have talked to a lot of Marxists over the years and have never gotten really consistent answers about the centrality of decommodification either in the communist utopia or in the struggle to get there. And to me, given the lack of currently viable playbook, there is no reason for dogmatism on this issue. As some will know, I am a big believer in paying wages for care work, including parenting. OTOH, I absolutely believe most government services should be provided without charge, which ought to eventually lead to a certain degree of decommodification.

      1. Paper Mac

        I think “ontologically” is being used so loosely here that it’s really difficult to say what it’s supposed to mean. MMT and Marxism don’t disagree about what kinds of things there are. That MMT is interested primarily in what Marx called “fictitious capital” doesn’t mean that MMT views credit or financial capital as ontologically prior to material relations at all- in fact most MMTers are quite clear that money/credit is historically (and therefore ontologically) posterior to particular material relations (agricultural states) which give rise to it. IIRC Stephanie Kelton has actually been quite explicit that MMT lacks an “origin story” about credit-money, and offered a sort of rough suggestion that it came out of tokens being used to represent feudal obligations as a stand-in. In other words, MMT doesn’t really care about the ontological status of money, nor does it need to in order to offer its analysis, and there’s no deep conflict with Marxist materialism.

        1. David Barrera

          “I think “ontologically” is being used so loosely here that it’s really difficult to say what it’s supposed to mean”

          Yes, it is

          “IIRC Stephanie Kelton has actually been quite explicit that MMT lacks an “origin story” about credit-money, and offered a sort of rough suggestion that it came out of tokens being used to represent feudal obligations as a stand-in. In other words, MMT doesn’t really care about the ontological status of money, …”

          No. Incorrect. Read for example Stephanie Bell-Kelton’s article quoted here by Ferguson. All across the article there are plenty of direct or indirect suggestions as to she has found an origin and the original substance-in the sense of an “ontological essence”- immanent in money which has persisted through history. The indirect suggestions are made mainly through other authors on footnotes when referring to economies when there was not the presence and action of a developed State-therefore not fiat money. She for sure seems to feel more comfortable on this issue under the modern state scenario. Nevertheless,I would like Ferguson and Kelton to define ontology. Some contemporary coexistentialists do not consider ontological entities and their metaphysics rests on “co-being” (natural world, human beings and their cultural products). In this latter case these thinkers do not believe or pursue a search for origin and perdurance (not a good fit for Kelton’s outline). On the other hand, the heideggerian distinction between ontology and Dasein could not find a place here either. Maybe a kantian insoluble subjectivity with the sublimation of infinitude in the money form…. Ferguson and Kelton need to clarify

          1. Paper Mac

            I may indeed be incorrect about Kelton- I only remember the talk I am referring to vaguely, and it could well have been another speaker. In any case, if Kelton is offering some kind of account of a sempiternal monetary essence, she is quite clearly not representative of MMT advocates as a whole, who by and large defer to historico-anthropological accounts like those of Michael Hudson. It would then seem that it is necessary to choose two accounts which are notably unusual within their respective traditions (Kelton and Harvey) in order to produce the claim of ontological difference between the traditions.

                1. skippy

                  Understand your perspective, but, I still question the term wrt its context, as well, as the inference about two limited distinctions – compounding the term in question.

                  Amends Paper Mac, but I see two distinct characteristics of human interaction being or forced to occupy the same space. If you get my drift.

            1. David Barrera

              There is good work done by a few economists which build within the field of Economics on the heideggerian ontico/Dasein contribution (I had a typo above and I meant the ontical, not ontological,and Dasein distinction). Of course, they are widely ignored

      2. PhilJoMar

        I like your comment in general but I think using the word decommodification is a bit of “fetish” (!) word when all we are talking about is workers only having their labour power to sell in a completely adverse relationship of power. Certain human activities that all humans would do if they didn’t have to sell their labour – such as gardening and growing food, making clothes, providing communal labour for housebuilding etc. – become part of market relationships under capitalism. Under a different system the absolute compulsion to sell one’s labour power would be missing and so people would regain autonomy by filling their time doing self-directed work with only nature as a compulsive force. So govt work even if its output was offered for free would still be commodified as it would still be part of the diminishing of human possibilities in light of govt workers having to do the same thing day after day and those consuming this work expecting the same daily greeting, the same forced smile, the same punctuality, same same same…
        I know this is simplified but any communist utopia (not sure why these words must always be used in this instance) might be very mundane, which to me would be very, very good because the kind of glossy capitalist utopia (a use of utopia much more urgent and actually applicable) on offer right now is about as delusional as humanity’s old beliefs in magic and reading entrails.

  14. John

    Such intellectual self-gratification, as this article and much of the commentary represents, is of no use to people. Stop this discourse and formulate real action please

    1. Disturbed Voter

      Politics and economy can only be separated as schizophrenia. And power can only be ignored in political economy by the naive.

      What is the basis of power? Consent of the governed. As long as people consent, the status quo will continue. Continuing the status quo is the fondest goal of the Elite. So the Elite will stop at nothing to obtain the consent of the governed … but not honestly of course. Honesty would result in a new power distribution.

      Let there be honesty, because the MSM which is the voice of the Elite, is ignored. Let the people consider all voices and pay attention to the honest ones. When the people understand their own best interests, the system will change. But not before then. Hence people continue to vote against their best interests.

      Change can happen, and it need not be violent.

    2. washunate

      That was my initial instinct, too. What this demonstrates most vocally is the disconnect of our entire intellectual class from what is happening in the world, outside the heads of us nerds.

      I guess I wouldn’t be quite so harsh. This is what they know how to do. And their professional reputation is tied up in the claim that MMT is a radical new way of thinking rather than the guiding principle of current federal budgeting.

      One thing that really intrigued me, if we are going to get into this kind of discourse, is why the author fails to define money. It’s the central term to his argument yet doesn’t address it. I find the MMT notion that money (as in, people’s time) is public to be the root justification for the neoconlib drive for authoritarianism. Yet the author thinks (or wants others to think) that he opposes the prevailing power structure.

  15. HotFlash

    OK, John, so help me out here. What do you propose? I am no theoretician, I am trying to figure out how to make free and fair economics work in (a/any/this) society.

    For instance, I think coops are pretty good, I belong to 7 of them and am a regular patron of another two (workers’ coops). They have different means, but the point is that the workers/shoppers/producers/listeners/whatever are co-owners. Hurray!!! And well, I have about the same influence over the operation of the coop as I do of, say, ComCast. Yes I get to vote for directors, but who are these guys? Never heard of them. Vote ’em in for 3 years and what do I hear back? Crickets? Do I vote for them again? No clue.

    That’s one coop, another uses volunteer labour and put my friend, who had a business in the same line, out of her regular for-profit business since as a non-profit charity they could legally use volunteer (ie free, aka slave) labour, which she could not legally do. How does this help society? Really, I want to know.

    Your assignment, if you chose to accept it: Pls suggest some real action, ideally some that is already tested and found workable.

    1. washunate

      I agree, it’s important to have solutions, and I’m very disappointed John didn’t respond. That was a pretty inflammatory drive by comment there.

      But having said that, there’s a certain rhetorical and logical underhandedness to requiring people pointing out problems to also have solutions. The burden of proof is on the person making a claim, not the person questioning its worth. Moreover, specific to economics generally and MMT in particular, there is an especially high volume of mismatch between grandiose claims made to solve big problems and little practical evidence and argumentation for how it would actually work or respect for alternative and dissenting voices. That’s all meta beyond John’s comment, but that’s basically what these big intellectual disputes are anyway. Abstraction upon abstraction that we aren’t actually talking about the areas of legitimate divergence of personal preferences.

      Because here’s the thing: in a nutshell, we know what works in terms of policy. The New Deal era demonstrated unequivocally that a blend of social insurance, direct employment, environmental sustainability, financial regulation, and so forth are an effective way to organize political economy. That’s what the post war period ever since has been about – a counter revolt by the elites who can’t stand the masses having their own agency and free time. Do we want a largely egalitarian society with limited government and universal social programs, or do we want a highly unequal society with a large government presence and lots of indignity and insecurity?

      It doesn’t take a complex policy to address the drug war, for example. It just requires the stroke of a pen to deschedule recreational drugs and defund the drug warriors.

      1. Left in Wisconsin

        we know what works in terms of policy. The New Deal era demonstrated unequivocally that a blend of social insurance, direct employment, environmental sustainability, financial regulation, and so forth are an effective way to organize political economy

        I’ll spare you my “we” speech and just note that there was serious opposition to every aspect of the New Deal from big business (+ political representatives + economists) before, during, and after. So while I might agree with you that the data suggests the New Deal was good public policy, that was certainly never a consensus position. Stigler was claiming in 1946 that no serious economist supported the minimum wage. In every downturn in the 1950s, prominent public voices were claiming that wages were too high, the gov’t was too big. And all it took was some oil-driven inflation for the big cannons to be turned on us plebes.

        Do we want a largely egalitarian society with limited government and universal social programs, or do we want a highly unequal society with a large government presence and lots of indignity and insecurity?

        Are you positing these as the only two choices “we” have? If so, you are mistaken. The vast majority of what government does is at the request of and to the benefit of big business. Limited government is an oxymoron (and a political slogan intended to dupe us plebes into thinking gov’t works differently that it does). If we are thinking binary, our two choices are good government or lousy government.

        1. washunate

          This is what I’m talking about. Yes, we can squabble about details all we want, and there are always better ways of doing things. And who is included in and excluded from “we”, from the social contract, changes over time and is its own important source of discourse and progress.

          But come on, the Social Security Act is basically the most politically popular and economically successful policy initiative in the history of government. We have had tremendous success in expanding it over time to be more inclusive. Meanwhile, financial consolidation is widely despised, and most people love reducing the workweek and work day to 5 days and 8 hours (and would love to work less if we continued in the New Deal tradition of less time in formal employment).

          I usually agree with you, but I don’t follow your point here at all. MMT proposals have much less evidentiary history than the social programs and financial regulations of the 20th century.

          As for the second part, yes. We cannot address inequality without reducing the power of government because public policy itself is responsible for so much of the suffering and oppression and waste in our system. Limited government is not an oxymoron. It is the understanding that individual liberty and collective action must be blended together. One without the other leads to tremendous – and needless – suffering. One of the major defects I have noted for an extended period of time in MMT advocacy is the ideological belief that more is always better. There is very little proactive interest in critiquing the oppressive parts of government, and there is quite a bit of pushback when someone offers an affirmative critique of government being too powerful.

      2. JTFaraday

        “in a nutshell, we know what works in terms of policy. The New Deal era demonstrated unequivocally that a blend of social insurance, direct employment… are an effective way to organize political economy. That’s what the post war period ever since has been about – a counter revolt by the elites who can’t stand the masses having their own agency and free time.”

        I know many don’t necessarily agree with this, but I actually think that the masses had precious little agency and free time under the New Deal, maybe especially free time. I think a fair minority of people today, most of them men, are really into the freedom from supervised labor that finance affords them. Call them traders, or whatever.

        To me they seem both aware that the financialization that has benefited them is hollowing out the real economy upon which it was once based, and also serve as a severe stumbling block to reanimating that economy because they’re engaged in all kinds of anti-Keynesian Austrian libertarian rationalization and intellectual hogwash.

        But I understand why they keep trying to rationalize their possibly unsustainable good thing. I’d like it better if they would just admit that their real issue is that when it comes to holding a job back in the real economy, they would just “prefer not to.”

        1. JTFaraday

          And not to put too fine a point on it, but THIS is the “nanny state” that was bailed out by the Fed.

        2. washunate

          Two of the major parts of the New Deal were reducing the time people spent working (the “weekend” and the 8 hour work day were major union victories) and payments to people not working (“Social Security”). These were highly successful, both the policy merits and the political viability. Today, most people (not all) would like to continue the trend with better social insurance coverage and a shorter work week/more vacation/etc.

    2. Paul

      Interesting. I suppose there are good and bad coops but may be a lot more potential for “good” compared to a capitalist enterprise.

  16. flora

    Oh, yonks ago, I took a college course in Marxism , a combined offering of the Philosophy Dept. and the Biz school. Englels’ theory of historical materialism made sense as an alternative to the ‘great man’ theory of history. Marx theories of economics were interesting. The USSR, however, seem to have made it a religion, discounting any scientific theory that could in any way be used to refute Marx’s theory of historical inevitability. This is no fault of Marx. Marx was not a communist.
    It’s troublesome to think capitalism (which I quite like in small ‘c’ version) is succumbing to the same temptation to reify what ought to be a rational economic analysis into something quazi-religious.
    Capitalism’s success over feudalism was based on it’s real-world analysis of conditions and what worked.

    Thanks for this post.

    1. flora

      adding: and by capitalism reifying its arguments I mean the current neoliberal discourse that assumes everyone is an “economic man”. “Economic man” does not exist outside the hothouse imaginings of academia, whose misbegotten treatises are uses to justify the real-world destructions of real people. The results are Trump, and Brexit, and Marie Pen, and on.

      1. flora

        shorter: Kant’s catagorical imperative
        “Act only according to that maxim whereby you can, at the same time, will that it should become a universal law.”

        If the current winners of the current capitalism system found themselves, instead, the losers would they still champion “economic man” economic theory?

      2. skippy

        Freud basically outed himself as a mythologist in a latter work, more creative writing class high jinks which enables the upper strata activities imo.

        skippy… how to break the inevitable meme epicycle… with attendant bio-political backing…

    1. Grebo

      Unfortunately he doesn’t understand MMT and erects a straw man (MMT insists the government have a monopoly on means of exchange) then uses failures of the gold standard as examples of why MMT is wrong (!). I didn’t plough through the whole thing though, maybe it gets better.

      1. washunate

        On the contrary, failure of the gold standard is one of the key flaws in MMT advocacy. Wray, Mosler, and others have described the key insight of modern money as being that of a choice among different kinds of buffer stocks to serve as price anchors (wheat, sheep, gold, silver, unemployment, full employment, etc).

        They say that full employment is preferable to a gold standard or a reserve army of the unemployed. Which is true in so far as it goes.

        But they refuse to address criticism that the main problem is not the unique badness of gold but rather the more general problem that buffer stocks don’t work. In just the last century in the US, we have had four different buffer stocks*, and they have all failed to maintain price stability, precisely because at those moments when the buffer stock would kick in, politicians change the rules. No buffer stock, however cleverly designed, survives sustained contact with reality. The monetary system is subordinate to the overall policy desires of the state. It is not some independent technical entity. Money is a much bigger concept than just the national currency units emitted by the state.

        *Gold standard failed in the 1930s, then again in the collapse of the London gold pool in the late 1960s. Silver failed in the 1960s. Copper failed in the 1980s. And most recently, NAIRU (unemployment) has failed spectacularly to maintain price stability over the past three decades.

  17. Rosario

    Good article, and I think it is a fair critique of Harvey on the technical side. Though as I thought I saw posted above, I always see Harvey as a Marxist Humanist (or whatever) first and a economic theorist somewhere down the list (if at all).

    Scott’s point here:

    Yet MMT holds money to be a boundless public utility that, while by no means untroubled, is well-equipped to actualize radical collectivist ends.

    The above statement ironically describes my major hangup with MMT. What is said is terribly heavy while being presented as “no duh”. Sure it has boundless potential as a public utility. The problem is setting the system up to make that work. All the work is political and social engineering that presents the same set of problems that every ideology before it has needed to deal with.

    How do we democratically control capital? Sorry the Fed in any of its manifestations up to now does not count for me. Prez appointments and technocrat committees are a far cry from democracy in my book (smells a lot like the Soviet Union). Hell, I’m not even a fan of Republics WRT the people’s control over their government. With the current Fed there is just too much room for corruption and crystal ball BS as post 2007 has shown.

    How does this system interpret internationally without a single global governing body? Even assuming capital is actually democratically controlled are we still operating as a planet of nation-states, and how will this system not be abused internationally (assuming it operates smoothly intranationally). Much of the power of US currency rides on military power and the history of its use to control markets internationally. What is to say that one country’s MMT is another country’s “free market” (i.e. resource colony) nightmare?

    MMT (and Marxism for that matter) to date has not dealt with ecology well IMO. Any economic theory at this juncture in history that does not tackle the problem of growth head on is lacking. We are going to need to find a way to prosper on this planet without cannibalizing ourselves.

    Fundamentally, the work has to be done to build healthy democratic structures within each nation and internationally, but capital is often at the fore undermining that. So that is the pickle. How do we simultaneously engage with capital’s infinite capacity for revolutionary change while simultaneously dealing with its infinite capacity to undermine democratic power?

    1. skippy

      Should we start with calling “Capital” by its historical nomenclature in act…. authority above the unwashed status – ?????

  18. Watt4Bob

    The following is an excerpt from one of my posts to Firedoglake, June 2014 in it, I believe I attempt to focus on the fact that the “ontological cleavage” the author describes is a result of the political game played, and won by the rich and powerful who by virtue of ‘winning’ are allowed to define the “macro-economic order.

    Everybody now just has to make up their mind. Is money money or
    isn’t money money. Everybody who earns it and spends it every day
    in order to live knows that money is money, anybody who votes it
    to be gathered in as taxes knows money is not money. That is what
    makes everybody go crazy.

    -Gertrude Stein – All About Money

    As far as I can tell, about 1% of us believe that money is not money, and the rest of us believe that money is money.

    Most of us believe that money is money because as Gertrude Stein said:

    Everybody who earns it and spends it every day in order to live knows that money is money…

    So here’s the problem: the 1% of the people, the ones who believe that money is not money, are in charge of everything.

    It’s not natural that so few people should be in charge of so much, and that they should be in charge of ‘everything’ is truly crazy. (Please excuse the slight digression)

    The people who are in charge of everything believe that it’s right, proper, indeed ‘natural’ that they be in charge of everything because they believe that no one could do as good a job of being in charge of everything because they think they are smarter than everybody else.

    The reason that the 1% of people believe they are smarter than everybody else is rooted largely in what they believe is their self-evident, superior understanding of money; that is to say, the understanding that money is not money.

    The trouble is, the difference between the 1%’s understanding of money, and the common man’s understanding of money is not evidence of the 1%’s superior intellect, so much as of their lack of a moral compass and their ability to rationalize the depraved indifference they show to their fellow man.

    So, to sum up my thoughts on todays post;

    Ontology is embarrassing. It is embarrassing because it announces plainly what is uncouth to admit in ordinary discourse. Yet it is especially embarrassing because it means exposing the unexamined desires that drive everyday discursive struggles. For these reasons, ontological claims are often met with skepticism, disavowal, or scorn.

    IMHO, it should be obvious that the question is not about the subtle differences between Marx’s, or MMT’ers grasp of economic reality, it is about facing the fact that economic reality is a political question and most of us are not allowed to join the discourse due to the fact that our political system is now owned by the pathological rich.

    What’s embarrassing is not “ontology” per se, but the fact that most of us have no part in the discourse, we’re not at the table where the technical operations of our political economy are hammered out.

    Ontological claims are not met with skepticism, disavowal, or scorn, they are never considered at all because those who would make any of these “ontological claims are excluded from the discussion, violently if necessary.

    The author may as well be arguing about the number of angels able to dance on the head of a pin because both Marx and MMT are defined by the pathological rich as heresy, and thus outside the scope of this discourse.

    We can’t argue, we are not really arguing, until we gain access to the table, and for quite some time now, we’ve been excluded.

    That We the People have allowed this to happen is what is embarrassing.

  19. cnchal

    By Scott Ferguson, who holds a Ph.D. in Rhetoric and Film Studies from UC Berkeley . . .

    You have been punked.

    1. JTFaraday

      Well, I can’t fully evaluate this. but it does seem possible to me that Harvey functions with an effectively historical reading/ model rooted in early modernity (forward) that regards capital as the end result of primitive accumulation, accumulation by dispossession, and profit from market activity. This is a private sector bias, (even if it’s a state project). It might well be interesting indeed for someone of Harvey’s intellectual caliber to more fully take on state finance and contemporary state finance.

      I’m not sure that you’d ever get him to agree that state finance = socialist nirvana by definition, which many fiat money advocates seem to want to do. It seems to me that state finance is already fully integrated into core capitalist economies. On that note, it’s also possible that Marxists are invested in the failure of capitalism, not its bailout by state finance, which is what we’ve been seeing. So, perhaps there’s a bias towards looking at other things.

      Of course, it is just this bailout that makes it interesting territory for Marxist analysis. But Marxists don’t love the state, They’re not the Party of FDR.

  20. Steven Greenberg

    “MMT locates the center of macro-economic activity in an abstract legal rapport between the currency issuing center and the body politic that depends upon the currency to physically survive and thrive. On this model, the totality hangs on money’s governing center and unfolds as an interlocking cascade of mediation that conditions economic life as a whole. ”

    I think Ferguson hasn’t thought through the abstraction that any model is. By definition, a model abstraction leaves out detail to make analysis of the problem tractable. Any good modeler should always keep in mind what detail gets lost in the abstraction. The modeler should always be looking out for real life situations in which the lost detail becomes a first order issue rather than something that can be ignored. No model, MMT included, is a description of everything that can happen in every situation that can occur in real life.

  21. Paul

    Would have been helpful if the author defined MMT and Marxism from his perspective, especially given the wide variance among proponents of MMT.

  22. St Jacques

    Ferguson starts off by contrasting Marxism and MMT as incorrigible opponents but in reality sharing some sort of hidden ancestry that he is about to reveal to us. Hold your horses sir, this is a confusion of ontologies. Marxism is a body of theory which deals with the historically conditioned evolution of the entire political economy and all the social and material relations that embodies, not, as Ferguson later asserts, a theory of a politically constructed and defended financial system with a tendency towards destabilization; MMT is the analysis of the monetary system within contemporary political economies. From here all sorts of confusion arise. Let’s try to keep our feet firmly on the ground.

  23. marcel

    I would like to remind people that Warren Mosler, a hedgefund manager, has stated himself from the very start that his monetary theory, which is much more disclosure of the monetary practice at the FED,

    can go ‘either way, left or right’.

    FED (and Treasury) mechanics are simply the dials at the monetary system’s source, and should be regarded as such, and can be use to create money that end up either at banks, in a welfare system, a weapons arsenal, government expenditure and anything in between, and equally can destroy any money that comes her way ..

    In Marxist thought, creating money for a bloated military budget to advance a doctrine of Full Spectrum Dominance worldwide, must be considered a class war based in US ‘exceptionalism’.

    MMT does not so much frees one from that, MMT rather explains what is happening with the financing of such, post Nixon ’71 ..

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