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Money, the Shape of Law, MMT, and Aesthetics

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Yves here. Get a cup of coffee. This is a meaty  piece.

By Scott Ferguson Associate Professor at the University of South Florida. He is a Research Scholar at the Global Institute for Sustainable Prosperity, co-founder of the Modern Money Network: Humanities Division (@moneyontheleft; https://www.facebook.com/moneyontheleft/) and co-host of the Money on the Left podcast. Originally published at Arcade

Titled Declarations of Dependence: Money, Aesthetics, and the Politics of Care (University of Nebraska Press, July 2018) my recent book develops the insights of Modern Monetary Theory (MMT) for critical theory and aesthetics. While the modern Liberal imagination treats money as a finite, private and decentralized exchange instrument that seems incapable of serving all, MMT’s state or “chartalist” approach to political economy insists that money is an inalienable public utility that can always be mobilized to meet social and ecological needs. In Declarations, I trace the historical repression of chartalist ideas to the rise of modern Western metaphysics through the negation of the medieval Scholasticism of Thomas Aquinas. I uncover the impoverished social topology upon which both Liberal modernity and critical aesthetics have historically relied. Ultimately, I labor to redeem critical theory and aesthetics by recovering a more capacious social topology from the Thomist theology that modern Western philosophy supplanted.

Here, I would like to extend this project by complicating the Westphalian model of sovereignty, which MMT’s state theory of money presumes. My contention is not that international finance, supply chains, and NGOs somehow render the modern-nation state powerless or passé, as theorists of globalization regularly claim. Rather, I contend that the metaphysical suppositions behind modern Westphalian sovereignty obscure globalization’s interdependent legal architecture, while simultaneously naturalizing a politics of irresponsibility. In response, I argue, MMT would do well to return to a Thomistic topology of law and politics, which figures law as the center of global interdependence and governance as unavoidably answerable to all worldly forms.

That MMT sounds foreign to contemporary ears owes to the fact that it unwittingly conjures a whole topological and causal background, which modern Western metaphysics long ago rejected. During Europe’s High Middle Ages, however, a similar social topology became legible in the scholastic theology centered around the Dominican friar Thomas Aquinas.

Writing during the great political and economic expansion of the High Middle Ages, Thomas argued that Being takes the shape of a centralizing, inalienable, and inescapably interdependent cascade. While no doubt reliant upon the contiguous comings and goings of individual creatures and things, this cascade realizes the broad labor of Creation all at once via its entire mediating infrastructure. Emblematized by the miraculously inexhaustible transubstantiation of the Eucharist on disparate altars, Thomas’s metaphysics sought to make sense of the mystery of the late medieval period’s ballooning political economy and converging heterogenous cultures. What is more, his topology served as the basis for legal conceptions of the fiscal apparatus or treasury, what contemporary jurists from Bracton to Accursius referred to as the “most holy fisc.”

During the fourteenth and fifteenth centuries, however, Franciscan theologians such as Duns Scotus and William of Ockham and humanists from Petrarch to Erasmus challenged the Thomistic synthesis with a new metaphysics and a recognizably modern social topology. This metaphysical topos decentered Thomism’s boundless cascade, reconstituting the Christian God as an absolute and immediate willing power in a definitively contiguous world. In so doing, the Franciscans and humanists variously contracted Creation’s wide causal breadth into a contiguous and alienable “thisness,” which Scotus famously dubbed “haecceity.” As a consequence, this new topology reduced causality to a series of proximate relations and deemed anything like concurrent mediation at a distance either unnecessary, artificial, or impossible.

Over time, the topos of haecceity became the unquestioned metaphysical backdrop for an ascendant Westphalian modernity. It enabled influential Franciscans and humanists to reject Thomist visions of an incorruptible sacred fisc and to re-envision money as an alienable medium of exchange well before the likes of John Locke. It also gave rise to Reformation conceptions of the Almighty as an immediately willing God which, in turn, perpetuated destructive wars of religion and the rise of a Westphalian system of fiscally-strapped sovereign states.

The problem with modernity’s contracted haecceity metaphysics is that it grounds human relationality upon a primary unboundedness or non-relationality, which externalizes the question of relationality from the start. Beginning from this lethal premise, modern metaphysics thereby envisions the central challenge of collective belonging not as governing an always-already interdependent and bounded reality, but as finding means to unify ontologically disaggregated beings into some kind of coherent and legitimate whole. Far from natural, this seemingly primordial difficulty is metaphysically spurious, thoroughly modern, and exceedingly political.

Liberal money is the most salient expression of this fantasmatic non-relationality, and money appears non-relational because the modern metaphysics of haecceity has inscribed estrangement into the heart of law and politics. To put a finer point on it, this originary alienation weaves itself into how Western modernity figures the topological relation between law and politics. In the eyes of Westphalian modernity, or if one prefers, Jean Bodin or Thomas Hobbes, sovereignty is exclusive and primary, and law is an extension of sovereign power. Should law spill over sovereignty’s jurisdiction, it is characterized either as geopolitical domination, a compact between sovereign wills, or wishful thinking.

On my reading, such a topology turns the relationship between law and politics disastrously inside-out and the modern Liberal money form is the result. This modern view of law and politics casts money as a decentered global exchange relation for which no governing body is ultimately responsible. It exculpates modern governance from perpetual legal entanglements in what are characterized as external social and ecological problems.

I would like to recast this inside-out relation between law and politics from the vantage of the Thomist metaphysics that modern thought has rejected. Thomas’s understanding of law and politics is most discernable in his philosophy of “natural law.” In Thomism, natural law is mostly empty of positive precepts and commandments. Instead, natural law marks the ineludible riddle of social and material interdependence from the widest to the smallest scales. This riddle knows no outside. It assumes a tiered, heterogenous, and overlapping structure. But it traces no external bounds. Natural law, according to Thomas, is the basis for the various positive laws that organize a given social order. Yet, for Thomas, just like the natural law it realizes, positive law forever mediates the many from one, ex uno plura, rather than tenuously forging one from many, e pluribus unum.

Having predicated law in an ineluctable dependence, Thomas then characterizes the rapport between human governance and law via the scholastic method of analogy. He begins with the broader relation between God and what he calls “eternal law,” a kind of cosmic or supranatural interdependence that forms the mysterious basis of all order in the universe. Articulating this relationship, Thomas once again proves perplexing since, for him, God is both an infinite font of Creation and a legally bounded subject of His own created order. On Thomas’s reasoning, that is, God is the boundless and omnipresent center of Being’s continual Creation, not the absolute power or unbounded will characteristic of post-Reformation divinity. Yet at the same time, God’s infinitude is ineluctably restricted by eternal law’s own sublime interdependence. As a result, law appears simultaneously to proceed from God’s boundless creativity and to hold sway over Creation in ways that no divine agent can instantly dismantle. Therefore, God is nothing like an absolute will or power, Thomas concludes, precisely because the Divine remains forever indebted to the order to which divinity gives rise.

We discover a similarly paradoxical topology in Thomas’s theorization of the rapport between human governance and law. A governing institution is a site and source of social provisioning which, as every MMTer knows, must remain indebted to a particular society in the long run if that society is to continue to reproduce itself. To do so, a governing institution wields law’s infinite capacities to organize a certain scale of social and material creation. Yet Thomas argues that law as such always traces wider, narrower, and overlapping scales of interdependence than any particular governing institution can possibly oversee. Demarcated by neither territory nor sovereign will, these many scales of interdependence meet at Creation’s widest circumference and encircle each particular governing institution on all sides. It is therefore impossible for any governing institution to operate either before or outside law. Governing institutions can contest, suspend, or overturn specific instances of positive law. They may collapse in revolution or war. But, for Thomas, even states of exception and political chaos never fully circumvent the abiding quandary of social and material interdependence.

Today, I think it can equally be said that nothing escapes law’s interdependent causal horizon and charge. Law’s purview weds the present-day nation-state to cities, unemployed persons, and territorial resources as well as to other polities, stateless peoples, and the challenges of global climate change. Thomist legal and political philosophy makes these elementary connections freshly perceptible by folding the relationship between governance and law radically outside-in. At the same time, Thomas’s insistence that this legal relationality leans on a boundless center lifts the fiscal ceiling that presently prevents governing institutions from meeting social and ecological needs.

In this way, Thomism appears to both buttress MMT’s political economy and to problematize its still-unreflected attachments to the language of modern sovereignty. The resulting MMT-inspired approach to law and politics would neither subordinate jurisprudence to the problem of sovereignty nor pit universal beneficence against the evils of political and economic power. Instead, a Thomistic MMT would re-imagine the originary shape of law and turn the terms of political contestation irreversibly outside-in.

This essay is based on an oral presentation delivered at Law in Global Political Economy: Heterodoxy Now, a conference organized by the Institute for Global Law and Policy at Harvard University, June 2–3, 2018.

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44 comments

  1. JOHN v GLEASON

    ’tis a strange god which is bounded by its “own creation order”: not so odd that man is boundless in his attempt to justify his god. Otherwise, the article does give one a reason to reread Thomas Aquinas and John Locke.

    1. Newton Finn

      But does not the very concept of creation, the act of bringing into being that which is other than oneself, apart from oneself, indicate that if a god chose to create a universe (or many universes), then that god was inherently engaged in an act of self-limitation? While there is no satisfactory theological answer to the most powerful argument for atheism–namely, the existence of evil–unpacking the complex subject of creation, particularly the separation and autonomy which it (on some level, in some sense) necessarily entails, seems to yield viable ground for religious faith in the face of evil. By the way, don’t you love authors audacious enough to weave together subjects as diverse as Aquinas and MMT? The thought has struck me that the religious concept of creation by divinely sovereign decision (let there be light, and there was light) bears more than superficial similarity to the MMT view of fiat money springing into existence merely by a decision to spend made by a currency-sovereign government.

      1. Plenue

        “unpacking the complex subject of creation, particularly the separation and autonomy which it (on some level, in some sense) necessarily entails, seems to yield viable ground for religious faith in the face of evil”

        Does it? The igtheist stance is that all of this is so much poetic nonsense. We can’t even have a discussion about the existence or non-existence of God until someone can first provide a definition of ‘God’ that is even vaguely coherent. What does it even mean to say that there is a disembodied mind that exists outside the universe?

        “The thought has struck me that the religious concept of creation by divinely sovereign decision (let there be light, and there was light) bears more than superficial similarity to the MMT view of fiat money springing into existence merely by a decision to spend made by a currency-sovereign government.”

        Not really. Not more than how any other idea can be conjured up by the human mind. The core point of MMT, and one which lines up well with what we know of the origin and history of money, is that currency is a social construct, and any amount of it can be created at will so long as the society continues to accept it.

        MMT has accounts flows explained down to the penny. Theology has bad grammar and special pleading.

  2. Steve H.

    MEaty indeed. The intent to “redeem critical theory and aesthetics” puts the perspective into a postmodern subjectivist interpretation of the world, indicated by words like ‘famously’ which subtly inject attitudes into a piece which requires enough book larnin’ that the act of reading it successfully is impossible, as it requires one to be within the mind of the author to fully comprehend. Applied to the political realm, this leads to an authoritarian social structure with THE leader in charge. Like most paragraphs with ‘postmodern’ in them, what I just wrote may be bs.

    As far as I can tell, the most local politics is a back alley with a Chicago cop. In such circumstances the Great Chain of Being can best be summarized as a command structure. “You know what the chain of command is? It’s the chain I go get and beat you with ’til you understand who’s in ruttin’ command here.” From the playground to the God-King, it’s the nature of The individual to mediate cui bono, cui malo. The God-Kings generally accepted their sovereignty as cosmic, and it worked as long as they controlled a single choke point like a port. But intersecting with other adaptive cultures at larger scales caused issues, requiring adaptation to the external world, and degrading the internal viewpoint of the self being the sacred center. As Lear says, “when the thunder would not peace at my bidding,” things changed. Turchin has a model of cultural migration which has some explanatory power of the mechanics.

    The point being, this perspective still obfuscates with a notion of The State, when “Universal liberalism focuses on individuality and shared humanity and seeks to achieve a society in which every individual is equally able to access every right, freedom, and opportunity that our shared societies provide.” That quote is from the article “Identity Politics Does Not Continue the Work of the Civil Rights Movements.” This piece seems to assume that money comes from central authority only, when Bitcoin etal is the proof that money is getting an individual to accept what is offered as money. The taxation part of MMT must still be enforced by individuals, and carries the ethical choices of who decides what is taxed.

    I’ll bring in mine own aesthetic construct here. After trying to use Royal Academy techniques of scansion in a community theater and seeing pictures of the rehearsals that looked like interpretations of Dante, I came up with a two-hour tutorial that used

    Row, row, row your boat, Gently down the stream
    Merrily, merrily, merrily, merrily, Life is but a dream

    Note the words with weight (number of syllables) are adverbs, while the word with the most efficient substance is ‘but’ and reflects ‘boat’ initially. Scanning as two lines, both are overall irregular, with more than ten syllables. However, in both lines only the first half scans as irregular, each resolves after the caesura to regular iambic. The boat is not ‘the’ or ‘a’ boat, it is ‘your’ boat and tells you the poem is about You. However, the difference between ‘the’ stream and ‘a’ dream shifts from a definite to an indefinite state. And the underlying philosophy date to at least as far back as Calderon de la Barca, “Life Is A Dream” from 1635. In a disordered universe the paths are not defined, and it’s the how of what we do that creates the World we live in.

    1. footnote 4

      [A] natural consequence of the belief in “laws of nature” is that there can be no novelty in the future, for future can be calculated from the past. With differential equations, past decides the present (or vice versa) and present decides the future. …
      This understanding of “causality” should not be confounded with “mundane causality”, where, say, we punish a criminal on the grounds that he is the cause of a crime. “Mechanical causality”, or causality as understood in physics, is incompatible with and excludes mundane causality or human agency. …

      1. footnote 4

        Newton’s laws failed just because of the conceptual confusion arising from the Christian dogmatic belief in eternal laws of nature. …
        Newton needed the calculus for the formulation of his “laws” (the second “law” needs the derivative with respect to time) and was concerned that the calculus was not “perfect”. (How could the “eternal” laws of God be stated in an imperfect language?) He thought (on his theory of “fluxions”) that calculus (i.e., the time derivative) could be made “perfect” by making time “flow”. (His confusion is obvious, for while things may flow in time, it is meaningless to assert, as he did, that time itself flows.) Anyway, he rejected physical time (as measured by ordinary clocks) as imperfect and chose “mathematical” time (which, he asserted, “flows on without regard to anything external”). That is, to make the calculus “perfect” he made time metaphysical, or known only to God. Alas, physicists too need to know how to measure time in order to do physics! That is, Newton’s concern for perfection (of the laws of God) led to his failure to define a physical clock, and that was the cause of the failure of his physics.

        1. footnote 4

          The Christian theology in mathematics is what has complexified mathematics and made it difficult, as I have explained elsewhere, so eliminating it makes math easy. … As for science, given the massive empirical evidence against the belief in “laws of nature”, it is clear that this Christian dogma ought to be abandoned by science. Physics must be reformulated to allow room for living beings to create a bit of the future. Clearly, also, this requires that we abandon (mechanical) causality. http://ckraju.net/papers/Islam-and-Science.pdf

  3. Aleric

    Interesting parallels with Deleuze and Guttari’s Capitalism and Schizophrenia – it makes sense that they would have been familiar with Thomas. In particular, their image of the World as a ‘rhizome’ – a network of interconnecting elements, instead of an ‘arboriation’, a linear network of hierarchical elements fits into this discussion.

    Though I suspect they take Thomas a step further and make the elements of the Law (agents, institutions, impact produced by words..) internal elements of the network, instead of externally radiated and connecting principles. Perhaps reflecting a more skeptical attitude to Authority?

    It seems like the old may become new again, and I should add some Thomas to my reading list.

    1. Ultrapope

      I too was reminded of Capitalism and Schizophrenia, principally through the Thomist connection. Whereas Thomas sees a world of many-to-one, and the scholastics one-to-many, DG in my understanding see the world as many-to-many (hence the rhizome)

  4. Rob Urie

    Thomas Aquinas’ metaphysics come from Aristotle. Aquinas worked from a Latin translation of an Arabic translation from the original Greek.

    As Martin Heidegger argued, Western modernity is premised in Plato’s ontology as interpreted by Descartes.

    Descartes’ interpretation of Plato’s ontology informs capitalist economics.

    The temporal premises of this economics can be found in Plato’s Allegory of the Cave.

    1. blennylips

      > Descartes’ interpretation of Plato’s ontology informs capitalist economics.

      Yes. If we believed humans were also animals – a part of nature, how could we comfortably countenance Concentrated Animal Feeding Operations and the like.

      Convenient that animals are mere robots with no inner life.

      Morality and our lives with animals

      The endurance of this belief held the door wide open for the likes of Rene Descartes (1596-1650) and his construction of non-human animals as behaviouristic machines. The idea that animals are “other” to humans, that they do not share any of our fundamental cognitive abilities and that they merely react to stimuli outside them through habit, like machines, are all direct consequences of this line of thought.

      In turn this led to the argument that considerations of animal mentation and consciousness were irrelevant, and following the Aristotelian line of thought we, as superior beings, have the right to do with inferior beings whatever we choose.

      thanks, Rene!

  5. Chauncey Gardiner

    Maybe I am misinterpreting Ferguson’s post, but is there really a need for theological underpinnings in order for one to support an MMT system of money? I think not, although that may be a cognitive foundational need or stimulating intellectual exercise for some. As is evident from decades of deficit federal spending, including the most recent set of federal tax cuts for corporations and the already wealthy, we already have an MMT system. It’s just that it has been used to implement the values and priorities of a narrow segment of society and to perpetuate their influence and control through endless wars; predatory debt; co-option of law enforcement, media and ubiquitous surveillance; and various asset concentration schemes ranging from markets to monopolies.

    To me, a key is how to recapture representative political control of the monetary and financial system in order to implement priorities consistent with dominant values; specifically reducing military conflict; assuring the functionality of the payments system; constructing less ecologically damaging infrastructure, agribusiness and energy systems; wellness and healthcare; public education; and pushing the frontiers of science, medicine and engineering that improves the quality of lives. I am rather attached to the ideas embodied in the Constitution – including separation of church and state – as well as those of the humanists, the Enlightenment, and e pluribus unum, rather than relying on a few individuals to interpret divine will or otherwise dictate policies. But again, perhaps I am not fully comprehending or appreciating what Ferguson is saying here.

    1. footnote 4

      He is addressing the metaphysical roots of the assumptions that make non-relational money seem ‘natural’.

  6. NoOneInParticular

    In other words, Medicare for all now.

    As I read this article, I asked myself, for whom was it written? My guess is other academics who need to have their brains stuffed with two-bit words before they can consider any new idea. Maybe this just plants seeds in the minds of the tenured that will eventually sprout as a cultural shift. Maybe. But is there enough time left?

    1. Gary

      At first I thought, is this another of those sly fake papers popping up in academic journals lately? “Over time, the topos of Haecceity became the unquestioned metaphysical backdrop for an ascendant Westphalian modernity.” Originary? Contestation? Fantasmatic? Actually, I understood everything being said, but yikes, does he need an editor. Just sayin’.

        1. Lambert Strether

          The initial version of a simple idea is often couched in complex terms, because it’s genuinely difficult to fight through to the new. As you certainly should know, but have perhaps forgotten.

    2. Wandering Mind

      My thoughts, more or less. As someone who has taken pride in expressing myself clearly in the English language, this article strikes me as beyond pedantic. For example, WTF is this?

      The problem with modernity’s contracted haecceity metaphysics is that it grounds human relationality upon a primary unboundedness or non-relationality, which externalizes the question of relationality from the start. Beginning from this lethal premise, modern metaphysics thereby envisions the central challenge of collective belonging not as governing an always-already interdependent and bounded reality, but as finding means to unify ontologically disaggregated beings into some kind of coherent and legitimate whole. Far from natural, this seemingly primordial difficulty is metaphysically spurious, thoroughly modern, and exceedingly political.

      If you want to communicate with more than those confined to the academic backwater, then you have to speak English, man!

    3. Korual

      If all you want is Medicare For All, fine, but that’s only what other neoliberal countries have already got. The other possibilities mentioned by Chauncey above will indeed require that cultural shift. It’s easy to preach to the converted but in the long term the people who already think they are doing god’s work will need to be convinced.

  7. Watt4Bob

    If there is religiosity, there must be an underlying metaphysics, no?

    And we’ve been entertaining the notion that the behavior of adherents to neoliberal economic theory tends to share some of the same characteristics as religious zealotry.

    So, this idea that the dominance of an un-just and immoral economics might be facilitated by a false religion, based on a contrived and deeply flawed metaphysics answers a lot of questions, and suggests many more.

    The question that springs to my mind?

    Was this supplanting of Thomist metaphysics necessary in order to allow the individual to attempt serving both God and mammon?

    Or more accurately, to justify the abandoning of the notion of serving God, and by extension, your fellow man because that was the old fashioned metaphysics, and ‘adjusting‘ to the notion of serving mammon because it’s obvious, that activity is aligned with the new, and more ‘correct‘ metaphysics?

    The other question that comes to mind?

    Is this question of a new and an old metaphysics really describing a turning point in the perennial battle between good and evil?

    From that perspective, I’d say the issue isn’t that MMT is a ‘better’ idea. The issue is that MMT is the truth, and neoliberal economics is based on an all encompassing lie.

    You can have a good life following the ‘old’ ways, but if getting rich is your goal, you’ll find it easier going if you join the folks worshiping the golden calf.

  8. Oregoncharles

    Doesn’t fiat money, the foundation of MMT, date from about 1972, when Nixon took the US off the gold standard?

    Granted, Keynesian economics goes back further than that; it’s what I learned in college. But even it goes back only to the 20s.

    1. eg

      Fiats are much, much older than that, although you are correct that Nixon’s action ended the Bretton Woods postwar arrangements which established a de facto gold standard.

      1. Wukchumni

        Something has to be rare* enough to be commonly found, so as to be able to create desire, and somehow mother nature money was perfect all over the world, not necessarily in what we think of as money, but coveted nonetheless.

        Not everybody played along, it seems as if nobody gave a damn in pre 1492 USA but south of the border-certainly. And desired in Asia & Africa.

        Look, I get it, nobody wants to go back to limits, and fiat money as it exists now or in MMT guise, lacks limits, very much in line with the way we live life now, it’s something we all know is killing us & the planet, but we soldier on, with growth predicated upon fiat money fueling it.

        Nobody wants to go back to the gold standard, the only way it happens is if everything else fails.

        *I’ve seen around 900 to 1000 bears in my life, 2 fisher cats & 1 Sierra Nevada red fox. The former is rare, but common enough to make a market out of based on sightings, the other 2 animals are just too rare to do the same.

  9. flora

    “While the modern Liberal imagination treats money as a finite, private and decentralized exchange instrument that seems incapable of serving all [*1], MMT’s state or “chartalist” [*2] approach to political economy insists that money is an inalienable public utility that can always be mobilized to meet social and ecological needs.”

    I would suggest – and I am not an economist – that the authors premise is A=A rather than A=C, where C=B and A=B.

    Shorter (or as short as I can make my argument): The notion that “money” has an accepted value and can be disconnected from 1st state (physical) conditions is false. Where once gold served as a first state condition because everyone agreed gold=gold. I am not a goldbug or a bitcoin bug (heh), and I have no argument regarding why people accepted gold-gold . Now people accept dollars as the reserve currency and mark of value. This does not discredit the 1st state condition, imo. The dollar is bolstered by the US Military that can force countries to accept dollars and dollar valuation, imo. This is a 1st state condition. (And, imo, explains much of the military budget and military spending in the US.) Military might gives the dollar its accepted value. Military might is the 1st state condition bolstering the dollar as the world’s reserve currency. (As the British Empire’s military bolstered the £ Sterling during the military pre-eminence of the British Empire.)

    Keeping this comment short, I understand the MMT argument as a technical argument but disagree it can be disconnected from 1st state conditions, in this case ‘military might’. For example, would MMT work in the real world for a country that pegged its currency’s value to the dollar, or for a country with sovereign currency that is not the world reserve currency? I don’t think so. So I think the US MMT theory is depending on the unacknowledged 1st state condition that the dollar is a reserve currency, and that reserve currency status is “guaranteed” by the US military (that is the 1st state condition.)

    Aesthetics and theory and philosophy is only social science accretion on a physical phenomenon, imo. Shorter (for the IT readers); in this field aesthetic and theorty and philosophy are a a variation of AI. ;) I am not an economist.

    *1: similarly gold or or silver. E.g. a physical 1st state condition or 1st state physical (not metaphysical) entity. (The argument about the basis of agreed cross-country valuations being moot at this point.)

    *2: In macroeconomics, chartalism is a theory of money which argues that money originated with states’ attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with which to tokenize debt,[1] and that fiat currency has value in exchange because of sovereign power

    1. flora

      Adding: and so the question becomes, ‘why does the government choose to spend more on X and spend less on Y.’ That is a political choice and a political question, of course.

      1. Watt4Bob

        Well, there you go.

        You’ve gone and asked the forbidden question.

        How is it that people who read this site feel so free to ask the forbidden questions?

      2. Watt4Bob

        I didn’t mean to be flip in my first comment, I was just impressed that your question hit the target so precisely.

        My take on the post, and your question is this;

        Chartalism hews more closely to what you’ve called the first state reality, and by doing so, stays more or less in harmony with the natural world, and some would say, God’s intent.

        This situation displeases clever men with intent toward riches and political dominance, and so they have over time supplanted chartalism with a new more ‘synthetic’ theory that projects upon’God’ all of man’s weaknesses, jealousy, anger, and vengefulness etc.

        The ‘new’ theory of everything, due to the fact that it is ‘wrong’ (it doesn’t conform to the first state, as you put it.) is an unstable base upon which to build, because among other things, it eventually allows for, and excuses the misappropriation of the governments power to spend, and thus, some would say, flies in the face of God’s intent.

        So my more thoughtful answer to your question is that government spends more money on X and less on Y because clever men, long ago highjacked the theoretical underpinnings of our system to allow for selfish manipulation of money for personal profit as opposed to providing for the common good.

    2. eg

      The US exercises “exorbitant privilege” by virtue of the use of USD as the global reserve currency, and this is likely due to US. military dominance, as you suggest.

      You are also correct that pegging a currency renders such a country currency constrained.

      However, any sovereign which exercises monopoly issuance of its own currency, and does NOT peg it (UK, Canada, Australia, Japan, etc) still enjoys the policy space described by MMT by virtue of its ability to purchase everything available for sale denominated in the currency over which it exercises monopoly issuance. The US is not unique in this regard.

    3. Mel

      The MMT creation myth (plus some ideas from Graeber) says that the state created impersonal markets so as to be supplied without having to do all the production itself. It created money to spend in the impersonal markets, and it created taxation so that people would take the money seriously. People sell their goods in The Market, when they don’t sell directly to the state, to get the money they need to pay their taxes. So the whole range of domestic products gets brought to The Market. (This, I guess, we already agree on.)
      At the bitter end, taxpaying is enforced by violence; domestically by the police, internationally by the military.
      Regarding pegs and reserve currency, the actual position is that a state’s money is a function of its sovereignty. A state can get its money used wherever it can get its laws enforced. If, or where, it can’t get its laws enforced, then life becomes complicated. Ditto if the laws have become complicated just by themselves.

  10. Craig Dempsey

    I am sorry Ferguson’s post is so burdened with jargon, but after looking up several terms, I think he has half of a great idea. After all, he addresses ecology at the start and global climate change near the end of his post. I believe Ferguson is correct in his censure of radical individualism and the libertarian disasters that flow from it in neo-liberalism. I think the problem is his advocacy for going back to a God-centered metaphysics rather than forward to a science-centered metaphysics. We need a new natural law based on scientific evidence, not an old natural law based on revealed religion. Environmentalism is the discovery that there really is a great chain of being, and that humanity has been behaving like the weakest link. The October 2018 Scientific American has a Special Report titled “What’s Wrong with Science–And How to Fix It,” so no one is immune to weakest link problems!

    In defense of God, let me point out that authors such as David Graeber (Debt: the First 5,000 Years) and Michael Hudson (…And Forgive Them Their Debts) are writing a lot about the historic interactions between religions and precursors to neo-liberalism. As Plato tried to teach Aristotle, “Man is a religious animal.” (Timaeus) For a preview of Hudson’s forthcoming book, see here: … And Forgive them their Debts

  11. Unna

    None of the various arguments in this piece as presented by the author are “true” in any real sense. They are merely formulations of rehtoric constructed from time to time by polemicists within the context of particular historical periods meant to legitimize the rule of one or another existing power arrangements in Europe, or of a power grouping seeking to overturn existing power.

    Catholicism: Salvation is only through Our Holy Mother the Church by participation in the sacraments of the Church as a member of the mystical Body of Christ. There is no salvation outside the Church. The most important relationship on earth you can have is your relationship to the Church.

    Protestantism: Individual salvation is through Faith alone. Your most important relationship is your personal relationship with Jesus Christ. Religious truth can be found by each person as an individual through prayerful engagement with the holy scriptures and through the grace of Faith. Every man is his own priest.

    When Protestantism burst upon the scene in the early 16th century, it happily coincided with a political desire of the North German princes to distance themselves from the authority of the Holy Roman Catholic Emperor crowned by the pope and invested with the spiritual authority of the Church to rule over the secular aspects of Christendom. Including Church property and money. If you were a North German prince, which narrative would you chose to say you believed in? The Catholic one or the Protestant one? And so it goes.

    So if you want MMT, just say, “I want MMT because I believe that, properly implemented, MMT can facilitate material benefits to society as a whole and will be good for working people. And let me enumerate these benefits.” That’s it.

    But please never allow some contemporary neo creepoid shill for oligarchy, named Socrates something or other, into the discussion or he’ll be sure to confuse everyone by asking, “And what do you mean by the good of the working class? And before answering that question, first and naturally, we should explore what is The Good and what part of The Good might this so called ‘good of the working class’ partake?” Whereupon, one of Socrates’ little rich boy sycophants replies, “Yes, Socrates, quite correct.”

    And when that happens, my advice is, quick, go get the hemlock….

    1. Unna

      Meaning, who cares what Thomas Aquinas thinks in relation to MMT? I tried to read him a few times and couldn’t stand it. Like trying to listen to Skrillex.

      1. Watt4Bob

        Meaning, who cares what Thomas Aquinas thinks in relation to MMT?

        So, since you don’t care, anyone who does is somehow suspect?

        I tried to read him a few times and couldn’t stand it.

        This proves what?

        Like trying to listen to Skrillex.

        Your critical faculties concerning EDM somehow inform this discussion?

      2. Paul O

        Skrillex was unknown to me until his headline slot at Glastonbury festival (2014). This was a joy to listen to.

        I have yet to read more than a few pages of Aquinas in the raw so can’t comment on the similarities.

  12. Eclair

    Thank you, Unna, for that basin of cold water thrown upon the overheated rhetoric of philosophers debating the number of angels that can dance upon the head of a pin.

    I found the piece slow going, but I have no training in philosophy. However I am fascinated by myth, metaphor, the various models of the world … the order we try to impose on the chaos of being. Religion, philosophical systems, economic theories, they all seem to be the product of this striving to weave meaning out of what is essentially a meaningless existence.

    Moveable type and the printing press appeared in the mid-1400’s. Bibles became more affordable; Bibles in translation appeared. Martin Luther nailed his 95 theses to the door of the Wittenberg Cathedral in 1517. They were immediately printed and distributed widely in Europe.

    As you point out, Unna, the Northern Princes and Scandinavian Kings (as well as the English monarch) in debt due to their never-ending wars, saw this as an opportunity to appropriate the wealth of the Church.

    In the absence of the printing press, would Luther’s theses have languished on the steps of Wittenberg Cathedral? Was it this divine confluence of technology and one pissed-off cleric whose idea that man could effectively talk to god without the intervention of a complex, and rent-seeking, bureaucracy, that lit the spark of the fire that would become destructive capitalism? And was it successful because it justified the theft of Church property by local rulers? Wealth which was, BTW, the result of ‘theft’ or rent-seeking, due to the accepted model of salvation being achievable through the giving of money to the established Church. Raped a virgin? Donate a chest of gold to build an altar in the cathedral and you will be assured of a delightful afterlife.

    So, what comes first, the chicken or the egg? Is it the act, or is it the myth, the philosophy, the religious belief that justifies the act? Or is it a happy synergy of the two emerging together along with the appearance of a technology that allows for the dissemination of the justification so that the masses acquiesce.

    So, we live in interesting times. The internet came into common use in the 1970’s (or, at least that was when I began to make use of it in my work). FaceBook popped onto the scene around 2004. Thomas Piketty’s ‘Capitalism in the 21st Century,’ addressing the problems of wealth inequality, appeared in 2013. It was preceded by Occupy in 2011, which brought the oppression of the 99% by the 1% into the public conscience.

    Should we be waiting for a group of opportunists to declare their adherence to a new belief system so they can seize the accumulated wealth of the 1%?

    Thanks for posting this piece, Yves. Good stuff and good commentary. Although I understand only a small portion of it. On the basis that technical jargon in any area is a foreign language to those who are not conversant in that discipline, I would like a good translation.

    1. Watt4Bob

      So, what comes first, the chicken or the egg?

      IMHO, that’s what this post attempts to answer, and I think does a pretty good job if one can understand that it describes a perennial battle between viewing the planet’s ‘natural’ bounty as our common birthright, (there is plenty for all), and so, by extension, that our money system should harmonize, and reinforce that reality.

      On the other hand, we’re offered the perspective that it’s entirely ‘natural’ for a few men to own half the world’s wealth, because ‘God’ rewards hard ‘work’, and if you don’t have enough it’s because you don’t work hard enough. (or “God made me King, and I do what I want.”)

      I’d go so far as to say the story of Adam and Eve, and the Garden of Eden tells the same story, and in that version, which came first is clearly stated.

      1. Amfortas the hippie

        Unless you’re some kind of Gnostic…in which case the Snake was the Prometheian Hero, come to lead us out of the proverbial Cave.
        Late to the party, I am, but this sort of discussion is why I love NC and all you folks,lol.
        I am no expert on Thomism…but I have always had an intuitive affinity for Thomists…a few of which I’ve known and had discussions with under various trees.
        I’m a Neitzsche guy, so I see “reality” as somewhat contingent. You can try on different lenses, and see a whole different world…spend time in honest communion with a snake handling preacher to see what I mean.
        We can’t get to “Real Reality”…cannot apprehend it…because we’re still firemonkeys, embedded in our sensorium.
        so the idea that Money and Accounting is Real and must be treated like a Holy Mountain always seemed stupid to me. Humans created them, so Humans can recreate them…we decide the meaning and value of a dollar…the dollar doesn’t decide.
        some folks value highly gold plated toilets, after all.
        My silver pitcher, on the other hand, serves to hold the supply of plastic grocery bags for the little bathroom trash can.
        Value is not inherent…even if we lazily accept it as such.
        we create it…or accept it’s creation by others.
        The hijacking of Value Creation by greedy bastards has a rather long history.
        The current, neoliberal/hypermercantilist, greedy bastardy is just more sophisticated.
        TINA(there is no alternative) is their most effective weapon.

        1. Watt4Bob

          The hijacking of Value Creation by greedy bastards has a rather long history.

          Which is the story in a nutshell, in order to be highjacked, it must exist.

          The myth underpinning the system we’ve lived under these last few generations posits a chaotic world that must be organized and dominated to enable the ‘growth‘.

          This in spite of the fact that any farmer will tell you that things have been growing forever, and you can’t stop the growth no matter how hard you try.

          We started out in the Garden of Eden, where everyone had enough, then some folks decided they wanted it all, and so they built Disneyland, and insisted we accept it as not only better, but natural.

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