This is just a quick (unedited) reaction post. “Modern Money Theory” deserves more, but I have too many topics on the go right now, and I can’t claim to be expert enough anyway.
Big fan of @PaulMasonNews economic proposals in PostCapitalism, but can’t stand his partisan politics. (See Labour Populism). Long time correspondent David Morey has a banking background as well as deep philosophical interests, and has been posting on Modern Money regularly over the years. Chris @contronline posted “The Magic Money Tree is Real” in response to the recent political chatterings over government spending priorities. The popular reaction to the whole meme is the degeneration of partisan politics into tyrannical populism. However, as Chris says, Magic Money Tree (Modern Money) Theory is not partisan, it’s neutral theory. Same as the explicitly Marxist ideas in PostCapitalism, the mechanisms of how things could work can still be managed by our social priorities.
Things I get:
Debt or a promise to pay being a Government promise, the same monetary value linked to tax repaid in return. (But it’s also linked to bonds used to raise debt finance within the economy.)
Traditional relative competitiveness: with two sides of a trade one is always better off than the other, BUT the other is still better off than it would be in the absence of the trade. Implies not just between individuals, but between states or fiscal constituencies, there need to be trade boundaries with exchange value in the currency itself. The point of MMT is that even without this inter-state trade, the value in the money can still be maintained by the government promise in the state economy, and an isolated or even a single global economy is still possible. However big the state “debt”, the two-way trust is that ongoing liabilities will always be paid.
My remaining doubts and differences (on both MMT and PostCapitalism) are entirely about how things might actually work in practice:
These are still “just theory” and IMHO, the biggest problem with economics in general is that it is “autistic” to believe the economy runs predictively on any objective theory, capitalist / traditional money or otherwise. Goods and services as objects. Value as numbers. Decisions as arithmetic. (This is the root of my main agenda.)
In fact real economics is almost entirely about trust and psychology and gaming of these, and experience and wisdom and fault-tolerance and irreversibility and much more. There will always be unintended incentives to game the system and hence unintended consequences.
If there is only one economy (or each economy is monetarily independent) everything depends on trust in that money supplier.
Trust is the one thing the world is really short of right now. Apparently every statement must be backed by objective evidence. The default position is that everyone who makes a mistake, or makes a statement we disagree with, must be part of some evil conspiracy. Our job is to label them as evil or ridicule them as idiots apparently. Opposition politics has been replaced with populist tyranny – the free-democratic opposition concepts of criticism and holding to account have been totally lost.
And the real question – even if we “trust” in the new model for a brave new world – is the Irish question. How do we get there from here? We can’t start anywhere but where we are now. So, revolution or evolution? And whilst we don’t need to predict all the what-ifs, we have to know how we would handle classes of problem, plan B’s, escape-routes and off-ramps. There are the billions of people’s lives at stake.
[Post Note : Book review link from David.]