ALB
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There is also the international aspect which would make doing that risky and even counterproductive. If one state is inflating its currency more than others that will raise its price level more than theirs, making imports cheaper and exports more expensive. It happened all the time in the 1950s and 1960s leading to balance of payments crises and devaluations (especially under Labour governments, forcing them to claw back some of the reforms they had brought in).
It still happens now in the era of floating currencies that came in after Nixon took the US off the gold standard in 1971. There are no longer any devaluations; the currency just sinks in relation to others.This helps exports but also makes imports cheaper. So there can still be a balance of payments crisis that would lead any such application of MMT (or Keynesianism, traditional or neo) to fail.
This used to be called a “capital levy” and was proposed, even by some capitalists and supporters of capitalism, as a way of paying off a part of the extra National Debt incurred to fight the First World War. I wouldn’t be surprised if someone here in Britain will or perhaps already has proposed this as a way to pay off the extra debt incurred to deal with the pandemic. Any takers, Labour reformists, or would that be too Corbynist?
Anyway, this is what we had to say about it at the time:
https://socialiststandardmyspace.blogspot.com/2019/03/the-capital-levy-1924.html
The “Job Guarantee” is not the same as UBI but it’s from the same stable, i.e., a scheme to guarantee everybody an income (even if a bigger one) even if they are not producing profits or anything. Also there is no incompatibility between MMT and UBI in that the state could decree into existence the money to pay UBI. In fact I daresay that there are some UBIers who are also MMTers.
The trouble with both reform schemes is that they don’t take into account the economic laws of capitalism as a system of production for profit by wage workers. If the state guaranteed every able -bodied worker a job that would put workers in a stronger bargaining position with employers and reduce profits. I know this is a reason why some MMTers say leftwing reformists should support it, but it’s actually a reason why it will not be introduced and, if it was, wouldn’t work.
To refute an MMTer who claimed that MMT was compatible with Marxism, I would emphasise (apart from the obvious point that Marx envisaged socialism/communism as a society which wouldn’t need money) the different theory as the nature of money — its commodity origin rather than as an act of state.
More generally, Lapavitsas and Aguila put the case against MMT well in that paper that they wrote:
“MMT is also right to assert that the state can never run out of finance since it can always create fiat money, but that again barely goes to the heart of the matter. The formalities of constructing a budget and the mechanics of operating the bank account of the state do not alter the underlying principle that there are three fundamental ways for a capitalist state to finance its expenditure, namely creating fiat money, imposing taxes, and borrowing. All three methods amount to claiming resources produced by others, and it is entirely arbitrary to privilege one, i.e., issuing fiat money, over the rest. (…)
Financing expenditure purely with central bank fiat money appears to lie entirely within the discretionary power of the state. However, creating fiat money could always disrupt the operation of the unit of account relative to the spontaneous measurement of commodity values. Inconvertible central bank money was accompanied by sustained inflation in much of the developed world in the 1970s and 1980s. Moreover, the easy availability of central bank money could also disrupt the paying and hoarding functions of credit money since it could destabilise the financial system, generate bubbles, and lead to crises with profound distributional implications.” (page 16).
Even the editorial in today’s Times calls his comments “crass” and hints that he should go in the next cabinet reshuffle. He’s got form. Theresa May sacked him as “Defence” Secretary (yes, believe it or not, he did once occupy one of the top posts in the state) for leaking details of a top level meeting. He had also been an advocate of sending an aircraft carrier to the South China Sea (which even the top brass thought was bonkers).
Mind you, he is not the only “vaccine nationalist”. Boris and a section of the media are too;
https://www.theatlantic.com/international/archive/2020/12/britain-vaccine-brexit-covid/617280/
I saw that too but strict vegans still won’t like it:
”Cultivated meat is different from plant-based meat substitutes such as Quorn because it comes from the cells of real animals.”
But, then, by the time socialism is established that fad may well have passed or survive only as a small sect or maybe the more pragmatic vegans might accept it ( or at least won’t pester non-vegans for eating it) as it doesn’t involve killing an animal.
He was the idiot who some years ago called Obamacare “fascism” and then had to retract as his firm was losing customers;
https://www.reason.com/2013/01/18/john-mackey-was-right-the-first-time-oba/%3famp
The Tartan Reformists are clearly showering promises about in a bid to win next year’s elections. Next they’ll be promising free broadband for all. And of course “after independence” money will grow on trees. Pull the other one.
No, it’s just a camouflaged way of “set aside” or the notorious taking of land out of agricultural production to limit production and maintain prices. It gets less criticism if it is presented as a way to preserve nature. In fact it tends to get praise. I think the European Union thought of this first.
That bevy of economists are right about a well-established state like the UK never being likely to go bankrupt in the sense of being unable to meet its debt obligations as it can always raise the money one way or another.
However, they have their own unfounded illusions. They seem to be neo-Keynesians who think that a government can spend its way out of a crisis, even if on infrastructure projects rather than on boosting popular consumption:
“Covid-19. Modelling suggests that public debt as a proportion of GDP could actually fall were the government to embark upon a major investment package boosting jobs and growth, a position similar to that of the IMF in its flagship publication (pp 18-19) on the issue. This is in line with standard macroeconomic literature which stresses the beneficial effects of countercyclical government spending during crises.”
Modelling and standard macroeconomic literature might suggest this but past experience doesn’t. When it was last tried in the 1970s it led to stagflation. If tried again, since they seem to have inflation under control, it is likely to lead to a temporary boost that will peter out and a return to stagnation. But this won’t last since there is no such thing as a permanent slump.
The capitalist economy will eventually recover but of its own accord not thanks to government spending. When it happens the government will of course claim the credit. They always do for an expansion.
I don’t think the formal change of name to a Republic made any difference whatsoever. It was just window dressing. You could argue more plausibly that Ireland didn’t become “independent” ( of Britain) until 1978 when parity between the Irish pound and British pound was broken. But this only meant a transfer of dependence from British to German capitalism (which some Irish Republicans had wanted in both world wars).
And of course the interdependent world capitalist system means that no state can be completely independent ( as the UK is about to (re)learn the hard way after 31 December). Scotland will be in an even worse position is workers there are conned into believing that an “independent” Scotland will bring them any benefit.
As I said on another thread. I got my £100 winter fuel allowance the other day. Also, YMS refers in the MMT thread to the economic crisis that the Labour government faced in 1968. One of the measures taken to deal with this was to end free milk for secondary school children (Margaret Thatcher Milk Snatcher merely extended this to primary school children over 7 a couple of years later; a subsequent Labour government abolished it altogether in 1977).
These reforms come and go. They might help the SNP win next May’s Scottish Parliament elections, but an independent and unsubsidised Scottish government will have difficulty sustaining them.
Remember that one of the first things the independent Irish government did in 1921 was to reduce civil service pensions. That reminds me, we need to do an article on the centenary of Irish independence and the establishment of the Protestant statelet in the north in March next year.
Yes, inequality still exists. You were born in a castle while I was born in a workhouse.
This is quite good, bringing out a criticism of MMT that we haven’t mentioned — that it couldn’t work in most countries because of the international monetary context, probably only in the US and even there it wouldn’t be as expected.
They bring out that money arises out of commodity exchange and is not simply made by the state (a view MMTers adhere to) and that this places limits to what the state can do in the monetary field (without making things worse, that is).
However, though they get the Marxist theory of money right there is a suggestion that there might be some sort of “Marxist monetary policy”; which is absurd since Marx wasn’t concerned with policies to be implemented under capitalism and in fact wanted to see a society in which money had become redundant.
That this may be their view comes out from the authors seeming to think that “monetary sovereignty” could still be possible in other countries if accompanied by other measures ( of a state capitalist nature) , even though they set out the huge problems involving in trying to do this.
One of the authors, Costas Lapavistas, was a prominent Lexiteer in the UK.
Congratulations twc. Your knowledge of ornithology has allowed us to identify what sort of bird we have sighted:
