The politics of MMT

The politics of MMT

I was prompted to remember some of my recent Macroeconomic reading as someone was asking about Modern Monetary Theory (MMT). I read Reclaiming the State last year, and I picked it up again to re-read the section on International Trade. I have not yet finished it, but I remember thinking that while public finance may not be a constraint on the economy, the long term balance of trade may well be, even for a monetary sovereign. Meanwhile this article “Brexit the slippery slope of left sovereigntism from modern monetary  theory to spiked” at https://tendancecoatesy.wordpress.com explores the political inertia that MMT’s exponents may be riding; much of it is based on an interview with James Meadway, once John McDonnell’s economics adviser which is available, at the link below/overleaf. For Coatsey’s regular readers they will be unsurprised at his pugnacious attacks on Faizi’s endorsement of the Full Brexit and Spiked. Schneider’s musing are interesting in that he emphasises that MMT, like Keynesianism  says nothing about inequality and ownership of the means of production. (The interview also addresses the moderation in Labour’s 2017 Manifesto.) …  …

Beyond People’s QE

Beyond People’s QE

A day or two ago, Alex Little, published a blog post called ‘Lessons for Corbyn in “Lerner’s Law”’. Lerner’s law suggests that using your opponents language limits your ability to make the argument. Little quotes Bill Mitchell, the inventor of Modern Monetary Theory (MMT) as to how Labour’s leadership in articulating the Darling Plan and its successors talk about balancing the budget and fixing the deficit concede the argument to the Tories. Little’s article also points at Lerner’s economic theories, described as “functional finance” and points at the wikipedia article on it. He argues that by describing the proposed pump priming as PQE, and accepting that when growth takes off, the government may transition to bond financing, by even accepting that we need to live within our means, the theory and benefits from the a more overt radical financing will be lost. …