Tuesday, January 2, 2018

Sean Keith and Alexander Kolokotronis — "But How Will We Pay for It?": Modern Monetary Theory and Democratic Socialism

An economic doctrine named Modern Monetary Theory (MMT) is surging in popularity and offering answers. MMT is debunking popular narratives about the harsh necessity of austerity and belt-tightening. It is showing that money is not a finite abstraction, but a limitless public utility that can be used to meet human needs. More than this, however, MMT and its heterodox economic cousins offer a framework to build directly democratic, egalitarian political structures, and thus reimagine and recalibrate the viability of democratic socialism....
 Truthout | Op-Ed
"But How Will We Pay for It?": Modern Monetary Theory and Democratic Socialism
Sean Keith and Alexander Kolokotronis

16 comments:

Matt Franko said...

“An economic doctrine named Modern Monetary Theory (MMT) is surging in popularity”

Yo:

https://finance.yahoo.com/news/former-treasury-secretary-lew-says-125300506.html


AXEC / E.K-H said...

MMT and grassroots movements
Comment on Sean Keith/Alexander Kolokotronis/Truthout on ‘“But How Will We Pay for It?”: Modern Monetary Theory and Democratic Socialism’

Sean Keith and Alexander Kolokotronis maintain: “An economic doctrine named Modern Monetary Theory (MMT) is surging in popularity and offering answers. MMT is debunking popular narratives about the harsh necessity of austerity and belt-tightening. It is showing that money is not a finite abstraction, but a limitless public utility that can be used to meet human needs. More than this, however, MMT and its heterodox economic cousins offer a framework to build directly democratic, egalitarian political structures, and thus reimagine and recalibrate the viability of democratic socialism.”

MMT has NO sound scientific foundations, therefore, it cannot by any stretch of the imagination offer a framework for building the Good Society. If anything, MMT is a social bluff package for the benefit of the one-percenters.

For details see
Down with idiocy!
https://axecorg.blogspot.de/2017/12/down-with-idiocy.html

MMT: Money-making for the one-percenters
https://axecorg.blogspot.de/2017/09/mmt-money-making-for-one-percenters.html

MMT is ALWAYS a bad deal for the 99-percenters
https://axecorg.blogspot.de/2017/12/mmt-is-always-bad-deal-for-ninety-nine.html

What the non-economist needs to realize is that there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Economics claims to be a science but is NOT. Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics (Walrasianism, Keynesianism/MMT, Marxianism, Austrianism) has produced NOTHING of scientific value in the last 200+ years.

MMT is one of the warring factions of political economics. MMTer have NO idea how the price- and profit mechanism works. As fake scientists, MMTer are as helpful for grassroots movements as the barber-surgeons, alchemists, and bloodletters of the Dark Ages.

Egmont Kakarot-Handtke

Ryan Harris said...

After Obama administration abuses of regulatory power, a Reimagined federal government sounds kind of scary. Just as Egmonts opinion pieces don't change any despite all the evidence and argument, I too cling to my ideological preference for Lower taxes, smaller government and more transfer payments despite dalliances with leftist and heterodox ideas periodically.

Tom Hickey said...

" I too cling to my ideological preference for Lower taxes, smaller government and more transfer payments despite dalliances with leftist and heterodox ideas periodically."

I don't disagree with that but I would put it differently.

I prefer "good" government over "poor" government rather than either "big" or "small" government. "Good" is a values' based, and values specify criteria.

Governance is a form of management. The Greek root of the English term "economics" implies management.

Peter F. Durcker is famous for "management by objectives." A key principle of management by objectives is that effectiveness is about choosing the "right" objectives and efficiency is about employing the "right" means.

The criterion of "right" with respect to objective is determined by policy, which is political as it relates to public governance and public policy.

The criterion of "right" with respect to means is determined by strategy and tactics for implementing policy to successfully achieve objectives. Efficiency means getting the most out of deployed resources. That implies using resources "economically", i.e., efficiently.

This implies that good governance is limited in means. However, it says nothing about broadness of objectives, which is a policy choice. Some prefer that government set few objectives and leave the rest to the market to work out based on assuming spontaneous natural order. Others prefer that government set objectives broadly enough to cover what the private sector either chooses not to address or does address in way that meets public preferences.

Functional finance reveals that the level of spending and taxation is dependent on the result to public policy and its implementation. Spending is set by meeting objectives through "good" governance as set forth above, and taxation is used to control price stability by modulating effective demand in relation to available resources.

Transfer pays are no problem as long as real resources are available. Taxes can be as low as possible consistent with functional finance applied to "good" governance.

The management is pretty straightforward. The issues are mostly political, and are thus determined by power, since politics is about power and its application.

Calgacus said...

Ryan Harris:Lower taxes, smaller government and more transfer payments

More, not less transfer payments? That doesn't go with the other two.

Andrew Anderson said...

Actually, more transfer payments could go with smaller government, e.g. a Universal Basic Income.

But that would deprive Progressives of what they crave most - power over other people's lives.

Andrew Anderson said...

As for lower taxes, let's recall that fiat is a creature of government and government may properly charge fees for the use of its fiat. Thus, negative interest on its fiat, especially for large users* such as the banks, could replace taxes to some extent.

*Individual citizens should be exempt from negative interest up to, say, $250,000 in the US to encourage savings for contingencies and initial capital formation, and also to encourage the transfer of fiat from a few large holders to the citizens at large.

Kaivey said...

No one has more power over your life than your boss. Progressives are really into workers rights which gives a lot of freedom to ordinary people. Also, public healthcare gives ordinary people more power too as they are not so dependent on a salary.

Calgacus said...

@Andrew Anderson:The way most people understand things, "more transfer payments" is by definition larger government, which is why I was puzzled about what Ryan said.

In addition to the fact that a UBI is a stupid joke that cannot and never will work anywhere, a UBI is about giving government more control over people's lives, a Job Guarantee is about giving people more control. You have it exactly backwards, just like someone who thinks he can shoot someone else by pointing the barrel of a gun at their own face.

I for one am sure you are honest about your completely misguided beliefs about the UBI vs JG. At least understand that we may agree about deploring the craving for power over other people's lives, although we disagree about what policy does constitute this control.

Andrew Anderson said...

Progressives are really into workers rights which gives a lot of freedom to ordinary people.

"Ordinary people" should not have to have jobs. It used to be, before the commons and family farms and businesses were stolen via government-privileged banks, that "ordinary people" could provide for themselves and their families.

Now Progressives did not initiate privileges for the banks since those originated by default and a misunderstanding of the nature of fiat but Progressives have certainly added to those privileges, e.g. the government insurance of private liabilities, including privately CREATED liabilities.

You should be careful calling people "ordinary"; it reeks of elitism, a disease Progressives are most susceptible to.

Andrew Anderson said...

a UBI is about giving government more control over people's lives,

A UBI is just another name for a "Citizens Dividend" and is the IDEAL, ETHICAL way to create or distribute fiat beyond normal spending by the monetary sovereign. Citizens would quickly see the justice in it as opposed to government privileges for the banks and the rich.

Neil Wilson said...

Citizens Dividend is just another name for theft.

If you want something from somebody else, then you have to do something in exchange. That's called a job.

Money isn't free. You have to work for it.

AXEC / E.K-H said...

Neil Wilson

You say: “If you want something from somebody else, then you have to do something in exchange. That’s called a job. Money isn’t free. You have to work for it.”

Obviously, you have NO idea how the economy works.

In order to see this one has to go back to the most elementary configuration, that is, the production-consumption economy which consists of the household and the business sector.#1

In this elementary economy, three configurations are logically possible: (i) consumption expenditures are equal to wage income C=Yw, (ii) CYw.

In case (i) the monetary saving of the household sector Sm≡Yw−C is zero and the monetary profit of the business sector Qm≡C−Yw, too, is zero.
In case (ii) monetary saving Sm is positive and the business sector makes a loss, i.e. Qm is negative.
In case (iii) monetary saving Sm is negative, i.e. the household sector dissaves, and the business sector makes a profit, i.e. Qm is positive.

It always holds Qm+Sm=0 or Qm=−Sm, in other words, at the heart of the monetary economy is an identity: the business sector’s surplus (deficit) equals the household sector’s deficit (surplus). Put bluntly, profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law.

Macroeconomic profit has NOTHING to do with working, productivity, exploitation, risk-taking, innovation, monopoly power, etcetera. Loss or profit are NOT income. Only distributed profit is income. The profit theory is false since Adam Smith.#2

Your assertion “Money isn’t free. You have to work for it.” proves that you do not understand the foundational concepts ― income and profit ― of economics.

This, of course, holds for the rest of MMTers, so you are not alone behind the curve.#3

Egmont Kakarot-Handtke

#1 The elementary production-consumption economy is given by three macro axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X. For a start holds X=O.

#2 Essentials of Constructive Heterodoxy: Profit
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2575110

#3 Down with idiocy!
https://axecorg.blogspot.de/2017/12/down-with-idiocy.html

AXEC / E.K-H said...

4th section replacement of signs

In this elementary economy, three configurations are logically possible: (i) consumption expenditures are equal to wage income C=Yw, (ii) C less than Yw, (iii) C greater than Yw.

Andrew Anderson said...

Citizens Dividend is just another name for theft. Neil Wilson

But using the same money to pay people to waste* their time isn't worse?!

If you want something from somebody else, then you have to do something in exchange. Neil Wilson

Then where is your opposition to positive yields on the inherently risk-free debt of monetary sovereigns? Hmmm?

That's called a job. Neil Wilson

No, that's called WORK - something people could do for themselves as they wished before the means of production were stolen from them via implicit and explicit government-privilege for private credit creation and other wicked means. A job is working for someone else as they wish and for their profit.


Money isn't free. You have to work for it. Neil Wilson

Pious hypocrisy from someone who supports government-privilege for usury cartels? Who is thus opposed to honest accounting in favor of sham liabilities wrt the non-bank private sector?



*I'm all for generous infra-structure spending but with bulldozers - not with teaspoons to maximize the number of jobs created.



AXEC / E.K-H said...

To be continued on parallel thread

Daniel José Camacho — The deficit doesn't matter: thinking morally about the economy with Stephanie Kelton
https://mikenormaneconomics.blogspot.de/2018/01/daniel-jose-camacho-deficit-doesnt.html?showComment=1515233459368#c2116644861677922461