Thomas Fazi and I recently published an Op Ed in Social Europe (October 20, 2017) – Everything You Know About Neoliberalism Is Wrong, which is a precis of the main arguments in our new book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). It seems that our message resonates with a lot of people. And, inasmuch as it is deeply critical of the extant Left position on ‘internationalism’ who continually seem to live in terror of those amorphous financial markets just waiting for a chance to send a nation state bankrupt, it seems to have also upset some who I consider to be the ‘lost’ mainstream Left. One such critic accuses us of using a “presumptuous title” but he is seemingly unable to capture the pop culture irony that is inherent in the choice. Just a bit of fun Andrew. Since when is comedy presumptuous? But failing to grasp the subtlety of the title is just the start. Things go downhill from there.
Among those who liked the article (and then presumably will like our book) were Dani Rodrik, who Tweeted (October 20, 2017):
It appears that Dani missed the irony in the title too.
And Wolfgang Münchau, in his excellent Eurointelligence Briefings (October 23, 2017) wrote in his introduction to his comment:
Bill Mitchell and Thomas Fazi provide a very useful insight into why the European Left is no longer betting on supra-national institutions like the EU, and why it is seeking national solutions instead. If you want to understand the success of Jeremy Corbyn in the UK, this is a piece worth reading.
Wolfgang Münchau continued … you can read the rest if interested.
These two among others who have received the arguments in a positive manner are clearly not part of the MMT cheer squad.
But there is also discontent from the mainstream Left.
I think discontent is a good sign when new ideas that run counter to the mainstream narrative (whether it be from the mainstream Left or Right) create angst.
It is better than being ignored, which marks the first stage of introducing new frameworks. As one of the first MMTers, I can say that we were heartily ignored for some years.
But when people get upset with the ideas and start to fight back against them it is a sign that they are getting bugged by them. The threat invokes retaliation.
And so the Andrew I mentioned at the outset is one Andrew Watt, who is clearly a EU and EMU supporter but professes to be part of the Left.
Just the target of our book (and article).
He is offended by our article calling it a – The left-sovereigntist fantasy – in his formal response to us.
The arguments presented by Watt are what you expect from a Europhile. But I was surprised how undeveloped his understanding of the issues we raised was.
He is upset the “colleagues at Eurointelligence” among others are favourably disposed to our argument.
Watt is initially upset that we represent the current dominant view held by progressives as being one where “nation states need to pool sovereignty in order to enact progressive policies”.
He claims that we do:
… not convincingly discredit the view that pooling sovereignty is a sensible response to the constraints imposed by globalisation. Nor does it make the case for a specifically left-wing strategy of enhanced national sovereignty, traditionally the mantra of the hard right, that might endear it to progressive politicians and academics.
He thinks our position is “indistinguishable from the extreme right” and thus demands a response.
Inasmuch as the ‘extreme right’ has grasped the reality that globalisation does not mean the nation state should surrender its legislative remit and currency sovereignty to advance the interests of capital over those of the rest of us, it is not surprising that we share that understanding.
But this is where the Left gets itself in a funk. Its kneejerk response to anyone who advocates an empowerment of the nation state and a dis-empowerment of surpranational organisations is that it is a descent into nationalism – and then – a few breaths later – xenophobia – isolationism – Fascism.
Before long our advocacy for the restoration of currency sovereignty (where it has been surrendered) and a progressive use of that sovereignty is interpreted – accused – as being giving succour to the “extreme right”. Mitchell and Fazi are supporting Fascism – it is obvious – they support the primacy of the nation state.
Well there is a world of difference between the nationalism of the National Socialists and currency sovereignty rooted in democratic institutions with progressive application.
Andrew Watt agrees with our characterisation of the mainstream Left position, which we write as (in our words):
1. National sovereignty has become irrelevant in today’s increasingly complex and interdependent international economy.
2. The deepening of economic globalisation has rendered individual states increasingly powerless vis-à-vis market forces.
3. The internationalisation of finance and the growing importance of multinational corporations have eroded the ability of individual states to autonomously pursue social and economic policies – especially of the progressive kind – and to deliver prosperity for their peoples.
3. Thus, our only hope of achieving any meaningful change is for countries to ‘pool’ their sovereignty together and transfer it to supranational institutions (such as the European Union) that are large and powerful enough to have their voices heard, thus regaining at the supranational level the sovereignty that has been lost at the national level. In other words, to preserve their ‘real’ sovereignty, states need to limit their formal sovereignty.
He says that is “a clear and accurate statement”. Okay, square one.
We pointed out that while progressives often stress how neoliberalism has involved (and involves) a ‘retreat’, ‘hollowing out’ or ‘withering away’ of the state, which in turn has fuelled the notion that today the state has been ‘overpowered’ by the market, the reality is that government spending as a per cent of GDP has, if anything risen, in most countries over the last thirty years.
Hardly a withering away of the state.
Andrew Watt, however, claims that this doesn’t mean that the “state capacity to deliver ‘progressive’ policy goals has not been eroded”.
He then gets lost in some argument about “regulatory matters” and “sources of financing” and that “mobile capital and higher earners have been able to reduce their tax burden at the expense of (immobile) labour”.
Andrew Watt is, I guess (although he doesn’t come out and say it), trying to say that the amorphous bond markets will punish a government that tries to ‘progressively’ spend or tax.
Well, he should have read the argument more closely and appreciated the nuances or if uncertain gone to the book. We explicitly say that we explain the argument in more detail in our new book Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017).
The article is, in fact, a teaser for that book.
But even in the article we note that the state maintains a capacity to run fiscal deficits at will but has imposed “deliberate and conscious” limitations on that capacity.
If he had explored the point further he would have read from pages 161 to 221 in our book, which introduce and expand the basic principles of Modern Monetary Theory (MMT) within the context of what a state that issues its own currency can actually do.
He would have learned, if curious, that the bond markets can do nothing to harm a currency-issuing government should the government choose to ignore them and play them out of the game.
Even the most cursory understanding of what central banks have been up to in recent years should inform anyone with a basic comprehension of the workings of bond markets and yield curves that the government calls all the shots. Through their central banks they can set yields wherever they like including at zero.
Further, through the central bank they can ensure interest rates on non-government paper are zero at the short end and low at the longer end.
Hasn’t the fact that many governments are now borrowing funds over 10 years or more at negative yields (that is, people are paying the government for the privilege of parking their uncertain funds in government paper) told the likes of Andrew Watt anything?
He claims we make the same argument as above that tax bases have moved due to globalisation which has made the capacity of governments to run fiscal deficits more difficult now.
And you don’t need to take my word on that because WM/TF say the same thing later in their essay.
Well that inference is highly misleading.
What we actually say is that it cannot be denied that in many respects – the capacity to promote local industries vis-à-vis foreign ones; to run fiscal deficits; to manage the money supply; to impose duties and taxation; to regulate the import and export of goods and capital, etc. – economic sovereignty, including advanced capitalist economies, is more constrained now than in the past.
But then we go on to say that to a large extent, however, this is the result of a deliberate and conscious limitation of state sovereign rights by national elites, through a process known as depoliticisation.
Note the causation. The nation states have become captive of the global capital elites and voluntarily acceded to limiting their fiscal capacity and using the legislative framework to advance the interests of the few at the expense of the many.
That has been a political decision not a financial imperative.
With a truly progressive political will and the correct understanding of Modern Monetary Theory (MMT) that capture could be terminated fairly quickly and capital brought to its knees.
Look at how Iceland has dealt with the hedge funds it has trapped within its sovereign borders by invoking capital controls. Nothing weak about that action. The government used its sovereign powers to take on two of the large investment banks in the world and succeeded.
So to finesse this point – Andrew Watt needs to become better informed about what currency sovereignty actually means. The understandings that MMT provides are intrinsic to comprehending what our book is about and what the article in Social Europe is about.
To criticise both by invoking the damage bond markets can do to a government or nation state is to demonstrate an ignorance of these advances in macroeconomics.
To put a finer point on it, Andrew Watt, for all his progressive pretentions, uses the mainstream neo-liberal macroeoconomics frame as a centrepiece of his attack on why Thomas and I are lost in some fantasy world.
He then agrees (says we are “broadly factually correct”) with the second main contention in the article that (in his words):
… that the state at national level, far from withering away, has intervened extensively and permanently to deregulate, liberalise and engage in regressive redistribution.
Yet he thinks this is supportive of the argument we are critiquing that (in his words):
… globalisation pressures nation states into becoming willing servants of mobile capital, pandering to its real or perceived needs and destroying the social acquis of an earlier generation.
There is a world of difference between this statement and the initial thesis that we introduce to motivate the article.
The first says that the Left thinks globalisation has rendered the state powerless.
The second says that globalisation pressures nation states to do the bidding for capital.
Entirely different things.
Obviously, the nation state has always been pressured by global capital to do its bidding and to stop = as we characterise it – mediating the capital-labour conflict.
And obviously that has been a drawn out process which required a strategy to convince the population to support the abandonment of social democratic policies in favour of the neoliberal approach.
Collective will and social solidarity gave way to individualism as this neoliberal strategy unfolded.
In the book, Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – we catalogue in some detail how the Right instigated that strategy – the rise of the think tanks, the assault on the media, the penetration into schools and universities of right-wing thinking, and more.
But these social processes that have allowed social democratic parties to abandon their historical mission and becoming the vanguards for the implementation of neoliberal policies are not irreversible.
In the same way the Right strategically set about to capture governments and turn them into agents of capital, the Left has options to.
The unfortunate fact is that the idea of an Oppositional Left has waned as the traditional social democratic parties adopt policy platforms that at times, are indistinguishable from the conservative parties.
Andrew Watt thinks that because “globalization can materially constrain sovereignty” there is justification in “pooling it in structures like the EU, without destroying it entirely”.
The point we make is clear. The EU began as a political model to ensure the historical Franco-German rivalry would not break out into another damaging military conflict.
I cover that in detail in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale.
Of course, those who believe it has been the EU that has curtailed conflicts on the Continent conveniently overlook the vast presence of US military bases under the NATO alliance, which above all else, have been a strong deterrent to any military ambitions that Germany might have exercised.
But a supranational organisation such as the EU is well-placed to handle matters that individual Member States cannot easily handle – such as migration, climate change, rule of law – human rights etc.
But none of those issues require any “pooling of sovereignty” in the sense that we use the term sovereignty – the primacy of the currency-issuance capacity.
The problem the Left created is that it took the supranational step too far and surrendered sovereignty when it pushed the Eurozone onto citizens.
In that sense there is no meaning to the term – “pooling of sovereignty”. When the Member States agreed (or were bullied into) to adopt what is essentially a foreign currency they abandoned their sovereignty in the way I use the term.
They lost their capacity to run fiscal policy in a way that would advance the well-being of their citizens. They created a democratic void – handing over key economic capacities to unelected and largely unaccountable technocrats in Brussels and Frankfurt.
They then accepted harsh and unworkable fiscal constraints which rendered what policy capacity they retained – under the misused concept of subsidiarity – relatively useless.
That is not an effective ‘pooling’ model. It has been an unmitigated disaster.
Andrew Watt thinks that because labour is immobile and capital is not that:
… gives rise to the view that progressive economic and social policies in small open economies are constrained in an international context and that pooling is a necessary step to regain policy-making traction.
That is a false conclusion.
We note that even the smallest of nation states can exercise power against capital mobility via capital controls if it so desires. The example of Iceland is a case in point.
Before that, the Argentinean default in 2001-02, provides nation states with a model on how to reassert their currency sovereignty despite massive hostility from global capital.
Our argument that neoliberalism has coopted states in many ways and led to a process of “depoliticisation” – which includes the myth of ‘independent’ central banks (see my recent blog – The sham of ECB independence); fiscal rules imposed by non-elected bodies, investor-dispute resolution mechanisms in trade agreements etc.
Andrew Watt thinks that these developments are:
… perfectly compatible with a view that it has been driven by external constraints and is therefore not a convincing counter-argument.
Perhaps. But if you historically analyse the way these developments were introduced – the background, who was pushing, etc – which we do in detail in Reclaiming the State – it becomes apparent that these decisions were not inevitable or even efficient responses to the pressures being brought to bear on nation states by a very well-organised and strategically focused right wing assault on social democracy.
There was pressure – certainly.
But there was also a corruption within the Left – which became enamoured with the Monetarist ideas in the 1970s and the microeconomic analogues of those macro ideas – deregulation, privatisation, etc.
The central bank independence shift is an excellent case study and the blog I cite above (and the links within it) demonstrate that the claim to independence has been a chimera – there is no functional independence – only the appearance of such. Which has allowed governments to deflect responsibility for major economic decisions to unelected bodies such as central bank boards.
Meanwhile, as I noted in the blog cited – the ECB is totally captured by the financial market elites by its own choosing.
None of this is surprising – it is the way elites maintain their hegemony.
Andrew Watt then says:
Quite how this Damascene-like conversion by national elites, or a sudden re-imposition of people-power that had been oddly absent to date, will come about remains a mystery; possibly the lack of an argument is intended as an incentive to read the authors’ book.
Yes, read the book. The Social Europe Op Ed was less than 2000 words, the book is 310 odd pages.
I have also documented extensively in past blogs how the Left fell into the neoliberal trap.
We also do not claim that there will be a “sudden re-imposition of people-power”. That is Watt being impetuous.
We argue that the ascendancy of the neoliberal program took decades and was the result of a very well-funded and coordinated strategy implemented through many platforms (media, schools, justice system, universities, think tanks etc).
The changes that are required to create a true Oppositional Left capable of rejecting the neoliberal narrative and offering truly progressive alternatives, which includes an understanding of MMT, is a work in progress.
How long it will take is conjectural. It clearly won’t be a “sudden” shift.
The point we make is that there is a window for the Left now – Brexit, for example, has opened that window for Jeremy Corbyn. At present, the Right is seizing that window and giving voice to the growing discontent by citizens of the neoliberal era.
The Left are still arguing about creating international movements and the like. The Right know that people want their governments to advance well-being. It is just that the Right’s construct of that is perverted in the extreme (at times).
So there is an opportunity. Whether the Left take it is another matter. Our book provides a guide as to how they might start to take that opportunity.
And finally, Andrew Watts gets all steamed up about our critique of the EU. He once again lapses into the false accusation that when we talk about reestablishing currency sovereignty that is tantamount to nationalism. He is wrong on that and just rehearsing the standard misrepresentation that the ‘Pan European Cheer Squad’ engages in to deflect criticism away from their prized baby, which has delivered such chaos and dysfunction for its citizens.
He thinks that the creation of the Eurozone has “some neoliberal … precepts were embedded in the economic governance of the EU and Euro”.
The whole plan was the result of the dominance of Monetarist ideas and the desire to put Member States in a fiscal straitjacket. It was a result of a belief that only monetary policy mattered and that the free market would self regulate to deliver optimal outcomes.
Neoliberalism front and centre. Not just tinkering at the edges.
And the flawed design – violating any notion of an optimal currency area – denying the long-held view that their had to be an alignment between the currency powers, the macroeconomic policy capacity and the democratic institutions – is the reason that the Eurozone has failed.
The 1970 Werner Report was categorical on what would be needed to create an effective currency union. The 1977 Macdougall Report concluded that these characteristics would not be attainable in Europe because of rivalries, cultural differences and vast differences in economic structures.
The 1989 Delors Report, ignored all the previous wisdom and pushed ahead with a neoliberal experiment. It has failed.
I say failed because the only reason the Eurozone is still intact is because the ECB has deliberately violated the Treaty via its QE programs (in various forms) which despite the denial are funding deficits across the monetary union.
And moreover, nations such as Spain have been allowed to violate the fiscal rules, because Brussels wanted the PP elected and knew that if austerity continued then growth would have been impossible and the PP would have been pushed out of office.
The Eurozone only continues intact because it is operating in denial of its own flawed rules.
And, moreover, despite Andrew Watt thinking that the “weaknesses of real-world sovereignty pooling” can be overcome by reform, the reality is different.
The necessary reforms to create an effective federation of Europe will never be implemented. Germany will never allow that to happen.
I cover that extensively in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale.
And then Andrew Watt loses it.
He claims that breaking up the Eurozone and returning to currency sovereignty will create “conflicts” on the Continent which will then:
… lead to the threat of the use of force and, horror of horrors, war on European soil once more? Are the authors really so blind as to the lessons of history when European countries engage as sovereign nation states without a (partially) supranational framework.
A really poor thesis.
I understand the lessons of European history probably, at least, as well as Andrew Watt. I have studied the post war period in Europe in minute detail.
I have read all the historical documents. I have a deep knowledge of the institutional history down to developments within individual departments and ministries in individual countries.
So to try to hide behind the personal abuse (“are the authors really so blind”) tactic doesn’t cut it.
The creation of the European Community as a political construct to deal with major issues was a positive step. But there was peace for decades without the next step of creating a monetary union.
It is the monetary union that has created the conflict, the disenfranchisement, the angst among citizens – despite the on-going support for it.
Further most of the negative externalities he notes that arose when nations were less linked in the post war period were the direct result of an obsession with fixed exchange rates, necessitated by the introduction of the Common Agricultural Plan.
And need I remind him that that CAP was driven by France’s desire to extract subsidies for its farmers from Germany, who went along with it because they were in deep shame after their War behaviour and needed to expand markets for their industrial production – which was the only way they were going to restore some sense of belonging within Europe.
Andrew Watt also rejects our argument that the supranational arrangements have impinged democracy.
He expresses it this way:
The EU is not an undemocratic liberalisation steamroller as the authors imply
Well, the tendencies and capacities of a system are tested when it is under stress. Those tendencies were revealed in the case of Greece, where the democratic will of the people was indeed trampled on by the Troika.
How else do you explain the ECB, which is empowered to maintain financial stability across its domain, deliberately threatening to send the Greek banking system bankrupt in June 2015 if it did not accede to impose even harsher austerity than before?
That was only 6 months after the people of Greece overwhelmingly voted to reject austerity.
How do you explain the fact that key economic decisions are made by Ecofin which is unaccountable to the people?
How else do you explain the dominance of financial interests on ECB advisory boards?
How else do you explain the Treaty ratification process after Denmark rejected it and the French referendum nearly failed? There was little democratic input after that and the elites rushed to Lisbon to make the Eurozone a fait accompli?
How else do you explain many other examples where national governments are forced to comply with dictates (fiscal compact etc) which clearly undermine the well-being of their citizens?
Andrew Watt can defend the Eurozone until the cows come home. But by any measure it has failed and only continues because its institutions break their own laws.
We reject the common currency for the same reasons I rejected the plan in the first place and for the same reason Pierre Werner’s team in 1970 and Donald Macdougall’s team in 1977 questioned the viability of monetary integration.
It is simply not politically possible to create an effective federation in Europe sharing a common currency with integrated fiscal and monetary policy at the federal level being executed by a democratically elected and accountable body.
Germany, for one, will never allow that.
The most superficial understanding of post war European history tells us that.
That is enough for today!
(c) Copyright 2017 William Mitchell. All Rights Reserved.
This Post Has 29 Comments
Tat best these characters are trying to slip an Epistocracy in via the back door. But really they just want rule by experts because they think people are just too stupid to vote ‘properly’. Neo-aristocrats is probably a better description.
Their writing and their attitudes sound like the well-meaning person running a toddler class: “Look how we empower our little citizens. Every day we have a vote about whether to have red low-sugar juice or blue low-sugar juice. How democratic we are”.
The future lies with highly cohesive sets of people lightly coupled to other highly cohesive sets of people and managing their resources via their own currency system. The challenge for political and economic theorists is how best to handle the peaceful interaction between areas of diverse views.
“Yes, read the book. The Social Europe Op Ed was less than 2000 words, the book is 310 odd pages.” What the heck- my copy only has about 150 odd pages- when do I get the other half?
Which is it to be? Socialist internationalism or neoliberal nationalism?
The socialist experiments of the 20th century failed comprehensively.
Neoliberalism is dying a death by self-strangulation.
With due respect to Bill, I don’t think MMT will save us either.
“With a truly progressive political will and the correct understanding of Modern Monetary Theory (MMT) that capture could be terminated fairly quickly and capital brought to its knees.”
Thus is delusory. Capital or foreign exchange markets will get you in the end, one way or the other, unless totalitarian tyranny is brought to bear.
Love being on this side.
Just have to state some facts and arguments from someone like Andrew Watt fall apart.
In general, I think there is this elitism that permeates in elite institutions. Educated people really think that they always know better and refuse to listen to other people’s opinions. The problem is that they are dead wrong in many cases.
I was working in a lab at a top uni and a graduate student there sincerely believed that only educated people should vote and make decisions. I have heard post-docs say that they have no respect and sympathy for people who commit suicide and they are weak to do that.
Of course, in reality, we have already had rule-by-the-most-educated. We have had the most educated people like Clinton and Obama, yet these people have always sped up the destruction of the social contract and push for intentional murder programs. All the freaks in congress now are highly educated by America’s most elite institutions.
Quite often, our misleaders say and push for things that show that they are no different than some stereotypical sociopath/barbarian.
In his book, Thomas Frank said workers who never went to college more accurately predicted free trade’s effect than the most educated economists.
Not saying we should attack or rollback education but honest people need to admit that education can lead to close-mindedness and allow people with sociopathic tendencies to achieve positions they have no business to take.
You are right. Sometimes I’d like to be “realistic” that MMT may not save us (in time?) because we are against so much well-entrenched economic ideas. However, we have also seen the developments of Corbyn and Sanders. I believe that it will take one real left party to push through this neoliberal mist to end this neoliberal age.
I don’t really buy the capital/foreign exchange market getting you either. We know from MMT the capacity of a sovereign government.
How does capital or foreign exchange market wreck a country that has sovereignty over its own currency? By denying essential goods? Can’t a country just work really hard to get those currencies like Korea had done before while a country develop its own capabilities?
For capital market, I think you mean like foreigners coming in a buying stuff up? Can’t you impose capital control laws?
You have examples of those? I would like to look at them.
Cuba has been under embargo by the US for how long? They aren’t dead.
Finally, whats the point of being a downer when every single time people say social change is impossible.
We don’t need any fancy theories.
All we need is common sense and a sense of fairness and decency.
But it seems this is all too much to expect.
I am a Europhile, Bill, even though I agree completely with your criticisms of those who run the show; and sometimes show it is. They have many bad ideas and the few good ideas they have they seem unable to see how to implement, which is probably because the two sets of ideas do not cohere together very well. Varoufakis’s discussion of what happened to him re the Eurogroup supports your position, though he takes a quite different stance in his reaction to this rather dysfunctional organization.
My Europhilia along with its criticisms of how the place is run was forged in the ‘Love it or leave it’ time during the sixties. Hence, my concordance with Varoufakis’s stance in this regard. I can’t talk for Varoufakis.
Let me put it another way. As an analogy, we can take the view that we are in ’20s Germany, where the elite is acting quite badly and thereby causing a good deal of misery within the population, and suppose it possible to consider that we could alter the situation from within. Or we could suppose, along the same lines, that we are in ’30s Germany, particularly subsequent to 1933, where the only reasonable position to take would be to leave. This was Bruno Bettleheim’s position in 1938 after his internment in a concentration camp. His friends told him he was mistaken and had misinterpreted what had happened to him. Who was being delusional here?
At the risk of being thought delusional, I am inclined to think that we may be in a situation analogous to that of ’20s Germany rather than ’30s Germany. Though, of course, I could be proved wrong.
Henry, common sense is nothing more than a set of theories that is generally agreed, sometimes in the absence of critical thought. Theories that are explanatory of what is happening in the real world need not be fancy. MMT could not be called a fancy theory. Though some neoclassical theories could and they are all empirically false. Data does not speak for itself, as once was claimed. A theory, or set of theories, is needed to interpret such data.
Addendum: With respect to my Euro comment (which does not include the Euro(zone) above, which is a disaster), I accept Keynes’ notion of what I call ontological uncertainty. Hence, I think it impossible at the present time under the present circumstances to assess the risk that I am being delusional. Which, of course, does not entail that I am not.
I would say, Bill, that anyone who accuses you and Fazi of fascism and/or the like has not read your book carefully, if at all.
Mine’s got about 300 odd pages too. But I’ve hit upon the answer. Turn the page.
“Never assume intelligence when stupidity will do the job.” -Gary Herstein
Well, it is clear that this week’s blogs affirm to me that life nowadays comes down to a Punch and Judy show. F*ck real life and come to Neverland where the people in power tell you what your reality is.
When I understand things right, our governments creates fiat money for a so called capitalist laissez faire economy with the promises of wealth for all of us through hard work, credit, and finance, while in the mean time they are actually enriching themselves and their members of the 1% club. OK, I had a inkling this was the case which is nevertheless very upsetting especially because governance is robbing us more and more of our powers to resist them. I referring to one of the blogs, I think you can better call it the sham of the European Union. We as members believing that the people representing us taking care of Europe’s ideals and values on our behalf, while in the mean time a select group is literary robbing us from everything Europe once represented. Confronted with the problems as a change agent in working environments and failing to understand what was going on, I started searching for answers in which it took me four years, reading a lot of books, and a change management training with emphasis on post modernism until Karl Polanyi’s Great Transformation put me in the beginning of the year on track to Bill (he came to Maastricht this year) and MMT. It was a long journey but MMT gives me a framework of thought and insight in everyday experiences which affects me but also gives me confidence and hope. So yes, you could say I was depoliticized and mechanical enslaved to these so-called self-evidencies or stopped beliefs.
Anyway, after reading Bill’s books I started to wonder about liberalism, conservatism, socialism, and fascism. In The Anatomy of Fascism, Robert O Paxton’s states that everybody is talking about this Marxist interpretation that capitalism will eventually get into trouble and inevitably need to adopt a fascist formula to save itself. Therefore we might be tempted to believe we can foresee where fascism is likely to appear, grow and take power. But that would mean falling into a determinist trap, because there remains the element of human choice. It’s a great book if you want to understand fascism and its history!
Interesting.. it is a issue I grapple with why my progressive left friends don’t seem that concerned about youth employment or the young not being able to buy houses? They have another set of progressive left ideals that you have to believe in to be part of the group. It use to be climate change now it is rights and freedoms for minority groups such as Muslims and Gay community.
I read a bit of ‘religion and the rise of capitalism’ and the books mentions the seismic shift that was caused by Luther in the reformation. That what values people believed in and individuals freedoms became important. It struck me that the extreme individualism of the left had alot in common with fundamental Christianity. What you believed is more important that what you do with the justification that if your heart is in the right place you will do the right things.
Though Bill most likely shares alot of the values of the left . There are fundamental differences his belief that ‘a society should have no unemployment’ and everyone simply having that belief isn’t going to make that happen. That we have to examine how society is working, and possible take away individual freedoms, such as creating a more central goverenment. That is very different to what alot of the progressive left thinks unfortunately.
Would Adolf Hitler be in favour of, be against, or not have any views on the existence of the European Community?
The final phrase in
“a renewed European project, based on multilateral cooperation between sovereign states.”
could have been written after WWII. Those that take control of the project determine the direction. There is every possibility for the peoples of Europe to determine any future direction if they can agree or compromise. If you leave the project you still need to cooperate with the neighbours and get on with the business of “multilateral cooperation between sovereign states”. In this sense leaving is not really an option.
Hitler would likely not have liked the EU in its present form but possibly tried to create his own kind of integrated community in his own way, das groessere deutsche Reich. His vision was not a success, and it is probably true that the present version is not a complete success either. But it is better than his.
I agree with you. I feel that there are many people who spent too much time on thinking about obscure theories. There are many things I imagine I could be doing that help many people than working in my lab everyday.
I must say that treating government like a household is common sense but it is simply wrong. I have seen that too often in all political discussions.
You are right though. Even with a imaginary straitjacket, my country can do a lot better with its government finance. No denying that.
Yeah, I think you have a point there. There is always this sense that if you don’t have these basic stuff, then there is something wrong with you. It is the protestant work ethic yes?
Increasingly, I see that neoliberals love to hide behind LGBTQ and colored people. It’s sad to see neoliberals (democrats in the US) use LGBTQ and colored people as shield to share the blame that they themselves deserve. (Of course, there are also LGBTQ and colored neoliberals too.)
I think my government (US) has enough power as it is now. Its just that there are too many congresspeople simply do not know how or have no interest in improving lives. There is nothing preventing them from introducing single payer health care, free college, or green new deal. They won’t touch the issues with a 10 inch pole.
I read in The Guardian yesterday that the defence against Bill’s position that the ECB violated the Lisbon Treaty is that they are giving loans to the southern states rather than an outright bailout so it doesn’t violate anything. Is this not true?
Dear Simon Turner (at 2017/10/27 at 8:27 am)
It is not true. First, they are not helping the most needy southern state – Greece. They are excluded from the QE program
Second, they are buying government debt, issued in the primary market to the dealers to provide euro-funds to match their deficits, in the secondary markets from those dealers. It is equivalent to funding the deficits. The primary dealers would demand a much higher yield if the ECB was not buying the debt off them and many governments would find that there would be no dealer wanting to buy the debt at reasonable yields.
That is, the ECB is bailing out the governments.
“If you leave the project you still need to cooperate with the neighbours”
You can co-operate without requiring a central institution. The UK has co-operated with nations in the anglo sphere for ages. There has been no suggestion we should re-create the British Empire.
You cannot leave the world, but there is no need for hierarchy – particularly when that hierarchy is a clear power grab.
The reason the EU elite are so keen on getting an EU army sorted out is that they know who is coming for them.
Sadly, in Kalecki’s homeland, the Kalecki Foundation warns everybody that the pension system is “out of money” and deep cuts are needed “now”.
Could you guys stage an intervention?
You state that ‘He (Andrew Watt) claims that breaking up the Eurozone and returning to currency sovereignty will create “conflicts” on the Continent’.
He never made that claim in his article. In fact, he didn’t mentioned the Eurozone at all (for all we know, he may agree with you on that point actually). I think you were perhaps a bit uncharitable with his piece?
Also, I think that you have insufficiently addressed his point about negative externalities. Surely, the obsession with fixed rate exchange that you mention might have been the source of many negative externalities in the past, but still, there is the general issue of states advancing their welfare at the expense of others which remains unaddressed. Same with his point on the more powerful states bullying their weaker neighbours. How’s the world of atomised sovereign states safer from all that and also from jingoism, territorial disputes, and ultimately violence, than, say, the EU (with all its flaws that Andrew fairly admits)? I think this is the point where Andrew says history is not your friend and I don’t think he meant post-war European history.
“How’s the world of atomised sovereign states safer from all that and also from jingoism, territorial disputes, and ultimately violence, than, say, the EU”
Surely the proof is the other way around. How is it any better? By sweeping the problems in Greece et al under the carpet and continuing to impose severe sanctions on them that they could relieve themselves with currency sovereignty?
The centralisation phase is over. Democracy works best at small size where you have a cohesive polity. Large democracies degenerate into autocracy with their ‘one size fits all’ viewpoint. The lies the globalists have deluded themselves with have been exposed for what they are.
What History shows is that empires fall.
“Democracy works best at small size where you have a cohesive polity. Large democracies degenerate into autocracy with their ‘one size fits all’ viewpoint. The lies the globalists have deluded themselves with have been exposed for what they are.”
“At the risk of being thought delusional, I am inclined to think that we may be in a situation analogous to that of ’20s Germany rather than ’30s Germany. Though, of course, I could be proved wrong”.
But isn’t that speculation entirely academic either way? We gave formal notice of leaving after the prescribed two years have elapsed. The clock is ticking.
And that was what the referendum decided (rightly, in my view) that the government must do. What’s the use of agonising about it?
Excellebt blog post;these internatiinalists(faux left neoliberals) are so boorish.my tribe really ofc(relatives+more middle class friends) but that is
Why it is so tiring.
“Andrew Watt is, I guess (although he doesn’t come out and say it), trying to say that the amorphous bond markets will punish a government that tries to ‘progressively’ spend or tax.” –
is EXPLICITLY a straw man. If you think he didn’t say anything, fine; but a flying guess at his intentions is self-serving.
This, even though I support MMT and oppose neo-liberal policies, so I’m on your side. It’s the sort of thing that makes me stop reading.
Dear Oregoncharles (at 2017/11/18 at 5:27 am)
You are, of course, free to stop reading.
But your statement is false (especially as you bolded the claim). The quote you list from my blog selectively excludes the context, which I elaborated on and which allows me to conclude what Andrew Watt was referring to.
He noted (in our words) that “The internationalisation of finance and the growing importance of multinational corporations have eroded the ability of individual states to autonomously pursue social and economic policies – especially of the progressive kind – and to deliver prosperity for their peoples.”
QED. No straw man or woman.
Do I understand well that you are favourable to the European Union without a monetary union or a fixed exchange rate system? In other posts on this blog you are arguing for capital controls and against free trade. You also state that it was the CAP that made the fixed exchange rate system necessary, so I guess the CAP needs to go as well – but then the nation states will replace it with national subsidy systems which make free trade of goods difficult. It seems to me that the policies of the EU are interlinked, and this is why integration needed to go on and on. What kind of supranational organisation would you favour then instead of the present one?
I also wonder if CAP really makes fixed exchange rates necessary – currently there are a number of countries recipient of CAP subsidies and having a floating exchange rate. My country, Hungary is an example.
Another, related question is currency wars. One interpretation of these supranational rules is to avoid a prisoner’s dilemma (or chicken game) situation and to create circumstances where cooperation is the only option, instead of trade wars or currency wars.
If you have already written on these issues, please link them here to me – you have so many writings that I have trouble finding answers to specific questions.
“But a supranational organisation such as the EU is well-placed to handle matters that individual Member States cannot easily handle – such as migration, climate change, rule of law – human rights etc.
But none of those issues require any “pooling of sovereignty” in the sense that we use the term sovereignty – the primacy of the currency-issuance capacity.
The problem the Left created is that it took the supranational step too far and surrendered sovereignty when it pushed the Eurozone onto citizens.”
“The creation of the European Community as a political construct to deal with major issues was a positive step. But there was peace for decades without the next step of creating a monetary union.
It is the monetary union that has created the conflict, the disenfranchisement, the angst among citizens – despite the on-going support for it.
Further most of the negative externalities he notes that arose when nations were less linked in the post war period were the direct result of an obsession with fixed exchange rates, necessitated by the introduction of the Common Agricultural Plan.”
Two points stand out for me in this:-
I’ve tried to get to the bottom of what is meant when people talk about “the mobility of capital” causing a constraint for governments. I don’t think it is just about whether governments need to worry about bond markets when running a fiscal deficit or even about whether governments need to worry about currency exchange rates. Sometimes people use the phrase when they are meaning whether a multinational corporation decides to locate in one country or another. So whether Nestle or Toyota or Goldman Sachs or Novartis or whoever decides to wind down or scale up in a certain country will depend on whether a certain country creates a business environment to their liking. Capital controls by a government can’t directly eliminate that and neither can MMT sovereign currency arrangements. Perhaps measures such as having homegrown industries with workers’ representatives on the board and perhaps government partial ownership of the companies might.
My impression was that when Andrew Watts was talking about the need for pooling sovereignty in order to stand up against global mobile capital, he was alluding to the need to stand up against the interests of multinational corporations in that sense (am I wrong on this?). My view is that the EU is not going to do that because the EU can’t have effective democratic accountability because of its super-national scope. The democratic accountability within each country comes about to the extent that people in that country argue stuff out and come to a common compromise as one coordinated conversation. Europe is so disparate that there is never a coordinated debate and campaign across the EU. There are not effective pan-EU political parties. Instead different discussions take place in different countries at different times. So irrespective of any electoral reform or whatever, the EU can never attain effective democratic accountability unless it first starts acting like one country. I think Europe benefits greatly from having many diverse nations so it would be a great loss if we all blended into a group-think as one country. So basically if we want democratic accountability, it won’t be at the EU level. And if we want to stand up for what citizens’ want, then that is only going to happen through individual countries because only individual countries will be effectively held to account by their citizens. Because the EU is immune from democratic accountability, it instead gets run on a technocratic basis. The technocrats inevitably represent the interests of those with the means to lobby them (eg corporations, land owners etc) and perhaps unconsciously the class interests of the technocrats themselves (as affluent professionals).