As I noted yesterday, last evening I accepted an invitation to speak on a panel…
Reflections on the 2nd International MMT Conference – Part 2
I am now on a train heading back from Galway to Dublin for tonight’s event. This is Part 2 of my responses to the conversations I had and presentations I attended during the Second International Modern Monetary Theory which was held last weekend in New York City. In Part 1 I focused on the importance of starting an activist program with a thorough grounding in the theory and practice that the core Modern Monetary Theory (MMT) team has developed over the last 25 or so years. As MMT becomes more visible in the public domain and seems to offer much to those with progressive policy aspirations, there is tendency to adopt a stylised version of it (a sort of shorthand version), and sloganise MMT. Part 1 cautioned against that tendency. The latter part of Part 2 also introduced the idea that there is only one Job Guarantee and many of the multitude of employment guarantee proposals that have popped up like weeds after rain in recent years do not have the essential technical design features to make them consistent with MMT. I continue that theme in this blog post.
Clarifying the lens-value distinction
To begin, I noted a comment overnight that seemed to reflect a puzzlement about what I mean when I say that it is meaningless to talk about MMT’s prescriptions because MMT is a lens rather than a value system.
First, that does not mean that MMT is merely descriptive.
I hope that the blog post – Understanding what the T in MMT involves – leaves no doubt that the body of work we have created combines behavioural theory, history, culture, descriptive elements, and accounting structures to form what we call MMT.
Second, when I say that MMT is a lens for understanding the monetary system and the capacities of the currency-issuing government within it and explaining the impacts of changes in behaviour and policy, I am excluding using that understanding to develop policy interventions.
I was surprised to see that this point is still somewhat misunderstood out there.
I have, what I think, is a very coherent set of policy interventions, which I consider to be a progressive response.
My 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015) and our recent book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017) contains a strong policy emphasis.
The former concerns policies that would allow a Member State of the Eurozone to exit gracefully with minimum damage and the latter provides a broader discussion about how a progressive agenda to counter the neoliberal stronghold can be designed and implemented.
The policy and applied discussions in both books are conditioned or informed by my understanding of MMT. That understanding provides me, I think, with a solid grounding to make estimates (qualitative and quantitative) on what will happen if.
I believe that understanding also allows me to counter the standard claims that the type of policies I advocate will elicit from mainstream economists.
For example, I don’t believe a unilateral exit from the Eurozone by, say, Italy, would deliver worse outcomes that they are already facing as a Member State of the common currency.
The point is that the policies I advocate reflect my value system rather than my understanding of MMT. MMT becomes a tool for me to work out what would be the impact of applying my value system in the policy space.
However, someone with diametrically opposed values could have exactly the same grasp of MMT and come up with vastly different policy prescriptions.
The point I have made in the past about that is that MMT lifts the ideological veil that creates a smokescreen in the public debate.
Thus, in the current neoliberal environment, a right-winger can mount the case that the government cannot employ all idle labour because it doesn’t have enough money.
This chimes with the dominant frames that reinforce the neoliberal dominance and so militates against progressive policy implementation.
But if everyone understood MMT then that right-winger would be forced out in the open and would have to declare that they wanted mass unemployment because it served a functional role in reinforcing the hegemony of the elites, by suppressing wages growth and creating a sense of desperation and precariousness among the workers.
That would be a much harder position to sustain in the public debate and that is why they use smokescreens to hide their true motivation.
I hope that clarifies that issue.
There is only one Job Guarantee – continued
It was also said during the Conference that MMT is not the “soul” of the ‘right to work’ movement. The core MMT team has never claimed otherwise.
As I noted in Part 1, the concept of ‘right of work’ goes back to the C13th and the right-wing has always opposed it and at various points in history have deployed various ruses to thwart its application.
The core MMT team considers the ‘right to work’ concept in terms of efficiency of use of productive resources, quite apart from our individual attitudes to the moral and philosophical aspects of the concept.
While we, typically, adopt a broader concept of efficiency (emphasising social costs and benefits) the the mainstream economists tend to have what I call a ‘narrow’ concept of efficiency (based on private costs and benefits), the pursuit of this goal is based on a view that wastage is undesirable.
So from a technical perspective, MMT is designed to produce a special form of full employment, through the deployment of an unconditional job offer at a fixed price to anyone who desires to work. That is quite a different motivation to any values-based desire to guarantee a ‘right to work’.
Although, of course, they deliver the same outcome (well mostly).
Building on what I was suggesting yesterday and consistent with the heading in this sub-section – ‘There is only one Job Guarantee’ – it should be clear that the core MMT team has never claimed to have invented the term ‘job guarantee’.
That terminology goes back in time.
But what is indisputable is that the work of the original MMT team is responsible for bringing the concept and terminology of the Job Guarantee into the modern era in the form of a buffer stock mechanism.
That is our unique contribution.
The ‘only one Job Guarantee’ statement relates to the buffer stock mechanism, which ensures that the Job Guarantee is part of a macroeconomic stability capacity rather than just being an employment creation policy.
In turn, this means that there are very tight specification requirements for an effective MMT Job Guarantee, which go back to the core body of work we have developed.
So while there is no criticism here of the many employment guarantee proposals that have been circulating in the public debate over the last few years, the fact is that most of these do not have a ‘buffer stock’ mechanism at their heart.
In that sense, these proposals are not related to MMT at all, although the tendency to see MMT as a slogan also promotes a tendency to align these proposals with MMT. I reject that and want to discourage it.
Whether these policy proposals have desirable aspects is beside the point. If they are void of a ‘buffer stock’ mechanism then they open the MMT approach to criticism that is undeserved.
For example, at the conference I heard people claim they would have a structure of wages built into the ‘jobs guarantee’.
Note I use lower case here which is a pointed distinction from a MMT Job Guarantee.
I have no problem with proposals that argue that we should introduce more public sector employment and offer those jobs with a skills-based wage structure.
But such a plan would not be remotely like the MMT Job Guarantee.
The latter is a buffer stock mechanism which unconditionally hires at a fixed priced in order to redistribute labour resources from an inflating sector to a fixed price sector or from a zero bid state to a fixed price state.
A wage structure would see the government buying labour resources at market bids, which defeats the price stability characteristics that are intrinsic to the MMT Job Guarantee.
It is crucial that activists who wish to organise around the MMT school of though understand the full implications of that.
The MMT Job Guarantee is a macroeconomic concept that replaces the conventional Phillips Curve (and the discussion about trade-offs between inflation and unemployment) with the capacity to achieve ‘loose’ full employment with stable inflation rates.
It also seemed from the discussions I had or witnessed during the Conference that many thought that any public sector employment initiative (such as employing engineers on public infrastructure projects) could easily be called a ‘jobs guarantee’.
This undermines the meaning and specificity of the MMT Job Guarantee.
Even the use of the term ‘jobs guarantee’ discloses a lack of precision about what we are talking about.
Language aside, this plethora of proposals can never be compliant with the MMT Job Guarantee.
That point was not uniformly understood by delegates at the Conference and needs to be.
The original MMT team does not want the plethora of non-MMT employment creation schemes to be associated with our work.
And to put a finer point on that, it is not even correct to think of MMT Job Guarantee as being mostly a job creation program. It is a macroeconomic stability framework and the job creation aspects are just one part of that framework.
Creating public sector jobs without the buffer stock mechanism does not conform with the stability features inherent in the MMT Job Guarantee.
There are things that have to be considered and thought about
During the Conference I heard many speakers say that there are lots of things that have to be considered and thought about in relation to the design and implementation of the employment guarantee.
I agree that we always need to keep an open mind and think all the possible angles that might arises. We always have to guard against so-called unintended consequences.
But, that doesn’t mean we have to continually reinvent the wheel.
Disturbingly, not one of the alleged uncertainties that I heard raised during the Conference about the Job Guarantee were new to the core MMT team.
Moreover, the fact that these issues were raised in this forum is indicative of the fact that people do not start at the beginning and become fully acquainted with what MMT is before they offer themselves as public commentators – in this context – as panel members – holding themselves out as ‘experts’ in one way or another.
I know that academics adopt a particular approach to things, particular those engaged in research. But that is no excuse for a non-academic to ignore the huge body of work that we have created over the last 25 years or so that have gone into all these issues in significant detail – both from a theoretical and operational perspective.
Optimism and realism
There was a massive wave of optimism at the Conference. Statements such as “We’ve won” were made. My own view is that we are not even close to ‘winning’.
My realist streak tells me that we are making good progress but systems of ideas don’t surrender their dominant position easily. It is a slow burn for a new set of ideas to establish congruency and for that congruency with the data to become visible and understood.
While the composition of the participants at the Conference confirmed that MMT has spread beyond the discipline of economics into other areas of academic activity (law, humanities, social work, etc), my view is that until it becomes mainstream in economics department no statement of ‘victory’ is justified.
The reality is that the economic policy process is dominated by economists in various guises. The graduates from these departments (and their programs) enter the public service, central banks and the economic think tanks, and dominate the economic policy making process.
The fact is that the mainstream undergraduate and postgraduate programs in economics are insensitive to change at the moment. Even in the aftermath of the GFC, very few changes have been made to the teaching programs and the textbooks that support them.
It is also important not to get ahead of ourselves. Groups have a tendency to build their own narratives, which can easily start exhibiting the signs of Groupthink. Staying grounded and open is a way to insure against that sort of tendency.
Need for on-going education
While the Conference demonstrated the significant progress that has been made in the MMT project and it is clear that we have developed a coherent body of work there is still much to be done.
There are various roles to play in this on-going effort.
The growing networks of activists now need to connect up on a global basis. Efforts are underway to accomplish that. There were many disparate groups (and individuals) of activists from a diversity of countries. Even Mongolia was represented (Hello to Bold!).
By bringing people together in this way for an immersion-session of MMT talk, the Conference is making a major contribution to widening and deepening the activist networks.
I thought during the Conference as to what my on-going role will be in the MMT Project.
As well as activism in the public domain, there is still an important and on-going educative role to ensure the practical manifestations of the Project stays connected to the body of work we have established.
Education empowers.
That is my role and is the reason I started this blog in the first place.
In that context, I have already indicated that in 2019 the ‘MMT University’ will start to offer courses to the public. Constraints imposed by various authorities on the use of the term ‘university’ will probably force me to rebadge the endeavour as ‘MMT Education’ or something like that.
The launch of the teaching programs is currently planned to coincide with the publication by Macmillan Palgrave of our textbook – Macroeconomics – in February 2019.
The core MMT team will support the academic activities of the effort.
We plan to offer very introductory ‘kindergarten’ level courses in MMT and then a range of courses in Macroeconomics up to graduate-level studies, which will be designed around the textbook.
Macmillan has also indicated it will be selling the textbook for $US75. I will find out what they plan to charge for the British and European market on Friday (tomorrow).
But this will be a very attractive price, although I know it will still preclude purchase for many workers and people of less means. I will be working on a solution to that equity access problem in the coming months.
The initiative will be a key part of the on-going MMT Project.
However, while I do not need large funding to support the endeavour, the reality is that I need some funds. My target is around $US150 thousand a year.
I also want to lock down financial support for a long period (say 5 to 10 years) so that we can plan ahead with some security of the resource base.
I thus am looking for sponsors who will be prepared to make a commitment to the this part of the project.
I am setting up a 501(c) not-for-profit organisation in the US in the coming month or so which will allow us to raise funds and channel them into ‘MMT Education’ in a way that can allow confidentiality for the donor if that is what they desire.
So if you are in a position to help then I would be interested in hearing. The financial support will be used to employ an administrative capacity and allow us to offer the programs for free to those interesting in learning MMT in a systematic way.
Accessibility of the core MMT academic team
At the final session, it was raised that the activists were in some way intimidated by the presence of the core academic MMT team at the Conference and were thus reluctant to make contact.
There were statements that we were “celebrities”, “heroes” and other exultory references, which presented a ‘social’ constraint against interaction between the activist community and the core academic MMT team.
That point was introduced explicitly at the last session while I was on the last panel.
My response was as follows.
I noted that use of the term ‘hero’ and the like was deeply discomforting to me.
I also think this is a curiously cultural tendency of the US. No-one in Australia would call me ‘sir’ or feel they were unable to address me by my first name (Bill).
However, whenever I am in the US, people call me ‘sir’ and ‘professor’ even if they have already made my acquaintance.
So in terms of accessibility, it works both ways. If a culture builds people up to sit on pedestals then it is no surprise that they will be considered unapproachable on a personal level.
I suggested that none of the core MMT academic team were resistant to approach.
We are all workers doing our job. We don’t consider the job we do is of a higher status than other jobs. It is just what we do.
In fact, I think low-wage cleaners, for example, are doing more important work and should be paid highly, because they prevent widespread health disasters.
Conclusion
I hope that these two blog posts have provided clarification to some of the issues I considered arose during the Second International Modern Monetary Theory which was held last weekend in New York City.
In general, I don’t want any of these ‘clarifications/criticisms’ to undermine the overhwelming sense of optimism, enthusiasm and energy that was clearly on display at the Conference.
My purpose is to continue my role as an educator, which is part of the overall effort to broaden the awareness of MMT and steer the policy applications that arise from this enhanced societal understanding in the progressive rather than reactionary direction.
Tonight I am back in Dublin for another public event and the details of that event and the ones to follow throughout Britain and Europe follow.
My current UK/European speaking schedule – update
Thursday, October 4 – Dublin – Reclaiming the State Workshop – at Wynn’s Hotel, 35-39 Abbey Street Lower, North City, Dublin 1, D01 C9F8.
Time: 20:00.
This is a public event
The event will be chaired by Dr Karen Devine from Dublin City University.
Organiser: Desmond Greaves Annual School.
Contact: Kevin McCorry – post@greavesschool.com
Friday, October 5 – London – Launch of the The Gower Initiative for Modern Money Studies portal.
Event Time: 12:30 to 19:15
Location: The Diskus Lecture Theatre, Unite the Union, 128 Theobalds Road, WC1X 8TN London.
Registration for the Launch is from 12.30 for a 13.00 start.
Afternoon seminars/workshops:
1. An introduction to Modern Monetary Theory (MMT)
2. The Job Guarantee.
Registration for the workshops is from 1600 onwards for a 1630 start.
There are a limited number of places. The launch is free, seminars have a nominal charge of £7.50. Booking is separate for the two sessions. Refreshments will be available.
At the Launch, I will be joined by Randeep Ramesh, Chief Leader Writer for The Guardian, who will he talking about the role of our media in shaping our economic narrative.
Sunday, October 7 – Lisbon – Details to follow. I will be talking about the Job Guarantee and UBI.
Saturday, October 13 – Wurzburg, Germany. Makroskop event.
I am on a panel at 13:15 with Heiner Flassbeck and Martin Höpner – topic Exchange rate regimes
Location: Tagungszentrum Festung Marienberg, Oberer Burgweg 40, 97082 Wurzburg
The workshop runs from 9:00 to 18:00 with several speakers discussing aspects of currencies.
Contact: rsvp@makroskop.eu for details.
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.
I really appreciate the comments on the “JG vs jg”. I have suggested in online discussions in the past that, from a theoretical sense, it might make sense to propose the MMT Job Guarantee “anchor price” at the same level as the current minimum wage. I definitely believe that the minimum wage (particularly in the US), is way too low, but proposals putting the JG labor price at say $15 an hour are making the scheme do two things at once. These types of proposals inherently turn discussion about the JG into a discussion about the minimum wage (i.e. Private business will close in masses because they can’t find enough workers). I am completely sympathetic to the need to raise wages for low income workers, but I believe there is value in isolating the price stability framework to clarify the core argument behind the proposal. This would make it easier to explain that the JG bid for labor will fluctuate in a way that anchors the price level to some “desired” level of inflation. Ultimately, using the current minimum wage as the JG price would serve as a simplifying assumption that would clarify the core argument for the program without opening it up to criticisms that are really separate issues.
Anyone going to the GIMMS launch please note that there is a strike tomorrow (Friday) on Southwestern Railways. So far they have not issued a revised timetable, but to be safe I have routed myself via Reading from Bournemouth which, though slightly longer in time is, surprisingly, cheaper.
So, an MMT Job Guarantee is not to be conflated with, say, a nationwide build out of a smart grid. Even though an effort of this magnitude would obviously involve creating new jobs? But would an MMT Job Guarantee involve some ‘fixed price’ flexibility, in terms of policy? For example, if the minimum wage is insufficient to allow for independent living but is rather a wage of sustenance only, would the Job Guarantee be allowed to establish a fixed price above the minimum wage? Otherwise the buffer stock would look a lot like the unemployed, as a practical matter.
Thank you Bill for clarifying the prescriptive/descriptive debate. I think I understand now. MMT does not select the goals of economic policy. But once those goals have been agreed upon, MMT allows a description of the prescription as to how to achieve them. Got it:)
That’s what i like a lot about the JG, the inflation suppression. Where I live, a JG is looked down on, as is public sector work. Then to make clear the JG is really about taming wage inflation while avoiding labour bottlenecks and cost-push inflation due to shortages at the same time, usually shuts up the critics.
It really sticks to any ideology without ever becoming ideological. A way to please anyone, given they put in the effort of studying the JG. I like that.
“So, an MMT Job Guarantee is not to be conflated with, say, a nationwide build out of a smart grid. Even though an effort of this magnitude would obviously involve creating new jobs?” Correct. MMT’rs argue in favor of the active and responsible use of both fiscal policy AND a JG to deliver what is politically determined to be in support of the public good.
I think I read that MMT supports the JG wage being what is considered a living wage, available for anyone willing and able to work.
” Otherwise the buffer stock would look a lot like the unemployed, as a practical matter.” It’s a buffer stock of employed people as opposed to the current buffer stock of unemployed people, which allows the private sector employers to treat people like dirt. That’s a pretty big difference!
‘We are all workers doing our job. We don’t consider the job we do is of a higher status than other jobs. It is just what we do.
In fact, I think low-wage cleaners, for example, are doing more important work and should be paid highly, because they prevent widespread health disasters.’
It is so rare to get a statement of such integrity from anyone in the academic world and tell’s us reams about Bill’s values and the way he works for a more collegiate, co-operative society . In a culture and society choking on arrogance and power this sort of thing stands out like a ray of light in a dank, dark dungeon.
Aside from the complex technical issues of MMT and macroeconomics, it is this sort of underlying sanity and intelligence relating to socio-economic relationships that gets me to return each day to read what Bill has to say.
This blog is a real gem!
What I hear Bill saying, and please correct me if I’m wrong, is that the JG of MMT is a device to reduce economic inefficiency by (1) eliminating or at least substantially mitigating the waste of labor resources inherent in able-bodied unemployment, and (2) establishing the ground floor of a stable and viable minimum wage throughout an economy. That, and only that, is the scientific contribution of MMT in the area of public job creation. All other proposals to create different or additional government jobs (jg’s) result from value judgments, which however wise and worthy of support, cannot be derived from the application of MMT principles. If different or additional government jobs are created for the purpose of, say, addressing environmental issues–which would require (in addition to minimum wage workers) the hiring of environmental scientists, engineers, etc.–then MMT can be used to inform that additional hiring process so as to avoid inflationary impact or other potentially adverse economic events. But the decision itself to undertake this additional hiring of scientists, engineers, etc. would come from how much we value nature, fear for her health, fear for our health, and so forth. It would not and could not come from any purely economic calculus.
Wouldn’t “Job Guarantee” be better termed “Work Guarantee” or “Paid-Work Guarantee”? “Job” implies that the work comes with “benefits”, which doesn’t seem necessary to achieve MMT’s objectives and adds to the confusion and administrative difficulties I’ve seen in other JG proposals.
Also, wouldn’t a JG program locally-administered, federally-paid, be more sellable, especially if a local region is not required to participate until they’re ready. (What local-region could not make good use of free labor!) The administration could be highly-automated, facilitating local-manager/local-worker coordination and federal payment execution and monitoring. Wouldn’t that relieve some of the fears of the program becoming just another federal “make-work” boondoggle?
Bill,
Is the price of the new text book correct? Is it really $US 575?
I am old and out of touch, so I may be wrong; but, that is what I paid as tuition for a Quarter back in 1966. So, to me it is way too much for a book.
Dear Steve_American (at 2018/10/05 at 3:15 am)
Thanks for picking up the typo. It is $US75. A 5 apparently entered the price unintentionally.
best wishes
bill
I want to be the proud owner of the first MMT textbook in NZ!
Will there be quizzes and questions at the end of each chapter? I always think I understand until I tackle a question, then realise I don’t. Will the answers be available online? Frustrating thing with textbooks is questions but no way to check answers…
MMT: Description and Prescription– 25 years of ongoing epistemological confusion on this issue.
Bill Mitchell in his part 1 and part 2 reflections on the 2nd International Monetary Conference indicates the following:
“To begin, I noted a comment overnight that seemed to reflect a puzzlement about what I mean when I say that it is meaningless to talk about MMT’s prescriptions because MMT is a lens rather than a value system.”
“First, that does not mean the MMT is merely descriptive.”
Bravo Bill, that gets you off on the right foot-but you then quickly slip back into incoherence when you state:
“…when I say the MMT is a lens for understanding the monetary system and the capacities of the currency-issuing government within it and explaining the impacts of changes in behavior and policy, I am excluding using that understanding to develop policy interventions.
“The point is that the policies I advocate reflect my value system rather than my understanding of MMT.
“…MMT becomes a tool for me to work out what would be the impact of applying my value system in the policy sphere.”
Bill are you saying that your value system had no impact on you helping to create the lens of MMT?
Isn’t it the case that the mental process you used to create the MMT lens also included your value system or structure of belief?
You seem to be implying that the value system embedded in your brain is somehow separate from the brute sense impressions also embedded in your brain that supposedly led you to be able to describe the intrinsic workings of the fiat monetary system.
Weren’t both you sense impressions and your system of belief inevitably involved in creating the lens of MMT as well as your particular policy prescriptions?
And doesn’t this fact also point to the realization that there can be no purely descriptive reading of any situation?
Maybe David Hume was right all along to call attention to the empirical unavailability of the pure “is” statement?
Dear Bill,
I would strongly encourage you to consider a crowd-funding approach as well as looking for larger sponsors.
While I trust your academic integrity and that of the core MMT academic team, it is true that relying on a few sponsor would give these sponsors leverage over you, which they could use to compromise the project under threat of removing funding.
Relying on individual smaller donors, on the other hand, would not have such a problem, because losing a single donation is not a huge blow.
I do believe it’s impractical to rely only on crowdfunding, but having a balance of the two should hopefully provide you with some leverage against large sponsors.
Thank you for the many insightful writings,
Andre
I’ll second cs’s suggestion. Exercises and answers, so that the reader can check his/her understanding, add value to any textbook.
Hello Bill,
Thank you, first, for identifying the elitism implied by the use of “sir” “professor” etc. I should have known better. When I was a young priest I bridled inside at being called “father” by folks much older than me.
Also, let’s just say we are substituting JG for minimum wage requirements and unemployment payments. That should satisfy some folks. And emphasize the efficiency arguments of unutilized workers. Think about folks idling on the sidewalks in city neighborhoods. Let’s see what happens with JG.
I respect the legitimacy of the term “theory” since that has to be the foundation of what is done. But, as you say, it is an explanation of what actually takes place and that is more of what most people relate to. So I offer the term “Modern Monetary Practice” as a supplementary term to be used for practical applications of the theory. (That is from another poster from some years ago.) JG would be an example of that.
Finally, since you have a theory that works, regular economic predictions based on the theory, broadly published, would both provide hard data testing the theory (the scientific method) and, if better than mainstream predictions (shouldn’t be hard), add to appreciation and application of MMT.
Keep up the good work!
Chris Hebert, Bill has said that the wages and benefits associated with the Job Guarantee should reflect the aspirations of the society with the JG. I imagine this has to be tempered by the real resources available to that society as well. He has also said that a JG job should offer a living wage and medical benefits and allow for the individual to engage in the social life of the community. (or something very similar to that). Since the federal minimum wage in the US is not sufficient for most people to live on, let alone the other things, this implies an increase over that for JG wages. And while there are doubts as to the American society’s aspirations for the working class, there is little doubt that the real resources are available in the US for an increase in the effective minimum wage which would be the JG wage.
And yes, the buffer stock is going to mostly look like people who would have been unemployed or even not in the labor force at all prior to a JG . There might be some people who would move to the JG voluntarily from private sector employment. There might even be a lot of people who do. But there also has to be people on the JG who are willing to transition to other employment as demand for labor increases or it really won’t work as a buffer stock that moderates inflation.
A propos of “It is a slow burn for a new set of ideas to establish congruency and for that congruency with the data to become visible and understood”, it was nice to see an MMT explainer of the government/central bank relationship appearing on the (web) pages of the FT. It was very nearly a BillyBlog post, though shorn of rhetorical colour! That should certainly help get the message out to a new, more mainstream audience.
BTW it was also nice to see from the comments section that a certain NeilW hasn’t fallen off the face of the earth.
Although I get the descriptive/prescriptive distinction, and thus the use of “lens” as an appropriate metaphor for MMT, when I drop down to another level, the question arises as to why efficiency should be the economic standard of measurement as opposed to other criteria or considerations? And then I begin to wonder whether the entire field of economics, per se, is predicated upon this implicit and questionable value judgment–the optimization of efficiency–which might help to explain why some have called it “the dismal science.” Surely, I’m overthinking here…or am I?
Newton Finn, despite Bill Mitchell’s insistence here that MMT does not necessarily include any kind of moral or ethical considerations about how economic policy should be devised, he has on a number of occasions shown a very important (at least, to me) diagram that makes clear that MMT views the economy as a tool that serves human beings, rather than the more typical economist view that human beings and the planet must adjust to serve the economy most efficiently. In my understanding it necessarily follows that ‘efficiency’, whatever that might usually mean economically, is not the most important thing according to MMT. People have created the economy and therefore it is possible to adjust it to serve the peoples’ purposes. I will try to find the billyblog link to that diagram and post it.
Sorry Newton, can’t find it.
I learn a lot from reading this blog and am aware there is still much to learn.
I am very appreciative of the MMT core teams’ work. It has a powerful and ongoing effect upon a whole range of my perspectives, including changing my understanding of Brexit. Most people I know, outside of MMT circles, think Brexit is a disaster for the uk. Brexit is just one example of many issues that require I try and gain a deeper understanding of MMT.
Your books and blog provide much needed insight and education about macroeconomics as well as eloquently highlighting the importance of aspiring to use accurate language.
It is this emphasis on the accurate use of language coupled with your stated willingness to remain accessible that has emboldened me to post this comment and try and respectfully suggest how and why the use of the Topsy aphorism used in the second to last sentence of the opening paragraph could perhaps be improved.
“… many of the multitude of employment guarantee proposals that have popped up like topsy in recent years do not have the essential technical design features to make them consistent with MMT.”
This may appear to be a harmless rephrasing of the aphorism, “to grow like Topsy” but I shall try and explain why this usage appears to represent a commonly held but important misrepresentation of the original meaning of the phrase that comes directly out of the anti-slavery movement.
The Topsy that the aphorism refers to, is, as you probably know, a black slave girl in Harriet Beecher Stowe’s American anti-slavery novel “Uncle Tom’s Cabin; or, Life Among the Lowly.” The novel, published in 1852, had a profound effect on attitudes toward African Americans and slavery in the U.S and tells how the eight or nine year old girl, Topsy, is bought from her previous violent drunken owners by the “respectable” white slave owner Augustine St. Clare for his cousin, Miss Ophelia, to educate and train.
When Miss Ophelia, asks Topsy, “Do you know who made you?”
Topsy says, “Nobody as I knows on… I spect I grow’d.”
(This is the dialogue in the book where the aphorism comes from).
Topsy’s new owner take this answer as evidence that Topsy is a “heathen” because she unable to acknowledge that God made her. It confirms in Miss Ophelia’s mind that it is her task, as a good Christian slave owner, to “educate” Topsy, (from a New England perspective), to accept that it is God, that made her.
But of course Topsy’s answer was, in fact, more accurate to the custom of her time, in that the babies of black slaves were literally the property of their white owners. At the time “Uncle Tom’s Cabin” was written, any slaves’ babies could legally be taken away and raised by white “speculators” to be sold later at a slave market. These children of African American slaves were reared as if they had no more rights than cattle.
Topsy did not know her age or that she had parents because she was raised in this way, by a speculator and sold at a slave market for a financial profit.
Because Topsy was black she was literally “grown” for commercial purposes and was a victim of a racist economic system that regarded her as a type of produce and not as an equal.
It is regrettable that this shockingly profound reference to the slave trade within the Topsy aphorism has altered over time to just denote something that proliferates, in an uncontrolled way, rather like a weed.
Due to Topsy being my name the story around this aphorism holds particular significance for me, in addition to it being a literary and historical phenomenon.
Hopefully it will appreciated why this point is worth making making.
Once again, I would like to thank you for all your work. This reflection is offered with a friendly and helpful intent
Uncle Tom’s Cabin – Chapter XX – Topsy – https://www.youtube.com/watch?v=S14bKgRitMg
Slave mother’s love – http://archive.kuow.org/post/slave-mothers-love-56-carefully-stitched-words
Thanks, Jerry, for the further clarification of Bill’s position, which comes through strongly in the excellent book he wrote with Thomas Fazi: “Reclaiming the State.” Those who haven’t yet read it, simply must, for it lays out the only viable political position left for the left–the advocacy of a nurturing and inclusive form of nationalism/patriotism capable of undermining and transcending global neoliberalism. But to return to the larger issue of economics per se, a threshold issue beautifully framed by E.F. Schumacher, there remains in my mind a nagging question whether the entire spectrum of economics, from mainstream viewpoints to unorthodox interpretations, does not suffer from a category mistake; namely, that it attempts to invade–and, worse yet, often occupies–the inherently subjective terrain of the humanities by the blunt and sometimes blanket application of allegedly objective scientific principles. The same charge, of course, could be leveled against many of the other “social sciences,” and it’s likely a problem that cannot be solved but only kept in mind as a kind of counterbalance to the often useful analyses and findings that these disciplines offer. None of this is intended as any knock against Bill, who has taught me much and whom I greatly admire.
Dear Topsy (at 2018/10/07 at 10:15 pm)
Thanks very much for the etymological analysis.
The fact I used the term that is in common usage demonstrates my ignorance in this respect.
I am editing the expression out of the post but will leave your comment intact for all to learn by.
Much appreciated.
best wishes
bill
I agree with everything Bill writes about the JG (as an admirer of his work how could I not?).
But I continue to believe that a tactical mistake is being made in putting so much stress on it because (despite all Bill’s and other luminaries’ eloquent disclaimers) it gratuitously provides ill-intentioned critics with useful ammunition – by its misuse of course and through self-serving wilful misrepresentation, but useful to them nevertheless for their own devious purposes.
Judging from Bill’s resume of the recent conference it’s also being used as a bandwaggon for a whole lot of (well-intentioned) free-riders peddling their own agendas. Although Bill strongly deprecated that and wants to discourage it he won’t succeed I’m afraid. It’s just too tempting.
Until the day dawns when an actual, working, “dry-run” JG is able to be set up and operated, and proves that it can work successfully, the lies and misunderstandings about it will not be able to be counteracted. That’s just human nature I’m afraid. Ordinary people are never going to be captivated still less convinced by a concept as rarefied as a “buffer stock”, however elegant it may be as a theoretical concept. Only a small coterie now is aware of the existence of the Philips Curve or NAIRU, let alone what they mean – though they’ve been around for donkey’s years.
In the meantime why not confine its technical exposition to the forthcoming textbook and to the classroom, while playing it down for wider consumption in the wider domain? No MMT purity would be sacrificed by so doing and tactically much might be gained.
In my humble opinion.