This is Part 7 of the short series of briefing notes that arose out of…
A structured approach for progressive political ambitions – Part 1
I am stuck in London courtesy of the terrorist policies of Donald Trump and his Israeli gang mates. I arrived at Heathrow on Saturday expecting to be home by last evening only to learn that all flights via Doha were indefinitely suspended. Big problem. I was lucky to find a hotel room at the airport where I am bunkered down for a few days before a rebooked flight on another airline is possible. Luckily, I have been able to find a flight with another airline and will leave London on Tuesday (fingers crossed). Anyway, that was a bad end to a good week’s work in London. Apart from the public launch of the new policy research group, MMTUK, which was a good evening, catching up with MMT activists in the UK, I had several meetings with various people. Those discussions must remain confidential here. However, I decided to write up some ideas that are relevant to how I think a progressive ambition can be politicised in an acceptable manner. The challenge for such an ambition is to shift the population’s focus from an obsession with financial constraints to a recognition that it is the availability of resources that matters. There are several related aspects to this challenge. This is Part 1 of a two-part series on that topic.
Progressives in the UK have tied themselves up in a straitjacket where their fears are always summarised by the epithet – ‘the City’ – which refers to a paranoid obsession that if a British government dares do anything that upsets the financial markets (The City), the latter will use its global powers to force up interest rates, destroy the British pound and force the government back into an austerity mindset.
How that actually can happen if the combined Treasury and Central Bank work together and use their currency-issuing capacity is not usually specified.
It doesn’t have to be because most people have been conditioned to believe that the global financial markets are all powerful and the national, currency-issuing government is subservient and has to fall into line.
So just the mention of the City is sufficient to make something politically difficult.
Nations have lived through that fiction since the 1970s and we provided extensive detail about that in our 2017 book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).
I was asked last week at one meeting to consider a scenario where a progressive political party is elected to office in Britain and immediately sets about implementing its widespread agenda, which might include renationalisation of privatised utilities (particularly transport), increased investment in social housing, revitalisation of the NHS, and more.
What would happen? What would the financial markets do?
My response was that the answer has to start with a planning strategy, implemented many years before the election day.
It would not turn out well if a political party just won an election based on progressive policies and immediately set out to implement the program.
The reason?
Read on.
An essential shift in focus from financial constraints to real resource constraints
My argument was that economists in industry and the financial markets and the financial media are continually pumping out their fictions about the use of fiscal policy and its consequences, which pressure government to implement policy frameworks that benefit them, usually at the expense of the vast majority of the population.
That has been obvious from our decades long experiment with neoliberalism.
Capital reconfigured the state to act in its interests rather than act as a mediator in the class conflict between labour and capital that was apparent in the immediate Post WW2 period.
Neoliberalism renders the state an agent for capital and a whole narrative structure is conducted to make that objectionable situation appear to be TINA so that the people will go along with it.
The problem is that the population (including the ‘voters’) have been so indoctrinated by decades of misinformation that the vast majority actually believes in the fictional construction, without really having the slightest clue about the theoretical elements that are used to justify it and the failings of those elements.
Our ‘intuition’ has been manipulated by a relentless campaign funded by Capital such that we have been conditioned to think that the financial capacity of the currency-issuing government is really akin to our own finances.
We have been conditioned to extrapolate our own experience as households into ‘knowledge’ we think applies to government.
We know that households are financially constrained and have to earn income, borrow, run down prior saving, or sell assets, in order to spend.
And, we have been led into then drawing the conclusion that the same constraint applies to government, which then conditions how we try to understand taxation, bond issuance, interest rates, exchange rates and more.
However, this ‘knowledge’ is wrong at the most elemental level but serves as a powerful political brake on government activity and allows the media and economists to run the financial markets fear story.
It allows the UK Chancellor to stand up in the Commons and prattle on about her non-negotiable approach to her fiscal rules, as if these rules are like the laws of physics – immutable and all encompassing.
As a consequence, the task for a progressive political party has to begin with education, long before any election opportunity.
Its responsibility must be to provide the public with an alternative narrative about the intrinsic capacities of a currency-issuing government and the constraints it actually faces – long before it seeks to outline a progressive policy manifesto.
The mistake progressive parties make is outlining the manifesto before the population has been offered this alternative narrative.
The result is then predictable – the How to pay for it reaction is inevitable.
Game over.
First, the narrative has to shift from an emphasis on financial constraints to a focus on real resource constraints.
The fiction that the government is just a ‘big household’ has to be exposed.
Such a narrative doesn’t construct the capacities and the limitations of the government in terms of ‘fiscal rules’ but, instead, shifts our attention to what matters.
Instead of prompting us to continually respond to policy suggestions with the ridiculous: How will you pay for it? – the new narrative will arouse our curiosity and attention in terms of:
Can things be done?
What does it take to get things done?
Where will the workers and equipment come from to build and offer what we want?
In other words, shifting the focus to resource constraints by advancing the understanding that Keynes’s elaborated on in his BBC Radio Address on April 2, 1942:
For some weeks at this hour you have enjoyed the day-dreams of planning. But what about the nightmare of finance? I am sure there have been many listeners who have been muttering: “That’s all very well, but how is it to be paid for?”
Let me begin by telling you how I tried to answer an eminent architect who pushed on one side all the grandiose plans to rebuild London with the phrase: “Where’s the money to come from?” “The money?” I said. “But surely, Sir John, you don’t build houses with money? Do you mean that there won’t be enough bricks and mortar and steel and cement?”
“Oh no”, he replied, “of course there will be plenty of all that”.
“Do you mean”, I went on, “that there won’t be enough labour? For what will the builders be doing if they are not building houses?”
“Oh no, that’s all right”, he agreed.
“Then there is only one conclusion. You must be meaning, Sir John, that there won’t be enough architects”. But there I was trespassing on the boundaries of politeness. So I hurried to add: “Well, if there are bricks and mortar and steel and concrete and labour and architects, why not assemble all this good material into houses?”
But he was, I fear, quite unconvinced. “What I want to know”, he repeated, “is where the money is coming from”.
To answer that would have got him and me into deeper water than I cared for, so I replied rather shabbily: “The same place it is coming from now”. He might have countered (but he didn’t): “Of course I know that money is not the slightest use whatever. But, all the same, my dear sir, you will find it a devil of a business not to have any …”
Had I given him a good and convincing answer by saying that we build houses with bricks and mortar, not with money? Or was I only teasing him? …
For one thing, he was making the very usual confusion between the problem of finance for an individual and the problem for the community as a whole …
The first task is to make sure that there is enough demand to provide employment for everyone. The second task is to prevent a demand in excess of the physical possibilities of supply, which is the proper meaning of inflation. For the physical possibilities of supply are very far from unlimited. Our building programme must be properly proportioned to the resources which are left after we have met our daily needs and have produced enough exports to pay for what we require to import from overseas …
Where we are using up resources, do not let us submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income, with no other denominator of values but this. I should like to see that war memorials of this tragic struggle take the shape of an enrichment of the civic life of every great centre of population …
Assuredly we can afford this and much more. Anything we can actually do we can afford. Once done, it is there. Nothing can take it from us.
It is a long quote but distils down to “Anything we can actually do we can afford”.
Please read my blog post – Anything we can actually do, we can afford (January 29, 2024) – for more discussion on this point.
The point is that the population must be moved from asking the how to pay for it question to interrogating politicians about productive resource constraints.
Reframing the situation and developing a new language
As part of the shift in focus, the education challenge will involve a shift in language and framing because we know that the way the arguments are framed and the language and vocabularies that are deployed is highly significant in determining whether the new views are accepted or not in the public discourse.
This is a crucial part of the program.
The following blog posts discuss these matters:
1. Framing Modern Monetary Theory (December 5, 2013).
2. The role of literary fiction in perpetuating neo-liberal economic myths – Part 1 (September 11, 2017).
3. The role of literary fiction in perpetuating neo-liberal economic myths – Part 2 (September 12, 2017).
4. The ‘truth sandwich’ and the impacts of neoliberalism (June 19, 2018).
5. Exploring the effectiveness of social media (September 5, 2018).
I wrote this up for an academic audience (co-authored with Dr Louisa Connors) in the Journal of Post Keynesian Economics – Framing Modern Monetary Theory (June 14, 2017).
Conclusion
In Part 2 we will discuss the necessity to build a resource planning capacity.
To give this shift in focus to resource constraints a legitimacy, the progressive group also has to build a resource planning structure that allows the political ambitions to be appraised within the decentralised resource capacity of the nation.
It is one thing to identify unmet demand across a nation – so many houses needed here, new transport infrastructure there, and so on.
That is a relatively easy task.
The challenge is to translate all the unmet demands for government investment into a feasible plan that is informed by how many productive resources are available in each location to actually service those needs.
This involves developments in cybernetics, the socialist calculation debate, AI etc.
We have examples of how this approach has been very successful in a past era and with the advances in technology it is entirely feasible now to adopt these frameworks.
Further, in addition to shifting the focus, the group has to express the purpose of fiscal policy as being to advance the notion of community well-being and fiscal functionality.
Fiscal policy aims should never be expressed in terms of achieving specific financial targets that are considered to be ‘sustainable’ within the neoliberal construction.
People have to be directed to understand that the government doesn’t actually control the fiscal outcome that the national statistical office publishes.
The operation of the automatic stabilisers mean that the spending and saving decisions of the non-government sector (consumers, business firms, exporters, importers) determine the outcome and the discretionary policy settings of government are only one influence.
Advancing that knowledge further militates against holding non-negotiable fiscal rules out as sacrosanct goals – ends in themselves.
We need to be taught to understand the purpose of fiscal policy as being to advance well-being and environmental sustainability and the actual financial outcomes are, in fact, a rather uninteresting artifact of that pursuit.
Part 2 will elaborate on all those points.
That is enough for today!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
The other week an Opinion Piece in The Guardian got all agitated about student debt in the UK, the debt burden weighing down young adults as the Treasury adopted the modus operandi of a private bank. I quote: ‘the Green party leader, Zack Polanski, called for “a conversation about student debt forgiveness”, ….(though he didn’t explain where he would find the billions that would cost).’ Whether the author or the Guardian’s economics/City editor insisted on the bracketed words I don’t know, but if its idea is accepted, then any following-on opinion is just hand-wringing (you might say, entirely in keeping with the G). It shuts off the legitimate economics conversation: if higher educated workers didn’t have their income curtailed, would their productivity improve, would their increased demand put too much pressure on the economy and demand have to be curtailed in some other way, perhaps by fairer taxation? Would they instead be able to put money into a pension pot (to keep the private pension industry ponzi scheme going), or into housing (to further prop up the sector for banks and rentiers)? The shut-down of domestic issue debate is not quite on the same criminal scale as the compliance with ethnic cleansing extending to genocide and the dropping of bombs on schools, but it does immense harm nonetheless.
In Australia SBS and ABC have pretty much been taken over by neoliberal think tanks capturing journalists with little to no economic knowledge and then using them as a platform manipulate the public.
If anyone want’s a good laugh and a cry at the same time I’d recommend the article below –
https://www.sbs.com.au/news/article/australia-government-debt-analysis/b7ibrbt13
To sum it up – it’s a right wing neo-liberal think tank called E61 using a young and macroeconomically challenged journalist to spread misinformation about public finance and fiscal policy to the general public.
The Journalist, Cameron Carr also wheeled out a so called expert Flavio Menezes, a professor of economics at the University of Queensland. His concerns with crowding out and governments having to borrow to fund spending are simply embarrassing to the economics profession.
Classic churnalism at best.
Many thanks for this much needed initiative to reframe the approach.
As a lay person, with regard to MMT and economics in general, and with relatively recent exposure to your work and those of your cohort, I have sought to inform my family, friends and professional circles in an as un-evangelical manner as possible, to little effect.
My little effect is largely my communication no doubt, but also likely due to available attention in this quite hectic and distracting world, so gaining traction of progressive and other parties may eventually get the desired message through to the broader population.
Thank you for your continuing efforts.
The importance of recognising that resource constraints matter, not financial constraints, goes well beyond recognising that what is physically and technically possible is never financially impossible. In saying that, the lack of a financial constraint is always confined to the currency-issuer, although the currency-issuer can always provide the financial means to enable currency-users to achieve the minimum of their physical and mental capabilities, which they should do with a Job Guarantee, never with a Universal Basic Income. Unlike a JG, a UBI doesn’t enable an individual to be anything other than a subsistence consumption machine. The JG recognises that human beings have higher-order psychological needs as well as lower-order physiological needs. The JG also recognises that society and individuals have obligations and responsibilities – reciprocity – whereupon society has an obligation to ensure there is useful paid work for everyone who wants it, and capable individuals have an obligation to perform it. If some individuals would rather participate in a ‘drop-out’ society (e.g., a commune), that’s acceptable, but they forfeit their right to receive a financial claim on the stuff produced by individuals who perform the paid work. The UBI simply encourages people to have their cake and eat it, which is ironic given that UBI advocates invariably call for higher taxes on the rich to confiscate economic rents (unearned financial claims on real wealth).
The point I want to make is that recognising the importance of real resources (and human know-how) draws attention to whether there are sufficient real resources to do the things required to meet the needs of 8.25 billion-plus people on an ecologically sustainable basis. It’s a sad state of affairs when the non-scarce (financial claims on real stuff) gets all the attention, but is falsely understood, and the scarce (real stuff) gets very little attention at all. The situation is made worse when the scarcity of the real stuff is also falsely understood and most humans, especially those in control, believe there are no biophysical constraints, or don’t care about them.
To serve the 8.25 billion people on Earth, humans must extract/harvest natural resources from the ecosphere. Whether we like it or not, it all becomes waste, having temporarily existed as physical goods. We can reconcentrate some waste materials, but not all of them (there is no circular economy!), and only by applying more energy. We can’t recycle energy at all. The current rate at which we extract resources and generate wastes amounts to a global Ecological Footprint that is 1.8 times the Earth’s Biocapacity. It is patently and grossly unsustainable.
The production of new consumer and producer goods involves the use of human labour and existing producer goods to transform the natural resources extracted from the ecosphere. In reality, production doesn’t involve the production of anything. It involves the rearrangement of the matter-energy embodied in the natural resources extracted from the ecosphere for production purposes. Since 100% technical efficiency is impossible (i.e., not all matter-energy embodied in the transformed natural resources ends up in physical goods), production begins the process of waste generation. Humans engage in ‘production’ activities to add use value to the use value already embodied in the transformed natural resources. Production is a value-adding activity. A wooden chair is more comfortable to sit on than a wooden log, although the benefits of a wooden chair maybe exceeded by the cost of lost ecosystem services if the forest from which the log is extracted is harvested unsustainably. The saw dust generated is useless unless converted, with the use of energy and goods devoted to recycling, to a composite material.
Consumption doesn’t really involve the consumption of anything. It involves the disarrangement of the matter-energy embodied in the goods we produce. Consumption is a necessary evil – we eat food and wear out clothes and gadgets to gain the benefits from them. Consumption is a value-destroying activity. If we could enjoy the same ‘consumption’ benefits from a lower rate of consumption, we would be better off, although we are encouraged to do the opposite because enjoying the same consumption benefits from a lower rate of consumption reduces GDP (the volume of economic activity). Conversely, it increases the Genuine Progress Indicator (same benefits at fewer costs).
The real output produced by an economic system is restricted by the limiting factor of production. All the labour and human-made capital imaginable cannot generate more real output once there are no more natural resources available to transform (Robert Solow won a ‘Nobel’ Prize for devising a production function that ignored this reality – in fact, he assumed that the contribution not made by labour and human-made capital was all technological progress, and in 1974, said that one day humans might get by without natural resources!). The full employment of a particular factor of production requires the factor of production in question to be the limiting factor of production. The full employment of labour, for instance, is only possible if we run out of labour before we run out of human-made capital and natural resources to transform, and if aggregate spending is sufficient to get to this point.
At the global level, is labour the limiting factor of production? That depends on whether you are referring to the current rate of resource throughput or an ecologically sustainable rate of resource throughput. At the current rate of throughput – 1.8 times global Biocapacity – it is probably labour that is the limiting factor of production. However, since we need to halve the rate of throughput for it to be ecologically sustainable, the limit factor of ‘sustainable’ production is almost certainly natural resources – a price we will pay for allowing the population of humans on Earth to reach 8.25 billion. There is no doubt in my mind that failing to control population numbers is humankind’s greatest failing.
We clearly cannot halve the rate of throughput overnight. The global economy would simply collapse, and billions of people would suffer. It must be done gradually. It continues to increase. Doing it gradually poses a problem in itself because every moment the Ecological Footprint exceeds Biocapacity, the Biocapacity is ceteris paribus eroded. Even if the rate of throughput was reduced at a greater rate than global Biocapacity declines, which is necessary for the former to one day be less than the latter, there are two further problems to contend with.
Firstly, if we currently are unable to meet the needs of many people, how do we meet them in a world with halve the current rate of throughput (again, highlighting the problem of overpopulation)? Secondly, how do we achieve full employment in a world with halve the current rate of throughput – that is, in a world where, without some dramatic changes, natural resources would be by far the limiting factor of production?
Estimates of the NAIRU are based on the current (unsustainable) rate of throughput, where it is assumed that labour is the limiting factor of production. For all that the NAIRU is difficult to estimate, I think it must exist at some labour unemployment rate and is very important. It worries me that some JG advocates (Bill Mitchell is not one of them) believe that everyone unable to secure paid work in the private sector or conventional public sector should be employed under a JG. I believe that people in this situation should be directed to a conventional public sector job on award wages until the NAIRU is reached. Why employ someone on a minimum wage if employing them on an award wage is non-inflationary? Only once the NAIRU is reached, which can be known by observing the inflation rate as unemployed people file through Full-Employment offices, should they be directed to a JG job.
The same JG advocates also believe that the JG can be used to employ people to deal with pressing environmental problems, such as climate change adaptation projects. JG workers should by all means be doing something useful, but if CC adaptation projects are so important, which they are, they should be part of the conventional public sector and fewer resources should be allocated to produce fancy goods to satisfy trivial wants.
An overnight halving of the rate of throughput would send natural resource prices through the roof and trigger hyperinflation at a very high unemployment rate. The NAIRU would be off the scale. No doubt, central bankers would exacerbate the difficulties by hiking interest rates. We know from the COVID pandemic how willing they are to raise interest rates when the cause of a high inflation rate and the rise of the NAIRU have nothing to do with what is happening in labour markets.
When labour is the limiting factor of production, as we need it to be, the NAIRU is reached when there are labour supply and demand mismatches, which are inevitable. The current approach of using a pool of unemployed labour as an inflation buffer is morally unacceptable. Bill Mitchell has clearly explained how a JG can flatten the Phillips Curve so that all unemployment (except for frictional unemployment) can be eliminated without triggering an inflationary spiral. Coupled with a more progressive tax system, especially the confiscation of economic rents (where the rich receive financial claims on real stuff produced by underpaid willing workers and at the latter’s expense), I believe the JG can help achieve a non-inflationary form of full employment as the rate of throughput is reduced to sustainable limits. It would, nonetheless, be performed in an unconventional way. Rather than the usual approach of increasing GDP up to the so-called full-employment level, which wouldn’t be physically possible as the rate of throughput is reduced, the full-employment of GDP would be lowered to match what is physically possible during the transition (degrowth) phase.
It is quite likely that the throughput-limited NAIRU during this transition phase would be higher than what would be desired, which means there would be a larger than desired percentage of the labour force employed on the JG. However, with appropriate resource planning, the NAIRU could be kept to a reasonably low rate to limit the number of people employed on a minimum living wage. Gross World Product would almost certainly be reduced, but it would be distributed more evenly (equitably) to ensure everyone’s needs are met, including the need for paid work. To hell with the trivial wants of the rich, albeit most Westerners would have to adjust their material expectations downwards. Perhaps they might discover a life that is more meaningful and purposeful.
Pardon me for the length of this comment.
1 tonne of gold ore can yield 5-6 grams of gold – though often only 1-2gms, and sometimes just 1gm.
(1 gram of gold per tonne is just 0.0001% by weight).
1 tonne of waste mobiles (which requires 6–10,000 devices) can allow recovery of 300–350 grams of gold.
The deepest gold mines are 4,000m deep and have ambient temperatures of 60ºC+ , needing 24/7 cooling for worker access.
There were 12 billion operational e-devices in 2025. Of these 7.6 billion smartphones have an average use life of 2-3 years (maybe 5-7 yrs tops).
Our comprehensive planetary resource extraction audits might just conclude gold is just too destructive to continue mining.
But of course we do not have any systematic resource evaluation system whatsoever regarding global resource management, or corresponding EROEI.
Comparable recovery ratios apply to rare earths, copper, and other non-ferrous metals.
Thus e-waste reclamation can be a much richer source of precious metals than all those ultra low concentration ores.
Lithium ion batteries begin to decline after 2-3 yrs and maybe 98% of lithium can be reclaimed. A frequently cited estimate of current lithium recycling is that it is a mere 5%, though some sources cite over 50% for phone batteries.
China and South Korea currently dominate that market, controlling 90%+ of lithium ion recycling.
Only connect.
I recently commented (re the looming global ecological and financial catastrophes): “Hence the need for *government central planning*, to achieve the required balance between aggregate demand and aggregate supply, to avoid inflation in all circumstances, and allow the public sector a role in determining “opportunity costs”, while delivering the essentials for all (given taxation and borrowing by national CICGs is not neceesary).
On Sat.14th I will be attending a ‘Public Money: Public Good’ conference , to enquire whether Torrens Uni MM Lab students favour a ZIRP (in conjunction with a JG).
It took about two hours of watching MMT basics lectures on YouTube to make this moderately-educated middle aged mum to “get it.” Money may not grow on trees but it can be typed into existence on excel spreadsheets by governments.
The question is how to get people to want to know more about where money comes from and macroeconomics in the first place so they do the YouTube search.