\t\t\t\tOne of the things I have noted with regularity is that readers and other second-generation Modern Monetary Theory (MMT) bloggers often fall into the error which we might characterise as the “When we have MMT things will be different” syndrome. Or the “we need to change to MMT principles to make things better” syndrome. Thinking that MMT constitutes a regime change is incorrect and steers one away from the core issues. In this blog, I reflect on that syndrome and some other aspects of the development of ideas, which I hope will provide readers with a clearer picture of what the core (early) MMT developers (Mosler, Bell\/Kelton, Wray, Mitchell, Tcherneva, Fullwiler) had in mind when we set out in the early 1990s to construct a better way of doing macroeconomics. The point is that while MMT constitutes a regime change in economic thinking within the academy it does not constitute a regime change in the way the monetary system operates. We need to separate the operational principles exposed by MMT academics from their ideological values to really come to terms with the fact that MMT is what is, not what might be.
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I have been reading the 2001 book What Evolution Is<\/em> by the famous evolutionary biologist Ernst Mayr<\/a> recently. He took on the establishment in his area of research and has definitely been a major influence on the way we think about biodiversity in modern times.<\/p>\n He was influential in the emphasis on secular explanations for evolution. In one interview<\/a> in 1999 he was asked:<\/p>\n \nEDGE: How do you account for the fact that in this country, despite the effect of Darwinism on many people in the scientific community, more and more people are god fearing and believe in the 8 days of creation?<\/p>\n MAYR: You know you cannot give a polite answer to that question.<\/p>\n EDGE: In this venue we appreciate impolite, impolitical, answers.<\/p>\n MAYR: They recently tested a group of schoolgirls? They asked where is Mexico? Do you know that most of the kids had no idea where Mexico is? I’m using this only to illustrate the fact that \u00ad and pardon me for saying so \u00ad the average American is amazingly ignorant about just about everything. If he was better informed, how could he reject evolution? If you don’t accept evolution then most of the facts of biology just don’t make sense. I can’t explain how an entire nation can be so ignorant, but there it is.\n<\/p><\/blockquote>\n That insight has bearing on how we think about macroeconomics as well and I will return to that soon.<\/p>\n His account of evolution is interesting and has parallels with the way other ideas develop, including those in economics.<\/p>\n To some extent, Mayr’s work constituted a ‘regime change’ in his discipline after resistance from the established thinkers. in another sense, his discussion of evolution itself has relevance to the ways ideas emerge and move from being unacceptable to broadly accepted.<\/p>\n Evolution, in Mayr’s work, involves novelty, changes to some species. Changes accumulate.<\/p>\n Our understanding of this process through time sometimes takes us down dead-ends or blind alleys as the new ideas are tested against reality.<\/p>\n These ‘mistakes’ in perception are important though, because while they cannot help us understand the reality of interest, they do provide other information that helps us see things in better perspective.<\/p>\n In economics, I characterise most of the mainstream theory as ‘fake knowledge’. Please read my blog – The failure of economics – reality and language<\/a> – for more discussion on this point.<\/p>\n It doesn’t help us understand the way the monetary system operates. The mainstream explanations and characterisations are just plain wrong – and systematically so – one myth links into and reinforces another in a stream of logical nonsense.<\/p>\n But if you then ask why the mainstream adopt the position that they do, which in any reasonable assessment is ‘just plain wrong’ – then exploring that question is insightful because we enter the world of ideology and the role that ideas have in reinforcing existing power elites.<\/p>\n It is clear that the adoption of ‘free market’ conceptions help maintain the elite position in the deployment of real resources and the income flows that are derived.<\/p>\n There was a recent and interesting article in The Nation (March 6, 2017) – Our political economy is designed to create poverty and inequality<\/a> – along these lines.<\/p>\n So, while mainstream economics is bunkum, understanding its role is important and helps us understand why ‘better’ ideas struggle to gain ascendancy in the contest of ideas.<\/p>\n There are many examples of such ‘contests’ in the evolution of ideas. <\/p>\n I have previously noted the struggle of American biologist Joseph Altman.<\/p>\n Please read my blog – Whatever – its either employment or unemployment buffer stocks<\/a> – for more discussion on this point.<\/p>\n He specialised in neurobiology and discovered adult neurogenesis in the 1960s. He showed that adult brains could create new neurons but the idea was fiercely denied by contemporary thought at the time.<\/p>\n The power elites in his field were challenged by the new ideas.<\/p>\n It wasn’t until the phenomenon was ‘rediscovered’ by another scientist (Elizabeth Gould in 1999) that the proposition became fashionable. Neurogenesis is now one of the most significant areas in neuroscience.<\/p>\n Why were Altman’s discoveries ignored for almost 30 years?<\/p>\n In an article – Three before their time: neuroscientists whose ideas were ignored by their contemporaries<\/a> – which came out in 2008 in Experimental Brain Research<\/em>. Charles Gross wrote:<\/p>\n \n… the dogma of ‘no new neurons’ was universally held and vigorously defended by the most powerful and leading primate developmental anatomist of his time.\n<\/p><\/blockquote>\n Paradigms reject change when establishment hegemony is threatened.<\/p>\n A while ago I followed the story of Jacques Cinq-Mars who was a French-Canadian archaeologist who did fieldwork, searching “the Yukon riverbanks and rock shelters for traces of Ice Age hunters”.<\/p>\n His work in the Bluefish Caves<\/a> in the North-West of Canada between 1977-87 and his subsequent analysis established that human life in that area existed 24,000 years ago.<\/p>\n The findings challenged the established view at the time – the so-called Clovis-First theory<\/a> – which had dated the arrival of humans to ‘America’ at 13,000 years.<\/p>\n A recent article (March 7, 2017), by Heather Pringle – From Vilified to Vindicated: the Story of Jacques Cinq-Mars<\/a> – provides an accessible introduction to this controversy.<\/p>\n On May 3, 2013, the editorial in the journal Nature<\/em> – Young Americans<\/a> – described what happened when Cinq-Mars released his findings and sparked “one of the most acrimonious – and unfruitful -in all of science”.<\/p>\n Cinq-Mars:<\/p>\n \n… endured brutal criticism from opponents who did not give them, or their evidence, a fair hearing. Scientists who supported the Clovis-first model countered that reports of pre-Clovis sites were examples of poor scholarship.\n<\/p><\/blockquote>\n Heather Pringle describes the criticism and pressures that Cinq-Mars was put under by the academy as he unveiled the findings of his research:<\/p>\n \nIt was a brutal experience, something that Cinq-Mars once likened to the Spanish Inquisition. At conferences, audiences paid little heed to his presentations, giving short shrift to the evidence. Other researchers listened politely, then questioned his competence. The result was always the same … In his office at the Canadian Museum of History, Cinq-Mars fumed at the wall of closed minds. Funding for his Bluefish work grew scarce: his fieldwork eventually sputtered and died.\n<\/p><\/blockquote>\n And studies now support his earlier claims “that humans reached the Americas well before the Clovis culture”. But the facts were not the issue – it was the challenge to the hegemony in this area of study that mattered.<\/p>\n As Pringle writes: “Today, decades later, the Clovis first model has collapsed”. It was fake knowledge all along but built careers and influence.<\/p>\n Well-paid professors who had made a lucrative career and garnered massive social status as a result of their claims about the first Americans were suddenly staring at a void – they had been peddling fake knowledge.<\/p>\n The impacts of the resistance are still being worked out.<\/p>\n Pringle writes:<\/p>\n \nDid archaeologists in the mainstream marginalize dissenting voices on this key issue? And if so, what was the impact on North American archaeology? Did the intense criticism of pre-Clovis sites produce a chilling effect, stifling new ideas and hobbling the search for early sites? Tom Dillehay, an archaeologist at Vanderbilt University in Tennessee and the principal investigator at the Chilean site of Monte Verde, thinks the answer is clear. The scientific atmosphere, recalls Dillehay, was “clearly toxic and clearly impeded science.”\n<\/p><\/blockquote>\n Similarly, does an adherence by policy makers to the fake knowledge offered by mainstream macroeconomics force millions of people to endure unemployment and poverty unnecessarily. The answer is clearly yes.<\/p>\n A final example before I move on is closer to home. I refer to the story of Helicobacter Pylori. If you do not know what I am referring to then it is an amazing case of the resistance to new knowledge by those who had entrenched interests in maintaining fake knowledge.<\/p>\n In this case, it also involved the capacity of large pharmaceutical companies to make huge profits by forcing unnecessary drugs onto unsuspecting patients, kept in ignorance by their trusted doctors, who under pressure from the pharmaceutical companies to resist adopting new discoveries.<\/p>\n It involves the research of Dr Barry J. Marshall, who was a young doctor at the Fremantle Hospital in Perth, Western Australia in 1984. He discovered that the bacterium Helicobacter Pylori was associated with the incidence of stomach ulcers. Further research convinced Marshall and his team that the association was causal.<\/p>\n The mainstream of the profession at the time considered ulcers to be caused by “psychological turbulence” (see New Yorker link below).<\/p>\n This New Yorker article (May 3, 2003) – Marshall’s Hunch<\/a> – provides an interesting insight into the controversy.<\/p>\n It recounts how Marshall first presented his work in 1983:<\/p>\n \n… at a gathering of infectious disease experts in Brussels. The audience was full of heavyweights … When Marshall finished speaking … The scientists chuckled and murmured and shook their heads, a little embarrassed for a junior colleague whose debut was such a disaster …\n<\/p><\/blockquote>\n One scientist said Marshall’s theory was “the most preposterous thing I’d ever heard … I thought, This guy is a madman”.<\/p>\n The problem for Marshall was that up to that point the pharmaceutical giant Glaxo(SmithKline) were making massive profits selling Zantac to people whose doctors had diagnosed stomach ulcers. The drugs were palliative only – moderated symptoms (pain).<\/p>\n Patients were then on a treadmill where doctors would perform expensive and regular investigative colonoscopy procedures to ‘see’ whether the ulcer was contained and in between times would ingest Zantac and other remedies to control the pain.<\/p>\n They were put on special diets (cutting out things they liked) to stop the ulcer from erupting.<\/p>\n All of which Marshall demonstrated was unnecessary.<\/p>\n Now, Marshall’s findings are standard fare for the medical sector but it took many years before the message got through to GPs who were under the influence of the large drug companies, intent on suppressing the findings and keeping their markets.<\/p>\n All of these stories (and there are many more I could write about) involve regime change. They involve a new set of ideas or explanations coming headlong against the perceived mainstream and then being undermined until it becomes self-evident that the facts support the new idea.<\/p>\n