Marv wrote: > arcane doctrinal disputes they've provoked, a critique of the theory rather > than vilification would be much more helpful.
Forgive me for being so "didactic" and "prolix" (a close friend of mine accused me of these vices), but think of it this way. Physical wealth, what sustains us, has to be produced the hard way, with workers, natural resources, and other means of production. It takes time, space, and the purposeful manipulation of that "substance" physicists call matter/energy. Maintaining our existing wealth is a subset of production, because it tends to decay. Even if wealth production were perfectly well coordinated and executed, we would only be able to produce as much wealth as the resources above, and our ability to elicit the generous cooperation of nature, permitted. Think of society flowing along a trajectory of full employment under this perfect social structure as the ceiling to which we must aspire. By definition, there is no social arrangement that could perform better than that. Money, on the other hand, is a particular social structure. It results from having exclusive or private ownership over wealth, which is a social construct. We, collectively, enable or allow individuals or groups to own wealth privately and, within certain limits, to transfer it to one another voluntarily -- giving it away or trading it. Call "bonds" the legal titles of ownership over discrete portions of total wealth. Money is a "bond" with certain peculiar characteristics -- all of them socially endowed. "Bonds" are legal claims of ownership over wealth. And all it takes to create one is the willingness of people to enter into agreements. Any and all contracts create, reassign, or swap "bonds" -- claims over the material wealth of society, which (again) can only be produced, maintained, and expanded the hard way. Clearly, at each point in time, the (properly discounted) value of all bonds taken together is only the monetary expression of the wealth that exists at that point in time. No more, no less. Note again that entering into contracts is piece of cake. In principle, I can expand my personal balance sheet (and this is true for every individual, household, firm, organization, bank, or government in our society) very "easily." All I need to do is issue "bonds" and have them accepted by others (e.g. a bank), which -- of course -- requires that others find my "bonds" acceptable. If you accept my "bond" and hand me some other "bond" in exchange for it (e.g. money, the title of ownership over food, or whatever), then the asset side of my balance sheet goes up. Of course, since I am issuing the "bond," then my liability side also expands. You can do the same. We all can, in principle. However, if we aggregate all balance sheets to the level of society globally, then individual assets and liabilities will massively cancel out and the leftover will be the direct monetary expression of the physical wealth of society at that point in time -- namely our own labor power, the natural resources we can immediately appropriate, and the stocks of products then available: productive and consumable physical or material wealth. In a society like ours, where people don't produce wealth for its own sake, but for profit, there are episodes in which the resources above will be massively unemployed, so the economic trajectory will fall way short of the ceiling path (if I'm allowed the expression). "Credit" or "debt" (broadly understood to include "equity," etc., and -- of course -- to include the "money supply") is a way in which we can help private producers mobilize more of the available productive resources in society. I mean, insofar as people trust the "bonds" that exist, and to that extent. MMT and the Keynesians say: Use that mechanism of balance-sheet expansion in various creative ways to get our productive resources back to "full employment." The big problem I have with MMT is that it does not make clear -- to me at least -- the fact that there is *no* way -- absolutely *no* way in this universe -- in which "bond" creation can make a society blow past its ceiling path. In fact, in a society with structures that are far from the perfect hypothetical case above, there will be bottle necks that will lower the effective ceiling considerably; but even that lower ceiling will not be broken. IMO, they just wave their hands all over the place, but fail to make this clear. My impression is that the particular points of disagreement between MMT and, say, Krugman is about which particular subset of the status quo is to be assumed as naturally given. On top of that, they pretend that the economy can glide along the ceiling path by sheer financial and monetary manipulation, without dismantling private capitalist ownership altogether. As Doug notes, they don't seem to realize that for full employment to be a possibility, working people have to build a tremendous amount of power. I agree with Doug. The ruling class obviously prefers wealth redistribution under a financial, monetary, or fiscal disguise to outright expropriation. So they will use Keynesianism as an emergency policy, but only as such, and under conditions of actual or highly-possible militant popular discontent. So, MMT or Keynesianism in general is not antithetical to the struggle for socialism, but it is not the same. Disclosure: I have not muster the patience to read carefully the MMT arguments. I only browsed them, and got the strong feeling that they are misguided. If somebody here corrects me with convincing specifics about my statements of "fact," I may take my words back. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
