Marx + MMT
MMT is seen as indisputably associated to post Keynesianism, however tenuous or even dubious the association might be (since (1) Keynes was deadset opposed to Abba Lerner‘s functional finance; (2) leading MMT proponents have explained that “MMT is useful for economists of all persuasions”, including arch-conservatives and Austrians, and (3) many leading post Keynesians seldom express their views on MMT).
Regardless, beyond saying that amateur Internet pseudo-scholarship by cheap charlatans and sycophants of the rich may have something to do with that, we are not dwelling here on the reasons for this phenomenon.
At any event, eminent MMT proponents have written about the relationship between MMT and the thought of Karl Marx, which suggests that Marxist economics is not fundamentally incompatible with MMT, although to extend that to post Keynesianism would be a stretch.
In his 2005 paper “Taxation and Primitive Accumulation: The Case of Colonial Africa” (Research in Political Economy, 22, pp.51-64: paywalled, freely available; my own take) Mathew Forstater explains how taxation imposed on colonial subjects and “natives” played the simultaneous roles of (1) creating a mass of workers “free” to sell their labour power and “free” from the means of production (hence, Forstater’s reference to the Marxist primitive accumulation), in (2) “the monetization and commodification of African economies”, and in (3) “the rise of peripheral capitalism”. Prof. Forstater has also spoken about this.
In his 1999 paper “Theories of Value and the Monetary Theory of Production” (in print in the 2012 two-volume Theories of Money and Banking, freely available; my own take), L. Randall Wray argues “that two theories of value are needed for analysis of a monetary production economy: the labor theory of value and the liquidity preference theory of value”. Considering that some post Keynesians believe that “profits are produced by specific macroeconomic flow of funds” to the exclusion of everything else, Prof. Wray may have some difficulty persuading post Keynesians.
Bill Mitchell often writes favourably of Marx, acknowledging his contributions, and advising his readers that “We Need to Read Karl Marx” (Aug 30, 2011). One of Marx’s ideas Prof. Mitchell has echoed is that “there has to be a surplus created and expropriated by the owners of capital” (“The Existential Crisis of Labour-Type Political Parties“, May 12, 2015; my own take).
By itself that would make of Prof. Mitchell a very unusual, but not unique, post Keynesian: a few post Keynesians (depending on the definition of post Keynesianism) sometimes pay lip service to some of Marx’s ideas, particularly the notions of surplus/exploitation.
However, in addition to that, Prof. Mitchell is known for scolding ignorant anti-Marxist propagandists (“There is Nothing New Under the Sun“, July 29, 2013) in terms astoundingly precise and applicable, given current circumstances (an example):
“They [anti-Marxist jihadists] always reveal their grunt ignorance when they retaliate with the socialism card. It shows they neither have read Marx nor the derivative literature (and if they tried they gave up because it was above their intellects) nor appreciated the historical record.” (My emphasis)
If for argument’s sake one accepts that MMT is part of post Keynesianism, that would make of Prof. Mitchell unique among post Keynesians.
But there is something else perhaps more important that makes of Prof. Mitchell an outlier among post Keynesians: if kowtowing abjectly before The Lord is a requisite for admission in the Keynesian church — as it seems to be — Prof. Mitchell may risk excommunication, for he has written critically on Keynes (as the above link on Lerner, for one, shows).
“We used to talk about the ‘Keynesian Revolution’, in the context of his debunking of the perceived classical thinking at the time (1930s) but it was replacing a flawed theoretical structure with a conservative set of ideas based on reality. Hardly revolutionary.”
That willingness to swim against the flow and to show independent thought argues against Mitchell’s membership in the Keynesian cult: intellectual honesty and personal courage are not usually associated to Keynes’ epigones and minions.
For me, this settles the debate MMT versus Marxism (h/t Peter Cooper).
Ben Chacko, Morning Star editor, spoke last year (2019) with Bill Mitchell about MMT. That’s when Chacko asked Mitchell: “So MMT accepts the labour theory of value?”
Read Mitchell’s answer here. Take that, bitches (you know who you are). Use Google translator for languages other than English. 🙂
Australian economist Peter Cooper describes himself as heterodox and Marxist. He also acknowledges the influence of MMT, Kalecki and the TSSI approach. Personally, I have never seen him referring to himself as post Keynesian, although this may be only an accident; more importantly, I cannot speak on his behalf.
At any event, he does believe MMT and the Marxist approach, as represented by TSSI, are compatible. Since last November Peter has posted an extraordinary series expounding on Marx and MMT:
It seems even a grunt like yours truly can actually contribute something comparatively original: “Marx, Fiat Money and a Simple Business Card Economy” (Feb 28, 2016). Whether this speaks more of my own astounding capabilities or those rather poor of the British internet “intelligentsia and educated bourgeoisie” and their online toadies is for you to decide.
[A] “A family tree of the Post-Keynesian school of economics”. Author: “Lord Keynes” (from beyond the grave). “This file is ineligible for copyright and therefore in the public domain because it consists entirely of information that is common property and contains no original authorship“. Source: Wikimedia.
So, I Actually Hate the JG, Who Knew?
This is not rocket science, Brian. (see also)
A recent exchange I had with online MMTer Brian Romanchuk — from Canada — about one of Chris Dillow’s posts turned out to be full of unsuspected revelations. Readers may find it as illuminating as I did.
Dillow, following Michal Kalecki’s famous 1943 essay “The Political Aspects of Full Employment”, argued that full employment (therefore a Job Guarantee) is unlikely in democratic capitalism.
(Arguably, the priority for so-called Keynesian economics should go to Kalecki and not to Keynes, at least if one believes Joan Robinson – probably the second name in the pantheon of “Keynesian” economists and contemporary of both men – and Prof. Bill Mitchell, one of MMT’s founders.)
This was part of my comment:
“Dillow’s point, which is Kalecki’s point, is that full employment is unlikely under capitalism, MMT or no MMT.”
Romanchuk’ succinct reply:
“I read Kalecki’s essay. From my perspective, Kalecki’s opposition is just him talking his book. Marxists have an innate reason to hate the Job Guarantee because it shows that we don’t need Socialism.
“Saying that a policy is impossible to implement has to be literally the worst strategy for campaigning for it. MMTers have read Kalecki, we can understand why some free marketers won’t like it, but that doesn’t matter if you win elections.”
Even the least perceptive reader can see that if Romanchuk read Kalecki’s essay, he didn’t understand it at all. Neither did he understand Dillow’s post and certainly not my comment.
But there are other things in his reply deserving comment, if scarcely more.
The first is his poor opinion of Kalecki: a (or even the) pioneering promoter of full employment through “Keynesian” policies must have been a rather dumb ideologue, for not seeing what’s evident to Romanchuk.
Let’s accept that, however, for argument’s sake. We are left with a question: if people are so susceptible to ideological biases, can we be as sure as Romanchuk seems to be of his own allegedly unbiased opinion?
To compensate for his underestimation of Kalecki, Romanchuk overestimates the powers of a benevolent MMT-inspired Government in a liberal democracy. This, I suppose, is how things are to pan out. Against Snidely Whiplash’s money, media, think tanks, politicians dirty tricks, Dudley Do-Right prevails on the technical excellence of his good ideas and becomes Prime Minister. He just had to reason and publish good books. Once elected, Do-Right applies his Job Guarantee without opposition, which ceases – POOF! – after elections. He’s wildly successful too. And Whiplash, witnessing Do-Right’s success, recovers from ideological madness. Everybody joins hands to sing O Canada. Semi-Happy Valley becomes Fully-Happy Valley forever more. THE END.
Romanchuk, no doubt, knows a lot more about Canada than I. Surely that’s how things happen over there. Somehow I doubt it would work like that in Australia.
But what really astonished me was the revelation that Marxists have an innate reason to hate the Job Guarantee, for I was not aware I hated it.
I actually used to think I much preferred the Job Guarantee to its alternatives (say, precarious employment at one hand, and the Universal Basic Income at the other). It took Romanchuk’s insightful reply for me to realise how mistaken I was!
And although I understand the reasons MMTers adduce to advance the JG[*], my preference wasn’t based on them. It was based on what I thought was a very good Marxist reason: under JG, workers remain, well, workers, with all the bad and good things being workers entails (MMTers may have read something different or understood what they read differently, but at least in my time, the working class was indispensable for Socialism).
UBI does not offer that.
In fact, mistaken as I might be, I suspect I’m in good company. I didn’t know it then, but I suspect Prof. Bill Mitchell (yes, the guy who invented the Job Guarantee and apparently the only MMT founder who has actually read Marxist literature) could feel devastated. At least in my delirium he seemed to write that the creation of jobs is important “so that workers would be aligned more strongly against capital”.
An everyday example that should speak to trade unionists: JG workers will need unions; UBI recipients will not. As a matter of fact, maybe I just dreamt the whole thing, but I thought I made that argument two years ago, almost to the day (But, do also see my exchange with one Kingsley Lewis: his question, my answer).
That coin has another side, however. Nothing of this is to say I’m totally immune to the allure of the UBI. When I take off my Marxist and union man cap, what remains is a bloke approaching 60. The only two things I have to show for some 45 years of labour are meagre savings for retirement (a situation more common than the Grattan Institute folks want to admit) and arthritic legs that make physical labour that extra bit more taxing.
A sufficiently generous UBI (in my case it doesn’t have to be particularly generous) would be a godsend to me and to those who otherwise will have to work until they drop dead, if they are lucky enough to find work. And, frankly, I don’t see MMTers – certainly not Romanchuk – taking that into account.
And, considering all that, I still prefer the JG. I take that red cap seriously.
One last thing about the JG. Things may have changed, but MMTers’ love for JG, implicitly unanimous in Romanchuk’s view, was far from universal a few years back. I even seem to remember this passage by one Cullen Roche (remember him?):
“Well, this [unemployment] is where we differ. You guys [MMT founders] see no need for unemployment. I do. I think it serves an incredibly important psychological component to any healthy economy. I’ve feared for my job and been unemployed. Those moments shaped who I am and what I’ve become. They were invaluable in retrospect. If I’d been able to apply for a JG job I might not be half the man I am today. Maybe it’s just personal entrepreneurial experience speaking here, but I know what it means to hunt and kill for ones [sic] dinner.”
MMTers invariably reproach those who criticise MMT without grasping its ideas. It’s a fair point, which would carry more authority if MMTers set the right example.
My advice? Don’t shoot from the hip. The likely outcome is to shoot your own foot.
And, really, you guys do need to read more and better.
[*] A JG should appeal to those worried sick with inflation, for it’s meant to provide a measure of counter-cyclical fiscal spending; it should also appeal to those complaining about wage stagnation. People like, say, Philip Lowe, the RBA Governor.
This is how it works: during an economic downturn, Joe Sixpack losses his job. Instead of becoming unemployed and receiving the incredibly shrinking dole designed to harass him until he finds any job paying him peanuts, Joe takes on a job for the JG. Joe’s pay increases fiscal spending, no need for special laws. Unemployment does not increase.
During the recovery, Joe finds a better job and quits JG. No need for harassment “mutual obligation”. Fiscal spending automatically decreases (much like Morrison wants), no need for special laws. Joe’s pay never fell below the level the JG paid: a wage floor.
There is something in JG, however, that may not appeal to Phil Lowe: monetary policy – the part of the RBA triple legal mandate the RBA really cares about – becomes superfluous.