The struggles to teach political economy and the aftermath – we all lost
(https://billmitchell.org/blog/?p=62745)
September 1, 2025
I started my undergraduate studies in economics in the late 1970s after starting out as an Arts student in the early 1970s studying philosophy, politics, history, anthropology and statistics. The Vietnam War movement and other things interrupted my first years of studies and it wasn’t until the Federal government introduced the National Employment and Training (NEAT) scheme in 1974 that I was able to get some government support to resume my studies, this time as an economics student combining statistics, politics, law and economics. The major student rebellions of the late 1960s around the world had ended and the Monetarists had seized control of the academy, which led to major shifts in the way economics was taught. The world is much poorer as a result of these changes and the end-game problems of neoliberalism that we are all struggling with now – housing crises, welfare retrenchments, aftermath of privatisation and outsourcing, casualised labour markets offering poorly paid jobs with precarious outlooks, rising income and wealth inequality, and the climate crisis to name just a few of the individual crises that are now converging into the poly crisis we are enduring now – are directly related to the shifts in the economics profession in the 1970s. I was a student then young academic through this early period and when I read an article in the Australian Financial Review this morning (September 1, 2025) – Why my dad fought against ‘Albonomics’ at Sydney University (usually behind a paywall) – I could hardly believe what I was reading.
The AFR article was written by one Warren Hogan, an Australian economist who works in the financial sector and regularly appears on the Murdoch’s shock media channel Skynews.
His article is intended as a defense of his father, Warren Hogan, who was one of the principle protagonists in the 1970s as a professor of economics at Sydney University that heralded in the shift in the way economics was taught.
Hogan senior was a towering figure in the academy in my formative years although growing up and being educated mostly in Melbourne in those days I missed out (fortunately) on having direct contact with him as a student.
I saw plenty of him though at conferences and other events and had zero respect for his position.
What has motivated this AFR article (August 31, 2015) from Hogan junior is the fact that 2025 is the 50th anniversary of the creation of some new courses in economics at Sydney University (Economics I(P) and Economics II(P)) which marked the beginning of the political economy group at that university.
Hogan junior, an antagonist of the current Federal Labor government, is using this anniversary to continue his attacks on the current government.
The link he is making is that the Prime Minister – Mr Albanese – studied within this political economy group at Sydney University from 1981 and is somehow a radical student as a result.
As an undergraduate student, Albanese was active in student politics and was part of the protest that occupied the famous clock tower at Sydney University in protest for some of the changes that were being pushed by Hogan senior to the economics curriculum.
You can read a bit about the role Albanese took at that time in this previous AFR article (April 12, 2022) – Albanese’s unconventional economics training.
Just the title of Hogan junior’s article – that the Prime Minister, somehow, has a distinctive economics doctrine – Albonomics – that is drawn from his undergraduate economics education – is farcical.
To characterise Albanese as a radical or somehow tainted by his undergraduate education in political economy could not be further from the truth.
And within that conclusion lies much of the problem we are facing with the dominance of mainstream economics in policy making.
Students of the 1970s political economy courses might have learned interesting and valuable things in their studies, but they also were remiss in not learning other things, which, in part, is why the progressive side of economics fractured some badly and became caught up in the growing post modernist emphasis on identity and things like hermeneutics.
I’ll come back to that.
Hogan junior is clearly miffed that his father wasn’t accorded the respect he demanded from many academic staff at Sydney University in the 1970s and beyond.
Hogan senior was appointed in to the chair in economics at Sydney University in 1968 and the following year another conservative (New Zealand) economist, one Colin Simkin was also appointed as a professor.
Simkin was a fan of Karl Popper and his falsifiability criterion as a basis for so-called ‘scientific activity’.
Popper also broadened his work into attacks on Marxism and attracted all the usual suspects who considered held out that Capitalism was the only way forward.
I was involved in a lot of those debates as a student in philosophy and political science in the 1970s.
I was more attracted to the work of Thomas Kuhn, Imre Lakatos and – Paul Feyerabend – and the idea of – Confirmation holism – all of which rejected Popperian thinking.
But that is a digression.
The appointment of those two professors began a period of massive turmoil at Sydney University.
The two of them pushed through a major restructuring of the economics curriculum, essentially importing the American model that had rejected Keynesian economics in favour of highly abstract, mathematically-oriented micro theory and Monetarist macroeconomic concepts.
Australian universities mostly went down this path – and students were told that the new approach was more rigourous and scientific – and reflective of the global trends where economics, ever the inferior lot, sought to imagine they were objective scientists like physics and chemistry.
I have some familiarity with the way the current mainstream took over the academy and expunged the Keynesian elements.
It was an aggressive, nasty, non-collegiate putsch.
I saw Hogan senior at events and he wasn’t a nice character.
But what they did to the economics program – and others like them (most of whom had received doctorates from US graduate programs or at the ANU – Hogan’s case) – was to abandon curricula that attempted to combine historical, social and political aspects with an understanding of the way the economy worked within that broader framework – and replace it with highly abstract theories that had little or no resonance with the real world.
I am reminded of a beautiful section in a book by American economist (and Marxist) Paul Sweezy who wrote in 1972 in the – Monthly Review Press – an article entitled Towards a Critique of Economics.
He argued that orthodoxy (mainstream) economics in recent times had:
… remained within the same fundamental limits” of the C19th century free market economist. He said they had “therefore tended … to yield diminishing returns. It has concerned itself with smaller and decreasingly significant questions … To compensate for this trivialisation of content, it has paid increasing attention to elaborating and refining its techniques. The consequence is that today we often find a truly stupefying gap between the questions posed and the techniques employed to answer them.
He then cites a wonderful example of mainstream written reasoning which the modern mainstream economists would be proud off.
It is taken from Debreu’s 1966 mimeo on Preference Functions and don’t laugh too much as you try to comprehend it:
Given as set of economic agents and a set of coalitions, a non-empty family of subsets of the first set closed under the formation of countable unions and complements, an allocation is a countable additive function from the set of coalitions to the closed positive orthant of the commodity space. To describe preferences in this context, one can either introduce a positive, finite real measure defined on the set of coalitions and specify, for each agent, a relation of preference-or-indifference on the closed positive orthant of the commodity space, or specify, for each coalition, a relation of the preference-or-indifference on the set of allocations. This article studies the extent to which these two approaches are equivalent.
In my so-called economics “education” I have read countless articles like this one – saying nothing about anything that will be of any benefit to humanity.
Studying mainstream economics with all the mathematics that came with it is like playing a boring version of chess.
And the students at Sydney University at the time were infuriated by Hogan and company’s takeover of the Department of Economics and complained the new subjects were too abstract, irrelevant to the real world, and more importantly, sought to promote a particular conservative manifesto (capitalism is best) at the expense of broader understandings and options.
I recall some junior academics at the University at the time ran a survey of students who railed against the new approach.
The nontenured staff were not renewed for the next academic year and the survey was prevented from being made public by one of Hogan senior’s professorial mates (goons).
Other staff who had previously taught development economics did not have their contracts renewed and in 1973 there was a mass student protest (of which the current Australian PM was a part of later on).
After a few years of infighting, a University enquiry recommended that the existing Department of Economics be separated into two entities, the new entity being the Department of Political Economy.
That recommendation was rejected by the Vice-Chancellor (an orthodox economist) and the only concession that was made was the introduction of the new courses mentioned above.
The orthodox economists in the Department held the power and there were often accounts of bias, discrimination and worse against the political economists.
More student protests and a resistance against any further political economy subjects from the senior professors followed.
In the early 1980s, the orthodox professors tried to get the small number of alternative courses scrapped.
And after more protests, the University’s Academic Board took over the dispute and some concessions and administrative separation were granted.
But the disputes continued.
In the AFR article yesterday, Hogan junior claimed that his father was the victim of “a vicious and one-eyed pursuit of both the man and the ball”.
That is certainly not how I recall the struggle.
I agree with Hogan junior that it was “a great ideological battle” but it was not a “battle between the socially progressive left-wing political economists and those advocating for the application of the scientific method in economics”
It was a battle between academics who believed in offering their students a broad education on economic matters and situating that discipline within the cognate disciplines of sociology, philosophy, history and politics, etc.
They rejected the sterile approach that the mainstream holds out as being ‘scientific’.
There is nothing scientific about mainstream economics.
I recall the following statement from Post Keynesian economist Paul Davidson [in the book by Bell and Kristol The Crisis in Economic Theory, Basic Books, 1981, p.157] which describes how mainstream economics uses methods and approaches that renders it unable to embrace real world problems:
There are certain purely imaginary intellectual problems for which general equilibrium models are well designed to provide precise answers (if anything really could). But this is much the same as saying that if one insists on analyzing a problem which has no real world equivalent or solution, it may be appropriate to use a model which has no real-world application. By the same token, if a model is designed specifically to deal with real-world situations it may not be able to handle purely imaginary problems.
Post Keynesian models are designed specifically to deal with real-world problems. Hence they may not be very useful in resolving imaginary problems that are often raised by general equilibrium theorists. Post Keynesians cannot specify in advance the optimal allocation of resources over time into the uncertain, unpredictable future; nor are they able to determine how many angels can dance on the head of a pin. On the other hand, models designed to provide answers to questions of the angel-pinhead variety, or imaginary problems involving specifying in advance the optional-allocation path over time, will be unsuitable for resolving practical, real-world economic problems.
That was the crux of it.
Hogan senior’s mainstream approach was really just a fictional version of the world designed to provide authority to the emerging neoliberalism.
I recall in a 2nd year microeconomics course we were studying how the provision of unemployment benefits causes unemployment to be higher and the terminology was a comparison between a ‘robustly independent income earner’ and an ‘indolent welfare dependent’ unemployed person.
At the same time the lecturer claimed the material was objective and value-free.
He should have studied linguistics and how language frames and can distort our perceptions of reality.
But the progressive side is not without criticism.
Hogan senior initially got offside with the staff at Sydney economics because as I recall he wanted to make first-year statistics compulsory for economics students.
Now while the citations I have provided above talk about the vacuousness of the mainstream approach, I am not against simplified (abstract) modelling.
Clearly, it is essential if you want to gain some traction on a real-world problem that is complex.
But the models have to be capable of capturing real-world dynamics.
For example, a model that claims central banks control the money supply via the money multiplier will always be false and provides no relevant information to the user.
And to be useful to society economists have to have applied skills, which in part come from a deep understanding of mathematical statistics.
I recall an honours graduate from Sydney’s political economy program (yes, eventually they won their struggle and separated into a separate department) applied for a job at my research centre.
We do a lot of technical work and this applicant was unable to even calculate a percentage much less conduct more refined econometric analysis.
The point is that I would have supported the introduction of more quantitative courses had I been an academic at Sydney University at the time Hogan senior came along.
And that also goes to the problems that political economics created in the 1970s when the academics (across the globe) became sidetracked by post modernism and methodology.
I wrote about that in this blog post (among many others) – Moving on from the post-modernist derailment of the Left (December 27, 2016) – and I won’t repeat that analysis.
Our 2017 book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017) – also traverses this territory.
Suffice to say that the ‘leftist’ academy was bogged down in deconstructing the hermeneutics of some such or another. Or telling us about “The legitimation of panopticism reinvents itself as the project of system” or that “The historicization of agency is, and yet is not, the fiction of millennial hedonism” (all courtesy of the – Postmodernism Generator – go to bottom of that page to have a play).
But it was in my field – macroeconomics – that the damage was extreme.
The political economy academics essentially abandoned the field to the conservatives and provided no contest.
Suddenly, political economists were writing about the ‘fiscal crisis of the state’ and accepting all the fictional nonsense that parades as modern macroeconomics including the government is like a household (financially constrained) and all the rest of the fictions that accompany that deeply flawed starting point.
And if you listen to our Prime Minister and his Ministers who are labelled as progressive talk about macroeconomics you will only hear nonsensical mainstream utterances that Hogan senior would have given 100 per cent to if submitted as essays by one of his undergraduate students.
Conclusion
I supported the political economic struggles in the 1970s and beyond and was horrified by the way the mainstream professors aggressively sought to impose their orthodox views and get rid of dissent.
I recall one professor at Monash, where I was a Masters student calling me in one day and saying “Billy you are very bright but you are a pop sociologist and should consider leaving this program”.
I earned high distinctions throughout even in the hard core economics subjects while practising my ‘pop sociology’.
But the intent to stifle alternative thinking was intense and for the most part worked.
Which is why our policy making departments in government are in such a deplorable shape and why the politicians utter nonsense.
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the @Scotonomics1 Scottish Currency Project. Thanks so much for your support to date!
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Scottish Currency Project. The Transition to a Scottish Currency
(https://scotonomics.org/scottish-currency-project-the-transition-to-a-scottish-currency/)
Over the coming months, Scotonomics will consult with monetary operations academics and finance professionals to build the knowledge base on a transition to a Scottish Currency after independence.
We will also refer to and cite the extensive literature on currency creation, currency operations, transitioning to a new currency, and establishing a new currency. We are fortunate that the literature is vast. We will also consult with the Scottish Currency Group and their new initiatives of a Monetary Research Institute and the commissioning of an academic, Dr Thibault Laurentjoye, Author of “Currency Options For An Independent Wales”, to look at “Options available for Scotland’s currency post-independence.”
We will also consider any pieces of work on a new Scottish currency from think tanks or academics. We will occasionally use Freedom of Information requests to the UK and Scottish Governments.
We will strive to make the content accessible to the general public while also ensuring it is technical enough to be of use to academics or policymakers, a challenging balancing act. We aim to fill the void between PhD dissertations, major academic studies, reports from Think Tanks, and debates on social media, threads on X, and pieces in general publications.
Scottish Currency Project. The Transition to a Scottish Currency
We support Scottish independence and believe that a Scottish currency is essential on the day of independence. We also believe that this is far from a straightforward process and will involve compromises, challenges and complexity for a newly independent State.
We will adopt a heterodox economic framework for our analysis and will state our assumptions where appropriate.
There are specific issues related to undertaking this work:
1. We are talking about a process with no specific timeline
It would be much easier if we knew that independence was going to happen in, say, 2028. But this is not the case. Independence may come quickly or be more than a decade away. The transition may also take between five and ten years, adding another layer of complication. Therefore, we must base all our assumptions on the information available to us today. This adds significantly to the complexity. This will very much make this a process of iteration.
2. We are operating without any guidance from the Scottish Government
As it is official party (SNP) policy to have a Scottish currency “as soon as practically possible after independence”, one would hope, and surely expect, that the Scottish Government would have completed significant work on the framework for an independent currency. However, there has been no substantive work on currency transition beyond the 2022 paper, Building a New Scotland, A stronger economy with independence. The paper is contradictory and offers a superficial analysis. We hope that we can conduct this work alongside work carried out by the Scottish Government and/or the SNP.
3. The unique position of a nation leaving a reserve currency
When Scotland gains independence, it will no longer use Sterling. It will be the first modern European nation to leave an established currency zone with a reserve currency status. This provides a challenge in finding appropriate examples. Although every nation is different, it would be useful for analysis if, for example, a nation had recently left the Eurozone. A more general note, this is hardly a unique position for researchers.
4. The ‘scarcity’ of resources and complexity
Each one of the questions most people would ask about a new currency would be enough for a PhD candidate to consider or fill a 100-page report. The lack of resources, unless we are commissioned for a specific piece, ensures that there will always be simplification in our work. Rarely does a researcher have access to the resources they require, and we will do our best to resource our project.
Given the above, the posts must be considered ‘working papers’ and will be subject to alterations. However, we will strive to create the most detailed, well-researched and cited resource on a new Scottish currency.
Resourcing the research
This is a significant undertaking that requires considerable time and effort. We may commission academics or professionals for specific small pieces of work. If you would like to contribute to the work, you can make a one-off donation here. Or join our Patreon membership site. All of our work will be initially published on that forum.
The research will be carried out by William Thomson, who has an MSc in the Green Economy and an MEcon in Economics of Sustainability.
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Reorganizing Production to Serve Life, Not Profit
Jason Hickel advocates for Global South development through economic sovereignty and eco-socialism, rejecting extractive capitalism to address climate and inequality crises.
At the 2025 GRIP Lecture, Jason Hickel critiqued mainstream development models, arguing that Global South sovereignty requires breaking from extractive capitalism through eco-socialist transitions. In this follow-up discussion, he emphasises the capitalist law of value as the root of ecological and social crises, advocating for democratized finance and public control over production.
On 15 May 2025, economic anthropologist, degrowth theorist, and author of popular works such as Less is More Jason Hickel delivered a provocative lectio magistralis as part of the Third Annual GRIP Lecture at the University of Bergen, sponsored by the Rosa Luxemburg Foundation’s Brussels Office. In his presentation on “The Struggle for Development in the Twenty-First Century”, Hickel dismantled the idea that the development of the Global South can take place within the logic of extractive capitalism and economic imperialism. Instead, he argued that only through movements for economic sovereignty and an eco-socialist transition is it possible to escape the traps of neo-colonial exploitation.
After the conference, he spoke with Don Kalb, Maria Dyveke Styve, and Federico Tomasone about concrete political strategies in the struggle for climate and redistributive justice, reflecting on the contradictions of liberalism, the ecological and social crises of global capitalism, and the possibilities for a democratic socialist future. In the discussion, Hickel shared his evolving perspective on Marxist theory, critiqued the limits of horizontalist politics, and underscored the urgency of building new political vehicles capable of responding to the planetary emergency.
DK: Yesterday, you argued that it’s essential to rethink the Russian Revolution and China’s history — not only for international politics, but also for working-class politics and global freedom. It struck me that your narrative has evolved into a more explicit anti-liberal reading of recent history. That wasn’t so clear in The Divide, but it was evident in your lecture. Have you shifted toward a more Marxist interpretation?
Yes, I think that’s fair. Two things are happening. First, my analysis has sharpened over time. Second, when I wrote The Divide, I was addressing an audience largely unfamiliar — and often uncomfortable — with Marxist or socialist language. I wanted to communicate effectively with people working in international development, many of whom are wary of what they think are ideological labels.
That strategic decision had a cost: The Divide largely bypasses the question of socialism, even though many of the countries I discuss were socialist or engaged in Communist revolutions. That absence weakens the analysis. You can’t fully understand the history of global inequality without addressing the attempts of socialist revolutions and the Non-Aligned Movement to break from capitalist imperialism and implement alternative development models, followed by the violent Western backlash that took the form of the Cold War.
Since then, I’ve increasingly used concepts like the capitalist law of value, which I now see as central to explaining our ecological and social crises. We live in a world of immense productive potential, and yet we face deprivation and ecological breakdown. Why? Because under capitalism, production only happens when and where it’s profitable. Social and ecological needs are secondary to the returns to capital.
DK: That’s precisely what struck me. I compared your work with that of David Graeber. You both start from anthropology and expand into politics, but the crucial difference, I think, is that you grasp the law of value — whereas Graeber, as an anarchist, tends to evade it. Would you agree that contemporary conditions compel us to reclaim key Marxist concepts and communicate them to a younger public?
Absolutely. As scholars, we should use the best tools available to explain material reality — and Marxist concepts remain analytically powerful. We’re in a moment where those tools can be reintroduced and popularized in new ways.
David Graeber was a brilliant and wildly creative thinker, and I learned a lot from him — both as a friend and a scholar. But you’re right, he approached political economy differently. In his later work, especially The Dawn of Everything, he began to acknowledge the limitations of anarchist organizing models like horizontalism. He saw the need for functional hierarchies — structures that can actually get things done without betraying egalitarian principles.
DK: That connects to another question. In 2011, the populist left failed to anticipate what I would call a global counter-revolution. What we’re seeing today isn’t just a resurgence of fascism — it’s a broader anti-liberal and anti-neoliberal insurgency. Some forces are anti-woke, others anti-globalist, and they don’t always share a coherent ideology, but some of the undertow is anti-liberal and potentially anti-capitalist, too. How does your work engage with this complex reaction?
It’s paradoxical. In one sense, this seems like the worst moment to talk about socialism. But in another, it’s precisely the right moment — because liberalism is visibly collapsing, and the rise of far-right populism is a symptom of that failure.
Liberalism claims to champion universal rights, equality, and environmentalism, but it also clings to a model of production dominated by capital and profit maximization. Every time those two commitments clash, liberal leaders choose capital — and everyone sees the hypocrisy. That’s why liberalism is losing legitimacy. The danger is that, in the absence of a compelling left alternative, disaffected workers gravitate toward right-wing narratives — xenophobic conspiracy theories, scapegoating immigrants, and so on. Fascists don’t offer real solutions, but they’re filling a void left by liberal and even social democratic parties, which have abandoned any structural critique of capitalism.
We need a democratic socialist alternative that addresses the root contradictions of capitalism, including its ecological irrationality. But building that alternative will require real political vehicles — not just protest movements, but mass-based parties with deep roots in the working class.
DK: Let’s return to the idea of the law of value. You touched on it earlier, but can you explain why it’s so essential to understanding the crises we face today?
The law of value explains why we experience shortages of socially and ecologically essential goods, even in an age of unprecedented productive capacity. Under capitalism, production is guided not by human or ecological needs, but by profitability. If something isn’t profitable, it doesn’t get made — no matter how necessary it is.
Take the green transition. We have the knowledge, the labour, and the resources to rapidly build renewable energy infrastructure, retrofit buildings, and expand public transit. But these aren’t profitable investments, so capital doesn’t fund them. Meanwhile, we continue producing luxury goods, fossil fuels, and weapons — things that actively harm people and the planet — because they are profitable. This contradiction is at the core of our ecological breakdown.
It’s funny, when people talk about shortages, they often refer to the socialist world, ignoring the sanctions and blockades those economies faced, even while their social outcomes were better than capitalist ones. Today, capitalism itself produces chronic shortages — of affordable housing, healthcare, education, and green technologies. This is a direct result of the law of value. We must overcome it if we are to survive.
FT: That brings me to Europe. The European Union tried to push a green capitalist agenda in recent years, but now we’re seeing a major shift towards militarization. What’s striking is that this agenda is being led by self-described liberals. Starmer in the UK, for instance, is at the forefront. The same is true in the European Parliament. How do you interpret this development?
It’s deeply disturbing. For years, European leaders told us there was no money to invest in decarbonization, public services, or social protections — because we had to uphold deficit and debt-to-GDP ratios to ensure price stability. But suddenly, when it comes to militarization, those rules are tossed aside. They’re ready to spend trillions on weapons and defence.
This reveals something critical: the deficit rules were never about economics. They were political tools used to block investment in social and ecological goals while maintaining an artificial scarcity of public goods. Now that military spending is politically expedient and profitable, the limits disappear. It’s a betrayal of the working class and future generations.
Moreover, their analysis is flawed. They seem to think that militarization will bring sovereignty and security to Europe, but true sovereignty would require a complete rethink of Europe’s geopolitical role. It would mean distancing from the United States and pursuing integration and peaceful cooperation with the rest of the Eurasian continent — including China — and the Global South. Instead, European elites remain trapped in the logic of US hegemony. Western Europe has been treated as a forward base for US military strategy for decades. Germany, for example, is filled with American bases. The US wants Europe to antagonize the East – but this is in the US interest, not in Europe’s. We must reject this. Europe’s true interests lie in peace and cooperation with its neighbours.
FT: That’s a perfect segue to my second question: the historical burden of European imperialism. Europe’s ruling classes have inflicted enormous harm over the past few centuries. How do we move beyond that legacy? Is there a real contradiction between the interests of the European working class and those of capital when it comes to foreign policy?
It’s an important question. First of all, yes — policies like the current wave of militarization are clearly aligned with the interests of European capital. That’s why they’re happening. But they run directly counter to the needs of ordinary people and to the stability of the planet. This reveals a deeper truth: there is a fundamental conflict between the interests of working people and those of capital. It forces us to confront the myth of European democracy. We are told that Europe is a beacon of democratic values, but in reality, the interests of capital dominate our institutions.
Democracy was never a gift from the ruling class — it was fought for by working people. Even then, we only got a shallow version of it. The original democratic demands — decommodification of essential goods, workplace democracy, control over finance — were abandoned. Instead, we get elections every few years between parties that all serve capital, in a media environment dominated by billionaires. If we want real democracy, we need to extend it to the economy. That means overcoming the capitalist law of value and redirecting production toward social and ecological needs. That means democratizing the creation of money.
DK: Let’s pick up that thread — money. One of the more original aspects of your work is the focus on the production of money itself. Could you explain how monetary sovereignty fits into your broader critique of capitalism?
Under capitalism, the state holds the legal monopoly over currency issuance, but in practice, it franchises that power out to commercial banks. Banks create the big majority of money in the economy through the process of issuing loans. But they only issue loans when they expect them to be redeemable and therefore profitable — when they serve the accumulation of capital. This means that the power to create money, and thereby mobilize labour and resources, is subordinated to capitalist profitability. It’s a direct expression of the capitalist law of value. Productive capacities are only activated if they yield returns to capital. That’s how banks steer the economy: not toward what we need, but toward what is profitable.To change that, we need two things. First, a credit guidance framework — a set of rules that direct bank lending away from destructive sectors like fossil fuels and luxury emissions, and toward socially necessary investments. Second, we need to expand the role of public finance. The state must directly create money to fund essential goods and services — renewable energy, housing, public transit — even if these aren’t directly profitable to private capital.
There’s a myth that we can only produce what is profitable. But in reality, as long as we have the labour and resources, we can produce anything we collectively decide to. The only barrier is political. Once we democratize money creation, we can liberate production from the profit imperative and organize it according to human and ecological needs.
DK: That’s compelling. Many of my left-wing friends in Europe argue that the euro is the main obstacle. They advocate for returning to national currencies to regain sovereignty. I take a different position: we should democratize the euro itself. These are small, interdependent states. Returning to national currencies risks division and renewed dependence on external powers like the US, who will play us off against each other. What do you think?
I’m very sympathetic to that argument. I understand the appeal of monetary sovereignty through national currencies — it offers more direct control over production and spending. But it also fragments the struggle. If every Eurozone country must independently wage its own class battle for economic transformation, progress will be at best uneven and vulnerable. A more strategic route is to reform the rules of the European Central Bank. That could be done quickly, at the institutional level. We could enable member states to expand public investment immediately by suspending austerity constraints.
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(Sorry, an impossible dream. See Bill Mitchell’s works. just in case: Eurozone Dystopia – Groupthink and Denial on a Grand Scale | Elgar Online: The online content platform for Edward Elgar Publishing
Ikus beheko Gehigarriak)
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Critics will say this risks inflation, and yes, if you simply inject public finance without adjusting the rest of the economy, you may drive up demand for limited labour and resources. But eco-socialist degrowth offers a solution: scale down harmful and unnecessary production — SUVs, cruise ships, private jets — and reallocate labour and resources toward socially beneficial activities. This stabilizes prices while transforming the structure of the economy.
Inflation isn’t a technical obstacle — it’s a political one. The real reason austerity rules exist is to preserve space for capital to accumulate unchallenged. If we shift productive resources toward public goods, we threaten the dominance of capital in the system. That’s what elites are trying to prevent when they invoke debt ratios and deficit limits.
DK: There was a strange moment recently. Trump said, in reference to inflation, something like: “Instead of 18 Barbie dolls, your kids will have two.” His argument was that economic sovereignty is more important than material abundance. I found it thrilling — in a way, he’s articulating a kind of anti-consumerist message. Isn’t that part of the danger of fascism today? It sounds anti-neoliberal, but it’s not anti-capitalist.
That’s exactly right, and I found that moment interesting, too. Some people even claimed Trump was embracing degrowth, which is completely false. Degrowth is a fundamentally anti-capitalist idea. It means scaling down ecologically destructive and unnecessary production while scaling up public goods, ecological regeneration, and social equity. Trump is doing none of that.
But there’s something we can learn from this moment. He managed to sell the idea of material sacrifice — “fewer Barbie dolls” — in the name of sovereignty and national pride. That tells us something important: people are willing to accept limits to consumption if they’re framed within a broader, meaningful vision. Too often, we on the Left assume that people won’t accept any kind of material constraint. But that’s not true. What matters is the narrative. If we offer people a coherent vision of freedom, dignity, economic democracy, and a habitable planet, we can make the case for transformation. The challenge is crafting that narrative in a way that’s emotionally and morally compelling.
Of course, for degrowth to be just, we must ensure that basic needs are met. That’s where a public job guarantee comes in. It would allow us to redirect labour from harmful sectors to beneficial ones, with dignified wages and workplace democracy. That’s the difference between an eco-socialist transition and authoritarian austerity.
MDS: That makes me think about how to build a truly democratic socialist alternative. Especially in the Global North, how do we convince the working class that this future — based on global solidarity, limits, and justice — is like you said, better than what they have now?
It’s a critical question. We must help people understand that consumer abundance in the North is built on unequal exchange — on exploitation of the Global South’s labour and resources. The fast fashion, the cheap electronics, the frequent produce replacement — all of it depends on a global system of appropriation. But more importantly, we must show that the working class in the North doesn’t actually win under this system. What they’ve gained in cheap consumer goods, they’ve lost in political agency, autonomy, and collective freedom. Their demands for decommodification, workplace democracy, and control over production have been abandoned.
Capital has used cheap imports to pacify working-class dissent, while consolidating its own power. So the real prize for workers isn’t another iPhone — it’s democracy, dignity, and a liveable future. We need to reignite that vision, grounded in shared interests with the Global South. The key is to frame eco-socialist transformation not as a loss, but as a liberation — from exploitation, precarity, and ecological collapse. And that’s where solidarity becomes real: not charity, not development aid, but shared struggle for a better world.
MDS: Exactly. That’s the tension I see. Western elites are clearly the main culprits of imperialism and ecological destruction. But in countries like Norway, working-class people also materially benefit from unequal exchange — our welfare state is funded by oil rents, cheap imports, and global extractivism. How do we build anti-imperialist solidarity under those conditions? How do we support revolutionary change in the South while mobilizing the North?
It’s an essential and complex challenge. First, we have to recognize that the landscape has changed since the 1960s. Back then, many leaders in the Global South came to power through mass-based anti-colonial movements. They had mandates for socialist transformation. But over time, those movements were repressed, co-opted, or overthrown — often with Western backing — and replaced by comprador elites who benefit from the current imperial arrangement. These elites are not interested in liberation. They’re aligned with global capital, even if their own populations suffer. That’s why today’s emancipatory movements in the South must confront not only Western imperialism but also their own domestic ruling classes.
This is where national liberation comes in. It’s not a matter of aid or development; it’s about political sovereignty and collective power. Western progressives must support these movements — not through charity, but through solidarity. That means breaking with the logic of the development-industrial complex and backing grassroots revolutions that seek to reclaim control over resources, production, and governance. You’re right: workers in the North do benefit in some material ways. But they are also deeplydisempowered. They’ve cheap consumer goods but not democratic control of production. Capital has used unequal exchange to buy off demands for autonomy and dignity. So the working class doesn’t really win. They’re offered illusions of prosperity, while their fundamental rights and freedoms erode.
We need a double-front strategy. In the Global South: national liberation movements that dismantle neocolonial dependency. In the Global North: movements that demand democratic control over production and finance. Together, that’s the path to ending capitalism. It’s not optional — it’s an existential necessity.
DK: That makes sense, but it raises a real problem of political timing. If national liberation in the South cuts off value flows to the core, that would trigger inflation, shortages, and political backlash. Will working-class movements in the North be ready to respond fast enough — with public investment, social protections, and a new vision? Or will the far right get there first?
That’s the critical danger. If we don’t prepare, we could see a very grim outcome. Imagine a scenario where the Global South begins to successfully delink — whether through China’s Belt and Road Initiative, regional trade blocs, or other means. That cuts off flows of cheap labour, resources, and profits to the imperial core. Suddenly, consumption in the North contracts. If the Left hasn’t built a coherent post-capitalist plan, capital will act to preserve its dominance. And what does that look like? Fascism. Crushing labour at home, cheapening domestic wages, repressing dissent. That’s the path I think Trump is preparing for — not because he has a clear plan, but because the logic of empire’s decline demands it.
That’s why we must present a real alternative path. The good news is, we have the data. Research shows that we can maintain or even improve living standards in the North with much lower levelsof energy and resource use. But that requires decommodifying key services — housing, transit, health, education — to shield people from inflation and secure well-being outside of market dependencies. This is the Left’s task: to make sure the collapse of imperial consumption doesn’t become a gateway to authoritarianism, but a springboard to democracy and liberation.
DK: That brings us to a key issue: political organization. I think we all agree that protest alone is no longer sufficient. We saw enormous mobilizations over the past decade — Fridays for Future, Extinction Rebellion — but they didn’t result in real change. What comes next?
Exactly. The protest culture of the past decade, while incredibly energizing, has hit a wall. Massive climate demonstrations brought millions into the streets. For a moment, it felt like the political class would have to respond. But they didn’t. Nothing substantial changed.
We’re now in a moment of reckoning. People feel disillusioned because they realize these actions weren’t enough. The energy dissipates, and the system remains intact. That’s why I believe we need to return to something that many have been reluctant to talk about: the party. Not the traditional parties that operate within the confines of liberal institutions, but mass-based, working-class parties — vehicles for building real power. These must be rooted in unions, communities, and popular organizations. They must operate with internal democracy but also with strategic coherence. That may mean a return to something like democratic centralism, which proved more effective than horizontalism in achieving structural change.
FT: That resonates deeply. Many of us from our generation saw the rise and fall of the “movement of movements.” We believed in horizontalism — in assemblies, autonomy, consensus. But over time, it became clear that these forms were not durable or effective enough to confront capital. They were easily neutralized or repressed. Now we’re facing a crisis of mass demobilization, especially among the working class. After decades of neoliberal attacks, unions and labour organizations have been hollowed out or co-opted. But at the same time, the promises of social democracy are clearly dead. Capital no longer shares anything with workers. So the old bargain is over, and the big question is: how do we rebuild?
That’s the question of the century, and it begins with clarity about what the working-class movement should be fighting for. Right now, many unions are trapped in a defensive posture — trying to preserve jobs by aligning with capital, hoping that growth will trickle down and keep their members afloat. But this logic is a trap. It’s embarrassing, frankly, that unions in 2025 still see capitalist growth as the solution to working-class precarity.
We need to move beyond shop-floor struggles for wages and conditions and reclaim the transformative ambitions of the labour movement. That means fighting for public job guarantees, for universal public services, for democratic control over production. Unions should be at the forefront of the ecological transition, not an obstacle to it. They must break from the logic of capital and align with the broader interests of humanity and the planet. Imagine: we can bring hundreds of thousands of people into the streets for wage demands. But why not go further? Why not demand the decommodification of higher education, or worker control over industry? We have the numbers. We have the power. What we need is the political vision.
MDS: I want to build on that. If we’re serious about rebuilding mass parties, how do we ensure that they’re internationalist in outlook? The far right has no problem organizing across borders. They collaborate. They strategize globally. But the left often retreats into national frameworks — especially in places like Norway, where people tend to focus on just protecting the welfare state. How do we organize transnationally, especially across global supply chains, where most of the world’s labour exploitation actually happens?
That’s such a crucial point. The Left’s political imagination is still largely confined by the nation-state, but capital is global. Supply chains are global. Fascism is increasingly global. Our response must be, too.
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(Sorry, but at the economic level, as Bill Mitchell claims all the real production pass through the State, which has two main agents: the Central Bank and the Treasury. With both, the government is able, using its proper currency, to properly manage the economy.)
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We should be organizing along supply chain lines — coordinating strikes and campaigns not just within countries, but across them. Global South workers, especially women in factories and agricultural sectors, are the backbone of the world economy. If we build solidarity between them and workers in the North — based on shared struggles rather than pity or charity — we can disrupt the system at its core. Imagine the power of coordinated actions across production nodes — from Bangladesh to Germany, from Mexico to Norway. That’s the level of strategic vision we need to develop. It’s not just possible — it’s necessary, and it begins with rebuilding internationalist institutions of working-class power.
FT: Yes, and to bring this home — our movements are facing a major generational question. We’ve seen waves of mobilization crash, time and again. The old forms don’t work anymore. But how do we reconstitute organization under current conditions, when the working class seems demobilized and the Left’s institutions are still captured by liberalism?
It’s true. We’ve been through a long process of disorientation. The neoliberal assault dismantled the organizational infrastructure of the working class — its parties, its unions, its media platforms. So we’re not starting from zero, but we are starting from a much weaker place, and you’re right: many institutions that still exist are stuck in a defensive mind-set. They’re clinging to social-democratic promises that no longer hold. Capital no longer needs to compromise. It’s offering nothing to the working class — not even stability.
The challenge is to rebuild — not just react. We need a new organizational paradigm. That means clarity, discipline, long-term vision. It means being unapologetically political. And yes, it probably means a return to mass-based parties — but rooted in contemporary conditions, learning from both the strengths and the mistakes of the past.
DK: That reminds me of something from an earlier generation. In the Netherlands, in the late 1970s and early 1980s, we had massive horizontalist squatter movements — tens of thousands of people willing to take the streets, occupy buildings, and physically resist police repression. It was revolutionary in energy, if not always in strategy. But we had no party structure. And eventually, the state responded with brutal repression and a cross-party political crackdown. The movement was dismantled, and within a few years, the Netherlands became one of the first “third-way” neoliberal democracies. That history is a warning.
Exactly. We’ve seen this pattern again and again. Horizontalism is great for mobilizing people quickly, for creating moments of radical imagination. But it’s not enough. When push comes to shove, it gets swept away. We need durable structures — organizations capable of holding ground, advancing demands, and taking power. We must learn from past failures, but also reclaim past strengths. Organization, discipline, clarity of vision — these aren’t authoritarian. They’re necessary. If we don’t build vehicles that can carry the struggle forward, we’re leaving the field open for authoritarian reaction.
FT: Finally, to loop back to the beginning — this really is a bifurcation moment, isn’t it? As Immanuel Wallerstein used to say, world-systems eventually reach points where their trajectories split. Either we find a way forward through transformation, or we spiral into fragmentation, repression, and ecological collapse.
Exactly. That’s what makes this moment so serious. Even if the far right isn’t fully aware of what it’s preparing for, the logic of global decline is pushing us in that direction. As the imperial core loses access to cheap labour and resources, the ruling class will respond by turning inward — crushing domestic labour and militarizing society. We’re already seeing this happen, and if the Left doesn’t offer an alternative — a post-capitalist vision rooted in justice, democracy, and ecological stability — then capital will manage the transition through violence and repression.
But we do have a chance. We know that human needs can be met with dramatically less energy and material throughput. We can build universal public services. We can stabilize prices without growth. We can reorganize production to serve life rather than profit. That’s the vision we must fight for. Not in the abstract, not one day, but now. Because the world we could live in is still possible, but it’s slipping away.
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Gehigarriak:
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An ex leader of a major party in Wales. In the audience, two attendees who top the regional list for major Welsh parties. All discussing the economics in an independent Wales through an #MMT lens
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Thanks to the organisers and all who contributed to this excellent event yesterday. Was also good to meet @wbmosler and @Williamgallus earlier for a thought provoking and wide ranging discussion on MMT, the Welsh economy and more.
Aipamena
Mark Hooper@markjhooper
abu. 25
Interested in #indywales? Then we can’t ignore the currency question & we can’t wait until the referendum moment before we discuss it.
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Warren Mosler uses the MMT lens to explain how both Scotland and Wales can enact progressive policies once they are separate from the rest of the United Kingdom
(https://www.patreon.com/posts/warren-mosler-to-137941629)
Last week, Warren Mosler, the founder of Modern Monetary Theory, delivered a landmark presentation in Cardiff. It was the first time he considered how his insights could be used to support the successful economic independence of both Wales and Scotland.
“When you’re trying to explain policy and what will work, what will be progressive, [mainstream assumptions are] a significant obstacle” – Warren Mosler.
And he couldn’t have made that any clearer. Supporting policymakers in reframing and removing outdated views of our economy is a significant challenge.
(…)
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NEW BLOG POST on @Scotonomics1
“Warren Mosler uses the #MMT lens to explain how both Scotland and Wales can enact progressive policies once they are separate from the rest of the UK”. https://scotonomics.org/the-mmt-lens-for-an-independent-scotland-and-wales/
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The MMT lens for an independent Scotland and Wales
Warren Mosler uses the MMT lens to explain how both Scotland and Wales can enact progressive policies once they are separate from the rest of the United Kingdom
(https://scotonomics.org/the-mmt-lens-for-an-independent-scotland-and-wales/)
In late August 2025, Warren Mosler, the founder of Modern Monetary Theory, delivered a landmark presentation in Cardiff. It was the first time he considered how his insights could be used to support the successful economic independence of both Wales and Scotland.
“When you’re trying to explain policy and what will work, what will be progressive, [mainstream assumptions are] a significant obstacle” – Warren Mosler.
In sum, supporting policymakers in reframing and removing outdated views of our economy is a significant challenge. There is no doubt about that. However, there are signs that some policymakers are open to other economic perspectives.
MMT in Wales
A former member of the Senedd Cymru and three prospective candidates who are very likely to be part of the 2026 intake were in the audience for Warren’s talk, which was the start of a process that will inform parties in the Senedd that there is an alternative to the UK’s austerity paradigm.
As ever, Warren challenges mainstream economic thinking. He explains how the standard mainstream economic narrative holds most governments hostage, based as it is on an economic understanding that has not shifted since the end of the gold standard—an economic framework that hasn’t been applicable for almost fifty years.
Warren explains how the MMT lens would help policymakers understand the potential to expand the policy options for Scotland and Wales should they become independent and launch their own currency.
MMT means no more gold standard thinking
Rigidly holding to gold standard thinking in a world of fiat money creation—where money is not linked to a fixed exchange rate or a commodity like gold—stymies progressive policies. With an up-to-date understanding, using the MMT lens, governments will be able to create a wellbeing economy based on full employment.
Warren tackles six areas where the mainstream has things “backwards”. He focuses on trade, savings and investment, jobs, the money creation sequence, unemployment, and interest rates. This is the core of the MMT lens for an independent Scotland and Wales.
He applies his MMT principles directly to the questions facing an independent Wales and Scotland, offering a fresh and radical perspective on how these nations could approach economic sovereignty. Should Scotland and Wales:
- Issue their own currency?
- Be concerned about the trade deficit they will both inherit?
- Sell long-term government bonds?
- Set high interest rates?
- Encourage savings to be able to invest?
- Pursue full employment?
Warren highlights the challenges faced by progressive administrations in Edinburgh and Wales. Warren says,
“You are up against people having things backwards. So, when you’re trying to explain policy and what will work, what will be progressive, it’s a significant obstacle. I just don’t want you to underestimate the size of that obstacle.”
Trade, Investment/savings, Jobs, Money Creation Sequence, Unemployment, and Interest Rates are “all backwards”. William Thomson (left) and Warren Mosler (right) in Cardiff. August 2025.
Warren Mosler and the MMT lens for an independent Scotland and Wales
We have broken down the MMT worldview, focusing on the six areas where mainstream policy is incorrect.
1. Trade Deficits and Exports
Mainstream economics frames exports as a national victory and imports as a loss, but Mosler turns this on its head. He explains that real wealth is defined by a country’s “pile of stuff” — the goods and services it can produce and consume. Every import contributes to making this pile bigger, while every export contributes to making it smaller. Strategically, some goods, such as steel or vaccines, may need to be produced domestically. However, for consumer goods, the logic is simple: imports are a benefit, while exports are a cost. Mosler ridicules the idea that countries are exploited when others send them goods, showing that the true problem with imports is only if they stop. He stresses that unemployment is the greatest waste of all, costing more in lost output than all wars in history; therefore, the priority should always be full employment and maximizing real wealth, rather than chasing export surpluses.
2. Investment and Savings
Mainstream thought teaches that savings fund investment, but Mosler insists this is completely backwards. In reality, investment creates savings. When a bank makes a loan to finance a factory, the loan itself creates a deposit — new money — which becomes someone else’s savings. Incentivising private savings through tax breaks for pensions and similar schemes creates a drag on demand, since unspent income must be offset by others going into debt or by government deficits. He emphasizes that large deficits are not evidence of irresponsibility but rather the mirror of high savings desires. If everyone saved more of their income, unemployment would rise unless deficits expanded. Misunderstanding this relationship between savings, debt, and investment leads to bad policy prescriptions that fail to sustain employment.
3. Jobs as Cost vs. Benefit
Contrary to political rhetoric that celebrates “job creation,” Mosler stresses that jobs are a cost, not a benefit, but instead highlight a failed full employment policy. The economic benefit comes from the output that jobs produce, not from the act of employment itself. We should already have full employment! If we did, we would value jobs as a cost, not a benefit. He illustrates this by pointing out that if everyone were already fully employed, adding jobs would simply waste labor that could be used elsewhere. Policies that promote projects based on creating more jobs — for example, favoring renewable energy because it requires more workers than coal — misrepresent the economic reality. Extra jobs reduce productivity, since more labor is tied up to achieve the same output. The real measure should be whether the project’s outputs are worth the opportunity cost of the labor, not whether it “creates” employment in itself.
4. Sequence of money creation
Mainstream views suggest that governments must first collect taxes or borrow before they can spend, but Mosler explains that the sequence is actually the opposite. The government must first spend money, which is used to pay taxes and buy bonds. Taxes are essential not for revenue but for creating demand for the government’s currency, as they compel people to seek paid work. The leftover after taxes is what shows up as savings or government debt. He emphasises that unemployment exists only because the government has not spent enough to meet both tax obligations and satisfy savings desires. Bond sales are not financing operations, but rather a means of shifting funds between accounts at the central bank. Misunderstanding this leads to false fears about deficits and debt sustainability.
5. Unemployment
Unemployment arises when government spending is insufficient to cover both tax obligations and desired private savings. Tax liabilities generate the need for employment and income, but if government expenditure does not provide enough financial balances to meet these obligations and accommodate savings, individuals are left involuntarily unemployed. Persistent unemployment is therefore evidence of an inadequate fiscal stance, not a natural feature of labour markets. The existence of unemployment signals that fiscal policy has failed to ensure sufficient demand to match the economy’s productive capacity.
6. Interest Rates and Monetary Policy
Mosler shows how mainstream thinking about interest rates is “180 degrees backwards.” Raising rates does not fight inflation by tightening money but instead increases government deficit spending through higher interest payments on reserves and bonds. These payments flow only to people who already have money, and in proportion to how much they hold, making the policy regressive and inflationary. He calls interest payments a form of “UBI for the rich.” He highlights Japan and the Eurozone as cases where low or zero rates coincided with low inflation, while countries with high rates, such as Argentina and Turkey, suffered severe inflation due to the large fiscal injections required to cover interest expenses. The true “natural rate” of interest under a floating exchange rate is zero; anything above that is a distortion that exacerbates inequality and inflationary pressures.
The MMT worldview
This framework is a macroeconomic model of our economy. It can be viewed as the MMT worldview that informs MMT policy. This is, of course, a model with certain assumptions that must be tailored to individual situations and circumstances. This is how all world views should inform policy.
Warren’s position, which I support, is that this is a ‘starting position’ that is based on a real-world understanding of modern money and provides a much more solid foundation for creating a progressive economy in newly independent nations.
Warren’s visit was covered in this interview in Nation.Cymru.
Audio podcast coming soon.
By William Thomson
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Audio of Warren Mosler‘s presentation in Cardiff: https://www.patreon.com/posts/audio-of-warren-138590165
(41: 30 m)
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