MTM gehi Bill Mitchell (2020)

Andrew Berkeley@spatchcockable

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gives an overview of the institutions, accounts, and banking infrastructure within which the UK Government’s financial activities are undertaken. Within the public sector, the principal administrative body is HM Treasury, which encompasses the key institutions of the Central Funds, Government Banking Service, and the Debt Management Office. The Bank of England connects these entities to the commercial banking system, which services the private sector money-users (households, non-financial institutions, and non-bank financial corporations).

Figure 1. A “System Map” of the Institutions, Accounts, and Banking Infrastructure that Supports the HM Treasury’s Financial Activities

Note: The Consolidated Fund, National Loans Fund, and Debt Management Account all hold accounts directly at the Bank of England. Government Banking Service represents the banking infrastructure that supports the day-to-day activities of governmental departments. Government Banking Service is therefore depicted holding liability (deposit) accounts for individual departments, shown in grey, as well as asset accounts, shown in white. These asset accounts support the settlement of transactions with the banking system and include accounts at the Bank of England used distinctly for expenditure and revenue, as well as Parliamentary Supply Funding from the Consolidated Fund. The Ways and Means accounts shown are technically two accounts and are described in their own subsection below.

The Central Funds are foundational accounting structures maintained by HM Treasury that serve as the origin of departmental expenditures, the source of government securities issuance, and the destination for most government revenue. They comprise the Consolidated Fund, the National Loans Fund, the Contingencies Fund, and the Exchange Equalisation Account (not shown). Despite their principal importance to government accounting, their existence and functions are not widely known or understood by the general public, and economic and media commentators seldom mention them.

The Consolidated Fund was established in 1787 as “one fund into which shall flow every stream of public revenue, and from which shall come the supply for every service” (HM Treasury 2024, 5). It is often considered to be HM Treasury’s “current account,” handling day-to-day cash flows related to expenditures and revenues. The National Loans Fund, established by the National Loans Act 1968, separately accounts for HM Treasury’s lending and borrowing activities and records many of the UK Government’s financial assets and liabilities.⁶ The Contingencies Fund is used to enable urgent expenditure beyond that provided by the routine parliamentary supply procedure. The Debt Management Account, while not formally one of the Central Funds, functions as an agent of the National Loans Fund and shares characteristics with Central Funds, such as issuing securities. These funds are interconnected through mirror accounts,⁷ with each having a claim on the Consolidated Fund to offset net liabilities or assets.

The Consolidated Fund acts as a sovereign line of credit that only HM Treasury, with consent from Parliament, can draw upon to commence spending. The Consolidated Fund is governed by the Exchequer and Audit Departments Act 1866 (the “1866 Act”), which stipulates that, “this enactment shall not be construed to empower the Treasury or any authority to direct the payment… of expenditure not sanctioned by any Act whereby services are or may be charged on the Consolidated Fund, or by a vote of the House of Commons, or by an Act for the appropriation of the supplies annually granted by Parliament” (Exchequer and Audit Departments Act, 1866, s 11). In essence, Parliament holds ultimate authority over government spending, and individual departments cannot spend without the authorization of Parliament. Sections 13 and 15 of the 1866 Act specify the mechanism that links two forms of parliamentary authorization explicitly to the provision of money: Standing Services and Supply Services.

Standing Services are forms of government expenditure from the Consolidated Fund that are permanently authorized under specific acts of Parliament. For example, HM Treasury may issue from the Consolidated Fund to make urgent advances to government departments (Miscellaneous Financial Provisions Act 1946, s 3 [1]), for making interventions in the banking sector for purposes of financial stability (Banking Act 2009, s 228) and for making payments towards “the principal of and interest on any money borrowed” (National Loans Act 1968, s 12 [4]). Supply Services, in contrast, are voted annually and result in the passing of Supply and Appropriation Acts by Parliament. There are usually two such acts each year (in July and March)⁸ and they itemize what would typically be considered the routine expenditure of the government, including allowances for individual government departments and other public bodies (e.g., health, education, defense, etc.).

In both cases, the mechanism is, for all intents and purposes, identical. The first step is the passing of legislation through Parliament, which authorizes an issue from the Consolidated Fund. Next is a requisition by HM Treasury issued to the Comptroller and Auditor General, who is today the head of the National Audit Office, for access to funds granted by Parliament. It is the Comptroller’s responsibility to verify that the requisition is consistent with the terms under which Parliament authorized the expenditure. If satisfied, the Comptroller grants HM Treasury a “credit” on the Consolidated Fund account at the Bank of England,⁹ whereupon HM Treasury may order the Bank to make issues to Principal Accountants from that account. Principal Accountants are public entities holding other accounts at the Bank.

Today, the Commissioners for Revenue and Customs are the key Principal Accountants, not only because they oversee HM Revenue and Customs, but also because they supervise the Government Banking Service. This service, established in 2008, streamlined the UK Government’s banking arrangements into a single, shared function that uses commercial banking partners for retail banking transmission services. NatWest currently handles payment services for most government departments, while Barclays primarily manages HMRC’s revenue collection. Although operated by these commercial partners, the accounts appear on the Government Banking Service’s balance sheet, with payment settlement flowing through the principal accounts shown in

Throughout, we have kept the accounting narrative to a minimum, highlighting only the primary banking transactions that achieve the outcome of each step. This is to help the reader follow the flow and understand what is driving the process. In the Appendix, we also provide supplementary graphical balance sheet representations of the key transactions, showing government spending (Figure A 1), the Exchequer sweep (Figure A 2), and Cash management (Figure A 3).

Table 1 outlines HM Treasury’s expenditure process, showing the series of transactions occurring across the balance sheets of all parties when a government department (Dept.) seeks to make a payment to a private sector payee (see also Figure A 1 in the Appendix).

Table 2. Accounting Transactions Involved when Tax is Paid by a UK Taxpayer

Following the establishment of the Government Banking Service, and with the current commercial banking contracts in place, HMRC’s revenue collection activities are processed initially by Barclays Bank PLC. HMRC’s receipt accounts remain within the Government Banking Service, with Barclays acting as processing agent for their sort codes. To pay taxes, taxpayers need to instruct their bank to send a payment to the specified sort code and account. This causes a deletion of the taxpayer’s bank deposit at the commercial bank and a corresponding transfer of central bank reserves from the taxpayer’s bank to Barclays. Barclays then credits HMRC’s tax collection accounts within the Government Banking Service with the appropriate amounts, allowing HMRC to account for the various types of taxes (step 1, table 2).

Several times a day, HMRC transfers amounts from their accounts at the Government Banking Service to their general account at the Bank of England.¹⁴ ensuring that any funds in Barclays’ reserve account, held on HMRC’s behalf, are transferred to HMRC’s account at the Bank (, step 2). Finally, these tax receipts are transferred to the Consolidated Fund account at the Bank at the end of each day as part of the daily consolidation “sweep” process (table 2, step 3).

Table 3. Accounting Transactions Involved When the Exchequer Pyramid is “Swept” at the Conclusion of Daily Business to Consolidate Cash Balances Held at the Bank of England

The Consolidated Fund is balanced according to the process laid down by law (National Loans Act 1968, s 18), which results in the balance of the Consolidated Fund Account at the Bank being transferred to the National Loans Fund Account at the Bank. This has the effect of zeroing the Consolidated Fund Account’s balance that has accumulated from the day’s spending and taxing activities (table 3, step 4).

Table 4. Accounting Transactions Involved with the “Cash Management” of a Net Daily Exchequer Deficit Position

Table 5. Accounting Transactions Involved with the “Cash Management” of a Net Daily Exchequer Surplus Position

To clear the deficit position in table 4, the Debt Management Account sells a quantity of short collateral to a counterparty, along with a contract to purchase equivalent short collateral in the future, a repurchase agreement or “repo” (table 4, step 3). Recording these contracts in full shows that the counterparty borrows short collateral from the Debt Management Account at the same time as the Debt Management Account borrows sterling from the counterparty. Short collateral is transferred from the Debt Management Account to the counterparty, and an amount is transferred from the reserve account of the counterparty at the Bank of England to the Debt Management Account’s account at the Bank. At this point, the Debt Management Account’s account at the Bank of England is above target. Once trading has concluded for the day, the Net Exchequer Position is cleared by a transfer of this excess amount from the Debt Management Account’s account to the National Loans Fund account (Table 4, step 4).

Table 5 shows the corresponding surplus scenario and works similarly, but with the cash and short collateral moving in the opposite directions. In many cases, this can represent the settlement of the repo contract put in place by a previous repo. The Debt Management Account opens with the repo from table 4 still in effect, and with a surplus position to clear by settlement of the repo part of the contract. The counterparty returns equivalent short collateral to the Debt Management Account, and an amount is transferred from the Debt Management Account’s account at the Bank of England to the reserve account of the counterparty (table 5, step 3). This leaves the Debt Management Account’s cash balance below target until trading for the day is complete. At that point, the surplus balance in the National Loans Fund account at the Bank of England is transferred, clearing the Net Exchequer Position (table 5, step 4).

Notes

Figure A2. The Exchequer Sweep

Note: All balances reflect each entity’s position vis-à-vis the Bank of England. GBS: Government Banking Service. HMRC: His Majesty’s Revenue and Customs. CF: Consolidated Fund. NLF: National Loans Fund.

Figure A3. Cash Management with Daily Fiscal Deficit and Surplus

Note: All balances reflect each entity’s position vis-à-vis the Bank of England. CF: Consolidated Fund. NLF: National Loans Fund. DMA: Debt Management Account controlled by the Debt Management Office (DMO).

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Bill Mitchell: Our sequel to Reclaiming the State in now in progress

(https://billmitchell.org/blog/?p=44390)

February 27, 2020

As parat of my recent European speaking engagements, I went to Rome on February 5, 2020 to speak at the Italian Senate on Modern Monetary Theory (MMT) and the dysfunctional state of the European Union. The next day I had long discussions with one of my co-authors, Thomas Fazi, who I wrote – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017) with. We have been working on the sequel to that book for some time, and, in the process, have had to work through some difficult issues on which there has been some degree of difference in our viewpoints. While I was in Rome, Thomas and I also recorded a video of a conversation where we talk about our sequel. We provide that video here as well as a brief discussion outlining some of the major issues that the book will address.

Video

The conversation took place on February 8, 2020 in the Hotel Indigo, via Giulia, Rome.

We had been talking that afternoon about the sequel and trying to resolve differences we had regarding the emphasis, especially with regard to how to tackle the difficult identity issues.

In fact, we have been discussing these issues for some months as we tried to sort out the proposed chapter outline.

We have been able to come up with a way forward that one think will not be divisive within the progressive community.

But then, given past history, an ant can walk across a path and the Left will find something to argue about. The next book is proposed for release later this year¹.

The video is the result of our lengthy discussions on various topics.

The video goes for about 37 minutes, was recorded on an iPhone XS Max, supported on a little tripod structure that we bought in a Trastevere street market for a few euros.

Some information about our proposed sequel

In Reclaiming the State and in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015) – the issue of identity came up.

Towards the end of that book, I was evaluating the various options that the 19 Member States of the Eurozone had to get out of the dystopic neoliberal austerity machine that they had created when they went into the common currency and surrendered their own sovereignty.

One option was clearly to create a true Federal Europe, which was the only way the earlier processes that explored further economic integration (the 1970 Werner Report and the 1977 MacDougall Report).

The – Werner Report – for example, concluded that for EMU cohesion “transfers of responsibility from the national to the Community plane will be essential” (Werner Report, 1970, page 10).

Moreover, the (p.11):

… transfer to the Community level of the powers exercised hitherto by national authorities will go hand in hand with the transfer of a corresponding Parliamentary responsibility from the national plane to that of the Community. The centre of decision of economic policy will be politically responsible to a European Parliament.

In a similar vein, the – MacDougall Report concluded in relation to the need for a mechanism to cushion “short-term and cyclical fluctuations” (p.12) that:

… because the Community budget is so relatively very small there is no such mechanism in operation on any significant scale, as between member countries, and this is an important reason why in the present circumstances monetary union is impracticable.

The current design of the Eurozone determines that the Member State governments are not ‘sovereign’ in the sense that they are forced to use a foreign currency and must issue debt to private bond markets in that foreign currency to fund any fiscal deficits.

Their fiscal positions must then take the full brunt of any economic downturn because there is no ‘federal’ counter stabilisation function.

The EMU is a federation without the most important component.

The decision by the Delors Committee in 1989 to ignore these recommendations reflected two realities:

1. The neoliberal ideology had become dominant and they didn’t want a major fiscal role for government in the new system.

2. But, relevant here, the decision to leave fiscal policy responsibilities at the Member State level reflected the diverse cultural, historical and language differences across the 19 Member States.

In particular, Germany’s dominant position in the European economy allowed it to dictate terms and there was never going to be a system established where permanent fiscal transfers could be made between states, which in the European context would have meant transfers from Germany to the South (mainly).

There was simply no European ‘demos’, which could force the creation of a truly federal Europe.

Which led me to conclude that the option for Europe to create an effective federal system was not viable.

That led me to recommend various orders of exit starting from the politically impossible orderly dissolution of the currency sharing to different forms of unilateral exit.

But the point was that currency sovereignty is only legitimised if there is a demos that accepts that sovereignty and all that it implies (permanent asymmetric spatial transfers and the like).

In our 2017 book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017), Thomas and I developed a progressive manifesto for reconfiguring the state (in concept) away from neoliberalism.

We had argued that neoliberalism was really a state-driven project rather than an abandonment of the nation state.

And as the agenda we outlined was based on the imperative for governments to have true currency sovereignty.

Modern Monetary Theory (MMT) outlines four requirements for sovereignty:

1. The government issues its own currency.

2. It floats it on international markets.

3. It creates no liabilities in any other currency.

4. Its central bank sets the interest rate.

So in Reclaiming the State, the progressive agenda relied on the government using its capacity as the currency issuer to pursue social, economic and ecological policies that advance the well-being for the people rather than being an agent for capital and overseeing and facilitating a process that systematically redistributes income and power away from workers to capital.

While we extended the ideas I had developed on culture and identity in Eurozone Dystopia, we didn’t fully develop the analysis.

Importantly, while MMT places currency sovereignty at the centre of the macroeconomic analysis, and we certainly made that a necessary condition for underpinning an effective progressive agenda, there has been much work from us on what determines the political legitimacy of the currency sovereign government.

Why are some currency arrangements unworkable (such as the EMU) and others effective (Australia)?

That is the first major question we seek to answer in the sequel.

And, clearly, it requires us to explore the delicate issues of identity and culture.

As is apparent in the video, Thomas and I are very aware of the way discussions of these sorts of issues can easily descend into one-line accusations of racism, xenophobia, homophobia, trans-phobia and all the rest of the nasty assertions that seem to appear regular on social media.

To some extent, there are elements that do not really want a debate about these issues but seek to close down the discussion.

We reject that strategy.

But, as the video shows, and as audiences who came to the GIMMS lectures in London and Manchester last week heard, I am also extremely cautious about entering discussions of these issues.

It is not that I am scared of the cancel culture characters.

Rather the issues are so nuanced that it is hard to make progress in a definitive manner.

So, Thomas and I will explore these issues using a dialogical narrative technique, where we can rehearse our individual differences on these topics and the conflicts within the literature to provide what I hope will be an intelligent and respectful portrayal of the divisions that exist.

We are searching for a ‘demos’!

The other question that was left unanswered but touched on in – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – was the question of internationalism.

Thomas and I are both committed progressives and have been deeply influenced by the aspirations to create a global working class resistance against capitalism.

But as one of the founders of MMT, I clearly consider national currency sovereignty to be essential.

I eschew the notion that an international currency is possible or even desirable, for reasons the first section of the new book (outlined above) establishes.

We also reject the notion that the European Union is to be supported as an expression of the international aspirations of workers.

The EU is a corporatist, neoliberal cabal where that ideology is embedded in the legal structure of the structure and is effectively incapable of reform.

The cosmopolitanism embedded in the EU, which many of the progressive Left hold out as a reason for supporting the arrangement and was behind their deep opposition, for example, to Brexit, ends at the Mediterranean!

We reject this limited application of cosmopolitanism.

The question therefore is this.

If we are committed to effective currency sovereignty, which usually means one nation-one currency, then how do we construct a meaningful progressive internationalism?

That is the second task we aim to pursue in the sequel.

We will develop a notion of ‘international solidarity’ with all peoples and then evaluate how that concept can be operationalised in a progressive manner.

And, again, entering the minefield we have to discuss population policy, migration, foreign aid and lots of related thorny issues.

Our view is that an open borders policy for a nation is impossible for a variety of reasons.

If we consider one of the foundational principles of MMT – that the constraints on a society (and hence government) are the real resources that are available for use at any point in time – then the idea of a population policy makes sense, without invoking any identity issues at all.

Real resources are typically fixed in space and/or fixed in ratio.

In the first case, at any point in time there is only so much housing available, so much public infrastructure, so much educational resources etc. They evolve slowly and although China built a hospital in 10 or so days that was atypical behaviour.

In the second case, while human resources clearly come with immigration, they are typically combined with other productive capital, which is less mobile and immediately available.

So a planned approach to population expansion is responsible.

But we are aware that wealthy nations have a responsibility to less well-off nations and the task is to devise ways of advancing that responsibility so that:

1. Global resources are more equitably shared.

2. Old colonial and post-colonial extraction mechanisms are terminated.

2, Multilateral agencies that are created do not destroy prosperity in weaker nations.

4. Foreign aid is generous and targetted to reduce the so-called ‘push factors’ that force people to seek migratory options.

5. Necessary migration (if that is the most equitable and effective option) is planned and scaled in a way to enhance solidarity within and across nations rather than promote division.

A big task.

But I think on these issues, Thomas and I are fairly close in our views.

We plan to have the sequel out later in 2020 and there will be a promotional tour probably in early 2021².

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Conversation with William Mitchell and Thomas Fazi, Rome, February 2020

(https://www.youtube.com/watch?v=8Cn8z9Ycknc)

In this video, Reclaiming the State authors discuss the scope of their sequel (due out later in 2020) and how they intend to deal with some of the issues involved.

Transkripzioa:

0:01

[Music]

0:37

down by the river and here’s Thomas party my co-author on reclaiming the

0:44

state and hey y’all you know and we’ve just been talking about our next project

0:50

and if there is going to be money because with all of these cohorts and

0:58

projects there’s always room for debate and we’re just working through all of

1:06

the issues there’s been a lot of attention on social media about some of these issues in recent weeks and months

1:13

and particularly the sort of identity issues that the that the left so

1:21

concentrates on at times and I think that these issues are so nuanced that

1:27

it’s very hard getting any clear noise out into into a debate you know as soon

1:35

as you talk about anything to do with the West Bank you’re accused of being an anti-semite and the issues are you know

1:44

the issues that we’ve been talking about today and we’ll talk about a bit today here together is that you know from a

1:52

strategic point of view I wonder whether they’re so nuanced whether we can

1:59

actually get anywhere focusing on those

2:04

sort of issues you know you know sort of progressive live debate but then I

2:11

understand your position that we shouldn’t be silenced by irrational

2:19

responses and and I accept that I mean my starting point is I’m I’m basically

2:26

politically correct and I guess the reason I’m I’ve accepted

2:33

that as being a reasonable discipline on dialogue is because I’m aware that it’s

2:42

very easy just to hurt people even if even if even if we might stand back in

2:51

some dispassionate way whatever that is and think well why would you be advised by something it doesn’t matter you know

2:58

that that’s not the point people do get hurt and see it could be very cautious in in what in and I think I think

3:05

society has evolved so we use language much better in these issues but but I do

3:11

accept your point that there’s this like I you know this I wrote about it a

3:18

couple of weeks ago about the cancel cancel culture or the call out culture and and I think that I think that

3:28

there’s that there’s evidence of you know messy inconsistency in that approach but I also think it’s sort of

3:35

anti education that my my period my my sense as an educator is that we should

3:42

be taking on these issues and addressing them you know you know scholarly fashion

3:50

and so what do you think about all of that well I mean I completely understand

3:56

your point I think it’s it’s a very thin

4:01

line between wanting to address controversial issues and risking to

4:08

seriously offend people I think that’s something that one should be aware of but I think there’s also very thin line

4:15

between political correctness and censorship and I think while I think

4:21

there are some there are some things that it’s correct to be politically

4:27

correct about because even if it imposes even quite rigid constraints on the

4:34

conversation in some context I think it’s been necessary to force

4:41

to evolve kind of you know force certain habits some people habits that might

4:48

have been offensive to a specific minorities or groups in society but I

4:54

think the mind has been shifted quite a bit in recent times and it’s been

5:00

shifting so much that the space for that the issues that have become taboo keep

5:07

growing and growing and growing which means that the space for debate has been narrowing and now in the narrowing down

5:14

so much to the point that the that you’ve got all these issues that that

5:20

are out there and that people are debating out in the streets people are debating in bars people debate in their

5:25

own homes for or against or just trying

5:31

to understand what these changes in society are about and those people that

5:37

have the capacity and the ability to approach these issues in a nuanced serious way so the world of academia at

5:45

the world research intellectual intellectual world more in general is

5:50

instead on the other hand terrified of touching these issues because you’ve got

5:57

these because you’ve got these people out that this year this year as Darryl

6:03

to police the debate it’s very interesting because you know I’m older

6:10

than you obviously and I was a generation that wanted to break down all

6:16

censorship in filming writing and you know I remember I remember when when I

6:23

was in my teenage years the big debate in Australia was where the D had four answers Lady Chatterley’s Lover but that

6:28

was banned and so you know I’m of the

6:34

generation that wanted to tell all of those restrictions down and and now

6:40

we’re seeing a sort of come back to that I mean in a way it was the it was the

6:45

conservative right in that 60s and in 70s that wanted to maintain censorship

6:52

and how’s the left and now the sort of the left self actions of the left part

6:57

of these parts a well I’d say so-called lived it’s just an interesting

7:06

transition how we were evolved where we struggled for freedom to express and and

7:12

now we’re restricting expression but I think as I said at the beginning I think

7:18

part of that restriction is that we’ve evolved in understanding you know I mean

7:24

those we’re also now much better to understand gender issues and issues

7:32

about sexuality and race and so we’re much more sensitive to to using language

7:40

and framing that that hurts and and it’s part of exclusion and those things and

7:49

anti solidarity so even though in the early 70s we were fighting for freedom

7:54

of everything mm-hmm I think it’s sensible that we’ve we’ve stepped back from that position somewhat and adopt

8:03

more care in our language because that’s an evolution of the way in which we think about issue is more deeply that

8:09

we’ve never did in in this in 60s or before that no no no I mean and I think

8:15

you know I mean the progress that has been done in in that you know in that area I think is important it should be

8:20

it should be offended so no one so it’s not about stepping back from what we achieved I think it’s about it’s about

8:30

having the ability to talk about how how sometimes the the the defense of certain

8:39

categories and society of learning minorities can can be brought so much to

8:44

the extreme where it becomes where where it simply becomes impossible to to talk

8:51

about how how some of these rapid changes in society might be you know my

8:58

cause you know my cause anxiety and my cause just confusion in a lot of people and I

9:06

think the not talking about this is not the right way to approach it

9:11

I think you know understanding how I think change is about you know I mean it’s it’s it’s a dynamic process you

9:17

know it’s about you know trying to introduce to introduce new awareness about new topics and a new and a new

9:24

consensus about topics and sometimes it’s about society having a hard time to to react to those changes and I think

9:31

sometimes that reaction is also you know it’s also rational and understandable

9:37

and I think it should be should be addressed but I think more in general I mean it’s um as I said a voice I think

9:44

it’s about upholding the right to talk about to talk you know to talk about

9:49

issues that are considered taboo because it’s so easy to remove the line in the

9:54

sand whereby you know it’s it’s easy for what I mean what may appear to be a

10:01

progressive narrative to turn into a you know very much pro-establishment narrative so for example if you take the

10:09

question of sovereignty which we’ve addressed a lot in in our book there are

10:15

factions of the left that they need you know they’re just talking about sovereignty is is making a nationalist

10:23

mr. argument and so and so I think this is a great example of how of how

10:29

dangerous this approach can be we’re even talking of an issue that should be fairly uncontroversial

10:34

even from our left standpoint which is the issue of you know the defense of sovereignty the pneumatic sovereignty

10:41

national sovereignty becomes a taboo you know that’s so when you know how the thought police to you know to show off

10:49

the conversation and to constantly shift over homeless and then then issues that

10:56

we would consider completely uncontroversial can become controversial yeah I think talking about that next to

11:06

to consider I mean we were talking earlier about – two concerns that I’ve

11:12

got in this issue and the first one is that there’s obviously one of the developers

11:19

of mmt which nm ticketing such you know

11:25

we now I think it’s not putting tickets on her selves to say that we’re now seen

11:31

as a real challenger to the mainstream mm-hm and the scrutiny that were under

11:36

now is intense and the we’re up against

11:41

you know will as I said in the Italian Senate yesterday were in the midst of a

11:47

paradigm shift and that that’s bringing massive resistance from the dominant

11:52

paradigm and and they you know history philosophy of science tells us that when

11:59

paradigms that are generating they use all sorts of vicious tactics to defend

12:05

their position and so as a public figure and as an author and as a researcher I

12:13

clearly don’t want to the MMT agenda to

12:18

be blurred by other agendas as a way of

12:24

undermining what I see as the MMT agenda and the second thing I think is it

12:31

because these identity issues are so nuanced and so so they’re like a

12:36

minefield and you know that as well as I do absolutely that you’ve then got a

12:45

methought to talk about them as in a public intellectual mm-hmm because they bear they bear on our

12:52

primary research agenda your yours and and what we want to empower talk talk

13:00

about in our sequel to reclaiming this day but they’re so complicated and

13:07

nuanced I don’t think social media as the vehicle to to advance them in any

13:13

constructive way I mean the research I’ve done on Twitter is that Twitter is not good for having any debates at all

13:19

the Twitter is only really good for pointing people

13:24

in the direction of of coherent writing

13:31

and research and report absolutely and so I think that trying to have these

13:36

identity issues out on with limited character tweets is really opening the

13:43

door for for misunderstanding as that their misunderstandings and and then it

13:50

just evolves into inter destructive conflict where I think if you you know

13:57

like we’ve had a nice discussion this afternoon where we’ve been able to go

14:02

through a whole lot of issues because we’ve been able to speak at length and discuss them at length whereas if we

14:08

just hadn’t been tweeting back and forth with each other we’ll make the progress and and I think you know that that’s

14:15

been my concern that some of these issues have been luring mmt and also not

14:22

getting us anywhere because and Aspire don’t really get involved with debates

14:28

on twitter i get it i get character assassinated you’re good enough not to get more than anybody I get careful

14:34

fascinated almost every day on Twitter and I just don’t buy because it’s not it’s not it’s too nuanced these issues

14:40

and and it’s just so you know I think

14:45

that’s I know I mean I as for the first on us they think no I

14:51

think that’s going to be increasingly an issue to deal with about you know the the the line between the MMP framework

14:59

analysis and political consequences that people draw from that I think it’s

15:07

almost inevitable that the line gets gets blurred because as we’ve always

15:13

said you know a monkey is not prescriptive prescriptive in itself it’s a framework if you want understand

15:19

reality and then you can apply that framework in in different ways and the people that don’t understand that

15:25

framework and subscribe to they can have very different views [Music]

15:30

society look at the case in Japan you know I’ve been I’ve been giving some

15:36

discussions with the Liberal Democrats conservatives you know the ruling party

15:41

are concerned we have completely different ideas about I’m very lift ok economy from you yeah better day about

15:48

the Iranian clears absolutely and I think there’s no there’s no easy way around it I think you know you’re always

15:56

going to have people that are associated with I mean putting aside a core mmt

16:03

group I said you had you do have an increasingly wide array of characters of

16:10

people of public intellectuals and I guess to some extent that you can include myself in that category

16:16

especially in my home country elite that are associated with MMT although of course they don’t belong to the core the

16:24

founding group but in the public debate on associated with MMP and they will have their own right is and I think I

16:32

can understand as I call haven’t you found out why you would just some sex find out troubling that you have people

16:38

out there that are somewhat viewed as associated German tea that may be put forward of you now in my case might be

16:44

probably quite similar views this is why in the last week I swim to clarify that by by differentiating what I call the

16:52

MMT as macro from the MMT project exactly I think that’s very important to draw that

16:58

there’s a project is much broader it informs mmt and it draws on them empty

17:06

but it’s not nearly empty so I’m sort of sought to draw draw that line in the

17:11

saying we’re just to help people I

17:17

understand where they lie and I think to some extent what the effort that people

17:22

that see themselves as them as mmt advocates can do is themselves to try to separate the line and so you know if

17:29

once if you’re engaging on specific economic issues that relate to empty you

17:36

know that’s that’s okay when you’re dealing with extra economic issue more cultural issues identity politics

17:42

issues and so on you should make it clear I think you know who whoever’s

17:48

talking to make it clear that that doesn’t necessarily have anything to do with MIP yeah I depend on that we do a

17:55

lot of people have said we well if you have these views you’re not part of them empty now you know I’ve responded and

18:01

said that’s not correct and I thought getting back to what we’ve seen before I think there are you know factions within

18:08

just as their faction within the left that are trying to frame what are the acceptable boundaries of the bay

18:14

you also have factions within the M&T wider well but I think they’re trying to frame the boundaries of what is

18:20

acceptable talk within the within the so-called mmt community and I also see

18:26

dangers in that and people trying to claim the flag of you know the true the

18:32

true in them tears that’s what I’ve said that ruling them tears MMT the Trail of Tears okay mm please project the MMT

18:39

project can be whatever people want know whether I associate with their work or

18:45

not so it depends upon the values in bulb solutely but I can you know as I

18:51

wrote this week or last week anyways start the week but that I can’t be out

18:57

there policing absolutely what I don’t think you should what the energy project

19:02

is I’m very happy that there’s lots of great people doing in humanities in a

19:08

mall or doing little group drawing on our work and in a way you know not in a

19:13

way but they also provide context for the macroeconomics oh that’s terrific

19:18

and and long way around but at the same time I can’t police some you know let’s

19:26

be crude a right-winger coming up with an mmnt project to lock refugees up and explaining how it would

19:35

be easy to for the government to do that because there’d be no financial constraints you know that’s it so let’s

19:41

go it’s we’ve been talking about the book I thought we might die give-give the people watching this video

19:48

and an idea of what we what we’ve been thinking about in terms of their sequel

19:54

to reclaiming this day in a way it’s

20:00

taken us a little while to think through how we can expand that in in a

20:06

constructive way and I think we’ve sort of come up with a plan today we reckon

20:11

yeah yeah I think we found a good middle ground as bill was saying we do have some this is we’re talking to me you

20:20

don’t just say but are we having conversation yeah yes as you were saying

20:29

you know we do have disagreements about specific issues but more importantly about the emphasis and the space that

20:36

maybe should be given to specific to these issues in the book and now I’ve

20:42

we’ve agreed that you know we will try to touch upon most of the even some of

20:47

the more control of controversial issues but not to make it obviously the focus

20:53

of the book yeah yeah I think one of the things we left implicit in reclaiming

21:00

this day I touched on it in my 2015 book about the euro zone where I concluded

21:08

that the euro zone was unlikely to be

21:13

reformed because because it needed to be a true federal system and there were too

21:20

many historical and cultural issues across the 19 member states that would

21:26

preclude that development and but Anne in reclaiming state we touched on the

21:34

way in which the left had had really embraced and I talked about it in the Senate yesterday where the left had

21:41

become sort of caught up in what what a postmodern deconstruction and really

21:48

left the macro space uncontested and and where they did are people in that closed

21:54

space they sort of became they rendered to the nail improve the mainstream macro and so in reclaiming

22:01

state we we just left a lot of those issues implicit and concentrated on the

22:08

the concept of a state as a currency as sovereign and that disabused all of

22:15

these other notions that we were nationalists or you know ethno nationalists or something like that but

22:21

I think in this next project we have to tease out what it is that gives a

22:29

sovereign currency political and societal legitimacy now you know and mmt

22:35

we talk about it being driven by a tax liability but that or that begs the

22:42

question as to what’s lying underneath the acceptance is that liability I think

22:47

that’s I think that’s the context you call it the demos they were what

22:53

constitutes a demo and what one of the characteristics of that I think that’s where we can have a nuanced and

23:01

reasonable discussion about identity and you know what binds societies together

23:07

and so I think that that would that’s

23:12

going to be a great yarn for this book I think that’s I think that’s a very important issue as you know and it’s

23:17

it’s a very delicate issue because it bears upon that a whole lot of a matter

23:23

of set of issues you know which include you know borders to some extent

23:29

population policy even integration to some respect and I think and these are

23:36

all issues that relate to the wider issue of the demos you know what constitutes demos and what extent is

23:43

democracy only possible in a context in which people feel the day that or have a

23:52

degree of have a collective understanding of the of the world have a

23:58

you know collective understanding of history and there are also more basic elements you know common language obviously helps which is

24:05

what you don’t have him in the EU for example and that’s something we have touched upon in the previous book and I

24:12

think you know just not shying away from you know discussing and analyze you know

24:18

what guess what constitutes the body politic and I think you know it’s not I

24:25

think an important point in males that no none of us whatever claimed that the body politic is fixed in history or is

24:33

always based on you know biological elements and you know that’s that’s absurd and that’s what some people know

24:39

right claim that there are you know biological elements you know that there

24:44

are the rule of the demos and I think that was I would argue is mostly cultural I mean I’ve long argued in the

24:50

Australian context that a progressive government has had a population policy

24:56

and that’s now much more apparent the

25:02

logic of that because of climate issues I mean Australia is a very arid continent as you know you’ve been there

25:08

you’ve lived there and that we’re all clustered around the east coast or you

25:15

know around the coast because the inland stew in a speedo ball or does that love water and so we have to be really

25:22

careful as to a popular managing population growth and so I I don’t think

25:28

you know I see some progressives saying where you could have open borders and

25:34

when you actually push that issue with them they end up agreeing that it’s it

25:39

would be impractical impractical for hundreds of thousands of people to descend on a country overnight I think

25:46

it’s like there should be uniform you know once you start thinking about it any sensible person reaches the conclusion that it’s just not doable

25:52

yeah so you know I think in this book I’m hoping we can elaborate start with

25:58

this notion of international solidarity where that’s a that’s a left ambition in

26:04

my view that’s been an historical progressive ambition and then then the

26:10

question is well how do you advance that to everybody’s best interest and that may

26:16

well be that you have immigration and that it’s done in a way in which there

26:23

can be employment opportunities and that it’s not seen by the existing working

26:29

workers as being undermining their potential for their families of that and

26:35

you have it in a growing economy supported by a currency sovereign state and in fully employed environment I mean

26:41

it’s quite historically it’s quite clear that tensions among you know we call

26:48

racial tensions they are very suppressed when there’s for employment and reduced reductions in

26:55

inequality and it may well be that international solidarity will in some

27:00

specific instances requires much more generous foreign aid and can technology

27:06

transfer and I think as we said earlier when we were mapping or said one of the

27:12

things that I’ve become really interested in well I’ve been interested a long time about this idea of the colonial extraction system as being sort

27:20

of a new progressive and so I think we can touch on we can analyze that and

27:25

this is you know we’ve both now had contact with Nodame going in West Africa

27:31

and done work for him and other no no and I think that the things that I’ve

27:39

learned from work I’ve done in South Africa and in Central Asia really has of

27:47

course you know I think this work to be done in there that expands reclaiming the state in turn in a really logical

27:55

one and I think but I mean I I think a fundamental point about which relates also the question of the

28:02

demons is that you do have societies can be very different cultures can be very

28:07

different and I think that diversity is great and I think so what mmt for example should be about is still provide

28:13

the means for each society to evolve in a more progressive manner according to

28:22

their own in their own way we’ve got also recognized that all societies are

28:28

interlinked the climate issues of evidence of that and also the fact that

28:35

you know one of the things I say when I’m talking about mmt is that the

28:40

currency sovereign government can bring all available productive resources into

28:48

use and therefore advanced material prosperity in that worry about

28:53

the sticking point is available resources so it can’t make a country

28:59

that hasn’t got very many resources poor rich and so I mean you know a natural

29:06

extension of reclaim the state and I think is that we talked about this earlier this idea of what does it mean

29:13

if you’re advocating currency sovereign states which we deal very strongly and reclaiming this day

29:20

what what what expression then does international solidarity have you know

29:25

what’s what formed says so a lot of progressives let’s talk we’re in Europe

29:30

you live in Europe think I think that the EU is an expression of international solidarity and therefore we should hang

29:37

on a reform at room whereas I think it’s an expression of the victory of neoliberalism and it should be torn

29:44

apart but I don’t abandoned for one moment the idea that we live in one

29:49

globe where we’ve got one climate and we’ve got we’re one people I’m a true

29:55

cosmopolitan type of person and even though I advocate currency borders and

30:03

the first bit teases out what what might determine feasible borders

30:09

I also became you know cross-border generosity and solidarity and equity and

30:16

I think that something aerbook and really build on yeah you know I think it

30:21

was always the confusion on the left you know of globalization and pre-trade you

30:27

know this idea that you know because we trade and you know it’s interconnect in the world evermore then there’s something intrinsically progressive I

30:36

sort of get confused by those who trade because the same free trade come often takes very exploitive

30:42

it’s been nice I face pride and I support failing trade not free track

30:48

I think of course I mean fair traders I think there’s a good there’s a lot there’s a lot to be said about a train

30:53

and that should be you know in basis of any trade you know should be done on fair conditions and social environmental

30:59

conditions but I think especially you know if we consider the extent to which trade the global trade contributes to

31:06

carbon emissions for example I think there also is a case for you know an ecological case to be made for a

31:13

reduction oh yeah trade I mean I think you know the old you know even case

31:18

themselves said you know I mean you know try to make you know like yeah whatever goods you can make it how should be made

31:23

at home and the finance should be national that was a crucial case that Keynes made and I think you know now

31:29

that might seem like an absurd argument to make nowadays but I mean I think from a purely ecological perspective that’s a

31:35

really important case to be made for the real localization of certain aspects of production I mean you’ve got these goods

31:42

be shipped all over the place you know often involving very exploitative conditions of labour of the environment

31:47

and definitely definitely the thing is that you know wealthy high-income

31:57

urbanites we’re probably in that category we benefit from the from trading systems

32:04

that exploit you know my profession has this idea that gains from trade you know

32:12

they you a country wouldn’t try it unless everyone gave you whereas we know from the colonial

32:20

extraction system that that that’s not true that the advanced countries have

32:26

really grown and prospered in a way that

32:38

here’s the way of saying it is that the way in which the advanced countries are

32:43

prospered is totally different to the way we were expecting me and that we’ve imposed them on that the poorer

32:50

countries and I think we need to discuss that in the book as part of the International Solidarity and what

32:57

internationalizing internationalization means for a left progressive because I

33:02

think there’s if there’s a lot of emotion about the first second and third internationals and you know I was young

33:09

I’ve suddenly international often and felt great about it but I think we need

33:14

to really nail that down in the context of currency sovereignty so yeah I think

33:22

the whole issue of internationalism is very interesting I think I mean the left as always let me go and people have to

33:28

always talk about international it’s an everyone sits and everyone’s that they sleep that word into every discussion

33:34

basically without often you know really thinking about the implications and how

33:41

difficult real internationalism actually is and in fact if you look at a history

33:46

of the left I mean it’s been most most

33:51

most changes have been achieved at the national level by you know individual individual countries and the masses of

33:59

the neutral countries taking power and implementing change in your own country and of course you’ve had important you

34:06

know levels of support between countries you know I think of the non-aligned

34:12

countries movement for example you have example in history of countries

34:18

collaborating but history also tells us that it’s very young that is very difficult I mean for for countries that

34:25

have different you know different cultures miles and so I think the dominant into

34:32

the nationalization and especially under capitalism has been these colonial or

34:38

postpone your extraction mechanisms I think it’s been a really unequal

34:44

relationships and no no no no I know but

34:50

then that is the way in which countries have oh yes absolutely that’s been the

34:56

most common formula so we’ve got to work out of why I mean you know I think this

35:01

book can tease out arguments as to how the advanced world can maintain their

35:07

material prosperity in the face of climate change but also in the face of

35:13

sharing resources more equitably across the planet so that we’re not we’re not

35:18

just extracting from other people’s and we’re sharing better and I think that

35:24

you know that will be a really great extract line extrapolation yeah I mean I

35:31

think that’s that’s the whole the relationship between the the national

35:36

the local and the global level is that it’s in Clayton is incredibly interesting I think and I think it’s

35:42

easy to overemphasize any of those levels so you’ve got people that say it’s all about you know neighborhood community action or literally or even

35:49

people that focus on the individual level you know recycle your garbage and so on and then then you’ve got you know

35:57

people to go to down to complete other end of the spectrum and say you know change can only be global and so you’ve

36:03

got you know what I would call this a globalist faction even the of the environmental movement for example let’s

36:08

say I was only possible if we have a global green you deal but realistically are you ever gonna have you know I mean

36:15

essentially managed authority that you know that can implement the green you deal or an equivalent of that

36:21

productivity level but that’s right he never gonna happen and so international collaboration is where you only leverage

36:27

that which that can happen which which also means taking into account that you know

36:32

countries will go over and and the volume in terms of consciousness all these problems at different paces

36:38

and there’s only so much you that living only so much to either live in Italy and

36:43

that you to live in Australia can can do about the pace at which other countries of world not on these issues that’s why

36:48

I would say that it’s a very important you know to to focus on changing things at the national level all sometimes

36:55

we’re providing a positive example to other countries and I think it’s I mean

37:01

to say that either change is global or you know screwed is a dead end because you know I mean change is not

37:08

going to happen simultaneously at all at the global level and that’s why I think that focusing on national level change

37:13

is so important because you know I mean who’s to say you know how inspiring it can be this in one country actually

37:20

implementing radical economic change and a radical ecological transition could provide a huge inspiration to other

37:27

countries I think and I mean I said I’ve argued for a long time and that’s the

37:33

role of the you in Europe to be to be just intergovernmental set up that can

37:40

handle those big issues across countries rather than try to squeeze them to death

37:46

through the currency unit okay so we’ve now better finish this

37:51

book oh yeah and so stay tuned everybody and we’ve conquered long enough here in

37:58

there Julia Julia Julia yeah and it’s a very public street and let’s do it yeah

38:09

well you’ll hear more about it [Music]

oooooo