This is Part 2 of an irregular series I am writing on some of the complexities of Modern Monetary Theory (MMT) that are often overlooked by those who rely on reading airport-style books or Op Eds on the topic. In – Exploring the essence of MMT – Part 1 (March 29, 2022) – I dealt with some conceptual issues about values and theory. Today, I am considering the way to think about the – Job Guarantee – within the MMT framework. The Job Guarantee is at the centre of MMT because it contains an insight that is missing from the mainstream economics – the concept of spending on a price rule. This insight leads to the conclusion that the price level is determined by what the monopoly issuer of the fiat currency – the government is prepared to pay for goods and services. This, in turn, means that the Job Guarantee goes well beyond being a job creation program and constitutes within MMT a comprehensive macroeconomic stability framework – where the so-called trade-off between inflation and unemployment (Phillips Curve) is eliminated. However, while in the real world, complexity enters the scene and we need to be aware of the nuances so that we do not fall into the trap of thinking of the Job Guarantee as an inflation killer.
Today, I am reflecting on the evolution of the body of work known as Modern Monetary Theory (MMT) and responding to many E-mails I get seeking clarification about things and some that keep getting things wrong. Some of the things I write today might introduce some dissonance, which just means that those feeling that have not really got to the bottom of the matter before and thought they knew what isn’t. This blog post also forms part of my – MMT Provenance – series where I trace the development of MMT in historical terms – who said what, who were there, who weren’t etc. And it is good sometimes to reflect on your work to see where it has gone and to wonder why. So, a bit of a different post today as we wait for tonight’s fiscal statement from the Australian Treasurer.
It is Wednesday and just some odds and ends today, including a fabulous tapestry that has just been framed for me. In addition, there is a podcast and some great music. A typical Wednesday that is. And tomorrow, I am…
This is Part 7 of my on-going examination of the concept of ‘duty to work’ and how it was associated with the related idea of a ‘right to work’. Today, I go back in history (again) to discuss a literature that influenced the evolution of my own early advocacy of a Job Guarantee. We see how I considered developments in the early C19th which established very clearly the responsibility of the government to act as an ’employer of last resort’ could be integrated with the buffer stock literature (which analysed the use of commodity buffer systems) in C20th to provide a coherent buffer stock full employment capacity in our modern economies. In Part, this establishes where the Job Guarantee idea, that is now central to Modern Monetary Theory (MMT) came from – at least, in terms of my early contribution to that body of work.
Its Wednesday so a shorter blog post today with an interview I recently did with financial market educational professionals, the i3 (Investment Innovation Institute) where I cover a range of topics of current interest from an Modern Monetary Theory (MMT) perspective. Then we get down with some very cool music. And that is it. And I turned off the debate today in the US after 5 or so minutes and wondered what the hell that nation has become. None of the contenders is electable would be my conclusion.
As the public scrutiny of the body of work we now refer to as Modern Monetary Theory (MMT) widens there is a lot of misinformation abroad that distorts or otherwise undermines what has been done to date. Most, but not all the misinformation or emphasis comes from those who attack our work. Their criticisms usually disclose an incomplete understanding of where MMT came from and what the core propositions and logic are. They stylise, usually using terms and constructs that are present in mainstream thinking, but inapplicable to an MMT way of thinking, and end up spitting out things like ‘printing money’ etc, which they think represents a devastating rejection of our work. As part of my own work, and I do this in liaison with Warren Mosler, I am interested in documenting the train of events that led to what we now call MMT. I love history and think it is very important in helping us understand things. So today I am continuing to examine archives to trace the provenance of key MMT concepts. And I am continuing to document the idea of a Job Guarantee, which is central to the MMT framework, despite many who claim to be MMTers thinking otherwise. I have noted in the recent press, claims that the origins of the buffer stock employment approach that became the Job Guarantee was the work of Hyman Minsky. Nothing could be further from the truth as you will see. It is important, in my view, to make the provenance very clear and that is what this blog post is about.
Modern Monetary Theory (MMT) has been gaining more attention in Australia in recent weeks. I have been shifting my face-to-face speaking commitments slowly to on-line presentations. I will be announcing more systematic MMTed classes beginning via the Internet soon. And I will do some Live Youtube presentations as well. Last week, the well-known financial market journalist Alan Kohler used his weekly column in The Australian newspaper to discuss MMT – It’s Modern Monetary Theory time as the state steps in (March 23, 2020 – subscription required). Apart from his private corporate work in the financial markets (he writes a regular briefing and does an inflight business report for Qantas), Alan presents the finance report on the national broadcaster ABC nightly news program. He is also a regular columnist in the business pages. So he has high profile. I discussed my concerns with Alan’s representation of MMT in this blog post – It’s Modern Monetary Theory time! No, it always has been! (March 23, 2020). We made contact soon after that – I E-mailed him to tell him I had written a response to his column and he rang me and we arranged to talk further. On Wednesday last week (March 25, 2020), we spoke as part of Alan’s regular podcast – published at Eureka Report (which is a subscription business service). The 48-odd minute is also published here with some additional commentary.
A different blog post today. On November 29, 2019, I sat down with my friend Warren Mosler in Newcastle, Australia while he was on his more or less annual visit to see us. We decided to film a conversation we had about the origins of Modern Monetary Theory (MMT), how we came to it, the current state of MMT and future trends, including being part of the narrative surrounding the Green Transition. You will hear our concern about how the work we put in place at the outset is now being used in popular debates as well as other anecdotes. We consider the recent YouTube debate that Warren participated in in Italy and clear up the misunderstandings that followed that episode. We provide our own perspective on the way the GND debate is unfolding. I hope you find the 38 minute video that follows interesting.
It is Wednesday, so only some snippets, although as it turns out the blog post is quite long. I am also travelling a lot today. I have recently come across the complete archive of the PKT Discussion List, which was an E-mail listserv in the early 1990s that brought Warren Mosler, Randy Wray and myself together. In this blog post, I provide some of the interchanges that formed the basis of our subsequent partnership in developing MMT to where it is today. The discussion below is incomplete because I have not yet pieced all the archive together in a coherent way (it is quite fragmented in the form I currently have it in). But I think it might be interesting for you to see what was being said back in the 1990s. There will be more on this another day. No music today (ran out of time) but, tonight, my band is playing in Melbourne (see below) and live music is always better than YouTube videos anyway.