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.
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 year.
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 2021.
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.