MMT makes clear that a currency-issuing government can always spend sufficiently to ensure full employment alongside low, stable inflation. It can always purchase what is available for sale in its own currency. The point – which, on a little reflection, should be obvious – is that the availability of real resources, not revenue, is the constraint on a currency-issuing government’s fiscal policy. Or, put another way, inflation is the constraint.
GUEST POST by jrbarch: There is a longing inside of every human being that we do not know how to label consensually. We call it the search for joy, contentment, clarity, knowledge, divinity, wholeness, truth, love-wisdom. No matter the label assigned, it is the same thing. But we cannot clarify the meaning this label masks. Mind jumps in, and like a used-car salesman announces, brashly: “Boy have I got a solution for you”. In this day and age, the solution is the political-economy, science, entertainment, and materialism – and there is nothing wrong with any of these, if manifest in harmony with and background to, existence. But mind has never been able to solve our quest. Our societies have never been able to fulfil our quest. Because it is the heart that needs to be fulfilled – not the mind. Mind will always be restless, creative, inquisitive, and have more questions than answers. The heart seeks but one answer, its focus is singular; and within that one answer, all other questions are resolved.
Magpie of the blog Magpie’s Asymmetric Warfare reminds us of Keynes’ evaluation of his own general theory:
I believe myself to be writing a book on economic theory which will largely revolutionise … the way the world thinks about economic problems. When my new theory has been duly assimilated and mixed with politics and feelings and passions, I can’t predict what the final upshot will be in its effect on actions and affairs. But there will be a great change, and in particular the Ricardian foundations of Marxism will be knocked away. (Keynes to George Bernard Shaw, Jan 1, 1935, as quoted by Geoffrey Pilling)
While sorting through old papers earlier today – or perhaps it was last week – the final play of a little known writer of considerable critical acclaim surfaced. If memory serves, it had been read while at high school, rather than watched, for reasons that will become apparent. If the recollection is accurate, the work of Morris Minor – there is no connection to the automobile of the same name – was encountered at about the same time as a children’s story involving farm animals.
Readers who infer from the title of this post that silliness is to follow would do well to heed the wisdom of their own inference and get out now if silliness is not their thing. Readers hoping for economics might likewise flee to the mountains to avoid persecution of their senses. Readers reaching this particular sentence of the post’s introduction are assumed to be as ready for silliness as its author and can be under no illusions as to what follows. To those of you remaining, congratulations: you are the heart and soul of what makes Heteconomist what it is.
In the comments section of the previous post, which considered the idea of labor as the sole creator of value, a participant provided a link to an interesting lecture by Steve Keen. Although I had not seen the lecture prior to posting, broadly speaking I have been aware of Keen’s developing perspective on Marx’s theory of value since reading the first edition of Debunking Economics. It may not have been evident to most readers, but partly I had Keen’s critique in mind when writing the post. It seems to me that his analysis highlights a need for those of us who defend Marx’s theory to explain why it is correct to consider labor the sole creator of value. In entertaining one possible rationale, the previous post was not intended as a proof of anything. Otherwise, I would have titled it a proof rather than a musing. But now it might be worth backtracking a little to provide some background on the rationale for that post.
I am pondering the legitimacy or otherwise of Marx’s claim that labor is the sole source of value in capitalist commodity production. It is not clear that such a claim can be proved. Sometimes it is simply presented as an assumption. Other times various motivations or intuitions are offered. Here are some thoughts of that nature.
When it comes to the means of production, society can be considered as falling into two basic groups – ‘owners’ and ‘non-owners’. Acceptance of a tax-driven currency can be achieved through the exertion of pressure on one or other of these groups, or both. In a low-tech, labor-intensive economy, the state essentially compels non-owners to supply labor services to owners. In a high-tech, capital-intensive economy, there is less need for such compulsion. It will become increasingly viable to place the initiative on owners to supply final output in exchange for the currency as technology continues to advance.
In the previous post, we encountered the views of a small subset of Internet Marxists who appear to adhere to a rather hard-line, Chicago-like neoclassical understanding of the capacities of the state. There is another small subset, the Austrian Metalist Internet Marxists (or Austrian Marxists, for short), who appear to believe that a state currency not “backed” by gold must surely have zero value or, at the very least, command a level of acceptance likely to crumble at any moment. In reality, the choice between a gold standard and fiat money changes little of significance when it comes to the value of the currency or its acceptance, although it does of course affect the policy space a state leaves open to itself for as long as the currency arrangement remains in place.
There appears to be a small subset of Internet Marxists – emphasis on the words small subset – who embrace Neoclassical or Austrian ideas. Take, for instance, the Freshwater Say’s Law Internet Marxists, who maintain that the state is powerless to do anything to alter the level of capitalist production and employment. In the end, the state will supposedly drag down capitalists under the weight of its own “unproductive” activity or bring on a Fiscal Crisis of the State. This will be the day on which the issuer of the currency somehow runs out of its own currency.