Austerians Will Eat Themselves

A recent report by NPR reveals that the Clinton Administration’s intention to pay off public debt raised self-inflicted conundrums. The consternation is evident in a document that makes for tragicomic reading. Cullen Roche has already done a great job of discussing the document from an MMT perspective and Tom Hickey has also drawn attention to the story. I won’t repeat what has already been discussed elsewhere, but will reflect on one of the implications of a government deciding to pay off the entire public debt.
 

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Implications of a Purely Mechanized Economy

Improvements in productivity make it possible to produce more with a given employment of labor. However, under capitalism, whether this greater potential is fulfilled is contingent on there being sufficient effective demand to sustain the higher potential output. Any deficiency in demand will result in unemployment and forgone production. Although it is always possible for a currency-issuing government to ensure full employment, long term, with increasingly robotized or mechanized production methods, some form of basic income system would sooner or later make more sense. We could imagine a mechanized economy, with output, inside resource limits, responsive to demand financed out of basic income. One way to reflect on such a possibility is in terms of Marx’s analysis of capitalism. Here, the temporal single-system interpretation is applied.

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More on Keynes vs the Neoclassical Synthesis

Yesterday (here) I linked to a post by Matias Vernengo on Keynes’ theoretical contribution in light of the capital debates. I thought it might be worthwhile to elaborate on a central aspect of Vernengo’s post, particularly as it concerns the fundamental differences between Keynes’ ideas and the interpretation of neoclassical synthesizers of his work. Vernengo’s perspective on the significance of Keynes’ theoretical insights and the deep flaws in the marginalist interpretation is one that is probably held by most heterodox economists working in Sraffian and Post Keynesian traditions. I would think MMT economists also tend to share this perspective.

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Vernengo on Keynes vs Neoclassical Synthesis

In previous posts, I have made frequent reference to the Cambridge Capital Controversy and its significance for macroeconomic debates. Robert Vienneau, who often writes on issues relating to this controversy, draws attention (here) to a recent post by Matias Vernengo which very clearly distinguishes Keynes’ contribution from the marginalism of the neoclassical synthesis and New Keynesian economics. Vernengo is addressing a recent post by Krugman on the history of macroeconomics.

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Debt and Taxes

The impetus for this post is a short video in which Amy Goodman interviews David Graeber, one of the organizers of the “Occupy Wall Street” movement. Hat tip to Tom Hickey at Mike Norman Economics for the link. The interview touches on a number of important issues. Here, I want to explore some of the points raised by Graeber in his discussion of debt and taxes.

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