The previous post considered the question of how best to assist a transition to a society in which people can opt for more free time, if they wish. The likelihood of a high degree of mechanization in production in coming decades creates the potential for such a transition. Basic income, in isolation, while offering a limited measure of freedom from the capitalist wage labor relation, would not provide sufficient support to individuals in their attempts to shape productive lives. It would remain important to provide opportunities as well as the resources for meaningful participation in productive activity. As a basis for a freer society, some combination of basic income and a job guarantee could serve a positive role. For instance, a policy that permitted people to choose between a guaranteed job, with defined wage and benefits, or a more modest guaranteed income – a ‘job or income guarantee’ – could assist a transition to a society in which individuals were largely free to spend their time as they pleased, so long as it did not cause harm to others. The idea of combining a job guarantee with some form of basic income is, of course, not original. It is a possibility that has been acknowledged by Modern Monetary Theorists.
One issue that arises, when thinking about the possibility of a transition to a freer society, is the challenge of adjusting to a future in which there might be far less compulsion to work in the formal economy and an increasing separation of income and employment. This is not inevitable but is one possible response to the widespread mechanization of production that is likely to occur in coming decades. A dramatic rise in productivity can open the way for people largely to be freed from formal employment to pursue their preferred vocations either individually or in voluntary association with like-minded individuals. But since the experiences of many have not necessarily prepared them for this transition, it raises challenges. It might be worth discussing this issue in relation to the main policy options that seem to present themselves; namely, basic income or a job guarantee.
The focus of recent posts has been on the possibility that fiat money, especially sovereign currency, offers a path to a better society. In considering what kind of path this might be, the thought occurs that it might actually be possible, by the completion of the fiat-money phase of societal development, to leap over Marx’s lower form of communism, as described in his Critique of the Gotha Program, straight into a rudimentary form of “from each according to ability, to each according to need”.
Modern Monetary Theory (MMT) sometimes receives criticism from the left. The following short online critique (link no longer available) is a case in point. It is in reaction to the idea that MMT, though in itself largely apolitical, suggests a way forward for the left:
How is attempting to manage capitalism through monetary policy a road to socialism? When you talk about MMT exerting democratic control over the economy what exactly is the nature of this control? Isn’t it just the ability to stimulate growth through state spending? How is more capitalist growth a road to socialism? If anything MMT seems to be a theory of state capitalism…
In what follows, I will respond to the comment sentence by sentence, although far fewer words will be required in response to the later points raised. The reason for this is that, although each question follows more or less logically from the preceding one, each is based on a set of misunderstandings which becomes apparent by the time the first couple of questions have been addressed.
While reading today, a couple of observations jumped off the page that relate to the social significance of sovereign currency (or ‘modern money’). One was contained in a passage of the The Great Transformation by Karl Polanyi. The other was expressed by David Graeber in an article in the Guardian. Thanks to Tom Hickey and Matt Franko for drawing my attention to Graeber’s article.
A recurring theme of the blog concerns the enhanced social possibilities opened up by ‘sovereign currency’ – also called ‘modern money’ – by which is meant fiat money issued by sovereign government. The social possibilities opened up by sovereign currency follow from an understanding of Modern Monetary Theory (MMT), which makes clear that a currency-issuing government, especially one that permits the exchange rate to float, faces no revenue constraint. The constraints on such a government fall into two broad categories: real resource constraints and political constraints.
Kalecki’s skepticism regarding the maintenance of full employment under capitalism is one example of how political factors are sometimes argued to narrow social possibilities. In this connection, though, it is worth highlighting that Kalecki’s skepticism did not relate to the maintenance of full employment per se, but more specifically to full employment under capitalism. Even if Kalecki’s assessment could be proved correct, this would not preclude the pursuit of ongoing full employment. It would mean, rather, that the achievement of this goal would require a transcending of capitalism.
Modern Monetary Theory (MMT) is sometimes perceived as left wing or, in some way, specifically suited to the left. MMT in itself, however, is neither left nor right wing. It is basically silent on political matters. The only sense in which MMT is helpful to the left is in the same way as it is helpful to all currently alternative perspectives. It indicates that social possibilities are open and that there is more than one alternative. This may be inconvenient for defenders of the status quo, but it does not mean that MMT is of any particular assistance to the left other than to make clear that its preferred political choices are in the mix along with all other social possibilities.