The following is a video featuring Bill Black and Stephanie Kelton speaking to activists at the People’s Summit in Chicago, June 17-19. Bill discusses banking and financial fraud. Stephanie debunks the misleading “government as household” analogy and emphasizes resources, not money, as the constraint on a currency-issuing government.
J.D. Alt has put together an accessible video explaining fiat money, intended for a general audience. (Hat tip to jrbarch in the comments.) For additional background, comments and links see J.D’s post at New Economic Perspectives.
Note: Content-wise the video is very good apart from a minor quibble. (See the first comment.)
“Lerner’s argument is impeccable but heaven help anyone who tries to put it across to the plain man at this stage of the evolution of our ideas.” (Keynes to Meade, April 1943)
“The need to balance the budget is superstition … a myth. It’s like a religious doctrine that is used to get people to believe a certain thing.” (Paul Samuelson)
Election time serves as a reminder of how difficult it is to break through the popular illusions clouding public debate. Try as we might – and this goes for anyone seeking to dispel prevailing neoliberal dogmas – the public perception, if it budges at all, appears to do so painfully slowly.
A global search to uncover the World’s Biggest Idiots has succeeded almost before beginning. It’s barely dawn as these words are written and, already, it is mission accomplished! Take a bow, Australians, with a special nod to three thousand Herald Sun readers. The extent of our idiocy leaves the rest of the world not completely in the shade, yet somewhat humbled.
Part of the opposition to MMT, at least when it comes from the left side of politics, seems to stem from a desire to believe that taxes actually finance government spending. When confronted with the observation that, as a matter of logic, taxes (and government bonds) do not – and cannot – finance the spending of a currency-issuing government, many appear to recoil. In terms of framing, and as a way of “giving taxpayers their due”, perhaps it is worth highlighting that we, as taxpayers, do indeed pay something for the functions and expenditures of government. It is just that what we pay does not finance the government’s spending.
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.
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.
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.