State Monies are Fundamental to Modern Monetary Economies

What is the most appropriate entry point to the study of a monetary economy in which government is currency issuer? Is it “the market”? Is it the definition: total spending equals total income? Is it real exchange? Real production? Is it total output? Total employment? Total value? Distribution of income? The origin of profit? Price formation? Competition?

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The Social Economy and the Potential Inherent in Currency Sovereignty

In any society, of whatever configuration, production at a given point in time is limited by certain ‘real’ (meaning non-monetary) factors. Notably, a society’s productive activity will always be limited by access to natural resources, the current state of its technology, and the skill, strength, size and imagination of its people. These and similar factors determine the absolute productive potential of a society. At a given point in time, these factors would apply even if, hypothetically, a society happened to be organized in a completely different way to its current form of existence.

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Not Investing in Infrastructure, Culture and Knowledge IS the Burden We Place on Future Generations

If we were to believe most politicians, we’d be under the mistaken impression that government not investing today does future generations a favor. Leaving communications systems underdeveloped, road and transport networks crumbling, education and public health systems deteriorating, our cultural institutions eroding, developments in science and technology stagnating, and so on, will supposedly free future generations of any burden that might otherwise be imposed upon them.

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Modern Monetary Theory is Relevant to More than Just Capitalism

Viewed from a certain vantage point, Modern Monetary Theory (MMT) is a very general framework that offers insight into how we might go about making genuine social progress. It does not simply facilitate an understanding of capitalism, but points to a way of transcending the present system. It enables insight into the opportunities available to any society that forms for itself a government and operates a monetary economy.

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Two Ways to Drive Currency Acceptance through Taxes

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.

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Heteconomist Holiday Amusement 2 – Idle Thoughts on Utility and Labor Time

This is surely a time of year when we can take a step back to ponder any crazy thought that might enter our heads. Nothing – in the theoretical realm – should be considered unthinkable. Some may be tempted to disagree, a few paragraphs along, but that could only add to the fun. Hopefully I will not be permanently banished from the internet for expressing such idle curiosities. If this is the price that must be paid, it won’t be pleasant, but so be it.

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Taxes as an Inducement to Supply Real Output

In the chartalist view, taxes drive acceptance of state money. Through one channel, taxes induce labor services. The need to obtain state money to pay taxes ensures a willingness of some individuals to accept employment in the public sector in exchange for the state money. There is another channel that exists under a broader range of conditions. It is the power of government to induce supply of real output from private enterprise. Not only does government induce a private supply of real output to itself (a transfer of resources from the private to public sector), but it also induces a supply of real output to private consumers. Unlike the inducement of labor services, the inducement of private-sector output would apply equally to a pure labor economy or a purely mechanized economy, as well as to intermediate cases.

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The Macro-Institutional Delimitation of Economic Complexity

A while back, Brian Arthur of the Santa Fe Institute wrote a short piece on complexity economics (h/t Tom Hickey). I find much of the work Arthur and others have done on increasing returns, path dependence and related phenomena very interesting. My doctoral supervisor’s doctoral supervisor (there has to be a less cumbersome way of expressing that) was Paul David who also had an interest in path dependence and the significance of history in economic development. My supervisor’s influence motivated me to devote chapters in my thesis to, among other things, an application of the theory of path dependence to the distribution of earned income and a consideration of the implications of cognitive limitations within the context of path-dependent economic processes. My (orthodox) postgraduate supervisor’s commitment to cross-disciplinary research also motivated me to integrate insights from liberal moral philosophy, policy history and institutionalism (new and old) into the analysis.

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The Diverse Economy: Part Capitalist, Part Socialist, Part Communist

A diverse culture is best served by an economy that can cater to diverse needs and interests. In our societies, perspectives differ widely when it comes to (among other things) the following five areas:

1. Competition and cooperation. Some people enjoy competition in pursuit of external rewards. Others prefer cooperation and feeling a part of something bigger than themselves. Most enjoy both competition and cooperation, just in varying degrees.

2. Personal motivation. Some people would largely lose interest in productive activity if it were not for the potential of private profit or a high salary. Others prefer to work in a not-for-profit environment and are more or less unmotivated by material gain.

3. Attitudes on inequality. Some people want to have more than others. Some would prefer not to. Some care if others have more than them. Some don’t as long as everyone has enough and the inequality is not so extreme as to undermine democracy.

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