Brendan Cooney at kapitalism101 has posted a long but interesting interview with Andrew Kliman, author of Reclaiming Marx’s Capital and, more recently, The Failure of Capitalist Production, in which he argues that a falling rate of profit underlies the current crisis. This position is presented primarily in opposition to Marxian underconsumptionist arguments but perhaps also is pertinent to other theories emphasizing demand deficiency. The interview got me thinking about various ideas not strictly related to the interview. I thought I would share them here. They are along similar lines to earlier posts on the social potential I see in sovereign currencies (for example, here and here).
The recent discussions over what is or is not Modern Monetary Theory (MMT) have brought out some differences in perspective on broader questions of where we might want to head as a society. As far as I am concerned, the Modern Monetary Theorists have defined their theory to include both descriptive and prescriptive elements, and that is fine. For non-academics who have taken a strong interest in MMT in the blogosphere, the definition provided by the academics has clarified our position relative to it. There are some on the political right who would not consider themselves to fall within the definition. And, of course, there are some of us on the political left who likewise consider ourselves outside the definition. In this post, I thought it might be interesting to touch on what appear to be some similarities and differences in vision between those on the left and right.
My recent posts on the possibility that fiat money could provide a path to a better (perhaps even communist) society have drawn very intelligent and stimulating responses. These are prompting me to think harder about what kind of path this might be. It occurs to me that it might actually be possible, by the completion of the fiat-money phase, 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”.
I thought I should elaborate a little on a comment I made in a recent thread. It concerns the question of how it might be possible to get from where we are now to a free and liberating communist society. For readers who have no desire for such a society, I hope there is something of interest, even if only as an idle reflection.
I am struggling lately (in a good way) to keep up with all the great discussion in the various threads, but really appreciate the diverse commentary. Timezone differences can be a nuisance. Just as I was about to go to bed, brendan put up a critical though interesting comment in response to one of my recent posts concerning the democratic potential that I think is offered by fiat money. I decided to sleep before attempting a reply, only to wake up to find that additional interesting discussion had occurred while I was away from the computer. So, as I said, I am behind the eight ball. The comment by brendan included the opinion that MMT seems like a “theory of state capitalism”. I thought this topic deserved a post of its own.
In my previous post, I mentioned Karl Polanyi’s argument that early capitalism included an attempt to integrate money completely into the logic of a pure market economy, eventually through the introduction of a gold standard in which money was conceived as a ‘commodity’. I then suggested that the eventual breakdown of the gold standard, and the subsequent breakdown of Bretton Woods, opened up social possibilities that we have so far failed to make effective use of, even though (on the basis of MMT) a flexible exchange-rate fiat currency system seems to offer scope for greater economic democracy.
While reading today, a couple of things jumped out at me that hold relevance for my previous post on fiat money and capital. One was a passage in the The Great Transformation by Karl Polanyi. The other was an observation by David Graeber in an interesting article in the Guardian. Thanks to Tom Hickey and Matt Franko for drawing my attention to Graeber’s article. In considering a few of the issues raised, this post is really just exploratory. I think the topic is important, but my thinking is only at an early stage.
The title of this post may seem bold, but even if readers disagree with what follows, I think it can serve as an interesting basis for discussion. I have very much appreciated the quality and diversity of comments in recent threads. The motivation for this post derives from aspects of earlier discussions regarding: (i) the political possibilities under a flexible exchange-rate fiat currency regime, which are arguably implicit in the MMT framework; and (ii) Kalecki’s skepticism concerning the viability of sustained full employment under capitalism, which is one example of how political possibilities might be argued to be less open than I have suggested in recent posts.
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.
In a commodity-backed money system, a common currency union, or a fiat-money system with a fixed or pegged exchange rate, external undemocratic constraints are imposed on governments which limit their freedom to use fiscal policy for public purpose. A consequence of this is that governments – and wider communities – become constrained in what they can do by unnecessarily erected financial constraints that have nothing to do with real resource limits. The provision of health care, education, infrastructure, and other goods and services, can fall far short not only of what is desirable but of what is possible given the availability of doctors, nurses, teachers, engineers, construction workers, etc., because of a lack of money.