I find it surprising that some commentators on the MMT-related blogs and elsewhere in cyberspace fear that MMT is designed to suit the political left. I disagree with this perception. The only sense in which I think MMT is helpful to the left is in the same way it is helpful to all alternative perspectives. It indicates that social possibilities are open and that there is more than one alternative. In this respect, it is more truthful than orthodox economics. This may be a negative 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 social choices are in the mix along with all other social possibilities.
For example, in MMT – as with most other heterodox approaches – there is no presumption in favor of laissez-faire capitalism. This is different from orthodox economics, which presumes – on no legitimate basis whatsoever – that laissez-faire capitalism is best except in specific instances in which it can be shown otherwise. Leaving out this baseless presumption is no doubt inconvenient for those who benefit from it in the current orthodoxy, but its omission does not favor the left over any other perspective.
Not only does the MMT framework not privilege the left, but from my experience, the left is probably at least as wary of MMT as the right. The socialist left tends to resist MMT because it suggests managed capitalism can be made to work. It is not expedient for socialists to argue that capitalism could be viable but should nonetheless be overturned for reasons of social justice. It is stronger to say capitalism is unviable. End of story. This is a much simpler and – given recent economic history – readily accessible message. Most journals and newspapers of the socialist and communist left spout voodoo on fiscal and monetary matters. Their analyses of budget deficits and public debt usually accept the orthodox propaganda uncritically, because it suits them politically to do so. It suggests capitalism is “broke”. Of course they oppose austerity, but they conveniently accept that the austerity is “necessary” under capitalism and take this as evidence that capitalism must be overturned.
Often those on the liberal left don’t seem to like MMT either, because it suggests that there is no financial reason to tax the wealthy more or cut back on military expenditure. Most liberals do not seem keen to admit that their reasons for wanting these policies are other than financial. It makes it a more difficult political sell. Given the neo-liberal propaganda offensive of the past thirty-five years, it is much easier to say “the country can’t afford tax cuts for the wealthy” than to say, for instance, “tax cuts for the wealthy are inequitable”.
If anything, I think the only people with any power who have embraced elements of MMT are in the establishment, and largely on the right. In the U.S., politicians use knowledge of the implications of currency sovereignty to expand the military and cut taxes for the wealthy, then pretend not to comprehend when it comes to social expenditures. They understand the realities of currency sovereignty when it suits them. In Europe, this schizophrenic understanding is even more pronounced. The ECB kicks the can down the road by providing financial assistance to member governments (and hence the banks) on the proviso that austerity is unleashed on general communities to “pay” for the assistance. The ECB understands that such assistance can be provided indefinitely, but pretends not to understand the options available when it comes to job creation, public-sector wages, the welfare state, education, etc.
My own view is that capitalism could be managed in such a way as to deliver full employment and price stability under a renewed class compromise that distributed the benefits of economic growth more evenly, even though I am not in favor of such a preservation of capitalism. However, I do not believe capitalism will be run in this manner. My assessment of the positive possibilities under capitalism draws on my understanding of MMT, but my belief on where things are probably heading does not, since MMT is silent on such questions. Short of ending capitalism, I suspect things are only going to get worse. It seems to me that, right now, political leaders are knowingly trashing the global economy. Part of the motive is presumably to dismantle what remains of the welfare state and organized labor, particularly in Europe, which is really the last stand of anything vaguely resembling social democracy. There are presumably also other geopolitical goals behind the austerity and extreme concentration of wealth, although the motivations do not seem entirely clear. Imperialist rivalries, control of natural resources through military means, and the further curtailment of individual liberties and an encroaching surveillance state all seem to be part of the story.
In short, I think political leaders, policymakers and financial capital all understand perfectly well that austerity is based on a class-interested lie. They might not understand it as MMT, but they know the supposed need for austerity is their own concoction. The fiction is enabling a corrupt and extraordinary upward transfer of wealth along with the introduction of more draconian surveillance and police-state measures. It is general communities who do not appear to understand the true nature of the deception. They do recognize that their interests are being run roughshod over, but they buy into the lie that suggests there is no alternative to austerity. Many are also likely to go along with further infringements of liberty that occur in response to civil unrest. All this is a god-send for authoritarians on the center and right. It is not a good situation for the left, or for libertarians of the left and right.
From my perspective, the reason to disseminate MMT is not to privilege one political perspective over another. It is to empower general communities. Once we understand the possibilities (and limitations) inherent in a flexible exchange-rate fiat-currency system, we will be in a position to determine our preferred course and attempt, through collective action, to overcome the daunting political obstacles in our way. Whether that is a leftward, centrist or rightward course, it will at least be a self-determined one, and one that is actively chosen rather than passively accepted as the inevitable consequence of impersonal forces permitting no alternative.