Money as Taboo for Economists

In a recent post, Tom Hickey (courtesy of Clonal Antibody) drew attention to a talk from a few years ago by Bernard Lietaer. The talk sheds light on what an uphill battle it is to take on entrenched, deeply flawed doctrines concerning money. Challenging them, it seems, can be damaging to an economist’s career.

Tom linked to a short snippet of Lietaer’s talk that referred directly to chartalism. Lietaer is not a Modern Monetary Theorist, as he makes clear, but the entire talk makes for interesting viewing. There are about six minutes in particular, in the third video-part of the talk, that are worth watching. The video of this segment of the talk is embedded at the end of the present post. (The other four parts of the talk are also available on YouTube.)

Around the same time as Lietaer’s talk, there was a good post that discussed it. Some choice excerpts:

One day [Lietaer] encountered the head of the BIS [Bank of International Settlements] who told him “I have read your book.” This was followed by a question: “Why are you working in a central bank?” Lietaer responded that his aspiration was to improve the functioning of the system. To this the BIS head asserted that institutions of the system, including the BIS, IMF [International Monetary Fund], World Bank and all central banks exist for only one purpose and that is to keep the system operating as it is; not to improve it. That is, to keep the system frozen as it was when the institutions were granted the existing set of powers. They therefore constitute what Lietaer termed an unseen lobby for the status quo. …

… Krugman asked [Lietaer], “Didn’t they warn you about not touching the monetary system? If you insist on talking about it, it will kill you academically. It takes a university economist completely out of the system of peer approvals that culminates for a few in the prize given by the central bank of Sweden in honor of Alfred Nobel.” …

… A very important observation made by Lietaer in the video lecture is that chartalism has never been academically challenged. In other words, the taboo is effective as an instrument of the unseen lobby.

There is specific mention of the University of Missouri, Kansas City (UMKC) both in the talk by Lietaer and in the post quoted above. The economics department at UMKC is where a number of prominent Modern Monetary Theorists work (or used to work) and where some of the younger generation are trained. The author of the post writes:

A reinforcing anecdote relative to the taboo and lobby was related to me by Michael Hudson, one of whose titles is “Distinguished Research Professor of Economics, UMKC”. I once asked him what kinds of challenges he receives from other economists to his views. He replied that he doesn’t get any. “They know I am right, and they concede it, but then go back to business as usual ‘because it’s a job’.”