Reform or Revolution, MMT or Marx

Marxists, in contrast to reformers, call for an end to the capitalist system rather than a preservation of it. This can predispose them to dismissing Modern Monetary Theory (MMT) on the supposed grounds that the theory is in some way inherently reformist. However, taking a position on reform versus revolution is actually a separate question from whether Marxists should accept the MMT understanding of currency sovereignty. This understanding opens up a wide range of social possibilities. An MMT understanding of currency sovereignty rules out neither socialism nor revolution.

MMT in itself is about as apolitical as a macroeconomic theory can get. Its insights can be applied by the left and the right alike. There is nothing in it that privileges a preservation of capitalism over socialism or socialist revolution. The theory is agnostic on such choices. While Modern Monetary Theorists have not explicitly worked a theory of value into their approach, there does not appear to be anything in the approach that is incompatible with Marx’s theory of value. Likewise, there is nothing that would prevent an incorporation of MMT’s understanding of sovereign currency into Marxist theory.

From a Marxist standpoint, a notable implication of MMT is that currency sovereignty, in principle, enables the logic of capital to be confined within whatever limits society deems appropriate. The reason is simply that a sovereign currency issuer, who faces no financial constraint, only resource and political constraints, need not spend on the basis of private profit considerations, nor be dictated to by markets. This makes a mixed economy, in which some activity is for private profit and some is not, potentially sustainable. Equally, it makes the complete elimination of production for private profit potentially sustainable.

MMT indicates that in those situations where it is deemed desirable to override the logic of capital, sovereign currency-issuing governments have more policy freedom than other governments. Even though a currency-issuing government’s fiscal policy can be used in a reformist way, it need not be used in that way. It could instead be used to initiate economic activity along lines altogether different, for instance by locating progressively more activity in the public and/or not-for-profit sectors of the economy and ultimately by working toward the elimination of the wage labor relation. An understanding of MMT makes clear the potential viability of such social alternatives.

Related posts

On the political openness of MMT:

MMT is Politically Open
MMT is Politically Open and Applicable to Both Capitalism and Socialism

From a Marxist perspective, the status of Marx’s ‘law of the tendential fall in the rate of profit’ is key to interpreting the implications of MMT for capitalism:

MMT and Capitalism from a Marxist Standpoint

The way in which currency sovereignty may open up a path to socialism is considered in some earlier posts:

Fiat Money is Logically Prior to Capital
Money and Paths to a Post-Capitalist Society
MMT is NOT a Theory of State Capitalism (!)
Fiat Money Socialism vs Lower Form Communism