Saturday, September 19, 2020

Marxists should not dismiss MMT

I'm not saying that Marxists should become MMT enthusiasts. Adam Booth is at least partly correct: MMT scholars are mostly not Marxists or socialists, and MMT by itself will not usher in a socialist utopia.

By definition, a truly "communist" society doesn't need anything remotely resembling money: the opportunity cost of producing and consuming the ordinary social product — food, shelter, clothing, communication, entertainment, etc. — is negligible and there is no need to carefully account for its use or ration its consumption.

But any kind of "socialist" society will need something that looks very much like money. By definition, a "socialist" society must manage scarce resources, which means that society must carefully account for the opportunity cost of producing and consuming the social product to ensure that we produce what we want the most, and ration the consumption of the social product. Essentially, anything that does the job of accounting for and rationing the social product is money*.

 *It's pointless to quibble over definitions, a task I have spent far too much time on. We could define the label money as including something unique to capitalism, and then, of course, socialists wouldn't use money. But there still would what we use to account for and ration of social product, which we'll arbitrarily label as gnippa. Then the rest of this article is about gnippa.

People in a socialist society will have very different relations to money than people in a capitalist society. Socialists will use and think about money differently than capitalists use and think about money, but whatever those relations, so long as they account for and ration the social product, they will have some relations to money.

There are two reasons I think Marxists should pay attention to MMT. The first is that at least initially, a socialists society must actually manage money. I can't imagine any benefit for a socialist society to not account for the social product, and try to ration access without using numbers. Once we start slapping numbers on the social product and use those numbers to ration access to the social product, we have what is essentially money. And if we're using money, we need theories about how it works.

And just as capitalist scientists can come up with good theories about how electrons, viruses, cows, and ecosystems work, capitalist economists can come up with good theories about how money works, and how to manage the accounting and rationing of the social product.

As an economist in a capitalist society, I understand that most of my colleagues spend most of their time just providing academic support for capitalist ideology, a task I don't really endorse, but there is a little truth, mostly independent of ideology, in there. And I think that MMT has some of that mostly ideology-independent truth.

The second reason that I think Marxists should pay attention to MMT is that MMT explicitly challenges a critical capitalist myth: the myth that money itself is a scarce resource, and that to get what they want, the masses must get money from those who already have it. 

If the capitalist class had all of the iron in storage, protected by armed guards, then regardless of our social structure, if we wanted to build stuff using iron, we would need to get the iron from those who had it, by persuasion or force. And because iron is really useful in making weapons, control over iron would give the capitalist class an enormous advantage in the exercise of force.

The capitalist class rules because it has control over money. So long as we buy the myth that money itself is a scarce resource, capitalists' control over money gives them as much or more power as they would have if they controlled all the iron. Even if 99% of the people wanted socialism, if the people believed that capitalists controlled a scarce resource they needed, then the capitalists can block socialism.

This myth has real bite. Margaret Thatcher supported her eleven-year rule with little more than the slogan, "The trouble with Socialism is that eventually you run out of other people's money."But if money is not a scarce resource, then we cannot run out of anyone's money. 

The Democratic party in the United States cannot implement even a hint of a progressive, much less a socialist, agenda just because they cannot imagine how they could pry the money out of rich people's hands. Worse, the Democratic electorate, as much as they might want a progressive agenda, falls for the myth that they need rich people's money, and they too cannot imagine how to get at that money, so they don't demand that the party attempt the impossible.

MMT proponents directly challenge the myth of the scarcity of money. Whether or not they realize it, they are fundamentally subverting a fundamental myth of capitalism, really in the same sense that Christian scholars who challenge the historicity of the resurrection fundamentally subvert a fundamental myth of Christianity. 

Capitalism dominates today not just because capitalists successfully argue that capitalism is better, but because capitalism is true, that any sacrifices or privation the people must suffer under capitalism are imposed not by the capitalist system, but by nature: there is only so much money to go around, and if there isn't enough money, we can't get what we want, regardless of the availability of other resources.

So no, MMT is not itself socialist, and a simple restructuring of the Treasury and Fed around MMT theories will not by itself bring about a socialist society. However, MMT subverts a fundamental myth that supports capitalism, and it behooves all anti-capitalists to endorse that subversion.

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