the_dunk_tank

mmt even strictly as an economic theory separated from macroeconomic policy isn't really descended from marx, my understanding is that there was maybe a little bit of interplay way back when liberal economists weren't sure yet that fiat could work as a money commodity but after that all of these related ideas like role of the state in guaranteeing public welfare with monetary policy and the idea of inflation as a substitution for taxation flowered independently within bourgeois economics, and that's what mmt as formulated today draws on. it's not surprising, economics is the priesthood of capital; financial capital is ascendent but monetarism doesn't work to check the destructive instability of free markets, the inefficiencies of specie and taxation are a constraint on growth, and mmt's explanations in terms of circulation suggest solutions that avoid challenging relations of production. it's not contrived, this is the actual social basis for the development of the theory. you can see premonitions of this in marx's time, proudhon argued against liberal monetary policy from a petty bourgeois perspective (i.e. while maintaining private production) but marx insisted that he and the liberal economists were all missing the real point that production ultimately gives rise to money and not the other way around:

Now suppose that the Bank of France did not rest on a metallic base, and that other countries were willing to accept the French currency or its capital in any form, not only in the specific form of the precious metals. Would the bank not have been equally forced to raise the terms of its discounting precisely at the moment when its ‘public’ clamoured most eagerly for its services? The notes with which it discounts the bills of exchange of this public are at present nothing more than drafts on gold and silver. In our hypothetical case, they would be drafts on the nation’s stock of products and on its directly employable labour force: the former is limited, the latter can be increased only within very positive limits and in certain amounts of time. The printing press, on the other hand, is inexhaustible and works like a stroke of magic. At the same time, while the crop failures in grain and silk enormously diminish the directly exchangeable wealth of the nation, the foreign railway and mining enterprises freeze the same exchangeable wealth in a form which creates no direct equivalent and therefore devours it, for the moment, without replacement! Thus, the directly exchangeable wealth of the nation (i.e. the wealth which can be circulated and is acceptable abroad) absolutely diminished! On the other side, an unlimited increase in bank drafts. Direct consequence: increase in the price of products, raw materials and labour. On the other side, decrease in price of bank drafts. The bank would not have increased the wealth of the nation through a stroke of magic, but would merely have undertaken a very ordinary operation to devalue its own paper. With this devaluation, a sudden paralysis of production! But no, says the Proudhonist. Our new organization of the banks would not be satisfied with the negative accomplishment of abolishing the metal basis and leaving everything else the way it was. It would also create entirely new conditions of production and circulation, and hence its intervention would take place under entirely new preconditions. Did not the introduction of our present banks, in its day, revolutionize the conditions of production? Would large-scale modern industry have become possible without this new financial institution, without the concentration of credit which it created, without the state revenues which it created in antithesis to ground rent, without finance in antithesis to landed property, without the moneyed interest in antithesis to the landed interest; without these things could there have been stock companies etc., and the thousand forms of circulating paper which are as much the preconditions as the product of modern commerce and modern industry?

We have here reached the fundamental question, which is no longer related to the point of departure. The general question would be this: Can the existing relations of production and the relations of distribution which correspond to them be revolutionized by a change in the instrument of circulation, in the organization of circulation? Further question: Can such a transformation of circulation be undertaken without touching the existing relations of production and the social relations which rest on them? If every such transformation of circulation presupposes changes in other conditions of production and social upheavals, there would naturally follow from this the collapse of the doctrine which proposes tricks of circulation as a way of, on the one hand, avoiding the violent character of these social changes, and, on the other, of making these changes appear to be not a presupposition but a gradual result of the transformations in circulation. An error in this fundamental premise would suffice to prove that a similar misunderstanding has occurred in relation to the inner connections between the relations of production, of distribution and of circulation. The above-mentioned historical case cannot of course decide the matter, because modern credit institutions were as much an effect as a cause of the concentration of capital, since they only form a moment of the latter, and since concentration of wealth is accelerated by a scarcity of circulation (as in ancient Rome) as much as by an increase in the facility of circulation. It should further be examined, or rather it would be part of the general question, whether the different civilized forms of money – metallic, paper, credit money, labour money (the last-named as the socialist form) – can accomplish what is demanded of them without suspending the very relation of production which is expressed in the category money, and whether it is not a self-contradictory demand to wish to get around essential determinants of a relation by means of formal modifications? Various forms of money may correspond better to social production in various stages; one form may remedy evils against which another is powerless; but none of them, as long as they remain forms of money, and as long as money remains an essential relation of production, is capable of overcoming the contradictions inherent in the money relation, and can instead only hope to reproduce these contradictions in one or another form. One form of wage labour may correct the abuses of another, but no form of wage labour can correct the abuse of wage labour itself. One lever may overcome the inertia of an immobile object better than another. All of them require inertia to act at all as levers. This general question about the relation of circulation to the other relations of production can naturally be raised only at the end. But, from the outset, it is suspect that Proudhon and his associates never even raise the question in its pure form, but merely engage in occasional declamations about it.

production begets money which feeds back to further production, but production is the primary regulator. you can try to find insights in mmt if you want to flesh out the money->production leg of the dialectical loop - hudson leans (way too) hard into this and graeber flips the precedence entirely upside down - but since mmt as such was developed to exist as a myopic slice of "the question in its pure form" I think it's fair to say that it's non-marxist

I like this comment on the blogpost:

I would think those who have a grasp of Marx’s critique wouldn’t be arguing about mitigation, but rather the necessity of crisis, mitigated or not, to the accumulation of capital, and the greater power of the bourgeoisie over the working class — as in the New Deal with its support of the “giant step” of the CIO disciplined the working class for the blood sacrifice of WW2.

Now if there are no longer any prospects for socialist revolution; if Marx’s conflict between forces and relations of production no longer comes to social life in a struggle for and against the emancipation of labor from the wage system… well go right ahead and plunk the magic twanger of behalf of higher wages and fuller employment, but that ain’t socialism and isn’t even an intermediate or transitional moment to the struggle for socialism.

I meant to add before that I first ran into mmt in my phase years ago of being fascinated by the market and listening to every hour of every bloomberg podcast for like 18 months. I remember that joe weisenthal and tracy alloway kept having mmt people on their podcast over and over and over to critique the fed and talk about mmt, and that really goes to show how comfortable that section of the bourgeoisie is with accommodating this whole idea. as long as you only address circulation, finance capital keeps benefiting in distribution, and nothing shakes its foundation in production. if you flip it on its head and start talking about changing relations of production you end up in a black plastic bag behind bloomberg's mansion on long island

which countries have currency sovereignty and which don't can tell you a lot about imperialism and hegemony

This is true, but the complication with developing countries (and I believe this is what the person you’re replying to was implicating without elaborating) is that more often than not, these countries also take on foreign loans, usually denominated in dollar.

If you take on a huge sum of dollar debt, this effectively limits the fiscal space of countries even with monetary sovereignty, because institutions like IMF will often impose demands like austerity measures (e.g. “cut back fuel and electricity subsidies”) to limit net public spending. You don’t follow the rules, you don’t get the loan, and your people starve.

All 5-6 of them ?

to this I would add tax liability under sovereign currency creates demand for the currency that otherwise has low value (socially necessary labor time required to produce). this is the part goldbugs don't understand. Of course the dollar inflates. Because it's backed by bourgeois state coercion violence rather than by the value of some metal coming from a mine.

That's a remarkably succinct and elegant summary. The only thing I can think to add is that taxes can also be a punitive measure to discourage certain behaviors i.e. nicotine tax

Makes a lot of sense. One interview I saw with Michael Hudson he seemed to say that government spending domestically doesn't cause inflation, but he didn't really have a chance to elaborate so I'm not sure what that meant. Something like, balance of payments is more important, for example I think he said the Weimar Republic experiencing hyperinflation was because all the money they printed went toward exchanging for foreign currencies to pay war reparations etc which drove down the value of their currency, but if they had just been printing money for domestic spending it wouldn't have caused such inflation. Idk if anybody here could clear that up for me. Intuitively, it seems like more government spending would increase the money supply and therefore be inflationary, but does anybody know what Dr Hudson was getting at?

"balanced budgets" are recessionary. lots of government debt is generally preferable because it means the government is spending more money than taking in. that money eventually goes to citizens and fuels growth.

This is completely wrong, both empirically and theoretically and shows the liberal ideology deeply embedded in MMT theory.

The stuff above is largely correct but better stated in the Marxist way. There are two kinds of government appropriation, real and symbolic. Real appropriation is spending, the government ordering people to do something, build a road, teach some students, etc. Symbolic appropriation is taxation, it doesn't actually matter that the government takes some bits of paper (or gold), but it justifies the real appropriation and sort of determines how the burden of government action is distributed.

None of this is to say that getting rid of taxation is a good idea, indeed, it is impossible to get rid of government appropriation without getting rid of government entirely. It is worse to have a hidden appropriation that has distorting effects as in the case of the Soviet Union and better to have transparent taxation which doesn't punish certain kinds of enterprises (namely the state owned ones, by requiring them to fund the whole government).

I am seriously scratching my head over this one, because it doesn’t relate to what I am saying?

How does input output used for planning negates the need for a financial system? How are socialist enterprises and organizations going to settle payments among one another, and with the State Bank? How do socialist enterprises pay their workers wages? How do the Soviet citizens pay for services?

The problem is not so much how to plan the economy, but how are you going to finance the economy.

MMT answer would be to hose with roubles needed insdustries and take in taxes surplus to stop inflation, where on earth that relationship was used in ussr

?? I literally just described how it works in my post above.

I have this post that touches on the subject although I'm sure @[email protected] can expand on the subject as well.

This makes no sense under fiat monetary sovereignty. The government never makes a “profit” or a “loss” in any meaningful way (in its own currency).

It would be closer to the truth to see it as the government 1) never having any money at all, and 2) having the power to distribute to others arbitrarily large amounts of money and 3) having the power to destroy arbitrarily large amounts of that distributed money through taxation.