Inspired by discussions our Capital Vol. I Chapter 3 discussions on money I decided to finally set down and give this article by Michael Roberts, The Modern Monetary Trick a read. Especially since we had discussion contrasting Marx's theory of money with that of MMT. I thought I'd share the article here, and give a brief rundown of Robert's main points as I understood them.
I am no expert in money, and I'm still developing my own understanding. This is just another article that I'm in dialogue with, but I thought I'd share it as MMT explicitly came up in our comments on Capital.
Article:
My comments below:
Roberts provides a Marxist critique of MMT and its exponents. The most important part of Robert’s critique is that MMT has no theory of value and hence it is incorrect in arguing that a state can run up a deficit without real consequences under any conditions.
Roberts does admit that certain MMT exponents mention real limitations to money-printing, but do not appear to focus on them sufficiently. There is also a comparison of MMT and Marxist understanding of taxes, as well as a brief discussion toward the end about the American Dollar as the international reserve currency.
MMT has traction among the left because there is a desire for a theory against balanced budgets and austerity. MMT lends support to the fiscal spending funded by central bank money without fear of budget deficits and debt resulting in a crisis.
MMT adds to the Keynesian idea of government boosting demand that a sovereign government cannot run out of its own currency. The argument is that since a state has a monopoly over fixing its unit of account it can print as much money as needed and boost demand. And as long as there is no full employment (no fully utilized resources), this demanded can be boosted.
Michael Roberts critiques MMT and its theorists in this paper in three parts:
- On a theoretical level: Is MMT the correct theory for how money is created?
- On a practical level: Is there no need to worry about deficit spending?
- On a goal level: What problems does MMT hope to solve?
For Roberts, MMT ...
- … is a theory to justify unrestricted government spending to sustain or restore unemployment. But even the job guarantee that some MMT theorists push have jobs below the minimum wage. Even more, there is no push to change the social structure of capitalism. Hence, MMT obscures the social relations of labor exploitation for profit.
- … doesn’t sufficiently analyze the capitalist sector - the lens is reduced to “state” vs “non-state” actors.
- … doesn’t analyze the contradictions in the capitalist mode of production and hence the causes of crises. Their analysis is similar to those of orthodox Keynesians. For Roberts, the crises are caused by the profitability capital accumulation, not by lack of demand or even austerity in public spending as claimed by MMT and/or Keynesianism.
- ... is a US-centric theory in practice. It offers no practical policy for nations that lack sovereignty (either formal or informal)
- …doesn’t have a theory of value. This is Robert’s most important criticism. There isn’t enough of an emphasis on the real productivity capacity of an economy, and the limitations that it brings (though some MMT advocates mention this). Roberts claims that since value is objective, it is not a product of the law or up to the dictates of the state. MMT ignores value and states that since the state can set the standard of price it essentially can also set value. Any increase in money must be backed by productive capacity, i.e. real value, else there will be consequences to deficits.
- MMT is the iteration of using “tricks of circulation” to save Capitalism, similar to views espoused by Proudhon which Marx critiqued in Capital and the Gundrisse.
