Economic Update: Government Deficits; Why They Happen, Who Benefits From Them, and MMT
Richard Wolff mentions the printing of money occasionally, but he never squares that with the government supposedly needing to tax and/or borrow first before it can spend.
He spends the last two minutes talking about MMT, but not as a theory of fiat money; instead as a novel monetary policy proposed by “progressive-minded economists.”
Somewhere in there he also repeats the common fallacy that what banks lend is other people’s savings. They don’t. The money they lend is created out of thin air, and the “money multiplier” is a myth.
I’m just a technerd who’s never taken an economics course, and I grind my teeth every time this expert botches these fundamentals. Why Michael Hudson and Radhika Desai never push back on him when they do talks together is a mystery to me.
The problem with MMT is it’s sort of like the social democracy of economics theories. It is an improvement on neo-classical economics, a correction if you will, but it still proceeds from many of the same capitalistic assumptions about how an economy is supposed to function. It is not a radical break with those theories like Marxism is.
MMT is not Marxism and Marxists should not be advocating for MMT as the theoretical framework through which we should look at monetary policy. Marxism proposes an entirely different paradigm for how to look at economics as a whole, not just monetary theory. A lot of the confusion that still exists in MMT is cleared up if you read Capital.
As for China, the economics field is quite ideologically diverse in China and there are certainly people there whose thinking is very close to MMT, mainly because the economics field globally is strongly influenced by western ideologies, but that doesn’t mean the government bases its policies on them. And MMT is not a set of policy prescriptions anyway.
Sure—it’s not some comprehensive theoretical framework. It’s only a basic puzzle piece to integrate into one’s framework. Whether it’s Marxist or not depends on whether a Marxist, like Michael Hudson & Radhika Desai, integrate it into their framework, or don’t, like Wolff (who somehow also still doesn’t understand how banks work!).