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.
All truth is God’s truth. Marx did not live to see modern fiat currency systems. We can of course take his writings and apply them to modern fiat currency, but the reality is that even if the nature of money is unchanged since Marx’s time, the operational nuts and bolts of modern money do need evaluation with modern tools.
I find MMT to be a useful tool for understanding how sovereign monetary systems function in the present day. I have yet to find anything in MMT that is fundamentally opposed to Marx’s understanding of the nature of money.
I also find that MMT has a tremendous amount of empirical support behind it. While I don’t advocate for a wholesale, uncritical acceptance of MMT, I think it would be shortsighted to simply write off MMT as bourgeois economics with no value.
Just for one example, I see the assertion that MMT ignores class struggle. I don’t think this is true. In fact, MMT points to a theoretical optimum of how government finances and monetary policy should operate. It then points out that most governments under capitalism do not operate this way; most governments today say that we must “balance the budget”. This balanced budget almost always comes on the backs of slashing services for workers instead of, say, higher taxes on the wealthy. The “balanced budget” paradigm serves a purpose for the bourgeoisie. Maybe it’s the Marxists who read up on MMT moreso than the pure MMT folks who highlight this, but I don’t think that’s a problem with the theory itself.