Modern Monetary Theory and How to Build a Better Economy

* Books: Stephanie Kelton, The Deficit Myth – Modern Monetary Theory and How to Build a Better Economy, Publisher: John Murray, 2021. ISBN: 9781529352566

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Michael Towsey:

"Kelton is a high-profile economist within the Democratic Party in the USA and has acted as advisor to Bernie Sanders. She is the best known of a growing number of advocates for Modern Monetary Theory (MMT). MMT attracts praise and condemnation in equal measure — condemnation because MMT’s critique of the financial system gets to the heart of capitalist exploitation and praise because MMT states that there is no purely financial constraint that stops governments from achieving full employment and eliminating poverty. Poverty is a policy choice made by governments who are protecting the wealth of those who are already wealthy. One of MMTs proposals is the Job Guarantee, which makes it attractive to public welfare groups who already know that there is something rotten at the heart of capitalist finance.

This is not the place to elaborate on MMT. Even advocates admit that it takes time to “get your head around it”. But one of the most common attacks on MMT is that policies such as the Job Guarantee would be inflationary. MMT advocates are at great pains to explain that they are not proposing the unrestrained printing of money. What they are saying is that all capitalist economies are grossly underperforming and not utilizing the resources available to them. High levels of underemployment (currently running around 16% in Australia and 24% in the youth age-group) are, by definition, indicative of a stagnant economy. MMT says that creating jobs for the unemployed is not inflationary if those jobs produce value. And this returns us to Mission Economy and all that the government sector can do to co-create value with the sectors of the economy.

Despite the maturity of the New Economics, there remains much that the Proutist perspective can offer. The five fundamental principles offer a solid theoretical underlay to Raworth’s powerful pictures. The three-tier enterprise system, socio-economic units, block-level planning, and economic decentralization are frequently implied in the NEM literature, but the ideas could be much further developed. What the NEM offers is an emerging progressive movement with whom it will be possible to grow a new economy."

(https://systemschangealliance.org/the-new-economy-movement-comes-of-age/)