Though Cowards Flinch

Clever Australian Bloke

As patient TCF readers will know, I’ve become quite interested in recent months about what Modern Monetary Theory might offer the British Left, and the Labour party, in the way of a different ‘narrative’ for our political economy, one which can challenge the foolish but absolutely dominant narrative of the Coalition about the need for the deficit to be tackled as soon as possible. 

Gary, from If You Tolerate This mputs this well: 

Knowing very little about the economic theories being discussed, I would just like to make some comments about the ‘Household economics’ narrative the Tories have adopted, because it is something that hugely pisses me off. 

Like a lot of right-wing arguments, it is short, snappy and sounds as though it makes sense (but really doesn’t). These are the main reasons that it has caught on – it is something that people can relate to very easily because it ties in with their own experiences, and it is very easy to remember and parrot. 

The Left needs to learn from this, and we need to find ways to make our economic arguments resonate with ordinary people.

I cover similar ground here in reponse to Barney’s criticism’s of us alway droning on about MMT.

So yes, I’ll probably be blogging a bit more about the political narrative aspects of all this, because to date comments on everything I’ve written has tended to get dragged towards the key, but for my not that key, question of  whether MMT can deal satisfactorily with the ‘inflation question’.

If you want that kind of detailed question explored, this is probably not the place to do it best, as this is a political economy blog with the emphasis on the political, not the other way round. 

You’re better off going over to Duncan’s Economic Blog, especially has he has promised us (me?) his sceptical thoughts on MMT over there, and to blogs like Credit Write Down, run by a US finance analyst who is a self-confessed ’Austrian’ but also declares an interest in the logics of MMT. 

There’s also John Authers’ (Lex from the FT) new book  ‘The Fearful Rise of the Markets’, which talks briefly of the rise of the ‘oil standard’ as a replacement to the gold standard, which is worthy of investigation. 

The ‘MMT community’ is very active in the blogopshere and is likely to respond to the detailed analysis and criticism coming from sceptical but economically literate blogs like these.  

This kind of engagement will be more helpful to people interested in the detail of MMT/post-Keynesian theory than has been say, the contribution of people like Tom Hickey has been at TCF; while it’s been welcome, it has tended to be a bald re-iteration of MMT analysis rather than a detailed engagement on the contested areas. 

However, my (and Adam’s) focus is likely to remain on the way in which MMT’s focus on a) deficit spending as an economically healthy phenomenon in fiat currencies; b) full employment as the ‘hook’ for economic management, might be developed as a a popular leftwing alternative to the current ‘deficit fetishism’ and all the cuts that come from that.  

We are likely to be less concerned with the differences between MMT and Krugmanesque Keynesian approaches because, to a large extent, they end up at the same place as regards fiscal policy in the current environment.  As Krugman himself says in his debate with MMT academic James Galbraith: 

Now, Jamie and I are, I think, in complete agreement about what we should be doing now. So we’re talking theory, not practice. 

So while I’m not overly concerned with (or capable of arguing) the finer detail of contested economic theory, I’m more than happy to promote MMT as a very good counter to the current narrative spilling out of the Coalition – that we have no choice but to cut, that cutting is just commonsense etc. etc..  

My abiding concern is that the British Left, without a credible alternative to hook its campaign to, is being easily divided and ruled by the Right.  

On the one hand, there are those in Labour, like David Milband, who say we must cut the deficit, just slower and when growth is embedded.  This, frankly, is a rubbish strategy of opposition; it simply makes Labour look ‘Tory-lite’ – would be deficit hawks who just haven’t got the courage of the real deficit hawks.  

On the other hand, there are those on the Left, of the type criticised by Paul S recently, who feel morally bound to oppose all cuts, but in terms of the macro-economics find that stance hard to justify, and then fall back on into an all-too-vague and unconvincing narrative of ‘their crisis, not ours’.  

That may resonate well enough within the committed Left, but to outsiders it can look like an avoidance of all responsibility;  the Right is very happy to portray the Left as a bunch of irresponsible idealists and wasters, and they’ve become pretty good at it. 

I’m happy enough, therefore, whatever my ongoing doubts about the operationality of MMT, and my sense that it’s not yet politicised enough to give it real credibility, to do my bit promoting it as an alternative narrative in the UK.  

It was interesting therefore to get an email the other day from Professor Bill Mitchell, one of the main advocates and academic forces behind MMT (based in New South Wales), offering to drop into the UK on a coming tour of Europe.  He proposes to do both a ‘teach-in’ for interested economists and politicians, and to meet with any of the Labour leadership candidates who want to see him.  

Warren Mosler, a principal US advocate of MMT and a close colleague of Bill’s, has also emailed to say he’d be up for it. 

The email is copied in below, and I wonder what readers’ initial take is on this. Would they be keen to hear what Bill/Warren have to say about MMT in relation to the UK economy/Eurozone?  

I’ll be putting the idea via the New Political Economy Network to see if they could host such a ‘teach-in’.  

Here’s the email. 

Dear Paul 

I refer to engagement over the potential for the development of Modern Monetary Theory (MMT) as an ‘alternative model’ of economic management for the UK, focused on full employment, and its role in combatting the deficit fetishism and economic vandalism now being engineered by the incumbent UK government. 

 I can confirm that I will be happy to come over to the UK at a mutually convenient time to discuss the matter with any of the Labour leadership candidates who choose to do so, and to participate  at any event you and Labour colleagues can set up to promote MMT concepts and economic policy in the UK. 

As a matter of practicality, I will be in London from September 18-21 (inclusive) but could also do a day trip anytime before the September 29 (I will be in Maastricht in that period). 

Warren Mosler and I can prepare an excellent joint workshop – 2 presentations with questions and answer if that would be of interest. 

I think it would be excellent if you could organise a workshop on the weekend of September 18-19 – or perhaps the following weekend (I could come back to London via train). Perhaps a one-day Teach-In of the type we have been running in the US recently. We had a very successful event in Washington in April and more recently in Boston in late June. 

Looking forward to receiving a positive response.