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.
  • smallpatatas@lemm.eeEnglish
    7·
    1 day ago

    OK so, I’ve only read Stephanie Kelton’s The Deficit Myth and listened to some interviews with a few others, so I can’t speak for all MMT proponents, but a lot of the critique from Roberts sounds flat-out wrong to me.

    I don’t think I’ve heard anyone claim that governments can create infinite money without consequences; the idea that there is no theoretical limit to the number of dollars in existence is simply a conceptual point, and the practical limit of government spending is inflation, which, if I understand correctly, happens when you keep spending money into an economy that has reached its productive capacity (something that it sounds like Roberts claims MMT does not address)

    I’ll absolutely grant that there are aspects of MMT that bother me (often there seems to be a focus on productivity and boosting the private sector) but I have never once heard of someone proposing to create jobs that pay less than the minimum wage. The phrase “setting a wage floor” AFAIK is usually framed as a way to ensure that jobs in the private sector are treating workers decently, because bosses will know that workers aren’t risking destitution if they quit/get fired.

    The critique that MMT does not offer a theory to nations without their own currency is fair, and I agree that MMT doesn’t offer much in the way of a critique of capitalism.

    What I think it does do - I see it as a step in a dialectical process - is show us that there is no magic fiscal obstacle to us collectively determining what society’s resources should be put toward.

    Like, national budgets to not have to balance; national debts do not have to be paid off. The government always has the money to pay for something, because there is no theoretical limit to the number of dollars in existence; the real limiting factor is whether or not that thing is available to be bought with the government’s currency.

    So really, discussions about budgets should be about our collective values and the availability of resources, and not about arbitrary fiscal constraints. Imagine what we could do!

    • Sebrof [he/him, comrade/them]@hexbear.netOPEnglish
      3·
      1 day ago

      To be fair to Robert’s point, or MMT, Robert’s does mention that MMT advocates discuss inflation as a real constraint. Once full employment is reached, further money printing will be inflationary. So on one hand, it also appears that Robert’s even admits that MMT accepts limits as a theory.

      On a second reading I can go back to see, well, then, is Robert’s stating that some advocates deny this or not, what or who is he critiquing then?

      But, I still think your last point about our collective values and availability of resources is something Roberts would agree with. Roberts would frame it in terms of value in the economy. We can print money as we need to, but it must refer back to real productive capacity. So the actual limits of an economy go back to real productive resources like labor.

      And I admit, the critique can be somewhat odd because on one hand he admits certain MMT scholars admit the above, but (maybe?) others are more likely to downplay it. And since MMT scholars aren’t all Marxists, then they ignore value. So Roberts has a bone to pick with that as well, in addition to the lack of critique of social relations that you also mentioned.

      There is also the discussion of the circuit of money and the nature of taxes. I didn’t mention that in my above overview, but interested in hearing ideas from others.

      Overall, I feel that MMT can be helpful in getting over the illusion that “there’s no money for x” that many fall into. The real limits are material, are about productive capacity, about the availability of labor and its possible allocation.

      Thanks for your comments!