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MMT: REPORT FROM THE FRONT

Summary:
By L. Randall Wray PART 1 As many readers know, the third annual MMT conference was recently held at Stonybrook, and you can find the program as well as videos of the conference at the link: (https://www.mmtconference.org/). In addition, real-world economics review has just issued a new volume devoted to MMT (http://www.paecon.net/PAEReview/issue89/whole89.pdf). I’ll briefly address both, in two parts. I’ll talk about the conference in this one, and about the RWER papers in the second part. Part 1: The Third International MMT Conference Unfortunately, I missed the first day of the conference as I was the plenary speaker at the annual ABFM (Association for Budget and Financial Management) conference in Washington DC. This invitation resulted from a chance meeting with a member of the

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By L. Randall Wray

PART 1

As many readers know, the third annual MMT conference was recently held at Stonybrook, and you can find the program as well as videos of the conference at the link: (https://www.mmtconference.org/). In addition, real-world economics review has just issued a new volume devoted to MMT (http://www.paecon.net/PAEReview/issue89/whole89.pdf). I’ll briefly address both, in two parts. I’ll talk about the conference in this one, and about the RWER papers in the second part.

Part 1: The Third International MMT Conference

Unfortunately, I missed the first day of the conference as I was the plenary speaker at the annual ABFM (Association for Budget and Financial Management) conference in Washington DC. This invitation resulted from a chance meeting with a member of the group when I was teaching on a Fulbright to Estonia. At first he was shocked at the views I was propagating, but quickly became a convert, converted another member, and that led to the invitation. This group mostly researches state and local government finance—obviously those are currency users and need to balance budgets—but they tend to apply what they know to the federal budget. MMT of course explodes that because the finances of the sovereign currency issuer are nothing like those of the non-sovereign government entities. However, many of the attendees were open to MMT—or, at least, now they want to know more. It was a pleasant experience—and I learned more about a whole sector of the academy that I didn’t know much about. Many of those attending are in Masters of Public Administration schools. My own Professor Minsky’s first graduate degree was an MPA. I actually wrote a paper on the topic of the problems of state and local government finance, up here at Levy (http://www.levyinstitute.org/publications/fiscal-reform-to-benefit-state-and-local-governments-the-modern-money-theory-approach).

And I missed most of the second day doing a nearly 4 hour interview. I’m pretty sure I’ve never talked for 4 hours in my life.

Fortunately, I finished in time to attend the evening’s special panel featuring Ndongo Samba Sylla on “Money, Imperialism, and Development”, with our own Fadhel Kaboub as the discussant. This one-two punch is the best panel on MMT I have ever seen. Whether you love MMT or hate it, you must see the video either on the conference website or here: https://www.youtube.com/watch?time_continue=507&v=lSCpJ3dSJ24.

I mean now. Stop reading. Go watch the video.

This shows that people like Jerry Epstein who criticize MMT because it supposedly applies only to the USA, and for supposedly neglecting poor developing countries are all—to put it in the most charitable light possible—ignorant or dishonest. Let me repeat that. Ignorant. Dishonest. He labels MMT an “America First” fascist approach. He’s ignorant or dishonest. Watch the video again. Tweet it at him. Do it again. And again. Send it to Doug Henwood while you are at it. Repeat every time you see one of their accusations. Ignorant or dishonest.

My own presentation came at the end of the conference. Since I had to catch a train, and to give more time to Q&A, Stephanie and I agreed to forgo formal presentations. I had jotted mine down as notes. I mentioned that I had come up with a half dozen fronts on which we had battled for MMT over the past quarter century. Some have written to me asking for the full accounting (as I only mentioned a couple of fronts in my responses to questions). So here we go: fighting for MMT on the frontlines.

Everyone knows by now how MMT began—it grew out of an early 1990s PKT online discussion group. That is where Bill, Warren, Mat (Forstater) and I met. We took our discussion offline because most of the other participants could not understand what we were talking about or were hostile to it. Mat and I tried to set up a center at the University of Denver, but the Dean nixed it. We started CFEPS at Levy but moved it to UMKC in 1999 because it had a pre-existing pluralistic and interdisciplinary PHD program—and because we wanted graduate students, for reasons I’ll discuss in a minute. Pavlina had been Mat’s student, and then helped Warren to put together the first “manifesto” (if you want to call it that) on MMT—called “soft currency economics” at the time. Pavlina also helped Warren to organize the very first MMT conference at Bretton Woods in 1996. I attended, as did Charles Goodhart (UK, Bank of England) and Basil Moore (Post Keynesian “horizontalist” endogenous money). Warren also helped to finance time off from teaching for me to write the first academic book on MMT—titled Understanding Modern Money, 1998. The title came from Keynes, and according to tradition, the term MMT itself came a comment on BillyBlog. Bill had created Coffee at about the same time that we created CFEPS; he then later created his blog and Stephanie followed with the NEP blog. In 2007 Bill and I began to write the MMT textbook, which was finally published in 2019—Martin joined us a couple of years ago and without his help the publication likely would have been sometime around 2029.

That’s the short version of the story.

We fought for MMT on several fronts.

  1. First, as mentioned, we wanted PhD students. While there’s some vanity in that, we knew that research paradigms have to reproduce themselves by placing young faculty into departments. Frankly, we had no idea in the beginning whether anyone would hire heterodox students pursuing interdisciplinary degrees in the heartland of America. But, yes, they will. I’m not sure of the exact number, but over the years the number of UMKC PhDs we produced must have surpassed the century mark. Almost all of my students finished, and all of those who finished got positions on the faculty of colleges and universities across America (and a few abroad). I’m not sure of the final count, but it is several dozens. Few university professors can make that claim. And mine were the best. Scott was my first MMT PhD—before I moved to UMKC. He had started with my old 1990 book but regrouped when he got the manuscript to the 1998 book. (Actually, I suppose I’d have to count Reynold and Stephanie, who had both studied with me at Denver—but they went on to do PhDs elsewhere.) And then came Eric, Joelle, Pavlina, Flavia, Yeva, Karol, Alla, and Felipe; and many others—some of which I directed and others on whose committee I served: Zdravka, Fadhel, Nicola, Kalpana, Ryan and too many others to list or recall (sorry, I’m listing those I worked with after graduation plus some of the recent ones and apologize for not listing all the rest). This was our most successful and lasting front. Some of these teach graduate students, but many are in undergraduate institutions. That is fine. Once an undergraduate is inoculated with MMT, there is no danger that she or he will become mainstream. As one of my students demonstrated in class, it is like taking off distorting glasses and seeing the world afresh for the first time. You will never see the world the same again. This is a legacy that will replicate itself and will last and will spread. It is like a cancer. But a good one.
  2. Second, at CFEPS (at UMKC) we hosted visiting scholars as well as many conferences, workshops, and graduate student summer schools. These largely catered to our fellow heterodox academics and their students. This was based on the belief that they’d be open to MMT. We thought it would be relatively easy to win them over—after all their backgrounds were the same as ours, steeped in the same traditions. Mat’s twin jobs were to find precursors to MMT in both the history of economic thought and also in the history of money. It turned out that was amazingly easy to do. Everywhere you look, the main ideas of MMT can be found in the economic literature—stretching all the way back to Adam Smith and Beyond, but lost in the twin thrusts of the creation of Neoclassical economics (1870s) and the rise of the even more virulent modern mainstream of General Equilibrium theory, Rational Expectations, and New Monetary Consensus (1970-present). And the main principles are also demonstrated through history back to Babylonian times. So here was the idea: bring fellow heterodox economists to UMKC. Host them, pay their expenses, give them offices, and invite them to all of our seminars. Prove to them that all the principles of MMT can be found in the works of our fathers and mothers and grandfathers and grandmothers that they respect. This was largely a grand failure. Many would take the money, eat the free meals, attend the seminars, and then lock themselves up in the offices we gave them to write in secret dishonest attacks on MMT. Not one of these stealth critics would ever confront us in the open with objections; not one would circulate drafts to check to see if they had understood our ideas correctly. They all saw themselves as assigned to top secret assassination missions. We would never see what they’d written until they published it in some heterodox journal. And the heterodox journals never let us see the critiques before publication. And once published, the journals rarely let us respond in print.

If you are not in academia you may not know how bizarre this behavior is. It is entirely unprecedented. The idea in academics is that you discuss and have open debate. Critics are supposed to let you comment on drafts. They are supposed to do actual research—that is, read what you write, provide citations to your writing, and engage in due diligence to ensure they’ve got it correct. Our critics virtually never follow normal procedure, and the journals did not require it (more in Part 2 on this). It is always “gotcha” with secret, often commissioned, attacks that are never revealed until published and with critiques that have little to do with what we actually write. The rules of engagement have always been ignored when it comes to criticizing MMT. It continues up to the present day. This sort of thing goes on in places like Nazi Germany where the state controls thought. But remember, these were heterodox economists with no influence, operating on the obscure margins of the discipline and publishing in journals that have no influence in policy circles. It’s like cheating to win the cow pie flinging contest at your local county fair. Why bother? I really do not know. Bill has called it ADD, Attention Deficit Disorder. As heterodox economists, they were sidelined and were not receiving enough attention, so they saw their attacks as the way to get it.  Professional jealousy? No doubt. Hostile editors of heterodox journals? Absolutely. Whatever the motive, it is truly hilarious to see all of them crawling out of the woodwork now that MMT is on the front pages to either accuse us of fascism, or to suddenly embrace MMT after 25 years of all-out war on it. Look at me, look at me, look at me now! Mugging for the cameras with the kind of grin you’d see on the face of the winning cow pie flinger at the local fair.

  1. Third front: financial markets people. Since Warren is a financial markets guy, we had a lot of meetings and conferences with them. It takes about 30 seconds for them to get the main points of MMT. Bond sales are a reserve drain. Yes, it clicks. Credit ratings are irrelevant for sovereign government debt. Right—they knew that. And lots of them are very decent people. The problem is that MMT would put most of them out of business. That has always been Warren’s stated goal. But many others aren’t on board with that. So we sort of won on that front, but it does no good.
  2. Fourth front: our political class—including elected officials, labor unions, and Washington think tanks. One surprise is that our elected national officials—Representatives and Senators—are sometimes not as dumb as they pretend to be in public. They, and their staff—Gebhardt, Kucinich, for example–often understood us. Government cannot run out of money. We need a Job Guarantee. Right. But they told us they cannot say that in public. Politicians are not leaders—they are followers. With rare exceptions, they cannot get out in front on scary issues. (Kucinich was an exception—so the Dems jerrymandered him out of office.) I also met with leaders of organizations (civil rights, labor) headquartered in D.C. They’d politely listen to me, but then ask: “What does EPI say about this?”. Unless an idea is endorsed by one of the official progressive think tanks in DC, there is no way any leader is going to publicly support a truly progressive policy like a JG. And the progressive think tanks are committed to tying unpopular tax hikes to progressive policies—they’d rather kill the chance of saving the planet than give up their tax “pay fors”. We struck out. Well, until Bernie and AOC came along.
  3. Fifth front: the blogs. I was skeptical of their usefulness—but Bill and Stephanie recognized that they were the future. They were right. You’re reading this one, created by Stephanie and then taken over by Bill Black. Blogs spread MMT outside academia and official policy circles. And then came videos and tweets. There are tens of thousands of followers now. This helped to foam the runways to the seats of power. No one can afford to ignore MMT any longer. The viral movement, as well as a few fearless candidates—Bernie and AOC—brought MMT out of the shadows.
  4. Sixth front: the textbook. In 2007 Bill, Warren and I sat down to plot the next step for MMT which was to produce a textbook for classroom use. Warren quickly completed his Seven Deadly Innocent Frauds of Economic Policy (2010), but the scope of our textbook grew and grew—to the 700 page monster published last spring. We wanted a two semester course in Macro that would be based on a coherent approach—coherent in two senses: stock-flow consistent and consistent with MMT. At the same time it would show the building blocks borrowed from Keynesian, Institutionalist and Marxist strands of heterodoxy. The first printing sold out almost immediately, and the second printing has either sold out or is on the verge of doing so. So there will be a third and we’ll prepare a second and improved edition over the next couple of years. This is not strictly speaking an MMT text—it is meant as a replacement for the macro textbooks used throughout the world to teach economics. All the alternatives that I know about are incoherent in both of the senses above. The textbook will help to inoculate future generations against mainstream nonsense.

The way forward. The global challenges we face will push MMT forward. While climate change is the most obvious challenge, it is linked to rising inequality, marginalization of displaced workers, ruthless austerity policy, growing waves of refugees, and the take-over of national governments by neoliberals and even fascists. Our “progressive” friends will push for market-friendly solutions: taxes on financial transactions, taxes on pollution, taxes on rich folks to pay for goodies. None of those helps. We have to return to the WWII mobilization to see how to tackle the current challenges—so MMT will eventually win out. It is all about resource mobilization, not finance. And we must include all the necessary social programs in the Green New Deal: jobs for all, healthcare for all, food for all, shelter for all, education for all, decent retirement for all. Bernie, AOC, and Naomi Klein recognize the scope of the challenges. The climate crisis cannot be resolved without taking on the social crisis—the financialization of the economy, the financialization of housing, food, healthcare, education, the electoral process; the entire society.

We probably are not the first intelligent life form to go through this. Any advanced alien species on other planets that survived 10,000 years of civilization have already successfully navigated a crisis similar to the one we face. They discovered fossil fuels and smoked their planet. Their financial sector took over the economy and produced intolerable inequality. But they greened the economy, overthrew their Wall Street, and took back their societies and economies and put them to work for the benefit of their species. Otherwise, they would not have survived.

We can take comfort and inspiration from that. We might just survive, too.

L. Randall Wray
Larry Randall Wray (born June 19, 1953) is professor of Economics at the University of Missouri–Kansas City in Kansas City, Missouri, USA, whose faculty he joined in August 1999.[1] Before UMKC, he served as a visiting professor at the University of Rome, Italy, the University of Paris, France, and the UNAM, in Mexico City. From 1994 to 1995 he was a Fulbright Scholar at the University of Bologna. He is also Research Director, of the Center for Full Employment and Price Stability, and Senior Scholar at the Levy Economics Institute of Bard College, NY.

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