by Summary:
Warren Mosler tweeted this. Fascinating!Just think what Keynesianism would have been like if Keynes had the time to read more of the work of the economist, Abraham Lerner - well, we may have had MMT much sooner?Jeremy Corbyn makes the same mistake as Bernie Sanders by wanting to sound fiscally conservative about tax and spend because the paradigm has been set the conservative neoclassical economists who have told the general public that the country has to be run like the family household budget. At face value, this sounds fair, and the Conservatives have repeatedly indoctrinated the general public that there is no alternative- TINA. But the MMT ball is rolling and it won't be too hard to explain how MMT works to the general public once the clever marketing people, who want a better
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Mike Norman considers the following as important:
This could be interesting, too:
Warren Mosler tweeted this. Fascinating!Warren Mosler tweeted this. Fascinating!Just think what Keynesianism would have been like if Keynes had the time to read more of the work of the economist, Abraham Lerner - well, we may have had MMT much sooner?Jeremy Corbyn makes the same mistake as Bernie Sanders by wanting to sound fiscally conservative about tax and spend because the paradigm has been set the conservative neoclassical economists who have told the general public that the country has to be run like the family household budget. At face value, this sounds fair, and the Conservatives have repeatedly indoctrinated the general public that there is no alternative- TINA. But the MMT ball is rolling and it won't be too hard to explain how MMT works to the general public once the clever marketing people, who want a better
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Matias Vernengo writes Milei’s Psycho Shock Therapy
Bill Haskell writes Population Growth Outcomes
Robert Vienneau writes Books After Marx
Joel Eissenberg writes Undocumented labor: solutions, not scapegoating
Just think what Keynesianism would have been like if Keynes had the time to read more of the work of the economist, Abraham Lerner - well, we may have had MMT much sooner?
Jeremy Corbyn makes the same mistake as Bernie Sanders by wanting to sound fiscally conservative about tax and spend because the paradigm has been set the conservative neoclassical economists who have told the general public that the country has to be run like the family household budget. At face value, this sounds fair, and the Conservatives have repeatedly indoctrinated the general public that there is no alternative- TINA. But the MMT ball is rolling and it won't be too hard to explain how MMT works to the general public once the clever marketing people, who want a better society, get hold of it.
Conservatives bribe the electorate with tax cuts and then cut public spending shrinking the economy and ruining prosperity for most but a few. It's time to call them out!
I’ve seen a couple of references to “Lerner’s Law” on Twitter in the last couple of days and thought “What’s that?”. Before anwering this question, let’s wind back a bit.
Who is Lerner?
Abraham (Abba) Lerner was a Russian-born British economist, who, writing in the 40s and 50s developed a theory he called “functional finance“. JM Keynes was aware of some of this work, and there is evidence he agreed with much of it. Unfortunately Keynes died before really exploring Lerner’s ideas. If he had, maybe what we think we know about “Keynesian economics” would look a lot different today.
Lerner’s functional finance is a key plank of what is today called Modern Monetary Theory (MMT), and it was one of MMT’s key figures Warren Mosler who I first saw mention “Lerner’s Law”:
@RichardJMurphy I'm functionally a supportor. My concern is largely about violating 'Lerner's Law' and thereby losing the debate.
So what is Lerner’s Law?
I’m not sure it’s actually known widely as such, but what Mosler alluded to was a passage from Lerner’s 1951 work “Economics of Employment”. Bill Mitchell quotes this passage in his latest book “Eurozone Dystopia”. I found the relevant section here. Bill writes:
“Lerner’s work also contains a very clear message for progressive thinkers who are reluctant in the current debate to think outside of the confines that the neo-liberals have created. For example, Labour politicians in the United Kingdom confront the austerity debate with claims that they would ‘fix the budget’ over a longer time period to avoid the massive damage that immediate austerity brings. Of course, even debating the ‘health’ of the fiscal position in terms of some financial ratios is ceding ground to the conservatives, ground that is illegitimate. Lerner (1951:15) called progressives who argued in this way ‘proponents of organised prosperity’ and argued:
A kind of timidity makes them shrink from saying anything that might shock the respectable upholders of traditional doctrine and tempts them to disguise the new doctrine so that it might be easily mistaken for the old. This does not help much, for they are soon found out, and it hinders them because, in endeavoring to make the new doctrine appear harmless in the eyes of the upholders of tradition, they often damage their case. Thus instead of saying that the size of the national debt is of no great concern … [and] … that the budget may have to be unbalanced and that this is insignificant when compared with the attainment of prosperity, it is proposed to disguise an unbalanced budget (and therefore the size of the national debt) by having an elaborate system of annual, cyclical, capital, and other special budgets.
Progressives should first and foremost seek to educate the public about how the economy and money actually operate and what opportunities the government has to act on our behalf to advance our wellbeing. If we think in this way, then options that have been constructed by the neo-liberals to be ‘dangerous’, ‘radical’ or ‘taboo’ will start to appear reasonable and grounded in reality.”
So simply stated, Lerner’s Law would be something like “If you try to present your ideas cloaked in the language of you opponents, it will do your cause great damage”.
This offers a lesson to Corbyn and his supporters. Corbyn has manfully tried to present policy ideas that currently sit outside what is thought ‘possible’ within the current orthodoxy. He has done so though while trying to present himself as being enthusiastic about balancing the budget, or at least the ‘current’ budget. He has also talked about how he would ‘pay for’ his policies by raising taxes on the rich. Both of these are examples of disguising ‘new doctrine’ as old as Lerner wrote, and leave him open to attacks from those holding on tight to the old.
D, in his Tweet embedded above invokes Lerner’s Law to criticise the idea of “People’s Quantitative Easing” as proposed by Richard Murphy and adopted by the the Corbyn campaign. It takes an idea that is actually quite revolutionary (Overt Monetary Financing), and cloaks it in the language of something that was on the unorthodox edge of current orthodoxy (Quantitative Easing). This has opened it up to all kinds of criticism (for example the recent FT letter signed by 55 economists).
When it’s suggested that ‘progressives’ should adopt different language to try and explain alternative policies, it’s sometimes replied that this is a hopeless cause as the current orthodoxy is so ingrained in the public’s minds. Lerner has an answer to this (quote also referenced from Bill’s book):
The scholars who understand it [the “new doctrine”] hesitate to speak out boldly for fear that the people will not understand. The people, who understand it quite easily, also fear to speak out while they wait for the scholars to speak out first. The difference between out present situation and that of the story [The Emporer’s New Clothes] is that it is not an emporer but the people who are periodically made to go naked and hungry and insecure and discontented – a ready prey to less timid organisers of discontent for the destruction of civilisation.
Let’s speak out!
https://alittleecon.wordpress.com/2015/09/04/lessons-for-corbyn-in-lerners-law/