by After two long and possibly turgid posts analysing Modern Monetary Theory, in this third post, I’m going to look at the practicalities – in other words, what are the policy proposals that MMTers put forward for the government to do in order to get more jobs at better wages and without provoking inflation? Michael Roberts does a decent job of stating the MMT position with quotes from MMT economists. He concludes: In this way, MMT acts as a backstop to capitalism – the state is the employer of last resort but not the main employer. It aims to compensate (patch up) the failures of capitalist production, not replace it. OK. Well, MMT didn't set out to replace capitalism. So, the MMT economists are not calling for revolution. As if that is most serious charge that can be mounted against
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After two long and possibly turgid posts analysing Modern Monetary Theory, in this third post, I’m going to look at the practicalities – in other words, what are the policy proposals that MMTers put forward for the government to do in order to get more jobs at better wages and without provoking inflation?Michael Roberts does a decent job of stating the MMT position with quotes from MMT economists. He concludes:
In this way, MMT acts as a backstop to capitalism – the state is the employer of last resort but not the main employer. It aims to compensate (patch up) the failures of capitalist production, not replace it.OK. Well, MMT didn't set out to replace capitalism. So, the MMT economists are not calling for revolution. As if that is most serious charge that can be mounted against MMT?
But what Michael Roberts apparently fails to notice, or at least doesn't mention, is that the buffer stock of employed that the MMT JG creates replaces the present buffer stock of unemployed that forms "a reserve army of the destitute" to control wages. That is a step forward in increasing labor bargaining power.
The MMT JG is a guaranteed job offer at or above the living wage (compensation package including benefits). This sets a floor for the labor market against which employers must compete. If funded by the currency issuer, as MMT recommends, the program is self-funding and balances fiscal injection with increased productivity over transfers.
The JG hourly wage also anchors the currency to a unit of labor time, which serves as a price anchor. The currency issue function as the monopoly provider of the currency is a price setter.
Marxian economists can find some things to like with MMT, although Marxists will argue that MMT backs up capitalism and forestalls socialist revolution.
Michael Roberts Blog
MMT 3 – a backstop to capitalism
Michael Roberts