by Summary:
I give Robert Murphy an "A" for at least trying to understand MMT assumptions and definitions, but it seems to me (I am not an economist) that he has not yet grasped the MMT understanding of the economic concept of saving. I use "economic concept" to distinguish it from the ordinary language meaning. They are different and also have different meanings in different contexts, e.g., economic schools. The ordinary language meaning doesn't sufficiently distinguish portfolio as financial and real assets such as equities and real estate, and saving as a result of "income not spent," that is, cash in the bank. Saving and what saving entails is a contentious area in economics, with each school having its own views. What Robert Murphy is saying is that if one accepts the Austrian view, then
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Mike Norman considers the following as important: MMT Austrian economics
This could be interesting, too:
I give Robert Murphy an "A" for at least trying to understand MMT assumptions and definitions, but it seems to me (I am not an economist) that he has not yet grasped the MMT understanding of the economic concept of saving. I use "economic concept" to distinguish it from the ordinary language meaning. They are different and also have different meanings in different contexts, e.g., economic schools. The ordinary language meaning doesn't sufficiently distinguish portfolio as financial and real assets such as equities and real estate, and saving as a result of "income not spent," that is, cash in the bank. Saving and what saving entails is a contentious area in economics, with each school having its own views. What Robert Murphy is saying is that if one accepts the Austrian view, then
Topics:
Mike Norman considers the following as important: MMT Austrian economics
This could be interesting, too:
I use "economic concept" to distinguish it from the ordinary language meaning. They are different and also have different meanings in different contexts, e.g., economic schools. The ordinary language meaning doesn't sufficiently distinguish portfolio as financial and real assets such as equities and real estate, and saving as a result of "income not spent," that is, cash in the bank.
Saving and what saving entails is a contentious area in economics, with each school having its own views. What Robert Murphy is saying is that if one accepts the Austrian view, then the MMT view fails in that its model is improperly constructed.
Of course, no one view is accepted by all, which is not surprising since there no one view of practically anything, and even if there were, unanimity is no guarantee of truth.
In science, theories make predications — assumptions generate theorems — that can be formulated as hypotheses and tested empirically. This is difficult in the case of social science owing to the scope and scale involved and also ethical issues involving human experimentation, especially at the societal level. So one must appeal to history but history presents its own problems.
So while I applaud Robert Murphy's attempting to address this issue, it seems to be to remain on the level of pitting one system as a set of assumptions and definitions against another.
However, I see this as a healthy direction for the debate to heading since it is getting down to the nitty-gritty of looking at different models and their construction, and assessing them on their merits.
A key requirement that MMT economists impose, which is one that most scientists do, is to operationalize terminology. The involves examining institutional arrangements. Money and finance are largely institutional creations.
Richard Murphy states what he takes as obvious based on the barter model that he presents and which lies at the heart of Austrian, classical and neoclassical models, but which Keynes rejected. Neo-Keynesians are neoclassicals.
The whole benefit of private saving is that it allows for more private investment.For Keynes and those that follow this analysis, investment causes saving instead of the other way around. Many of the arguments in economics are over the direction of causality.
Correct imputation of causality is based on sound analysis of operations involved. Here, this involves a different view of money and finance than the other schools hold, such as loanable funds and money neutrality. This "endogenous" view has been elaborated by Post Keynesian and MMT economists. But that is beyond the scope of this undertaking.
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