Michael Roberts — MMT and Marxist monetary theory – a reply to Bill Mitchell by a man with no name

MMT points out that both firms and consumers also borrow on credit and credit is really the basis for circulation in a monetary production economy. Minsky showed that financial (credit) cycles drive the business cycles, introducing instability as credit issuance runs up against it the limit and the cycle climaxes in a debt crisis.

This is the dynamic that MMT addresses. It seems to me that MMT economists hold that the cycle can be smoothed and downturns ameliorated, but I don't think that they claim that the financial/business cycle can be eliminated.

I think that MMT economists, Marxians and other heterodox economists are close to being in the same page regarding the outcome of liberal economics on ecology and that only state interference can adequately approach the issues, which will necessitate changing the basic nature of economic liberalism one way or other in the direction of socialism. The only way to preserve a modicum of economic liberalism is by imposing true cost accounting that takes externality into account rigorously. Would that be enough? Not really, since there are other isuues.

There are the social consequences of rising inequality. Obviously, the only adequate answer to this is more socialism involving distributive justice aimed at producing common (distributive) prosperity as a public good and a necessity condition for social cohesion.

I am in basic agreement with Michael Roberts' main point, that "capitalism" as economic liberalism (laissez-faire) is the problem and there is no way to fix it and have it remain economic liberalism. This is a key fundamental in the paradox of liberalism, in which social, political and economic liberalism cannot be resolved. Either economic liberalism will dominant at the expense of social and political liberalism, or social and political liberalism will result on the imposition of socialism on capitalism.

This is happening in China, ironically, since China is not socially and economically liberal in the Western sense. But the Chinese government realizes that to stay in power it needs popular approval and adjust its policy based on public opinion, which it researches carefully. As a result the China government has the overwhelming approval of the populace, while the opposite is the case in the West.

However, it must also be noted that in the West, economic liberalism as laissez-faire is no longer the case, even though the principles are advocated. Rather, the reality now is neoliberalism, which is state capture by capital through institutional arrangement that class power is used to impose to its advantage. This is the basis issue facing the world today, since neoliberalism is joined at the hip with neo-imperialism and neocolonialism.