The Real Movement

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Month: March, 2019

Reply to a comment from Joymo on MMT

I received a comment from Joymo on one of my blog posts on modern money theory, MMT is right … which (paradoxically) is why it is wrong.

The comment begins with a quote from that blog post which accuses MMTers of doubling down on the sham of fascist state deficit spending in order to subsidize capitalist profits:

“Now, MMTers could have used their knowledge of how “modern money works” to expose this scam, but they have chosen instead to lobby for more of it.”

Commenting on this statement, Joymo writes:

I don’t think you’ve taken an honest look at the the positions of MMTers. One of the key points of MMT is that it shows that the state **doesn’t need to issue treasury bonds to finance itself at all**

Most MMTers call for an abolition of the treasury bond system and correctly equate it to “welfare for billionaires”.

I also get the feeling you haven’t fully digested the theory when you say things like: “In return for this service to the capitalist of generating riskless financial assets for them to hide their dead capital from devaluation, Washington get to consume the excess capital unproductively to build the largest military in human history.”

No, the whole point of MMT is that a powerful enough state could do this anyway, with or without the capital of the capitalists.

Joymo misunderstands my argument. I readily accept that, within certain definite limits, the state can finance its operations without taxing or borrowing. This was not the point of my post. As simple as it appears, however, the last statement by Joymo, that a powerful enough state could could build the largest military in human history, with or without the capital of the capitalists, is really quite wrong.

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Doug Henwood is not the only simpleton who spends a lot of time weirdly bashing MMT

I am sure Doug Henwood has read this recently published paper by Larry Summers, On falling neutral real rates, fiscal policy, and the risk of secular stagnation. If not, he should at the earliest opportunity. The paper literally shreds his argument against modern monetary theory.

Summers paper should remind Henwood how dishonest his own examination of MMT was.

Which is fascinating,considering how little the two men are thought to have in common. Henwodd styles himself a socialist and “critiques” — if that is the word — MMT from the standpoint of the radical Left. Summers, by contrast, is the archetype neoliberal, a former economic adviser to Presidents Clinton and Obama.

Henwood essay on MMT is a sloppily written diatribe that never quite gets to any real point. While Summers employs complex mathematical models to demonstrate that what Washington calls a neutral real rate of interest may be significantly negative were Washington not running massive fiscal deficits. This means conventional fascist state economic policy as it has been implemented since the great stagflation of the 1970s is dead — and, it is likely capitalism may soon be joining it unless some variant of modern money theory is adopted — and quick.

Oddly enough, however, despite their differences, Summers, like Henwood, seems rather perturbed by MMT despite appearing to argue for it.

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Did someone drop yellow vest protesters on their heads when they were infants?

Say you want to hurt Macron, right? Say you want to see him down on his knees begging for mercy.

What do you do?

In France, you spend your free time on weekends protesting his austerity program, right? Eighteen weekends in a row that you could be spending with you family and friends you sacrifice to make the point that you don’t like Macron’s policies.

And then, on each Monday, like good little boys and girls, you report back to work to create more surplus value for Macron, the capitalists and the fascist state, satisfied that you really, really showed that asshole how much you dislike his policies …

… that you made possible with your wage labor on Mondays.

Five hundred words of empty blathering from Anselm Jappe

What is wrong with communists today that they cannot just open their otherwise useless pie-holes and say, “We must aim for the immediate and unconditional abolition of wage slavery?”

The latest attempt to obscure what communism means comes today by way of Anselm Jappe who, when asked in this interview what emancipation looks like, gave this silly non-response:

Alastair Hemmens: Finally, what do you think the development and shape of a movement of human emancipation might look like in the best possible scenario? In other words, what should human beings be doing in the face of the crisis of capitalism?

Anselm Jappe: The question is no longer if we can escape capitalism but how it will happen, because this society is already collapsing all around us, even if it does so at various speeds in different sectors and regions of the world. A huge portion of humanity has already been designated as “garbage” and is condemned to survive, as best it can, often in rubbish dumps or by recycling refuse. Money, value, labor, and the commodity are being overcome but in the form of a nightmare. Not a great deal of actual work is needed in production, but we are all forced to work in order to live. The money currently in circulation is mostly “insubstantial,” based only on credit and confidence. Value-production is shrinking. The real question now is how to construct alternatives and these can only exist in a world beyond the market and the state. There are no longer any “economic” policies or systems, even if they are “fairer” or “alternative,” that can solve this problem because they are all based on the accumulation of abstract labor. The only role the state can play in all of this is to be the repressive administrator of the misery created by the crisis of capitalism. No party, no election, no “revolutionary” government, no storming of the Winter Palace can lead to anything other than the continual administration of commodity society under ever-worsening conditions. This is why all left-wing politics has completely failed in the last few decades. The left hasn’t even been able to impose Keynesian economic policies or bring back the welfare state to replace neoliberalism. It’s not a question of a lack of will power. “Economic laws” cannot be “humanized.” They can only be abolished in order to return to a society where the satisfaction of needs is not based on an “economic sphere” that relies on labor.

What we need, therefore, could be called a kind of “grassroots revolution” with a new meaning, one that is not afraid of the necessity of confronting those who defend the ruling order, particularly when it comes to appropriating basic things—housing, production facilities, resources—by bypassing the mediation of money. We have to bring together socio-economic struggles—against housing evictions, for example, or the expropriation of land by big companies—with environmental and anti-technological struggles—against mining, new airports, nuclear power, GMOs, nanotechnology, surveillance—and struggles to change people’s way of thinking—overcoming the commodity psyche. That would mean a real transformation of civilization, much more far-reaching than a mere political or economic change. The transformations I am talking about go much further than simply saying, “we are the ninety-nine percent:” that is just a form of populism that pits a tiny minority of so-called “parasites” against “us,” the honest workers and savers. We are all of us deeply entrenched in this society and we have to act together on all levels to escape it. Humanity has been completely victorious in its struggle to become the “masters of nature,” as Descartes put it, but it is also more helpless than ever in the face of the society it has created.

What the fuck is so difficult about saying we want to abolish wage slavery? How did that ever get to be too radical a statement for a FUCKING COMMUNIST!

Can someone please tell me that, please.

How Ben Bernanke refuted Doug Henwood on MMT

In my last post, I explained some of Doug Henwood’s major objections to modern money theory, as expressed in his essay, Modern Monetary Theory Isn’t Helping. The biggest of these objections, that MMT carries the profound risk of hyperinflation, can probably be captured by this passage from his essay:

That brings us to the next problem: inflation. When the printing presses run freely, it’s not only reactionaries who think that runs the risk of spiraling prices. As I was researching this piece, many people to whom I described MMT, from Democrats to Marxists, brought it up as a worry. MMTers are coy about the topic — they never say how much is too much, and they profess great confidence in their ability to control it. In a paper criticizing MMT, the left-Keynesian economist Thomas Palley says he’s heard a “leading” MMTer say inflation less than 40 percent is “costless.” That’s nearly three times the modern US record of just under 15 percent in 1980, which was widely regarded, and not just by bondholders, as a crisis. Since wages typically lag behind price changes, inflations can lead to real declines in living standards.

Hyperinflation can impoverish a country in a matter of months, says Henwood. And it can set in motion a chain of political events that lead to a Reagan, or worse, a Hitler:

Though it might scandalize some liberals to say so, it’s dangerous to be sanguine about inflation. People find it destabilizing and it feeds a hunger for order. The rise in inflation through the 1970s that climaxed in that 15 percent record helped grease the way for Reagan. The extreme inflation of Weimar Germany in the 1920s contributed to the rise of Hitler. As a British diplomat stationed at the embassy in Berlin wrote to his bosses at home during the hyperinflation: “The population is ripe to accept any system of firmness or for any man who appears to know what he wants and issues commands in a loud, bold voice.”

Oddly enough, one of the most important policy makers in the last two decades, former Federal Reserve Chairman Ben Bernanke, agrees with Henwood on the inflationary impact of MMT-style dollar printing. Bernanke however viewed this impact positively because he believed the U.S. economy faced the more pressing risk of deflation. To address this danger, Bernanke argued Washington should be prepared to use its ability to create unlimited fiat dollars on a computer terminal and force the tokens into circulation in much the way MMT describes.

In a deflationary crisis Washington could depreciate the value represented by a single dollar to whatever extent necessary by a series of measures involving purchases of both domestic and foreign bonds. These purchases could be undertaken in cooperation with a fiscal stimulus program — including a so-called ‘helicopter drop’ of cash on households and a huge tax cut.

Surprisingly, Bernanke argued in his presentation that none of what he was suggesting was breaking any new ground. The interventions he proposed in 2002 to rapidly depreciate the purchasing power of the dollar had already been implemented by Washington during the last huge outbreak of deflation in the Great Depression:

Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it’s worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt’s 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt’s devaluation.

Modern money theory isn’t a new idea by any mean; it was how FDR implemented the New Deal response to the Great Depression.

Doug Henwood has a problem with MMT: He just doesn’t know what it is

Doug Henwood has problems with modern money theory (MMT):

“The major problems at the fiscal level are what we spend money on and what we don’t. If anything, we’re closer to terminal now than we were fifty years ago, when Martin Luther King Jr said, “a nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

More broadly, we have a private economy driven by exploitation, overwork, asset stripping, and ecological destruction. MMT has little or nothing on offer to fight any of this. The job guarantee is a contribution, though a flawed one, and it’s not at the core of the theory, which proceeds from the keystroke fantasy. That fantasy looks like a weak response to decades of anti-tax mania coming from the Right, which has left many liberals looking for an easy way out. It would be sad to see the socialist left, which looks stronger than it has in decades, fall for this snake oil. It’s a phantasm, a late-imperial fever dream, not a serious economic policy.”

That is the conclusion to Henwood’s recent essay for Jacobin, Modern Monetary Theory Isn’t Helping, but it isn’t his real problem.

Doug Henwood’s real problem with MMT is that he doesn’t even know what his real problem with MMT is.

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#5 on Postone’s ‘Rethinking Capital’

There is, I think, a great deal of confusion regarding Marx’s argument in the Grundrisse and it is playing out in this discussion of Postone’s, “Rethinking Capital in light of the Grundrisse”, as well. It can best be summarized this way.

The current dominant view is presented by Luc:

Marx makes very clear that the categories of his critique are historically specific. Even categories that appear to be transhistorical and that actually do play a role much earlier historically – such as money and labour – are fully developed and come into their own only in capitalist society (Marx 1973: 103)

I have nothing against this view, except that, more often than not, it is taken to mean, essentially, that commodity production as we know it did not exist before the capitalist epoch. I think this latter (mis)reading of Luc’s view is wrong. Commodity production and exchange existed prior to capitalism and exhibited all of the features Marx described in first part of Capital.

My view, which is more along the traditional (Engels) reading of Capital holds that, as above, commodity production existed prior to capitalism and exhibited all of the features Marx described in first part of Capital. Capitalism, however, is historically unique in that “The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities”. Which is to say, in no previously existing society did wealth present itself exclusively in this fashion.

To put this another way: commodity production and exchange is not unique to capital, but capitalist society rests uniquely and exclusively on commodity production and exchange; this is its historically specific character.

To further clarify the difference, I think everyone will agree that there is a great deal of difference between saying,

“Commodity production and exchange only begins with capitalism.”

and saying,

“Capitalist society is the first society to rest exclusively on production and exchange of commodities.”

The first statement can neither be supported by current historical evidence nor by Marx’s writings. The second statement rather neatly sets up Marx’s prediction in the Grundrisse that capital inevitably leads to the collapse of production based on exchange value.