Michael Hudson on Modern Monetary Theory

There is an enormous amount of information across the internet on Modern Monetary Theory (MMT). A search in google gives around 2.6 million results, while that for post-Keynesian produces a mere 974 thousand! Marxist economics gives even fewer, at 913 thousand.

Having said that, a search for Marxism produces 13.3 million results. Of course, Marxist thought has had an influence far beyond economics, and even philosophy, politics and sociology, into such fields as anthropology and psychology.

Here is maverick economics Professor Michael Hudson on MMT, taken from his book J is for Junk Economics (p.155-7). Hudson is supportive of the theory and the economic policies which it implies.

Later in the week I will outline some ideas on money and inflation drawn from Anwar Shaikh‘s 2016 work Capitalism. Shaikh is critical of some aspects of MMT and provides extensive theoretical discussion and empirical evidence to make his case for a ‘Classical’ theory of modern money and inflation. Continue reading

Profitability and investment – via Michael Roberts blog

An interesting take on the reasons for the continued weakness of investment and growth in the aftermath of the Great Recession. For Marxist Michael Roberts, it is mostly about the failure of the rate of profit to recover to pre-recession levels. The link to his post is below.

Recently, Larry Elliott, the economics correspondent of the British liberal newspaper, The Guardian raised again the puzzle of the gap between rising corporate profits and stagnant corporate investment in the major capitalist economies. Elliott put it “The multinational companies that bankroll the WEF’s annual meeting in Davos are awash with cash. Profits are strong. The return on […]

via Profitability and investment again – the AMECO data — Michael Roberts Blog

J is for Junk Economics – Michael Hudson on the Real News Network

This year I have been regularly posting excerpts from Michael Hudson’s new book J is for Junk Economics. Below is Part One of his interview with The Real News Network, in which he discusses his reasons for writing this iconoclastic ‘dictionary’ of economic thought. In his words, it is a guide to how the economy really works and seeks to overturn a misleading orthodoxy propagated by the media and many academics, not least economists!

Yanis Varoufakis explains debt deflation

A short video featuring the ever-engaging Yanis Varoufakis, self-styled ‘erratic Marxist’ and former finance minister of Greece. Here he explains the process of debt deflation which, during the eurozone crisis, has hit Greece hard. In particular he outlines the difference between devaluing the national currency and reducing wages, and the effect these have on the debt burden and the prospects for economic recovery.

Michael Hudson on Class Consciousness

Here is another extract from Michael Hudson‘s excellent J is for Junk Economics (p.57-8):

Class Consciousness: This term has been associated mainly with the working class, but the elites may have an even stronger feeling of solidarity as a cohesive class. Their view of their place in the economy is much like that of England’s Norman conquerors, who extracted rental and tax tribute. The medieval Arab historian Ibn Khaldun attributed the conquests by pastoral nomads such as Genghis Kahn and Turkish tribes moving into Europe to the binding force of asabiyyah (asabiya), or social cohesiveness. His Muqaddimah, an introduction to a history of the world published in 1377, explained the rise and fall of nations and empires as reflecting the degree to which marauding tribes held together as an ethnic unit, whose mutual aid and shared goals spanned economic classes. Today’s financial class is cosmopolitan rather than ethnic or nationalist, absorbing client oligarchies into its ranks.

What is needed for economic success as a class is self-consciousness of common interests. Labor has won concessions from industry, but has not deterred finance from exploiting wage earners via mortgage lending, personal debt and pension-fund capitalism. Wealth is concentrated at the top of the economic pyramid as banks and bondholders gain control of industry and move to take over governments. Their political aim is to shift taxes off finance and its major clients, and to force taxpayers to pay interest to private bondholders. It seems as if today’s working class (the 99 percent) does not realize that a class war is being waged against them – or that as Warren Buffett said of his own One Percent, “we are winning it.”

The financial strategy in this class war is to popularize “identity politics” prompting voters to think of themselves as women, ethnic or racial minorities, or sexual categories (LBGTQ) instead of economic categories such as wage earners, debtors and/or renters. True identity politics should begin with economic class consciousness, solidarity and mutual aid. There can be little promotion of group self-interest without this.”

Production and realization of surplus value – Marxists, Keynesians and others

Karl_Marx_001This quote is taken from a footnote to Marx’s Capital Volume II (p. 391 in the Penguin edition). The volume was put together after Marx’s death by his friend and collaborator Engels, drawing on extensive notes. The quote provides inspiration for the analysis of one particular contradiction in the dynamics of capitalism :

“Contradiction in the capitalist mode of production. The workers are important for the market as buyers of commodities. But as sellers of their commodity – labour-power – capitalist society has the tendency to restrict them to their minimum price. Further contradiction: the periods in which capitalist production exerts all its forces regularly show themselves to be periods of over-production; because the limit to the application of the productive powers is not simply the production of value, but also its realization. However, the sale of commodities, the realization of commodity capital, and thus of surplus-value as well, is restricted not by the consumer needs of society in general, but by the consumer needs of a society in which the great majority are always poor and must always remain poor.” (my emphasis)

It is important not to take this quote out of context. In addition, despite significant inequality and poverty, Marx was clearly wrong about the majority always remaining poor under capitalism. However, the contradiction described here between the production of surplus value and its realization upon sale, has given rise to plenty of debate among left economists. Continue reading

Trumponomics Part 3: Alternatives

TrumponomicsHere is Part 3 of my series on the book Trumponomics – Causes and Consequences. As it is an early assessment of the economics of the Trump presidency, concrete left policy alternatives do not take up much of the content, but there are some ideas to draw on.

Central to the aim of making the left ‘great again’, to quote one of the authors, is a political programme which pivots away from the dominant liberal, politically correct agenda, and which serves the interests of the masses.

This would be a social democratic platform, offering a radical alternative to the neoliberal ideology which has captured both major parties in the US. Bernie Sanders, despite failing to win the Democratic nomination, gave many a taste of what could be achieved.

Sanders styled himself a ‘socialist’, but by the standards of Europe, his policy proposals were far more social democratic. He certainly was not calling for the revolutionary overthrow of capitalism, but merely a larger role for government in the economy. Continue reading