Bill Mitchell and Chris Williamson Podcast

The GIMMS organised Labour Fringe Meeting with Bill Mitchell on the Green New Deal successfully happened and there will be a forthcoming video on this from GIMMS shortly.

A second meeting, organised by Greg Hadfield at the Rialto Brighton (no surprises there on either count with respect to Chris Williamson alone), involved both Chris Williamson and Bill Mitchell. I was not able to attend either meeting but, thanks to the MMT Podcast team,  there is an audio podcast of the latter.

This is primarily Williamson introducing and mc’ing a talk by Bill on MMT and Labour and. also, MMT in general. It is a good talk with some decent and serious questions with interesting answers in the Q&A. I do recommend it, whether you are a Labour supporter or not. There is much to gain there, especially if you are not familiar with MMT.

Still I think a major opportunity was missed by GIMMS and Bill, on both the topic and fellow participants. Given Bill”s last two books (not the text book) and the situation in the Uk over Brexit I thought a three way talk/debate between a hard Lexiter such as Bill, a soft Lexiter such as Stephen Kinnock and a Remainer such as Kier Starmer could have drawn much interest from across Labour and possibly achieved national media coverage.

Once I had heard there was going to be a GIMMS Labour Fringe meeting, I thought of then suggested this to a couple of Labour activist friends who are well connected in Labour and with whom I have discussed MMT before and had recommended they read Bill’s blog. They thought this was an excellent idea and very doable but there were a number of caveats.

Whether we could have got the MPs I suggested, still possible they said but given the official evolving stance of the Labour Party was moot but, certainly, we could have got speakers significant to Labour, MPs or not, to represent those other positions.

Yes, this would have been more than just an MMT meeting but Bill (or someone else) could have started with an introduction to MMT, noting that, even within the MMT lens, one could be for any of those three positions (as is the case across the different members of GIMMS and the advisory board).

When GIMMS was  planning this meeting, surely something like this was thought of as a possibility? Maybe this was preferred but not feasible in the end – unlikely given the feedback I received? Surely someone in the advisory board would have suggested something like this, if not by GIMMS executives? Were the board consulted? I suspect that nothing like this were ever considered and the board were not consulted.  which would be a failing of the GIMMS team.

From my chats with these activists we all thought this could have far more potential than just a GND/MMT meeting with one MP. Which brings us to the other caveats.

Of course they said : “it’s a bit late to suggest this now”,  “you need a venue”, “who is going to organise/promote/fund it” , “too late to get on the official fringe program”. When they found out that there was a venue, organiser, topic and speakers already, we still all thought my suggestion was better. The killer, go on guess,  was when I said it was currently with Chris Williamson. They both said this might make it harder for GIMMS, and  Bill, for any future such meetings especially with other MPs such as I suggested. Neither I nor they knew the personal stance of these specific MPs on each other (one signed the letter to re-suspend him, one did not) but they noted it as a general concern.

Now I am sure that GIMMS executives are far better connected with Labour than I am and they will disagree with this, but this is what two people I know, both very long time Labour activists, that I happened come across recently said. In old internet parlance YYMV, your mileage might vary.

Following on this note, I have to add a few comments given the background of my issues over Chris Williamson  with regard to the promotion of MMT.

On the one hand, this talk alleviates 99% of my concerns in  my previous post. There was nothing contentious or controversial that would have caused me problems to have attended. I was going attend anyway and the training meeting the next day but was unable to attend either in the end. Certainly, even though, as should be clear, I dislike Chris Williamson, and continue to hold the position that our  only official MMT organisation should not be promoting him, should there any further such meetings, I would have no qualms about attending. I will continue to criticise GIMMS if it were them doing the promotion, in the future. In this case, and only through force majeur, the second meeting was not organised by GIMMS.

On the other hand, this podcast was weirdly edited. Williamson’s introduction to Bill sounds like it starts mid flow and that likely other prior statements had been omitted, or it could have just been an engineering/sound issue? At around 14 minutes, Bill comments on social media controversies over him talking with Williamson. Apart from me defending Bill against an insinuation of antisemitism by a well know UK economist, there was apparently much I missed out on. I could not find the particular phrase Bill stated was associated with him (or MMT?) “the dark side of fascism” in online searches.

On a side note, I did find something intriguing although not do with Bill directly, but I imagine it is of the same ilk – Statement Against Stephanie Kelton’s Meeting With the Far Right in Japan –  since I know Bill has met up with Japanese politicians too. This goes to the point that I have made  calling MMT a ‘framework’ and, what Bill calls a “lens”, it is independent  of ideology and values. Bill makes this clear in the talk and I fully agree and have stated the equivalent myself. We want all parties to use the MMT framework, this will manifest different policy implementations given differing value sets. For just illustration one could imagine both Labour and the Conservatives agreeing that the Job Guarantee is a better macroeconomic stabilization tool than the alternative of unemployment, but Labour might do this with a Basic Income too and the Tories without. (Bill uses another example).

Still Bill does make some unfortunate and ill judged comments, in the talk and online. He unnecessarily defends Williamson over his antisemitism issues in Labour in the talk. He does the same online and, it seems,  he continues to encourage a silly and non-existent division in the MMT community when he says, in conspiratorial tones:

As a result of Chris’s suspension from the Labour Party for spurious claims he made anti-Semitic comments, some characters (unknown – not enough courage to reveal themselves) threatened the venue where our event was to take place.     

Well every MMTer I have (UPDATE: I meant privately, most, cowardly in my view, go public on this)  corresponded to on Bill’s position with respect to Chris Williamson, given my previous posts and tweets, is of the view, explicitly or implicitly,  that Bill is simply blinded to the failings of Williamson, because Williamson is the only UK MP who promotes MMT, thats it.  Whilst I can’t speak for anyone else, from my correspondences, I doubt that any MMTer would have tried to sabotage that event.  Far more likely, in my view, it would have been either a campaigner against Labour Antisemitism or a local resident, as this was public knowledge given the Independent article: Labour facing fresh Chris Williamson row as suspended MP set to speak at ‘multiple’ events at party conference, 

Making such insinuations is pathetic and unbecoming of an economist of your stature  Bill. Grow up.






Response to Bill Mitchell

This blog post is a reply to what became and should have remained a Twitter spat, between myself and Bill Mitchell, over Chris Williamson and MMT. I would have liked to have replied just on Twitter and to keep it short and simple except that Bill has taken it to another level, responding on his blog in a highly questionable manner, so I am forced to reply this way too.

I do not know who will read this, even though this will probably be no one, since I do not promote this blog and it is pretty much inactive anyway (no posts for over a year), but on that basis I need to add some detail for those who do not know the parties involved.

Anyway, given this, I will first provide sufficient notes on our shared economic views, followed by my concerns on Labour in the UK. Then I will summarise the discussion between myself and another twitter MMT advocate which will also cover my concerns over Chris Williamson. I will then expand it to the discussion between myself and Bill which led to some questions for Bill to answer which he sort of answered in a post and to which this is the response. Still I will try and be as concise as possible hopefully without losing any nuance.

Modern Monetary Theory

Bill Mitchell is one of the founders of a macroeconomic framework called Modern Monetary Theory or MMT. This post is not about this theory per se. If one peruses previous posts here, in this dormant blog, you will see I support this approach.  My concern here is about PR and marketing of MMT in the UK, at this point in time in 2019.

For those of you who are unfamiliar with MMT, all you need to know for this discussion is that we argue it is a descriptive framework,  one that is available to anyone, whatever political values or location that they take in a political spectrum or compass: Left, centre or right; Authoritarian or libertarian; racist, including anti-semitism and also anti racist. Even if they are not consciously aware of this framework. That is, it is above and beyond any political value set anyone might have. Critics might disagree but that is beyond the scope of nor relevant to this discussion.

This is the same as a position over the theory of gravity. It does not matter what one’s political values are the theory of gravity still applies. There is an obvious difference to that analogy since, if one groks MMT, then one’s political values are likely to be altered or modified e.g. one could no longer use “neoliberalism” to support one’s position, however one could keep that position but need different arguments. (I put neoliberalism in scare quotes but again as to what that is not relevant to the substance of this discussion, I use it here and elsewhere for illustrative purposes only). Still the fundamental point remains, disputed by critics or not, that any political values can be congruent with MMT.

This means that differing MMT academics and advocates can operate within this framework with differing political values. So I fully expect to disagree with others within this framework.

A case in point is the UK remaining or leaving the EU. One cannot tell merely from knowing that one uses this framework, as to what their position is over the EU. In Bill’s case he is, what I call, a Hard Lexiter. Some founders of the first formal MMT advocacy group in the UK (I was in the meeting where the seeds for this were sown but was not involved in it’s creation) the Gower Initiative for Money Studies (GIMMS) voted Remain. I, if anyone is interested, support a soft Lexit position: Efta/EEA. Reasons why and for these differences are, again, not relevant and outside the scope of this post but the point is all these positions can be made within an MMT framework combined with everyone’s differing political values.

Labour and Antisemitism

That all being said both myself, Bill, GIMMS and others that might be mentioned here are of the left persuasion. I like to say I am  left but not of The Left. I am critical of Labour for the same reasons that Bill is, they are still under the influence of “neoliberalism”, not just what I call the social neoliberals – called by the democratic socialist wing of Labour e.g. Corbyn et al. “Blairites” – but also the democratic socialists themselves, with, for example, their Fiscal Rule.

Where we differ is that I am also concerned over Labour Antisemitism, on which Bill and GIMMS has pretty much remained silent. That is fine, he and they are making economic critiques of all parties, there is no need, expectation or obligation to get involved in that, certainly nothing within MMT should be affected by remaining silent on that. That issue, I would put it, is orthogonal to economics.

I have been more than happy for him and the official MMT body in the UK to ignore this and not take sides. The bone of contention that is the primary trigger for this post is that this is no longer the case.

James Tapper,the Brighton August and the GIMMS Fringe Labour Conference Meetings

The issue started when James Tapper, a Twitter advocate for MMT, drew my attention to a meeting on MMT to be held by Chris Williamson  in Brighton on August 8th 2019. Now, as most people are aware, in the UK at least, Chris Williamson is a highly controversial Labour MP who has been stirring the mud in the Labour Party over a range of antisemitic issues and more, but specifically was suspended over comments he made over Labour being “too apologetic” over anti-semitism.

Now since Chris Williamson is promoting MMT, it is inevitable that he will gain some converts to MMT in his talks. After all advocacy is one of his goals. This also means whether due to Chris directly or not there will be MMT twitter advocates who stand with Chris Williamson. It is to be expected. I don’t like it and will happily challenge them, in the hope that they are more rational than others of his supporters unaware of MMT.

So I was concerned that he promoted Chris Williamson without qualification. For myself, I often quote, with qualification, writers that I or just others  find problematic or controversial, who still make specific good and well supported arguments, ones  that I can endorse without meaning I endorse anything else they say. Far from wanting to qualify his support for Chris Williamson’s meeting, he made the absurd claim denying that Chris is not even controversial and that there was nothing to qualify!

Then it turns out that Chris is not only giving a talk on MMT but he is also substantiating the moniker applied to him by the many in the Jewish community of “Jew Baiter”, by auctioning the infamous antisemitic Steve Bell cartoon that the Guardian refused to publish!

It is a bone of contention as to whether Chris is currently the most notorious provocative (suspended) Labour MP when it comes to the issue of institutional antisemitism in Labour  but no one could deny that he is controversial. Anyway far from being contrite over his suspension, here was Chris belligerently clearly stepping over the line and linking what should have been a much valuable discussion and advocacy of MMT with his notorious Jew baiting behaviour. It was his choice to mix these two entirely distinct and orthogonal issues. This should have drawn pause by anyone seeking to promote an understanding of MMT in the public arena, even if this was not an officially supported meeting. There is still to date has been no condemnation even any comments about from any significant MMTers involved.

After all our banter James then posted a promotion of a a GIMMS organised Fringe (i.e. unofficial) Labour Conference event which was hosting Bill Mitchell and Chris Williamson! It was here that Bill got involved but I first want to complete my twitter discussion with James Tapper.

After all our discussion James continued to promote the original August 8th meeting without qualification – when James undeniably knew that Chris was specifically and deliberately merging advocacy of MMT and Jew baiting in one meeting.

When he promoted the GIMMS meeting., I was concerned over his denial that Chris Williamson was controversial and that I did not want that controversy to affect the GIMMS meeting,

He then linked to an Independent article that made my case. I responded specifically to him with an acerbic, sarcastic and ironic piece of rhetoric. That is what triggered Bill’s response, which was not addressed to him and hence this blog post.  If instead I had said “QED” or equivalent none of this mess would have occured. But it is twitter and was a individual spat between two no names.

Here is the conclusion of our banter

Questions for Bill and GIMMS

Prior to my last sarcastic tweet, Bill had become involved in our discussion and provided two tweets, which led to these questions from me. His tweets are included in this tweet thread

Bill’s Blog post response

So what was his answer? It was in a blog post not a tweet. The full post is here but here is the relevant section:

Thugs try to derail MMT presentation

We learned overnight that an event in Brighton tonight, where British Labour MP Chris Williamson will talk about Modern Monetary Theory (MMT) has been compromised by mindless thugs who have threatened violence to staff at the proposed venue should the event go ahead.

The full story is here in the Morning Star (August 6, 2019) – Williamson refuses to bow to thuggery after venue threatened by two men.

One of the tactics fascists deploy is to bully people with threats of violence in order to curb ideas they cannot counter.

The last week on Twitter has seen a continuation of the barrage of anti-Semitic accusations being made.

They seem to keep coming. I wrote about them recently in this blog post – When the Left disgraces itself(July 30, 2019).

But the dirt continues to be aired.

One creep went so far as to Tweet this week:

So apparently MMT is “For the many, not the Jew”.

I have been roped into the fuss because I am appearing at an upcoming – GIMMS Fringe Event – at the British Labour Party Conference in Brighton on September 23, 2019.

I will be sharing the stage with Chris Williamson to discuss MMT and the Green New Deal.

Chris is a friend and a dedicated Labour MP who has been courageous in embracing MMT and seeking to advance those ideas within the policy space.

Apparently, for all these diehard defenders of freedom, my association to Chris proves I hold anti-Semitic views, and, in turn, proves that Modern Monetary Theory (MMT) comes out of the same dark origins.

It is an absurd proposition and reflects the desperation that people within the Labour Party or sympathetic to it are willing to go to undermine the leadership and purge progressive economic thinking.

The Tweet was grossly disrespectful of my academic work and the work of my MMT academic colleagues.

It was plain wrong because in the body of literature that defines our work you will never find anything that one could remotely infer as being consistent with that statement.

After all, MMT is not a regime (“for the many” or otherwise).

But to try to slur our work with the anti-Semitic tag is disgusting and the person should be ashamed of himself.

As is clear – the hate talk of US Republicans against minorities has spawned gun massacres – the ‘manifesto’ of the El Paso murderer contains sentences that you can trace to various Tweets from Trump and his gang.

Relentless misuse of anti-Semitic accusations to make political points not only degrades the Jewish people but also spawns more extreme behaviour.

We cannot rule out the proposition that these thugs in the UK have been emboldened by this Twitter and social media onslaught against Chris and MMT (dragging me into the fray).

Let me state this clearly – the event that I am involved in on September 23 will go ahead, even if we have to stand on Brighton beach or in a park with a loud hailer.


Before I respond to what was addressed to me, here is a comment I made on Labour Reddit:

There had been some speculation there and elsewhere that Chris or Greg Hadfield – the organiser of this event and also twice suspended from Labour over… go on guess… antisemitism issues – had been making this up. Unlike many on Twitter, I did my best to actually find out. Only 10 minutes and two phone calls is all it took.  (By the way both Chris and Greg have blocked me so I have no idea what they might be tweeting.)

UPDATE: I still have seen no evidence for the “two thugs” claim and nothing Bill provided supported that allegation. This been further exaggerated by Jackie Walker claiming there was a bomb threat, although that is quite independent from anything Bill asserted – presumably his claim was via the ever reliable unbiased Morning Star. Note  the Holiday Inn Brighton has not confirmed to any journalist that the email was real, were they telling me the truth but then instructed to remain silent after my query? I will assume that is the case. Still one cannot infer the “two thugs” claim from that.

What happened

Well I was very surprised that Bill even saw my tweet to James. I know he has an impressive and  prodigious capacity for high quality work but where would he find the time to even see this tweet? I assumed that James Tapper had been a cry baby and DM’d the tweet saying look what Martin said to me.

I was wrong. 

After my cynical comment and long after his post the tweet thread continued:

The penny dropped on my second reply.  Usually when, such as in this case, a tweet is misread in some form or other, the injured party responds, politely or not and I can redress it there and then.

Now realising that Bill received this directly he would understandably be extremely upset. In his shoes, I would be too. However it would never occur to me to amplify it to a blog (if I had an active one) without first seeking a response or redress on the original medium. Even more so if I had a far greater reach than my respondent. If he had responded, however irately, I am sure we could have quickly unravelled that that comment was not aimed at him nor the MMT community, that him seeing it all was an innocent mistake and that I would have more than happily apologised for any confusion or upset caused, including deleted this tweet. 

He did not do that. Instead he responded in a quite despicable fashion in that post quoted above.

That is a real dick move.

Given the way he did respond, I will not delete the text but it should be quite clear it is not aimed at him nor the MMT community. 

He owes me an apology for his appalling behaviour, in particular insinuating that this tweet  was somehow contributed or helped trigger the obnoxious behaviour that led to the event being cancelled. Apart from anything else,  look how many people have even read that tweet:


He adds a most disgusting and near libellous rant when he knows I have defended him from accusations of anti-semitism from well know economists on Twitter. I have also said that I have never seen any antisemitism from any MMT academic (I have done enough screenshots for one post but you can check my timeline).

All I have said is that it is not a good look for MMT officially to be associated with  someone as controversial as Chris Williams.  The fact that he might be only Labour MP who groks MMT and defend it is sad. Bill has spent many years of effort trying to gain traction but I hope that this has just blinded him to Chris’ other failings.

Whatever has happened between myself and Bill,  I am and will be an advocate for the best realistic macroeconomic theory and to date I hold that is Modern Monetary Theory. I will continue to refer to the 20 odd years’ body of work including papers, posts and tweets by Bill.

I do not need to repeat the questions already stated above. Has he or GIMMS answered them? I think not but I will let you be the judge.

UPDATE: Given the disaster of the August 8th Brighton meeting, I fear for the GIMMS Fringe Labour Party meeting.

Whilst I think both Bill and GIMMS are one the wrong side of history on this, I also sincerely hope that the issue remains solely on the Jew Baiting of Chris Williamson. I hope it does not spill over to give critics giving  ammunition and another excuse to dismiss MMT, GIMMS and/or Bill. That was and is my primary concern.

Ironically my active active interest in Labour Antisemitism, was due to investigating whether Chris Williamson was antisemitic, in some form or other, solely in virtue of him being the only MP who groks and promotes MMT. Unfortunately my investigation led me to no longer supporting Corbyn’s Labour, with an emphasis on Corbyn and his cabal,  which also makes me politically homeless at present.  I am particularly concerned over those who “Stand with Chris Williamson”, noting that supporters of MMT I regard as an exception for whom I give the benefit of doubt – that they are not racists. Clearly James Tapper fails that test.  Still I wish it will eventually be dealt with and resolved, until then I cannot support Labour. It is quite clear that a necessary but insufficient condition would be the expulsion of Chris Williamson However since I repeatedly see support for Chris Williamson across my MMT timeline, I will address that as and when it occurs.


So Bill  has deleted my reply merely pointing to this post to  resolve the confusion He has never done this before. Bill claims to support Freedom of Speech and is against No Platforming yet he he denies me the right to reply on the medium that he chose. In all my 30 years+ online debating, I have never been denied the right to reply on the medium of choice of my opponent. This is a first.

Hypocrisy or what?



Bretton Woods and the Golden Age Of Capitalism

Last night I went to a presentation for William Mitchell’s and Thomas Fazi’s new book “Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World” . I am long familiar with Bill’s work, have read draft notes of his book published at his blog, Billy Blog. Thomas Fazi is new to me but I heard enough to buy his own book The Battle for Europe: How an Elite Hijacked a Continent – and How we Can Take it Back

The presentation was by Peter Ramsey, Professor of Law at the LSE and a blogger at the group blog The Current Moment:

This is neither a review of either book nor the presentation itself, which I did thoroughly enjoy. I think Peter did a stellar job summing the issues up. He was concerned that he was not an academic economist but I view that as a positive, since if this debate were to remain amongst only academic economists and interested laymen, who have put considerable work into to economics – such as myself – then the debate is lost. We need a far broader base rather than to be dismissed as dealing in complicated and obscure economic debates.

Anyway I really want to just make two comments here, one about Billy blog and the other about a question I asked in the Q&A.

I chatted with Bill in the pub afterwards and was asking about the effort into writing his blog.

Now, if you are not familiar with it, it is prodigious with high quality output, published 6 days a week, 4 of which are very well referenced arguments promoting and applying Bill’s take on the macroeconomics framework he co-founded, called Modern monetary Theory or MMT. Indeed I have not recently seen or followed any other blog in any area with the consistent quality of output from one person as his blog.

That does not mean I agree with everything he says, but I have certainly learnt far more from it, than I have found disagreement with. My learning method is to seek flaws and find challenges to whatever argument is presented, and see how the argument deals with them. I will get back to this just stated point in my following comment below, which was what I perceived as a challenge to his one of his arguments.

What really astounded me is that Bill claims that he tries to limit the time spent on each post to an hour, with a maximum of 90 minutes! If you start reading his blog you will realise why I am astounded. Many of his posts take around 15 or 20 minutes to read and digest! (Heck, maybe I am a bit slow, feel free to claim better). Clearly he does not included the actual research and he must have a very good index system, plus, I guess he knows how to touch type.

This, at least currently, is serving as an inspiration to me. I probably spend far more than 90 minutes a day on this field, including reading Bill’s blog, as well as many others, doing some other research, reading books and writing/building models (not ready to publish just yet), all slotted in amongst my many other commitments. I actually need to save some time on this and focus on other more pressing needs, as passionate as I am on this topic of evidence based macroeconomics. So I have resolved to when I have a clear idea write it up as soon as possible, limited to 90 minutes maximum and publish it, worts and all. I will note (for my own edification how long it took to write – 26 minutes so far, so the target is another 30 minutes, then the rest is references, proof reading etc.).

As a long-term programmer, I am a fast typist, but could far better, both for writing and programming, if I were a copy typist. In my typical maverick way, when I last learnt to type, I chose Dvorak rather than Qwerty. Have to think about that but need to properly learn one or the other soon. I will devote 30 minutes a day to that. I will report back as to whether that helps me writes these posts, if nothing else.

As for frequency of posts, I make no promises on that. I need to build up more content get some ideas in my head on paper to really see where they fit. I am thinking of getting together some like-minded economic thinkers into a group blog. But that is for the future.

Now onto the second comment.

An issue that has bothered me in the writings of MMT theorists is the relation of the “Golden Age of Capitalism” – the Post War to  the beginning of the 1970s period which operated under the Bretton Woods fixed exchange rate regime. Compare that to the post Bretton Woods floating exchange rate regime (from the 1970s till now) period, where MMT argues that states with sovereign non-convertible floating currencies have the largest available policy space. That has been the case in the post Bretton Woods era, (not immediately in some cases, and not at all, more or less with others, due to various attempts at currency boards, and in the Eurozone, the evolution to the Euro). So why was the Golden Age of Capitalism, with full employment, decent GDP growth, growth shared between wages and profits, the era that operated under a fixed exchange rate regime?

Now I was totally confident that Bill would come up with a decent reply, my point really being it should be more clearly stated and answered by Bill and others when writing books on the topics of Europe and states. I think sometimes these authors suffers from not seeing the wood for the trees and those new to these topics need to be shown the trees first.

I also added two elements. The first was that this growth was after the devastation and destruction of people and land. This, surely, made it easier to create full employment, given the tragic loss of other working age able-bodied people in the war, and, given, the need for huge infrastructure repairs, across Europe, for both the victors and losers, for significant growth. Given this, could we hope to go back to such days, since we far from having a deficit of workers and skills have the opposite (mostly) and we have a far better level of infrastructure (yes London roads are still terrible compared to most of Europe) than starting after the war.

Bill answered the first part of this question and Thomas answered the second.

Now I probably made my question clearer here than when I asked from the floor at the presentation, as both Bill and Thomas seemed to not fully address my question until I probed further. Was this due to my inadequacy in how I asked, or was this due to their frames missing the point, possibly thinking I was an anti-MMTer looking to find flaws in their views? I don’t know. I do often find people making interesting points but not answering my question even online and the question is there in black and white. I wont dwell on their initial responses, which whilst somewhat missing the point, I quite agree with anyway.

I will flesh out Bill’s reply with one addition of my own (clearly implied in Bill’s answer), that do not alter the substance of his reply. This addition is the Mundell-Flemming Trilemma which states “The policy trilemma, also known as the impossible or inconsistent trinity, says a country must choose between free capital mobility, exchange-rate management and monetary autonomy (the three corners of the triangle in the diagram). Only two of the three are possible. A country that wants to fix the value of its currency and have an interest-rate policy that is free from outside influence (side C of the triangle) cannot allow capital to flow freely across its borders. If the exchange rate is fixed but the country is open to cross-border capital flows, it cannot have an independent monetary policy (side A). And if a country chooses free capital mobility and wants monetary autonomy, it has to allow its currency to float (side B).” I chose this Economist quote, quite deliberately as it partly misrepresents the argument, which is not just about domestic monetary policy (interest rate management) but also domestic fiscal policy. That will be a topic for a future post.

Whilst states under a fixed exchange rate system need to earn the convertible base (in the case US dollars or the gold equivalent under Bretton Woods), they also had capital controls which prevented, mostly, capital flight and domestic currency destabilization and speculation. This did not prevent, in some cases, internal devaluation (austerity) or, failing that, currency revaluation (devaluation) but the rest of the time the social democratic policy of a mixed economy focused on full employment, with significant unemployment support (which was actually short-term in those days due to the full employment policies enable when possible), coupled with worker protection, and other welfare states provisions.

Now in the post Bretton Woods era there have been significant changes. Capital controls have been dismantled and the Monetarist/Supply-side Trickle-Down/Neoliberal ideology (there is no real empirical evidence for any of it), has also dismantled key worker and social protections and seek to demolish state regulation of the market and, with it, the whole mixed economy model that supported full employment.

We now live in a world of free capital and floating currencies and it looks like domestic monetary and fiscal policy suffers, with the increase of the capital share of growth and the decrease of worker share of growth. That is prior to the many new issues ensuing after the Great Recession of 2007/8.

Still it is not entirely clear to me how much of that Golden Age was specifically due to starting from both a lower infrastructure point and a surfeit of skills and workers, rather than this difference in the Policy Trilemma coupled with the Neoliberal versus “Keynesian” version of state governance. (I put Keynesian in scare quotes but this is also a topic for a future post).

So, with all this in mind, is it still feasible to get to the level and shares of worker in GDP and full employment?

Thomas answers yes but things will be different. The needs of today’s societies have changed to that period and require new and alternative skills and applications. The Job Guarantee and other state guided policies (such as Peoples QE – but drop the misleading label – Bill argues) can provide a range of jobs fit for social purpose that are invisible to the profit motivated private sector.

I want what Thomas (and Bill) says to be correct. One of the key thrusts of this blog is to investigate the Job Guarantee and other fiscal policy tools further.

Steve Keen’s ” Can we avoid another finacial crisis?”: A review (Updated)

[UPDATE: This is a heavily revised and improved review]

Steve Keen is one of the few economists to have warned about the impending Global Financial Crash (GFC) of 2008.  Here he  shows the core reasoning that helped him make that call. Using the same approach, what can he say about the present in 2017 going forward?  Whether one ultimately agrees with his arguments or not, surely he has better earned a position at the high table than many others who failed to call the GFC, who  undeservedly remain at that table without merit? Would we not all benefit by having him and his arguments as part of the core debate of economic policy? This book is a bold, accessible and provocative attempt to remedy that sorry situation.

The Professor and Head of the School of Economics, History and Politics at Kingston University in London,  “Can we avoid another financial crisis” is his second book after “Debunking Economics” (He also has a collection of his papers in
“Developing an economics for the post-crisis world”). It is far more accessible than his first book and clearly his intended audience is different and broader. Indeed, even MPs and political journalists should be able to understand this except, maybe, it is still beyond George Osborne … since this is not a Ladybird book.

His concern is over the growth and change in growth of private debt as a threat to economic growth and financial stability. His main argument is that when the debt grows too large, its maintenance becomes unsustainable, and the process of us repairing our balance sheets leads to a reduction in the demand for credit, which, in turn, reduces total demand the economy and, especially if the debt is large enough, this can stall the economy and lead to a recession. This makes it even harder to repair our balance sheets and a vicious cycle can ensue.

He argues that a demonstrably erroneous and almost anti-empirical design and application  of mainstream neoclassical macroeconomics has rendered this perspective invisible, until recently mostly denying any importance or significance of private debt, as they must, given that their core models, as Steve says, excludes “banks, debt and money”! This  is why they all missed calling the GFC. This, in turn, misinformed and misinforms its ideological neoliberal sibling, so policies since the GFC have not enabled us to sufficiently repair our balance sheets and slow or negative credit growth has turned some economies into “zombies”.

Now  whether one agrees with him or not, can one reasonably deny that this should be part of the Overton window (the window of discourse)?  and, if nothing else, this book is a highly forceful and concisely readable argument to make this a central focus of future economic and populist debate.

Given modern attention spans this is a short book and certainly readable in a few hours but possibly quite dense in new ideas if one if unfamiliar with his work. This is probably easier to get with the background of  a decent scientific understanding but far less so if one is already immersed in (or corrupted by?) mainstream dogma or, even worse, educated in a  PPE course at university as far too many of our politicians and commentators have been.

There are many things he does not address (but maybe I read it too quickly) such as criticising the erroneous application of the household analogy to governments nor does he specifically mention the Loanable Funds doctrine although he does discuss this foundational mistake of mainstream economics at length and very clearly. Overall he amply argues for and demonstrates his theme that one of the main concerns of policy makers should the growth and change in growth of private debt – worryingly still not a concern of the UK Treasury and OBR. He shows, in very elegant fashion, without a single equation in sight (some are verbally stated to describe the most simple of his pure credit models) why this is likely the case. He also makes some very concise and clear arguments as to why the mainstream neoclassicals and New Keynesians – the backbone of neoliberal political ideology – repeatedly miss the point. I, in particular, liked his simple and profound verbalisation of the Sonnenschein–Mantel–Debreu theorem  which really demolishes the micro-foundation argument for macro economic DSGE models. However  he does not mention issues such as the Arrow Debreu model which was one response to this, although he does note Gorman‘s arguments. The point is this work will suffice to get you to understand the main issues involved, but would not be sufficient to argue with someone suitably informed but there are other sources, including his first book to take you further, if you are so inclined.

He is relatively pessimistic over the final outcomes that are possible or, certainly, politically feasible and, sadly, I have to agree. I wonder if he does not dwell enough on policy space and bank reform. He does discuss his debt forgiveness jubilee approach and how to circumvent the moral hazard issue of only rewarding debtors. Still he does not mention say, MMT’s Job Guarantee whilst possibly too fleetingly discusses MMT’s Godley inspired sectoral balances approach to clarify what Government or Public debt really is.  Futher, as two off the cuff examples, both Bill Mitchell‘s argument that banks should not on sell their originated loans and Richard Werner‘s argument over how to direct banking to more productive financing (he does discuss that though) could have augmented his arguments without much addition, focus or loss of clarity.

All in all this feels like a well-edited if not, possibly, an over edited book. By this I mean some other points including some as just noted could have been also simply argued but this might have detracted from the overall force of the book.

Still what results is a very important and accessible work. We need to insure that every MP, journalist and pundit is familiar with this.  I hope if you read this and you happen to know such a person you send them a copy in return for them giving you their informed opinion on it. If they are unable to do so then they really have no business being involved in politics.  What would result is that no-one could claim ignorance of the issue of private debt and that it becomes a key focus of the economic debate going to forward.


“The Eurozone, Groupthink and denial on a grand scale”

An excellent talk by Bill Mitchell, Professor of Economics at the University of Newcastle, New South Wales, Australia and a Post Keynsian specifically one of the founders and proponents of Modern Monetary Theory school. He gave the talk as the 3rd Joan Muysken Lecture  at the Maastricht University School of Business and Economics.

(Watch on Youtube)