Battle Royalés Round II
MMT Insiders in the Ring Only
In today’s privatized MMT message to the public:
Yesterday I wrote a piece on two interrelated MMT topics,
the concepts of “sovereignty”,
the idea exports could be a real benefit.
Both are anti-MMT framing, and my article explains why, at least from my MMT lens perspective. The guts of (2) is that some exports can be a strategic benefit. They are sill our real loss and at the expense of our workers otherwise doing possibly nicer things.
Today I wanted to record a follow-up note that is less for public consumption, so it will not go on the open substack. This note amplifies but abbreviates yesterday’s substack piece.
A Trade Tête-à-tête
Background: I’ve been writing in parallel with Jim Byrne over in Scotland with his MMT-101 project. He’s a good guy. His output is better for n00bies than mine. However, Jim was backing Fadhel Kaboub’s “sovereignty” framing, and I gave a little push back. Then Jim responded, telling me to “read this”…
Ref: Jim’s article.
I do not want to trouble anyone much, but I drafted a fairly stern reply to Jim, and wondered if it would be wise to post openly. I decided maybe not. It is more of an MMT insider issue I feel. Not a desire for some sort of weird “MMT Purity”, but more for consistent language framing and concept clarity. I always like concept clarity — again, not for any hermetic purity reasons, but for intellectual ease. It troubles my head if I have to think too deeply about what may be otherwise simple concepts (this happens an awful lot in theoretical physics).
So I wrote to Jim telling him I disagree (respectfully) with Fadhel, and always have. Money has nothing overtly to do with food and energy and so forth, but does have something to do with state power & authority. Fadhel is redefining terms, and I do not like his redefinition, they are clouding some issues in my view.1
The MMT Frame (as I see it)
The currency is a way to get a society going with proper records of account and a robust public sector, if a government has this then they are monetary sovereign. It blurs boundaries and useful categorizations to otherwise frame things the way Fadhel does. And I do not even know what “technological sovereignty” means, it sounds like a made-up notion — what community has ever in all history had technology “without reliance on foreign knowledge”? None as far as I can tell, except in the unrecorded stone-age. Isaac Newton: we stand on the shoulders of giants.
Having stated that, it is indeed a huge problem if a nation is not energy and food self-sufficient it is a huge problem if a nation is not food and energy secure. 2
But they’re not going to do any better than use MMT policy space wisely. Every well-formed country has legislative and monetary sovereignty, period. It is a good base to start from.
Saying, “… full monetary sovereignty unless it has sovereignty over four key areas…” is a definition is all. I think it is dopey. What I can agree with is simply remove one word:
“… full sovereignty includes these four conditions…”
You do not need to drag “money” in on top, it is already the first of the four conditions, so stating it as “… money sovereignty is…” — is redundant, which reveals the silliness of the language framing the way Fadhel insists. The thing is, it serves no useful framing, he does not have to insist a nation lacks money sovereignty. Besides, by Mosler’s definitions Fadhel’s is simply false. Who’s definition do you prefer then? I prefer the one that removes the redundancy. Call it my theoretical physics bias (it matters a lot in physics, like a difference between stability and violent blow-up to infinity),
Of course Fadhel is free to go with his definition, but it would be dishonest to call it “MMT”. I’d thus advise against, since it is somewhat de-powering. Food and energy insufficiency can always be overcome with good imports and assistance from wealthier nations. I think this is Fadhel’s point, but he should lead with it! MMT in isolation is not enough for an isolated unsustainable nation. But it is the best a nation can do domestically up to policy choices. With full MMT policy space available the nation is as “sovereign” as it can possibly be absent international relations.
I like Fadhel, he does great work on developmental economics, but I think he is co-opting “MMT” here in an unhelpful way. Even MMT101 has stated “MMT is just a lens”. I think we should stick to that, it is useful categorization and compartmentalization, while allowing for more holistic macroeconomic understandings. This is just my personal opinion, filtered through my highly autistic brain. Hopefully Mosler & Mitchell can convince you if I cannot.
The Full Metal Wrap
May when all is said and done for today, I just think the talk about “sovereignties” is a might too cute for my taste. If the final conclusions are the same then I guess I should not care too much how much of a convoluted garden path people like Fadhel take to get there, maybe you just need to write academic papers that are longer than a few sentences to justify your salary? Here is my academic paper, for which I had a Warren Mosler seal of approval — in fact I almost stole these words off Warren, but he freely offered them up:
Consider this ‘pyramid’:
In today’s so-called civilized world, none of us, for all practical purposes, is self-sufficient. We ‘import’ food, clothing, shelter, energy, etc. from others.
No village, town, or city is self-sufficient.
No state is self-sufficient.
No nation is self-sufficient.
And we are all better off for it. Well-being is enhanced by expanding all this.
The only thing gained by going backwards towards full self-sufficiency is security. That only needs to be done in a few limited resource areas. With an imagined (but not unrealistic) proper United Nations structure this security need can be incredibly minimal, which saves effort among all nations and reduces the burden on necessary labour which is always dumped upon the working class. We need to really eliminate that economic class divide. All can be workers (during able years of life), and we are all better off for it. When you’re dealing with friends, you minimize the security risks. So I support making the world safer by relying upon trade. In other words, it can be strategically beneficial to become dependent upon output from another nation, by relinquishing some limited “sovereignty”. We will create a better world this way.3
What else, really, is preventing Israel and the USA from nuking Iran entirely?
I am “punching up” here massively, note. Fadhel is one of the credentialed elites, and I am a nobody. I feel I need to mention this because there’s a lot of confusion these days about academic respectability. My position is that you have to respect good peer reviewed research. The contemporary issue is what happens when the peer review is bad? Who is peer reviewing the peer reviewers? This is the question!
The question is not as some cranks like Sabine Hossenfelder and Eric Weinstein constantly whinge and moan about that academia is rotten. The best research is still coming out of academia and well equipped laboratories. Are they sincerely and spiritually motivated though, or just motivated by the imposed need to seek grant funds outside of stable salary and block grants? To the extent academics are motivated only by making monetary profit I think their research should be distrusted at the outset. But this does not implicate all that much of academic research. Anyhow, this is just to say you need have no reason to trust what I write, you should think things through for yourself and be part of the communal peer review. This can on occasion be superior to academic peer review, but is not intrinsically superior, nor is academic review intrinsically superior. It is just mostly good, and sometimes bad.
I left my initial sentence is strike-through there, to note sometimes I write dumb things. I very friendly reader caught this error. He wrote me, “I don't agree with that statement. What is important is energy and food security, not self-sufficiency. Security only = self-sufficiency if you basically see the whole world as your enemy and you can't trust or rely on anyone. That is not a good world to live in, even for self-sufficient countries.” Right on brother.
If tankies and ultranationalists disagree then I'm going to go with well, that only helps prove my case.