King Tong Say Our People goto Factory
The Battle of the Quasi Monarchs
There is a basic inconsistency in fake-MMT discourse, which usefully reveals a few important things.
I dare say many genuine MMT’ers have not perhaps thought about this brew of nonsense. But these two low tensile strains of thought are related:
The idea of “sovereignty”.
The idea that exports are a real benefit, imports a real cost.
Both are anti-MMT framings. Hence both stupid.1
If you desire “sovereignty” then that is an ultra-nationalistic mindset, so while neither MMT nor not MMT, it is anti-Dirtbag MMT for sure, since the dirtbag folks tend to lean towards democratic socialism (from what I can tell from a limited sample size). MMT pure and simple is neither sovereignty nor not sovereignty, it is what it is, it is an understanding of the implications of control by legislative fiat of a tax credit (or chartalist) system. If a nation happens to run such a system then you can refer to this as “currency sovereignty” and by all measures I can make sense of it is just that, since the power to tax and legislate is a pretty gross authority. It makes no sense to say it is “partial sovereignty”. Such control is great power, and comes with Spiderman superhero ethics, at a minimum, though thank goodness without the nonphysical superpowers and Multiverse hopping catastrophes.
When I write: “It makes no sense to say it is partial sovereignty” I think some comrades might accuse me of going against friend of MMT Fadhel Kaboub’s framing, so I have a hard task here to defend my preferred framing, since Fadhel is credentialed elite and I’m a nobody.
The correct framing is that a nation’s exports are a strategic benefit, since the whole purpose is to be on friendly trade terms so you can get nice imports and/or export to assist a fellow nation who may lack vital goods. Now think, is “strategy” a “real benefit”, yes, but that is not the semantics in the macroeconomic meaning of “real benefit”. In macroeconomics we are always at a high but coarse level of analysis, so “real benefit” just means “real goods”. There is no need to muddy this term any further with unnecessary nuances. Hence the MMT frame becomes practically a tautology:
Exports are a nation’s real cost, imports are a nation’s real benefit.
If you twist the intended meaning of “real benefit” to suit your own agenda, then please admit so, and do not gaslight MMT.
As I just wrote, it can be a strategic benefit to export certain things, but the generic case is that every typical export looses real goods at the expense of the labour of our workers, which may have otherwise been employed for better domestic purposes. (Delivering free public healthcare as opposed to manufacturing sports cars or computer chips for foreign buyers.)
If you are one of the slow brains who still think “money” is “real stuff one can consume or make medallions out of,” then I can understand you are now thoroughly confused. That’s ok, I am slow in many ways too. I am not asking you to accept everything I write as gospel, at least not immediately.🤣 And I expect you to correct me where you think I am wrong.
Right, so do not export your top talent unless to assist poorer nations, and do not import toxic waste and politicians. It really should go without caveat or qualification that strategic trade is always assumed as a given. Otherwise the semantics can be made no sense of, either way.
Links Between Trade and Sovereignty-like concepts
Fadhel divides “sovereignty” into at least four spheres: (1) monetary, (2) food, (3) energy, (4) technology.2 See Jim’s write-up here. Maybe I am dumb, but I cannot make much sense of some of this, some of it strikes me as fabulous story-telling about self-sufficiency, which I believe is a mirage. Since almost the dawn of time, no community has ever been fully isolated and sovereign in Kaboub’s sense. We have always lived in interconnected communities that share all of these things (food, energy, knowledge, and yes, maybe even currency3). All of them!
You are living in pretty dire circumstances when you have full sovereignty. I would not wish it upon anyone.
I am being deliberately provocative here to make a point. I do not even want to use the term “sovereign” because it is highly regressive ultra-nationalistic language. Especially though with “Technology sovereigns”. What nation is truly technologically self-sufficient? If they were, would it be good to remain so?
The answer is clearly no. Because high-tech is a constantly moving target. We are an international species, not nationalistic, the nation-state binds people together culturally not by biological barrier, and it is a good thing in moderation, but it is like a high level concept of family. It is not everything. And as in Science, you need to recognize we “stand on the shoulders of giants,” (Isaac Newton) — but more than that, we stand on cooperation and knowledge sharing, not “knowledge sovereignty.” Learn from the mathematicians. No mathematician worth anything ever patented or copyrighted a theorem. Since software is abstractly a kind of theorem, we should not allow software patents either (www.gnu.org) imho.
I think I am making a strawman out of Fadhel Kaboub here, since he might agree with me. But my job today is to attack this strawman, in case it gets sparked into real life any time. Self-sufficiency is a good thing. But you can always do better by not strictly going “full sovereign”. Be dependent upon other nations. It is a good thing. Just do not let them run your monetary system and other social policies. My slogan would be “Be a Minimal Sovereign, if a Sovereign at all.” Then you are not stressing your workers beyond what needs doing.
The truth is, or the wiser thing to acknowledge is, you do not really want these full four ‘sovereignties,’ you only need one of them for a decent social life: the legislative hence monetary “sovereignty.” It is sufficient. Why? Because any nation that is food and energy/technology self-sufficient can always do better by importing nicer food and cleaner energy/technology. But so can a nation that is not food and energy self-sufficient. You’d be mad not to relinquish some sovereignty this way, either way, global north or global south.
What you want to do is deliberately imbalance exports and imports in real terms to achieve a strategic balance or optimum. (All totally regardless of the current account balance, which is a near meaningless ex poste accounting record of what transpired.) And not be a complete ꕗ𖧳𖧥𖨚𖢧𖧥𖦪𖦧 about it with respect to your working class and other people in other nations who are not doing as well.
The problem in our world today is that some weaker nations while having legislative fiat governments, are not food and energy/technology self-sufficient, so they have to be importing some essentials, or suffering, one or the other. This is not about craving to be “fully sovereign”. There is no such thing, except in the minds of the ultra-nationalists.
What is the solution? Become “more sovereign”? Yeah, but how? If they fundamentally lack the material means to be self-sufficient, then the only solution is to import a lot. But the whole point of progressive internationalism is that this is what we should arrange. That poorer nation should never have to be expected to become food and energy self-sufficient. If they do, then that’s great. Then they can become the net givers for a time.
If they are expected to build a self-sufficient economy then the whole world has failed them.
When you get to the guts of it all, really, who cares that some small nation is resource poor and miserable? Because what if they were the most advanced nation? But let’s suppose the more realistic relative poverty case, that they are the weakest. If they run an MMT-aware system they are able to optimize their domestic economy with full employment, no questions asked. They cannot do better in isolation, and so in this sense are fully sovereign. But who cares? Well, we all should care. They should not be so poor and miserable at all! It is a failure of the world wide community of nations to allow any one nation to suffer under lack of self-sufficiency.
It is not their lack of self-sufficiency that is the problem, it is lack of international community.
In relative terms, if they were to remain isolated and self-sufficient then over a short span of industrial time they will (in all likelihood) soon fall behind the development of all other cooperative nations4. This reveals the silliness of “sovereign” language framing. If you think “sovereign” you’ll be either a giant imperialist nuisance and blight upon the world, or a miserable impoverished republic. Neither being good in the macro.
“But the government is retarded”
I also do not like this frame, and have heard it a lot from ProfKeen. He doesn’t trust the government to do the right thing in response to current account deficit (our real win on trade). Well, this is stupid. I do not trust the government either. But imposing artifical austerity is not a solution. My response is, so what that the government is retarded? What are you going to do about it? Steve did to his credit try running for office. But the more effective action is to build community organizations that can exert real pressure on our governments. You are not constrained by elections and lobbyists this way. They are our governments, the fact they are today run by the oligarchs by de facto is another “so what?” What are you and I going to do about it?
You are not going to get anything better than getting working class interests in control of government. If you go for eliminating government then you are inviting mass suffering and an even bigger red hot poker up the ꗇꕷꕷ of the working class.
ProfKeen (among many, many other anti-MMT’ers) is deploying the same stupid libertarian tactic here as, “Democracy would be ok, but ‘the people’ are retarded.” The mantra of all libertarian authoritarians. There is so much horrific and wrong about that anti-democratic framing that I hardly know where to begin, and it is a topic for another day, but maybe we can begin with, “And you are not so retarded?”
The Full Metal Wrap
Maybe 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 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 save effort among all nations and reduces the burden on necessary labour which is always dump[ed 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.
To tie this all back to trade policy considerations, while exports are in fact by definition our real cost, it is strategic to give stuff away to poorer nations, because the whole world is more secure and safer and more prosperous when the poorest nations are aided altruistically. No big brother condescension or “return on investment” is required. We just help weaker nations because it is the right thing to do, period.
There is a spiritual return in investment, but that is not the motive. The motive to export for free to a poorer nation is done regardless of any reciprocity. That is possible because reciprocity is a deep human spiritual attribute, it will occur eventually without expectations.
And, by the way, deep MMT is just this spiritual attribute when institutionalized. Records of account (aka. money systems) are a nice way to ensure reciprocity is possible with complete and utter strangers whom you are not expected to trust blindly. The raw knowledge of MMT is however insufficient, it is the means, but not the guarantor. The guarantor of reciprocity is within the human soul, not underneath the software code or fountain pen ink running the accounting records.
Lest one forget, we are Dirtbag MMT here. 007 License to Grill.
You can think up many more, which I think illustrates the relative uselessness of the term. We desire NZ Rugby Sovereignty, I am sure. Do we export All Black’s, and import Fijians? Yes we do. To the benefit of the game.
In the ancient days when face stamped coins or tally sticks were the records of account, I am sure there was always some implicit exchange rate. Maybe your neighbours did not accept your tally stick for their rice, but they could have. Usually rumours of a tyrant King getting dethroned were the risk, not the tally stick itself.
Cooperative (mostly) and friendly-rival competitive both I would say, there is a place for both.