The idea that MMT can just change politics and economics the moment people engage with its ideas is wrong. While I very much believe in the efficacy of MMT, I do not accept some of the views about how it should be taken up by politicians. Particularly, the suggestion that leftist and progressive politicians should lead with the ideas of MMT. That they should be bold in talking about the real limits of government spending, when that government has the sovereign powers to create a currency. From the perspective of MMT, currency is introduced into the economy through government spending, it withdraws currency through taxation. This is contrary to the orthodoxy of seeing taxation as a revenue and government spending as an expenditure. MMT aficionados become hot under the collar when they hear politicians, media presenters and lay persons relating tax to spending: that all government spending must be matched up to tax revenue.
A short while back I found myself responding to a blog post from the heterodox economist Bill Mitchell. British Labour has to break out of the neo-liberal ‘cost’ framing trap. Bill was incredulous with the British left, that John McDonnell (Shadow Chancellor) and Jeremy Corbyn (Leader of the Opposition) had abandoned progressive economics. There is another out to day. British labour lost in a neo-liberal haze. Mitchell’s argument is that UK Labour are being lured into the neoliberal thinking because they are explaining their economic policy based on tax and spend. A crime against MMT.
Now I have greatest respect for Bill Mitchell, I have learnt a great deal from his books, his blog and various videos on YouTube. It is his writing that has helped me understand post-Keynesian economics and MMT. It has empowered me politically. While the economics is crystal clear, I feel Bill has a blind spot politically.
I’ve also had arguments on social media with MMT supporters about this. And it is perhaps my own research in education that makes me realise why the introduction of a new theory or a new idea—no matter how brilliant, how insightful or how effectively and accurately it reflects the real world—does not change people’s thinking and behaviour easily.
The reason for this is to do with human reasoning. There is a duality in our reasoning facility. At one level, we are rational and logical. We have the capacity to consciously reason based on the evidence, assumptions and premises in front of us. At another level we are highly intuitive, we make judgements based on the situation we see in front of us. With this kind of reasoning we draw much less on our capacity to consciously reason. We rely on our experience and judgement. We rely on our memory and previous experience.
For the most part, humans are much more reliant on intuitive reasoning than they are conscious reasoning. The reason is simple, conscious reasoning requires much more effort, the mental processes required draw on the body’s resources. Unlike a powerful computer, human beings are not able to sustain conscious logical and deliberative reasoning for sustained periods. We therefore must rely on our intuitions.
But if we were simply to rely on our intuitions, our social lives would be chaotic. It would be an interaction of individuals making fairly random intuitive judgements and responses to the situations they met. Fortunately, we have culture to overcome this. This provides us with a shared pattern of behaviour to make our actions more predictable and more understandable for each other. Call it what you will, these are life’s protocols, mores, manners, and even language. It is like much of our behaviour is pre-programmed but constantly adapting. Vary it too much and your behaviour appears abnormal or even unacceptable.
My research has been largely about the professional learning and development of mathematics teachers in secondary schools. I have observed many lessons and they mostly follow similar patterns, like a cultural script. The teacher begins by explaining or demonstrating a mathematical method or idea. The students will follow this with practice on exercises or working through textbook questions. Even the dialogue follows fairly predictable patterns. Notably, the initiation-responds-feedback routine of teacher-student dialogue predominates. The teacher asks a closed question to the class, a student responds and the teacher replies yes or no. It is predictable classroom rhetoric.
The classroom is an intense and demanding place. The teacher has little opportunity to consciously reason through their actions and decisions in carrying out their teaching. They are relying on patterns and routines, heuristics and cultural scripts in order to make complex social interactions more predictable. By the same token, students also become familiar with the cultural script and the ground rules.
And this is how I understand the frustrations of MMT economists. Why is it that we have a theory that is so good, it explains the economy so effectively and so comprehensively but everyone is not using it? And I felt the same way when I started researching the professional learning of mathematics teachers. Why is it that we know so much about learning, through a combination of anthropology, sociology, psychology and neuroscience? Why isn’t the teaching and learning that I observed in the mathematics classroom reflecting this knowledge?
My explanation, which draws on the work of philosopher and cognitive psychologist, Philip Johnson-Laird, is in the duality of human reasoning and the limitations of our capacity to consciously reason. Furthermore, it is our reliance on culturally defined patterns of behaviour and thinking.
That is not to say, humanity is incapable of change, that it is incapable of adopting new ideas, new thinking and acting in different ways. However, the assumption that new ideas will simply change behaviour, no matter how good that idea is, simply misunderstands the nature of human thought and behaviour.
In terms of economics, the orthodoxy that government spending is dependent on taxation is not simply a construct of neoliberalism—of liberal economics—from the last few decades. No, once we start to dig and search for the origins of this thinking we go back centuries. Mark Blyth, in his recent book, Austerity: The History of a Dangerous Idea, sees the source of cultural thinking about economics in the work of John Locke in the 17th century. It can be tracked through the work of Adam Smith and David Hume, for example. It is embedded within cultural thinking about political economy, it is a fundamental cultural artefact: that in order for government to spend it must raise tax.
Of course, this is reinforced by the media and by mainstream economics. It is easy for people to accept since it is analogous to every individual’s experience of their own personal finances.
So, we do not simply change people’s thinking with a radical idea. We need so much more. Education is at the heart of this, people need time to think about and muse on how the economy works. People need teachers to guide and challenge their thinking and help bring heterodox economic ideas into everyday use. It is complex, demanding and it needs time and investment.
I acknowledge therefore, that no political leader, however progressive will be in a position in the current cultural orthodoxy to change thinking. No matter how eloquent, how compelling and how richly they explain MMT, without addressing cultural dispositions towards economic ideas, thinking will not change.
However, what political leaders can do is move the argument on. They can present progressive economic ideas in terms that mean things to people. At the same time, as Jeremy Corbyn and John McDonnell have done, they can get more people talking about how the economy works and in many cases people are reaching for further understanding. This presents an opportunity for heterodox economics, such as MMT. People are looking for something different.
It is important to think about economics in political economic terms. Orthodox economics lends itself to the worst forms of exploitative capitalism, like for example, neoliberalism. There are indeed vested interests in retaining the status quo. You don’t have to listen to the BBC for very long or read any of the UK’s leading newspapers to realise how embedded politically and culturally, orthodox economics is in our society. Vested interests prefer it that way and will do everything to retain it.
It is necessary therefore, that any project to revolutionise the economic thinking of the masses is seen as a political project. That doesn’t mean that progressive forces seize power and impose new economic thinking. No, it is a more consensual project. One that must concurrently develop economic thinking and political purpose. This is about the development of economic literacy in tandem with political empowerment. These two elements are inseparable. You can’t have political empowerment without economic literacy. MMT aficionados recognise this and find it frustrating, understandably. However, they must also recognise that economic literacy only comes through political empowerment and action.
I was listening to a podcast from Novara Media on Saturday as I pottered round the house. The Long Depression: Michael Roberts on Capitalism and Crisis. The presenter James Butler questions the guest, Michael Roberts, about post-Keynesian economics. As a Marxist economist, Roberts puts forward a view not dissimilar to the one that I present here. It was interesting, as I was made to think about tensions between Marxist economics and post-Keynesian MMT. The former, as described by Roberts, is rooted in a political struggle of between capitalist and proletariat. On the other hand, MMT does not have the political dimension. It is an economic model with political consequences. As this discussion unfolded, between Butler and Roberts, I found myself in sympathy with both positions. I have a good understanding of MMT but also recognise that economics is necessarily a political project. In other ways Marxist and post-Keynesian economics are not incompatible.
And this is why I ask that progressive economists back the UK Labour Party, Jeremy Corbyn and John McDonnell. Their proposal for the economy, while not exactly in the language of MMT is not inconsistent with it either. I refute the claim that it is neoliberal. If we are generous, we can see that they are attempting a combined political and economic project. Increasing public spending, progressive taxation and potentially greater regulation of the financial sector. However, they are using the language of the economy that people are familiar with. As a political project, their aim, in my opinion, is to make government more democratic and transparent. It through this that economic literacy can be expanded.
At a personal level, this is the first time in my fifty-two years that there has been anything close to the faintest sniff of something radical or different. We must support it.