Blog-Reference and Blog-Reference
The key point for understanding economics is that there are TWO economixes: political and theoretical economics. The main differences are: (i) The objective of political economics is to successfully push an agenda, the objective of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
Theoretical economics (= science) had been hijacked from the very beginning by the agenda pushers of political economics. Note that neither Simon Wren-Lewis nor Bill Mitchell knows how the economy works but both have very strong opinions on what the Labour Party’s economic policy should look like.
There is no need to bother much with the scientific underpinnings of Simon Wren-Lewis’ or Bill Mitchell’s policy guidance because there are none. Both DSGE and MMT are scientifically worthless. Economics is not a branch of science and economists are not scientists.#1
For political purposes, though, this does not matter much because in the political sphere the number of useful idiots is decisive for success and not any genuine scientific merits.
So, how are the useful idiots positioned these days in the UK?
(i) The hardcore neoliberal position is that the state has to be kept out of the economy, so fiscal policy is a priori ruled out. What is admissible is interest rate policy of a (nominally) independent Central Bank. This policy is already in place and is continually adapted/ improved.
(ii) The soft neoliberal approach of Simon Wren-Lewis gives fiscal policy a greater role in the case of economic emergency/stress but delegates policy to a (nominally) independent body of experts that is tasked with budget-balancing (ex investment spending) over a rolling five-year horizon.
(iii) The hardcore MMT position is that monetary policy has always been ineffective and that only permanent deficit-spending/money-creation keeps the economy going at full employment. Bill Mitchell’s main point of critique of (ii) is that Labour clings to the obsolete idea of budget balancing and is not progressive enough.#2
After blowing the whole pseudo-scientific argumentative fog away what remains with regard to the positioning vis-a-vis the current Labour leadership is:
(i) means attacking Labour/Corbyn from the right,
(iii) means attacking Labour/Corbyn by the fake left a.k.a. Progressives,#3
(ii) means neutralizing Labour/Corbyn through a committee of (nominally) independent economic experts.#4
Among economists, the current Labour leadership has NO real supporters. A paranoiac view of the political world would come to the conclusion that the Oligarchy has Jeremy Corbyn successfully encircled with their useful academic idiots.
#1 For details of the big picture see cross-references Failed/Fake Scientists
#2 How Bill Mitchell stalks Jeremy Corbyn
#3 The Kelton-Fraud
#4 The demise of phony experts: macroeconomics is provably false