Comment on Bill Mitchell on ‘Why economists kept getting the policies right!’
Bill Mitchell gives an inside report of academic economics: “But if you have been inside the profession all your life, as I have, then you get a pretty good feel for what is going on. And it is not what the rest of you think.”
“Economists are not fellow travellers ‘on a mission from god to do god’s work’ …” … “They are part of the capitalist establishment designed to safeguard capital and its profits and keep the working class in its place so that challenges are confined to disputes about wages and conditions around the margin, but, never question the basis of the system ― the ownership of the material means of production and the capacity of those unequal ownership relations to extract surplus value as profits from forcing workers to work longer than they have to to produce their (social) subsistence.” … “the development of neoclassical economics, from which the modern day Monetarism and New Keynesian economics emerged was no accident ― no scientific event.”
True, since the founding fathers, economists were not so much scientists as political agenda pushers: “Economists were hired by industrialists to come up with a body of work that made capitalism appear fair. It was in the second half of the C19th when Marxist thought was spreading among workers and the intellectual class and manifesting into social and political instability as evidenced by the ― Revolutions of 1848 ― and later, the ― 1871 Paris Commune ― among other uprisings.”
And he concludes: “Economists were part of that conspiracy to obfuscate the inner workings of capitalism. And it has been that way ever since.”
Except …
“Me, I was an aberration. A black sheep. That got through this system because my mathematics and mathematical statistics was first-rate and I could jump their hoops with ease.”
And now it turns out that Bill Mitchell and the MMTers got it right: “The author notes how everyone is jumping on the big deficits bandwagon now and no-one is talking much about the public debt issue any more.”#1
This is true, MMT has now become official doctrine.#2, #3, #4
While Bill Mitchell asserts that economists have always been “… part of the capitalist establishment designed to safeguard capital and its profits …” he tries to make the impression that he and MMTers and Progressives are different.
This is NOT the case.
The 3-sector macroeconomic Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. So, the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy. Private financial wealth grows in lockstep with public debt. For public debt holds: #OligarchyOwnsIt and #WeThePeopleOwesIt. Public debt as interest cash cow produces perpetual income for the Oligarchy that is taxed from WeThePeople.#5
COV19 is a godsend for the Oligarchy: more deficit-spending/money-creation produces a profit explosion. Best of all, it can be propagandized as a benefit for WeThePeople. Fact is, though, that in real terms, WeThePeople pay for the economic relief package through stealth taxation.
If anything, Bill Mitchell/MMTers/Progressives are “part of the capitalist establishment”.#6, #7 Like the rest of economists from Adam Smith onward, economists are NOT on a “mission from god to do god’s work”. Economics is failed/fake science. Economists are NOT scientists but clowns and useful idiots in the political Circus Maximus. MMTers are NO exception.
Egmont Kakarot-Handtke
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REPLY to Matt Franko on Mar 17
The deficiency of MMTers in literal language is that they are too stupid for the elementary algebra that underlies macroeconomics:
Proof of MMT's inconsistency.
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REPLY to Matt Franko on Mar 18
I said that MMTers (the social media trolls, the academics in general, and Bill Mitchell, in particular) are too stupid for the elementary algebra that underlies macroeconomics and that the MMT sectoral balances equation is provably false. Every MMTer can check the proof.#1-#4
You argue: “Bill is well trained in Mathematics....”
If so, he knows that science is about material/formal consistency and proof. So, he should be able to understand the proof of the inconsistency of the foundational MMT sectoral balances equation. And, as an academic, he should know that science defines itself by the high standards of scientific ethics.
According to these standards, he is obliged to check the proof of the inconsistency of MMT as soon as it comes to his notice and to either point to the exact location of where the proof is faulty or to openly confirm the refutation of MMT so that others are no longer misled.
Neither Bill Mitchell nor any other MMTer has done the right thing to this day. MMTers have disqualified themselves and therefore have to be expelled with shame and disgrace from the scientific community.#5
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REPLY to Peter Pan on Mar 18
You ask: “Bill has never addressed your critique on his blog?”
Obviously, you still do not understand how economics works although Bill Mitchell has given you a clear description. Economics does not work according to the principles of science. And this is long known: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941)
Economists violate scientific standards from Adam Smith/Karl Marx onward and this is why Walrasianism, Keynesianism, Marxianism, Austrianism, and other long-refuted proto-scientific garbage is still around.#1 What we have is the pluralism of false theories.
Bill Mitchell knows this but claims that MMT is different. That is NOT the case. MMT is refuted but MMTers push it “as if nothing had happened”. Academic economics is politically corrupted and MMT is an integral part of it.#2
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Answers/continuing links to your 3 questions.
1 Capitalists' consumption
Profit follows from the Profit Law. It can be distributed or not. So one gets distributed profit Yd as a part of total income Y=Yw+Yd. Distributed profit, in turn, splits into consumption expenditures and saving of “capitalists”. See section 7 of
Essentials of Constructive Heterodoxy: Profit.
2 Cash
You assume “cash on hand to begin with”. In a fiat money system, things start with zero cash. Money is created ex nihilo by the central bank for the financing of the wage bill.
3 Investments
You say “investments create fixed capital” and “Investments only create profits because of a time lag between borrowing and repaying”. For the exact relationship of investment expenditures and profits see
Squaring the Investment Cycle.
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NOTE on Barkley Rosser on Mar 31
You take toilet paper shortages in Venezuela as proof that they are “corrupt and incompetent”. These two keywords bring us immediately to the current state of economics.
Bill Mitchell gives an inside report of academic economics:#1 “But if you have been inside the profession all your life, as I have, then you get a pretty good feel for what is going on. And it is not what the rest of you think.”
“Economists are not fellow travellers ‘on a mission from god to do god’s work’ …” … “They are part of the capitalist establishment designed to safeguard capital and its profits and keep the working class in its place so that challenges are confined to disputes about wages and conditions around the margin, but, never question the basis of the system ― the ownership of the material means of production and the capacity of those unequal ownership relations to extract surplus value as profits from forcing workers to work longer than they have to to produce their (social) subsistence.” … “the development of neoclassical economics, from which the modern day Monetarism and New Keynesian economics emerged was no accident ― no scientific event.”
True, since the founding fathers, economists were not so much scientists as political agenda pushers and disinfotainment clowns in the political Circus Maximus.#2
The temporary shutdown of the Suez Canal may trigger physical toilet paper shortages in Western markets. Due to the superiority of Capitalism over Saint-Simonianism, though, this does not affect the production of intellectual toilet paper in US academia.#3
