June 9, 2017

MMT: No sound basis

Comment on Terry Sullivan on ‘Austerity Is A Sham: The Road to Resilience’


Terry Sullivan writes: “Recently, a friend of mine sent me a video explaining the doctrine of Modern Monetary Theory. In the most recent The Nation magazine (May 22, 2017), there is a feature article on it. Economists such as James Galbraith, Dean Baker, and Paul Krugman have quietly admitted that the theory has a sound basis.”

Everybody can climb on a soapbox and make a save-the-world economic policy proposal EXCEPT an economist because: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

The problem is that economists do NOT have the true theory. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got profit wrong. This includes MMT.#1

Economics claims to be a science but is NOT. Economists claim to know how the economy works but do NOT. From this follows that economic policy guidance with regard to monetary, fiscal and employment policy has NO sound scientific foundation. This applies to orthodox and heterodox economics and this applies to the whole issue of austerity.#2

Egmont Kakarot-Handtke

#1 Where MMT got macro wrong
#2 For the details of the big picture see
Austerity and the idiocy of political economists
Austerity and the utter scientific ignorance of economists
Austerity and the total disconnect between economic policy and science