September 11, 2020

MMT: the Oligarchy's latest beauty treatment

Comment on Bill Mitchell on ‘British-EU disputes suggest the Tories are set to break away from the sordid Thatcher legacy’

Bill Mitchell summarizes: “There are several facets to the discussion: (a) the on-going hypocrisy of the European Union elites; (b) the necessity for major state intervention in Britain (and everywhere) and the possibility that the Tories will abandon Margaret Thatcher’s EU single market legacy is another sign that the paradigm shift in macroeconomics is well under way. (c) the way in which the Labour party are being wedged on the issue and refusing to come out in support of further state aid. Instead, inasmuch as they are saying anything, they are just repeating the mindless, neoliberal dogma about ‘free trade’.”

Reduced to slogans, Thatcher/Reagan neoliberalism is remembered for:
• anti-statism/deregulation/privatization 
• free trade/globalization
• a macho/aggressive/anti-99%/pro-1% policy style
• rhetorical budget discipline.#1

After the successful implementation, at some point, the Oligarchy realized that this program backfired badly. So, in the last few years, the program was literally turned on its head. The most spectacular policy switch was from globalism to nationalism (MAGA) and from minimizing the state (Reagan's “government is the problem”) to capturing the state.

Bill Mitchell and his MMTers are the propaganda prophets of the new strategy. This new policy is sold as progressive, i.e. as benefiting WeThePeople, and it is heavily pushed over all communication channels from Bill Mitchell's speaking tours to Stephanie Kelton's NYT bestseller to massive Twitter trolling by an army of morons.#2

The fact of the matter is that the U.S. economy hangs already for a long time on the state ventilator for its survival.#3 In the elementary production-consumption economy with a state sector, macroeconomic profit comes ultimately from the household and state sector’s deficit-spending/money-creation, i.e. Qm≡(G−T)−Sm. This means that the greater part of the profit in the U.S. is actually produced by the state. The U.S. economy is NOT a dynamic/wealth-creating free-market economy as described in the economic textbooks but hangs on the state ventilator for its survival. Private financial wealth is created by public deficit-spending/money-creation and is roughly equal to public debt.

The MMT policy of deficit-spending/money-creation is ultimately a means of postponing the breakdown of the U.S. economy.#4 It does not matter at all whether deficit-spending is justified by fighting unemployment, fighting COVID, or fighting climate change.#5 Because of the macroeconomic Profit Law, i.e. Public Deficit = Private Profit, the alleged benefit for WeThePeople, in any case, turns out to be a free lunch for the Oligarchy.

In order to save itself and to take the profit production into its own hands, the Oligarchy has given up its anti-state stance and tries to take over the national treasury and the central bank.#6 This is a Wall Street coup and has nothing at all to do with anti-Thatcherism/Reaganism/Neoliberalism.

Hollywood's political casting department has just replaced the bulldog face of aggressive Maggie Thatcher with the pretty face of emphatic Stephanie Kelton and ordered the academic Bill Mitchell to sell this botox farce as a scientific Paradigm Shift.

Egmont Kakarot-Handtke

#1 “During Reagan's eight-year presidency, the annual deficits averaged 4.0% of GDP, compared to a 2.2% average during the preceding eight years.” Wikipedia