Category: Heterodox Economics

Monetary policy is ultimately based on a theory of money: A Marxist critique of MMT

nicolasaaguila5 Comments

By and Nicol谩s Aguila

During the last two decades, Modern Monetary Theory (henceforth MMT) has won wide academic recognition and public influence. Its most prominent achievements include shifting the public debate on the conduct of economic policy and reviving interest in the theory of money. The former tends to attract most of the attention of both advocates and critics of MMT, but this is unjustified. MMT policy conclusions result from its underlying understanding of money, as some of the more illuminating MMT thinkers make abundantly clear (Bell, 2001; Tcherneva, 2006; Wray, 2010, 2014). A far richer assessment of MMT economic policy proposals would result by first considering the foundations of its theory of money, that is, neo-Chartalism.

In a , we contrasted MMT with the Marxist theory of money. We showed that there were four important points of disagreement between these two schools of thought, namely on: (i) the ontology of money, (ii) the state and money, (iii) state economic policy, and (iv) world money and monetary sovereignty. We supported our argument with historical examples that we omit here for reasons of space.

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Pluralism in economics 鈥� its critiques and their lessons

Claudius GraebnerLeave a comment

By Claudius Gr盲bner and Birte Strunk

In we engaged with common critiques of the concept and the movement for more pluralism in economics. We found that while the majority of the critiques are either unfounded, easy to dismiss or address strawmen, others do highlight challenges the pluralist movement should address.

In 2017, we were spending a week at the , when the German economist Johannes Becker published a blog article on Makronom entitled 鈥溾�� (translated from German). He argues that the movement for pluralist economics faces a decision: it could continue to be a movement of fundamental opposition against the 鈥榚conomic mainstream鈥�, or it could start striving for 鈥榬eal change鈥�. Economics professors, at least in Germany, Becker argued, were highly perceptive and open-minded towards alternative perspectives in economics. If the movement would focus more on constructive engagement with economics faculties rather than on fundamental critique, then there would be a greater amount of pluralist seminars and lectures.

Being surrounded by around 100 fellow pluralists who dedicated a week of their summer to study different approaches to economics, the accusation of simply being a movement of unconstructive opposition seemed alienating to us. So we drafted a , arguing that pluralist economics is about both critique and the construction of alternative practices. Based on this response, we wrote an article evaluating the critiques posed toward pluralist economics, drawing from philosophy of science, philosophy of economics, and philosophy of interdisciplinarity. When writing the paper, which has recently been published in the , we indeed found many critiques of pluralism to be unconvincing, yet we also discovered that some critiques of pluralism are not easily dismissed. They should be taken seriously by pluralists because an honest engagement with these critiques rather than the neglect of their relevance could, we believe, make the movement for pluralism in economics more convincing and successful.

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What Is Value? A Marxist Perspective

desmondmcneillLeave a comment

Marx鈥檚 critique of capitalism, and more specifically his theory of value, is still very relevant today, as I argue in my new book听

But his work is often misunderstood, not only by orthodox economists but also by others 鈥� such as 鈥榞reens鈥� 鈥� who seek inspiration in his writings. Economists, if they refer to his work at all, have tended to focus on the quantitative labour theory of value, ignoring what Marx called the qualitative theory of value: his critique of the economic categories of 鈥榖ourgeois鈥� economics which mystify 鈥�  and hence also justify 鈥� the reality of what is really going on. The concept of fetishism is crucial to this theory, but by economists this has been either ignored or treated as the work of Marx the philosopher or Marx the sociologist. Marx introduces the concept of commodity fetishism in the very first chapter of Capital Volume I, where he seeks to get to grips with the mysterious phenomenon of exchange value. Rather than simplistically equating value with price 鈥� as is the practice of the market system and mainstream economics 鈥� he delves deep into the beliefs and practices that constitute and sustain the capitalist system. In other works, he applies the concept of fetishism to capital, money and interest-bearing capital. By reference to what he calls the 鈥楾rinity Formula鈥� he shows how, by presenting profit as the return on capital and rent as the return on land, both profit and rent are taken for granted, and go unchallenged. That the surplus value generated in production accrues solely to capital is treated as somehow 鈥榥atural鈥�.

In my book, I show the continuing relevance of Marx鈥檚 theory today, especially with regard to finance and the environment. Both the financial crisis of 2008 and the continuing crisis of environmental destruction are related to the way in which the market increasingly extends its grip over our lives: through the financialisation of everyday life, and through the use of market instruments and market principles that shape our relationship with nature.

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Neoliberalism鈥檚 many deaths and strange non-deaths听

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neoliberalismBy Jack Copley and Alexis Moraitis

The coronavirus pandemic has required states to take unprecedented steps to backstop the world capitalist economy. This has included enormous liquidity injections into financial markets, guaranteeing the wages of furloughed workers, and temporarily requisitioning and coordinating parts of the private sector. Yet last year a different threat 鈥� not epidemiological but proletarian 鈥� similarly forced states to adopt redistributive policies against their wills, albeit on a smaller scale.听

From the vantage point of the current uprisings against racist police violence, the empty streets of the early 2020 lockdown appear as a brief exception to the broader trend of mass unrest. In , streets, avenues, and squares in different parts of the world flooded with protestors decrying the pro-rich policies of their respective governments. The scale, endurance, and spectacular disruptiveness of these popular explosions pressed governments from Western Asia to Europe to Latin America to abandon so-called neoliberal fiscal rectitude and reluctantly embrace Keynesian stimulus policies.

In Chile, on the eve of the autumn 2019 revolt, billionaire austerian president Sebasti谩n Pi帽era a classic metaphor of neoliberal stoicism to explain how he would resist popular opposition to his painful reform programme: 鈥楿lysses tied himself to a ship鈥檚 mast and put pieces of wax in his ears to avoid falling for the 鈥� siren calls鈥�. Less than one month later, this modern Ulysses had broken free from his tethers, announcing increases in the minimum wage, healthcare benefits, pensions, electricity subsidies, and the reform of Chile鈥檚 very constitution. There are clear with France鈥檚 Emmanuel Macron, a former investment banker who assumed power in 2017 on a platform of market discipline, only to buckle under the weight of the relentless Gilet Jaunes movement and announce a 鈧�17 billion package of concessions.

How are we to grasp the jarring Keynesian U-turns of such cartoonish neoliberal governments in the face of mass protest and pandemic? It is commonly assumed that the neoliberal project represented the shrinking of the state sphere and its replacement by the cold logic of the marketplace. The 2008 bank bailouts appeared to buck this trend, as states were called upon to undertake drastic interventions. But this turned out to be a hiccup in neoliberalism鈥檚 larger narrative arc, as austerity quickly took hold. Yet perhaps this latest accumulation of crises will at last force states to reclaim the territory they had ceded to the market. After its 鈥樷��, is neoliberalism finally dying?Read More »

The Nature of Social Reality: Issues in Social Ontology (Review)

yannicksladecaffarelLeave a comment

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Review of Lawson, T. (2019). . London and New York: Routledge.

Ontology is the study of being. Social ontology is the study of social being or, in other words, the study of the nature and basic structure of social reality. We all do ontology all of the time, economists included, whether we like it or not. For all practices carry ontological presuppositions. Economists only have a choice between doing ontology explicitly or implicitly. Tony Lawson鈥檚 contributions stand out and are of such profound significance precisely because he explicitly grounds his analysis in an account of social ontology. It is only by redressing the ontological neglect that has for some decades characterised the discipline that a productive transformation of economics is at all feasible.听

Lawson is perhaps best known amongst heterodox economists for his critique of the mainstream emphasis on mathematical modelling. Lawson shows that the implicit ontological presupposition of an insistence of mathematical modelling is a world of isolated atoms and argues that, as the social realm is not characterised by isolated atoms, the mainstream approach will produce largely irrelevant research. However, it would be wrong to consider this critique to be his major contribution. Rather, it is but one of an increasing number of powerful (sometimes startling) results derived from Lawson鈥檚 three-decade project of developing and defending, along with other participants of the Cambridge Social Ontology Group, an account of the nature of social reality.听

The Nature of Social Reality: Issues in Social Ontology provides the latest developments that Lawson has made in the field of social ontology. Here, he sets out an account of social ontology that has come to be regularly referred to as a theory of social positioning, demonstrating its explanatory power. An exciting feature of the book is that it sets out the theory of social positioning in its most advanced form to date and then puts it to work through analysing the nature of the corporation, money and emancipatory practice. Whilst Lawson is pursuing themes in social ontology at an advanced level, he takes great pains to ensure that the analysis is everywhere accessible. The detailed and provocative accounts of the corporation and of money provide ample illustrations of the enormous potential of the social positioning framework.听听Read More »

Cambridge Journal of Economics Special Issue on Financialisation in developing and emerging economies: Manifestations, Drivers and Implications Deadline 31st August 2020

Carolina AlvesLeave a comment

In December 2018, we organised a two-day workshop on 鈥淗ow to Conceptualise Financialisation in Developing and Emerging Economies? Manifestations, Drivers and Implications鈥� at Girton College, University of Cambridge. The idea behind this event was to move away from a significant focus on developed economies when discussing financialisation phenomena and give more space to find out what is happening in developing and emerging economies (DEEs). Existing studies on DEEs have often focussed on particular case studies. Investigating empirical aspects already observed in developed economies, There have been both limited attempts to engage with the concepts and perspectives from the Global South and at systematising the literature and in analysing particularities of DEEs.

The workshop was a success in many fronts, such as attendance, quality of papers and exchange of ideas. Five roundtables attempted to encompass key crucial aspects of this discussion in the context of DEEs, namely, Financialisation and The Global Economy, Financialisation and Production, Variegated Financialisation, Financialisation and the State, and Micro-financialisation. This was complemented by two excellent plenaries approaching both the theorisation of financialisation in DEEs and the avenues for future research. See the programme听.Read More »

Is Postcolonial Capitalism a Thing to Itself? Reviewing Sanyal鈥檚 Rethinking Capitalist Development

srishtiydv3 Comments

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Kalyan Sanyal鈥檚 Rethinking Capitalist Development (2007, 2014) is a rare work of political economy for many reasons. It is written by an economist, but it鈥檚 so interdisciplinary that you won鈥檛 be able to tell. It is an attempt to theorize capitalism in the postcolonial context from the inside-out rather than outside-in, i.e. with no reference to an ideal type. It refuses to sit neatly in theoretical boundaries 鈥� it is not entirely Marxist, not entirely Postmarxist, not entirely neo-Gramscian, not entirely Foucauldian, but a strange concoction of all. Perhaps the only thing that is not rare is that like most interesting and influential works that emerge from the Global South, it too has been largely ignored in the academic circles of the Global North, especially in Economics.听Read More »