MMP Blog #30 Responses

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Originally published January 4, 2012 on the New Economic Perspectives blog.

Q1: A few quick questions:

(1) Isn’t Charles Goodhart essentially a neoclassical who accepts the chartalist approach to money?
(2) Would it be accurate to say the sources of modern chartalism/MMT are:
    (a) Mitchell Innes’s work
    (b) G. Frederick Knapp’s work
    (c) Keynes and Abba Lerner’s functional finance model
    (d) Post Keynesianism
    (e) some contribution from Minsky? (i.e, FIH)

In this sense it is a new macro theory sharing many ideas with older Post Keynesians (uncertianty, endogenous money, subjective expectations) but that has done innovative work in shattering myths about how the central bank and treasury really function, even though one might argue that Abba Lerner was the trailblazer in this work:
Lerner, A. P. 1943. “Functional Finance and the Federal Debt,” Social Research10: 38–51
Lerner, A. P. 1944. The Economics of Control, New York, Macmillan.
I’ll just end by saying that when Keynes finally read Lerner’s he appeared to endorse it.

A: The first MMT conference I recall was organized by Warren Mosler at Bretton Woods in 1996. At that time, he called it “Soft Currency Economics”, but most of the pieces of the MMT puzzle were there. The 3 economists invited by Warren were: Charles Goodhart, Basil Moore, and Yours Truly. I would not accept “essentially neoclassical” as an accurate description of Charles. However, to say that he marches to his own drummer would be accurate! We don’t agree on everything, but we agree on much. A bit more on that conference:

a) the one who actually did the work of organizing Warren’s conference was none other than Pavlina Tcherneva, who at the time was an undergrad student of Mat Forstater;

b) my memory is notoriously bad and someone will probably correct me by reminding me that the BW conference was not the first meeting of MMT, but it was certainly the first time I met Warren and Pavlina! I think I had met Mat before, and had known Stephanie for quite some time; I think I had met Bill before 1996–but memory is foggy. I knew all of these people on-line and we had been working on MMT for several years, but I think the meetings and conferences began in 1996.

Q2:  Does Basil J. Moore subscribe to MMT? I know his work on endogenous money. Just to clarify: the founders of MMT are Warren Mosler, Charles Goodhart, Basil Moore, RandallWray, Bill Mitchell, Pavlina Tcherneva, Stephanie A. Kelton and Mat Forstater? Since Basil Moore was obviously a Post Keynesian, is it correct to say that many of the founders were influenced by Post Keynesianism ? Does not Warren Mosler have a connection with Paul Davidson? And good old Hyman Minsky influenced you, Profesor Wray? Finally here are my brief thoughts on the history of MMT: http://socialdemocracy21stcent…

A: Looks good. Look at the first MMP blog which has a list of contributors, and students etc that I thank. It is impossible to formulate a complete, definitive list. Kelton is Bell. Except for my “students” (Tcherneva, Tymoigne, Kaboub, Nersisyan, Leclaire, Fullwiler, Bell, etc, too many to list here) most of us originally met on the old PKT internet discussion group. Others, like Moore and Davidson and Minsky and Kregel are “fathers” in some sense of the PK approach–so I knew them from early 1980s. They accept elements of MMT, but except for Kregel it probably would not be good to list them as MMTers. We all learned from them. Note I have been negligent in forgetting to list Ed Nell–and will do so–because he was a supporter from the earliest days. And he helped to organize meetings at the New School. Minsky is without question the greatest economist of the second half of the 20thcentury. So, yes, we were influenced.

Q3: Would Henry C. Carey be considered as a kind of precursor to MMT?  Was he an influence in your intellectual formation? Could this be the source?…

A: Professor Mat Forstater is our resident historian of thought. He might know Carey or this Burstein; the names do not ring a bell with me.

Q4: John Carney’s piece referring to crony capitalism was most interesting as was Mitchell’s response talking about the JG. I also saw your blog on the JG. These all have a great appeal and I hope you will comment more. There is no doubt there is just plain corruption when the government tries to stimulate the economy directly but even the JG will be subject to that. I suppose corruption or whatever name you give it exists in all endeavors.  The JG has some problems in this world, not least of which is a base for effective political support.  So, again, I hope you will spend some time on those issues. At some point the economics has to come to grips with political power and society.

A: We will deal with most of these issues in coming blogs. But if we all agree on the theory then all we need to do is put our heads together to make it work. What amazes me is that upward of 95% of the objections now—20 years later—are about program implementation, political feasibility, and corruption. OK I think some of you are smart. Put your darned heads together. Stop criticizing. Start solving problems. I cannot see any use of economics or any other branch of human endeavor if it does not try to tackle problems. Finding useful work for a JG employee seems to me to be on the order of difficulty as finding a pot for your 2 year old to pee in. If you cannot resolve that problem, you are up the creek without a paddle, so to speak. Have any of you ever put a diaper on your damned kid? You began as all thumbs and sharp pins. After a few months you could do it with eyes closed, one-handed, in a restaurant while serving your guests with your other hand. As Keynes said, this is like dentistry. Solve the damned problem. Stop complaining. All of you, every single one of you, should be able to resolve all these issues before I even start posting blogs about the JG.

That’s a challenge. My upcoming posts on JG should be completely redundant. Get your buns in gear. You’ve been here for more than half a year; all the pieces are in place. Go for it. Prizes and fame await.

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