Episode 109 – Institutions with Linwood Tauheed

This week Steve talks with Linwood Tauheed, someone we’ve heard about from several of our recent guests. Dr. Tauheed is an institutionalist economist; he looks at the economy not as a macroeconomy or a microeconomy, but as an economy that’s founded on institutions. Beyond the economy, or perhaps intertwined with it, institutional frameworks enable and constrain all parts of social life. They are sometimes the unconscious or conscious ideas that structure the way ordinary people live their lives.

Such an expansive, dialectical look at society inspires Steve to takee this interview down a number of paths, visiting both recent and distant history. They talk about the stark differences between the French and American revolutions. Slavery was outlawed during the French revolution, which was fought by the poor against the rich:

It was a class-based revolution, whereas the American Revolution was a revolution of the very well-off in this country against the monarchy, the very well-off in Britain. And so it wasn’t a revolution that was based on freeing the poor. It was a revolution based on freeing the rich.

The US Constitution is just one representation of the institutions that undergird the divisions of race and sex in the service to capitalism. According to institutionalist Thorstein Veblen, capitalists organize systems enabling them to “make a living without earning a living.” There are micro-institutions and “habits of thought” that continue to divide people whose common oppression should unite them.

This episode includes discussion of A Tribe Called Quest, the life of Malcolm X, and, of course, Modern Monetary Theory. A transcript of the interview is available on our website. For additional, related content, check out the Extras page.

Linwood Tauheed is an Associate Professor of Economics at the University of Missouri Kansas City, and teaches introductory and advanced courses in Institutional Economics, Political Economy of Race, Class, and Gender, Economic Development, and a doctoral seminar in Interdisciplinary Research Methodology. His primary research interests are in Economic Methodology, Community Economic Development and Analysis of Education. A major research project involves the development of ‘Critical Institutionalism,’ an interdisciplinary metatheoretical framework for developing models for evolutionary institutional change in social systems through social action.

He is the current president of the National Economic Association (NEA), which was founded in 1969 as the Caucus of Black Economists and recently celebrated its 50th anniversary.

Macro N Cheese – Episode 109
Institutions with Linwood Tauheed
February 26, 2021

[00:00:04.480] – Linwood Tauheed [music/intro]

The French Medal of Honor given to African American soldiers in gratitude for how they had served and helped to defeat the Nazis and then come back to the U.S. and still not be allowed to go into the front of a restaurant when Nazi prisoners of war were allowed to go into the front of restaurant.

[00:00:27.620] – Linwood Tauheed [music/intro]

There’s also the habit of thought that says, “If you’re so smart, why aren’t you rich?” There’s the idea you turn that upside down and the rich are rich because they’re smart. And if I’m not rich, it must be because I’m not smart.

[00:01:35.220] – Geoff Ginter [intro]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N and Cheese with your host, Steve Grumbine.

[00:01:43.080] – Steve Grumbine

All right. And this is Steve with Macro N Cheese. Today I have Linwood Tauheed. He’s an associate professor of economics at the University of Missouri, Kansas City. He teaches introductory and advanced courses in institutional economics, political economy of race, class and gender, economic development, and a doctoral seminar in interdisciplinary research methodology.

His primary research interests are in economic methodology, community economic development, and analysis of education. A major research project involves the development of critical institutionalism and interdisciplinary meta theoretical framework for developing models for evolutionary, institutional change and social systems through social action.

Dr. Tauheed holds an interdisciplinary Ph.D. in economics and social sciences, a master of arts in economics, and a B.S. in computer science mathematics, all from the University of Missouri, Kansas City. He is the immediate past president of the National Economic Association, NEA, which was founded in 1969 as the Caucus of Black Economists and recently celebrated its 50th anniversary. And without further ado, let me bring on my guest. Thank you so much for joining us, Linwood, thank you so, so much. I really appreciate it.

[00:03:09.500] – Linwood Tauheed

Thank you, Steve. It’s great to be here.

[00:03:12.050] – Grumbine

We’re in some troubling times and this seems to be a recurring theme, obviously. For a year, all of us have been locked in our houses mostly, and we’ve witnessed the implosion of our national economy. And for many people, this is not a new thing. The precarity of this moment has impacted a great many people that probably weren’t expecting it.

But there are many people out there who have been buried in this economic malaise now for many, many, many generations. This is not a new thing for them. And what I’m speaking to in particular are minorities in America, those people that have been oppressed from the dawning of the nation’s founding, at least from the colonization perspective, when we have witnessed time and time again the changing of institutions, the changing of laws, the changing of perspectives, customs, belief systems and even the way we phrase things since the dawn of time.

Michelle Alexander in her book The New Jim Crow, very eloquently touches on the fact that going back to Bacon’s rebellion, the white man has been able to place a wedge issue to separate the classes, to always leave minorities out in the cold. And this has not changed. It happened through reconstruction. It has happened throughout history, through the industrial revolution and even to this day as we suffer through covid-19 pandemic.

And that’s why I brought Linwood on, because Linwood is an institutionalist and this is an item, an area that I have not explored myself personally. And it is so exciting to have someone on that does have that perspective. So with that long winded explanation, tell us a little bit about yourself and how what you do plays into what I said.

[00:05:04.630] – Tauheed

So, yes, as my bio indicates, I am an institutional economist and I received my Ph.D. at the University of Missouri, Kansas City, which has a long tradition of institutional economics, but also post-Keynesian economics. And so, UMKC, over 20 years ago became a very fertile ground for the development of some economics ideas that are becoming very popular, including Modern Monetary Theory.

That theory itself kind of stems mainly from some academic work coming from the work of Hyman Minsky. But of course, also some work out in the field by people like Warren Mosler and so forth. But Hyman Minsky identified himself as an institutional, post-Keynesian. And so I think I’m in that tradition, that means that I look at the economy not as a macroeconomy or a microeconomy, but as an economy that’s founded on institutions.

And of course, institutions are not just relegated to the economy. All parts of social life are enabled and constrained by the institutional frameworks that exist. And so what institutionalists, in my tradition of Thorstein Veblen, for example, think of institutions is they’re not buildings. They’re not groups of people, which I would refer to as organizations, but they are sometimes the unconscious, but sometimes more conscious ideas that structure the way that ordinary people live their lives.

[00:06:44.300] – Grumbine

So going back, African-Americans had to fight just to be considered human beings, even in the Constitution. We’re talking about three-fifths of a human being. They did not give rights to African-Americans. They did not treat them as equals. And this has not changed. It’s gotten better in some ways, but in many ways there’s a huge amount of not just growth that needs to be done, but deep down systematic change that has led us to this point.

[00:07:15.110] – Tauheed

Mm hmm.

[00:07:15.860] – Grumbine

What are some of the institutions that you study that directly impact the African-American community?

[00:07:23.900] – Tauheed

Well, you just mentioned, one, the idea that an African-American that a person of African descent is not human is an institution. It is an idea in this sense, it’s what Veblen called a settled habit of thought. It is a habit of thought that people of one group have against another group, and that habit of thought gets passed down from generation to generation.

The institutional economics that I study and research in is a type of evolutionary process, and evolution means that things move forward sometimes. Some things change, but some things remain the same. The idea that a person of African descent is not a human is an institution. It’s an institution that if we look historically comes into place around the middle of the 1400s. Prior to the 1400s, about 1450,  Africans and Europeans were engaged in, for example, fairly normal trading relationships.

There were intermarriages between African royal families and European royal families. There were kind of a normal relationship that you would have between people who thought of each other as equals in a sense. The idea that persons of African descent are not human comes about as a result of growth in capitalism that requires labor for this part of the world, the New World.

And it begins with labor from Europe and labor from Africa coming to this part of the country as indentured servants. You mentioned Bacon’s rebellion, with Africans and Europeans engaged in that rebellion in 1675, 1676, they engaged in it as persons who were equals. They were indentured servants who were brought here to this country and when they paid out their indenture, they became free. That was whites and persons of African descent.

What Bacon’s rebellion did with that group of indentured servants rebelled against their treatment and they collectively rebelled, they rebelled together. The idea of separating them was a divide and conquer scheme in which the whites were given their redress and their conditions were improved, but the persons of African descent who were indentured servants were therefrom to be considered permanently enslaved.

And so they were no longer indentured. They couldn’t work their indenture off and become free again. They were put into another category. And in order to justify that, the idea that these persons were not human was invented as a habit of thought to justify the enslavement, the permanent enslavement of persons of African descent. And so we call that a change in the institutional structure.

From before Africans and Europeans  – particularly poor Africans and Europeans, right – were considered the same type of person, just poor people who needed work. After Bacon’s rebellion in Virginia, Africans were considered less than human, and that institutional change created quite a bit of structural inertia for the development of a slavery economy in the United States.

And so don’t think of institutions, at least from my point of view, as a thing like the Federal Reserve Bank. That’s an organization from my point of view. Institutions are much smaller and we combine institutions together to create the processes that enable or constrain what people can do. Bacon’s rebellion, the idea that African-Americans, persons of African descent, were not human enables whites to benefit from their labor and it constrains blacks from benefiting from their labor.

[00:11:20.930] – Grumbine

You look back at the Saint-Domingue uprising and Toussaint, that whole mixture with the French Revolution and then the hatred between the French and the British and fighting going back and forth. The French during their revolution had outlawed slavery.

[00:11:40.940] – Tauheed

Mm hmm.

[00:11:41.510] – Grumbine

And yet here we are with Saint-Domingue being a French colony and having that entire structure bleeding out any kind of potential for real, meaningful change there, which history tells us didn’t last long. But that said, that relationship between the French and their monarchy and the idea of slavery, all these institutions, as you call them, are shifting and changing.

The people are seizing power once again. They’re envisioning a different world that they had never been involved in. They had never been able to make decisions. They had been under a serf-type of scenario. They had been indentured servants. They had been working on a farm or part of a master’s plot of land, so to speak. And now all of a sudden, they were creating rules and laws and institutions, new customs, new ideas, doubting the church, et cetera.

And clearly, there was still something driving them that made them maintain slavery in Saint-Domingue. And you see how that crept back up through the Louisiana Purchase and all the other stuff that was tied to that particular period of time. It kind of set the stage once again because the French were ever-present, supporting the U.S. in various endeavors against the kingdom of the U.K., the British Empire. I’m curious as to how you see the international view of these institutions versus just the domestic view of those institutions.

How much of that bleeds over and is global now versus how much of it looking back even? Obviously there was no Internet, there was very limited travel. It took months to travel the seas to get back and forth. But clearly, with time and distance curtailed by technology, have you seen a bleeding over of those institutions globally now? Are they still localized? And how would you say that impacts the lives of African-Americans, both in the United States and globally?

[00:13:48.130] – Tauheed

Well, that’s a very good question. If we look at, for example, differences between the way that the French population interacted with persons of African descent, particularly African-Americans, let’s say, during World War II. African-Americans in this country, of course, during World War II became soldiers and went to Europe to fight. There were medals of valor and, I guess, gratitude.

The French Medal of Honor given to African-American soldiers in gratitude for how they had served and helped to defeat the Nazis. And then you have situations where African-American soldiers would come back to the US and still not be allowed to go into the front of a restaurant when German prisoners of war, Nazi prisoners of war were allowed to go into the front of the restaurant.

And so we have differing habits of thought – and I’ll continue to use that way of talking – we have different habits of thought in terms of the humanity of persons of African descent in Europe and in France. And for me, I think part of that certainly goes back to the French Revolution itself in terms of the idea that that was very much a revolution between the poor against the rich.

It was a class-based revolution, whereas the American Revolution is a revolution of the very well-off in this country against the monarchy, the very well-off in Britain. And so it wasn’t a revolution that was based on freeing the poor. It was a revolution based on freeing the rich. And I think if you follow that stream of thought from the French Revolution and the difference between the American Revolution, you get in France an idea that fraternity, liberty, and equality [Liberté, Egalité, Fraternité] were at least things that the French thought about.

And it made it easier for them to think of Africans from the United States or from Africa, in that fact, as the possibility of being citizens. The US went a different path. When this country was founded, in 1776 in the war and the Constitution in 1787, Africans in that document were not considered to be full citizens. We were considered to be three-fifths, and three-fifths allocation only came so that the Southern states could use our population for their political empowerment.

The population determined how many representatives you could get. But still, I mean, it was only in the Constitution for that purpose. It wasn’t in the Constitution that we were being considered as full citizens. All men are created equal, did not include us. And so we have two empires, one of British ancestry, and then the French that actually began to think of Africans and persons of African descent in different ways.

And so we get those results that move through history because institutions – or habits of thought, how people think about people, as an example – is going to be passed down from one generation to the next to the next. And those things do affect how laws and customs are formed later. I hope that wasn’t too involved of an explanation, but it is a very involved topic.

[00:17:12.980] – Grumbine

I asked you an involved question. You can give me the most involved answer you’ve got. This is fascinating stuff to me, something that I think is important. Collective wellbeing, collectivism, is baked into the constitution on one hand. It looks like it anyway, at least superficially – the good of the people. But in reality, it was defending wealth. It was defending capital. It was defending private property.

And the way we try to this day to get collective wellbeing for the citizens of the United States, and what do we have? We have the Ayn Rand school of neoliberal ‘pull it up by your bootstraps’ and all these moral arrangements that possibly came partially from Calvinism, partially from a well-oiled attempt at the wealthy in this nation to discipline the [inaudible 00:18:03] pause, if you will, to make sure that they always felt like they needed to work a little harder, and this whole work ethic idea.

And every time we try to get health care, try to get student debt relief, or we try to make food stamps more humane or provide meaningful services like a job guarantee, et cetera, we’ve always got these austere perspectives. It comes down to moral stories. It never comes down to anything meaningful so we can get past that financial perspective once we have an MMT lens. But it seems like there’s this behavior.

It’s generational, but it’s also reinforced by our media and all the other organizations and concepts throughout that really reinforce this idea that the government shouldn’t do anything for us, that you’re a taker, you’re a moocher. And this mindset has really been pervasive. And I believe a lot of it, aside from the fact that it’s capital wants to make a buck off of us.

And if it’s taken care of by the state, they can, or they can’t do it, and the devil may care way that they would be able to do as long as it’s privatized. There seems to be a mental logjam in this entire nation really starting to become around the world as we export this belief. But I believe it is largely directly tied, this racism, to the concept of not wanting to see African-Americans have nice things.

And this whole racial hatred is so baked into these pushbacks. I really do believe that there’s people out there that simply don’t want these programs because they’re afraid to see a black man get health care or they’re afraid to see a black mom who is struggling with five kids to receive help because she should have done better. What are your thoughts on that? The rugged individualism baked into a racist context?

[00:19:52.180] – Tauheed

Well, you started off by talking about the Constitution. The Constitution of the United States as a document, you are absolutely right, is designed to benefit those who have money and power. Of course, in that time, it was white men with land holdings. Those are the only persons who could vote. Women were not allowed to vote because women were considered, well, human, but not as good as men.

That’s another institution that undergirds the foundations of patriarchy, the fact that they are persons who are not “white” and I’m doing white in quotes, right, because who is considered to be white can shift over time and has done so. But those who are white, if they’re put into opposition with those who are not whites, it provides another divide-and-conquer strategy for those who have land and have wealth and have power to make sure that the working class, the poor don’t coalesce and realize that they’ve been duped, that their work effort is actually being stolen by a group who in fact don’t create the things that they create; they simply steal the wealth created by them.

And so in this context, within a capitalism in which capitalists are wanting to organize systems so they can, as Veblen said, “make a living without earning a living,” Thorstein Veblen, again, the father of the institutional school of thought that I teach and research in. His first notable book was called Theory of the Leisure Class. And by the leisure class, he meant the persons in society who had, let’s say, stocks and bonds, who had an income stream from that and therefore did not have to do work.

They could simply make a living but not earn it. They didn’t have to do any work. It’s called stealing the surplus. And that surplus, in order for it to continue on, needs to be supported by a number of, and I won’t use the term institutions  any more, because we can get confused. I’ll use the term micro institutions. There are micro institutions that need to be in place in order for the wealthy to justify their income.

One of them, for example, happens every now and then when the President of the United States wants to have a tax cut that’s going to benefit the wealthy. There’s the habit of thought that comes along that says, well, “the wealthy are the jobs creators.” And so if you want a job, then you have to give money to the wealthy and they’ll reinvest that, and you’ll have a job. To grow their plant, you’ll have a job. Now, the fact that that hasn’t happened doesn’t deter people from believing that that’s true.

And so that’s a habit of thought. The idea that African-Americans or persons of African descent are not equal, that women are not equal to men, that the government, the federal government has to run its household on the same type of budgetary framework that we run our households is a habit of thought that allows the wealthy to continue to drain the surplus, to do what’s called rent-seeking to drain that surplus away from the poor, to live much better. Jeff Bezos wealth has increased, what, $75 billion dollars in the last year, during a pandemic . . .

[00:23:19.189] – Grumbine

Insane

[00:23:19.810] – Tauheed

That wealth was, I’ll use the term, stolen from the poor or at least from his workers. It was stolen from his workers. You know, he refused to pay his workers hazard pay, is refusing to provide benefits for them. He’s standing in the way of a union being organized because any of those other things would decrease his wealth. And so you have these ideas I call micro institutions that can combine together to create a process whereby the rich can get richer and the poor can get poorer.

And because they seem so natural. It’s obvious that the federal government has to budget just like I have to budget. That’s an obvious thing, right? Well, it’s not obvious if you understand how money is created and what money is, but that doesn’t become part of the general educational system. It’s something that the wealthy know, but that the poor don’t know.

[00:24:15.550] – Grumbine

It’s interesting, the more I think about this, and I’ve probably thought about this differently, but you’ve helped me come to a new understanding just in the short time we’ve been talking here. It seems to me that institutions I know that you’re staying away from, but I want to use the term for this particular case.

[00:24:32.188] – Tauheed

Sure.

[00:24:33.160] – Grumbine

Institutions impact the viability of hope, the realm of possibilities, what you can accomplish, what you could possibly accomplish and what would equal, quote-unquote, “being uppity,” dreaming a better dream, envisioning being able to survive in a world where people don’t hate each other and so forth. But they’ve really conditioned us to eat our peas and to suffer silently and to just accept that these problems are because we failed as people, we are a failure.

What do you think the overall impact to society is for the law of diminished expectations that appears to be conditioned directly into the psyche of not just African-Americans, but the American people that would equal the 99%, the labor force. The workers in this nation really have a lot of short versions of the truth that don’t really give the full picture and they live by these false constraints. What do you think contributed to that and how might we change those institutions?

[00:25:39.510] – Tauheed

Well, I’m going to continue to speak in terms of micro institutions. You had mentioned something in an earlier comment about Calvinism, a particular religious doctrine that is very much a doctrine about the punishment of God if we don’t eat our peas. And there’s also the micro institution, the habit of thought that says, well, “If you’re so smart, why aren’t you rich?”

There’s the idea you turn that upside down and the rich are rich because they’re smart, and if I’m not rich, it must be because I’m not smart. And if I’m not going to be working 24 hours a day, then I’m not going to get ahead. That’s out of that rugged individualism. That’s out of that Calvinist and Protestant ethic idea that people believe.

And when we believe those things, if we believe that we’re not smart and that’s why we’re not rich, or if we believe that we don’t work hard enough, that’s why we’re not rich, then it suppresses our sense of human agency. It suppresses our ideas about what we can become, and it allows the wealthy who don’t work hard, who are not smart. I mean, we certainly have gone through an era of the last four years in which we had to question whether or not a person who was supposedly rich was also smart.

The covers have been somewhat lifted on that. But these ideas are deep in American society and they’re used, for example, to differentiate the poor black from the poor white. To allow the poor white person to believe that they’re not quite as poor as the poor black person, therefore they must be smarter or they must work harder, or that the poverty in the African-American community or the Native American community or the Latinx community is because these people are not sufficiently hard workers, they’re lazy or they’re just dumb.

And these ideas enable those who want to take advantage of our work and our labor to do so. And it constrains us in terms of our thinking about how we might change things. If we begin to realize that some of the rich are rich just because they were lucky; or because they stole things from other people. They weren’t smart, they were just devious.

Then if we can see through that, then we can understand that perhaps our fate and the fate of our children is structured in a way to disadvantage them against those who have the advantage and who will continue to use that advantage in their generations and the next generation to make their children and grandchildren even richer.

And so I think there are ideas, there’s certainly ideas in terms of class issues that overlap with issues, in terms of racial issues, the same idea of who’s smart and rich or who’s hardworking and wealthy and lazy and poor. They’re all-purpose ideas. They can be used to explain class difference or racial differences or gender differences or any other kind of differences. There are all-purpose micro institutions in that sense.

[00:29:11.850] – Intermission

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[00:30:01.110] – Grumbine

Malcolm X, he had a rough life, his father killed by racists. He went through life grifting in the beginning and he went to jail and met some really important people. He learned some really good things. He said there was never a time he didn’t have a book in his hand. He read the entire time he was in prison, came out having been through the Nation of Islam, and his whole world changed and he started seeing things very differently. Clearly, this is a change in agency.

He started believing that he could make a difference. He started seeing the devil, if you will, in terms of the institutions and the belief systems, the things that were blocking them from ever achieving the goods. There was an understanding that, in fact, they were being played, that they were being used. And he became more militant.

He went to Mecca, and I find it fascinating that his letter from Mecca when he came back and he realized that, oh, my goodness, there are white people that don’t think the way the American people think. That I’m not treated like less than human. I’m treated as a peer, as a revered individual. And this change that occurred during that time period, it exposes the mindset of the United States and how deeply ingrained racism and classism are. I’m curious what your take on Malcolm’s conversion is and what he maybe experienced in Mecca and what his revelations leaving Mecca may have told us about society.

[00:31:39.880] – Tauheed

Yeah, I think it’s an excellent question. Malcolm X, el-Hajj Malik el-Shabazz, is a hero for me, and a case study. I gave a lecture here at UMKC in 1999 when the U.S. Postal Service commissioned a stamp in his honor. And in that talk, I talked about Malcolm’s three transformations. He didn’t just have one. Of course, you mentioned that his father was killed by a group of Klansmen and his father was a follower of Marcus Garvey, of that movement.

And that, of course, stuck with him. But when he came to Detroit, he didn’t think very much of himself and he started to get into criminal life. His arrest and then movement to prison was his second transformation in that sense from growing up and then going to prison. And you’re right, his connection to the Nation of Islam doctrine that essentially worked against his sense of inferiority, his internalized racism, if you will.

Part of the doctrine of the Nation of Islam was that black men were superior to whites. And I look at that in terms of a psychological process as the counterbalance to the inferiority that he went into prison with. In other words, he took his inferiority, and while he was in the Nation of Islam that got counterbalanced with a superiority, which allowed him then to make his third transformation when he left the Nation of Islam to become an orthodox Muslim.

He could see that he was the equal of everyone and everyone was equal of him. He would not have been able to see that as Detroit Red, the hustler, and pimp in Detroit because his working out that was a working out of his internalized racism. And so Malcolm went through a couple of transformations and – you used the term “agency” – his sense of human agency was put on an even keel by the fact that he could now see that he wasn’t inferior and he wasn’t superior to other humans.

He was human and they were the same. That sense of inferiority or superiority is part of the dynamic of American society. And as American society has infiltrated other parts of the world, the idea of racial superiority, of white supremacy, the idea of other types of superiority have in many instances has been transported and reinforced from American society. I’m not saying that it started in American society, but capitalism has kind of shown its rewards, the rewards of taking a white supremacist attitude.

If you are white in America and you take advantage of the capitalist system, you can become fantastically wealthy. Whereas you look at people of color in other places, or in developing countries, so much of standard economics at one point had the framing that those people are poor simply because they are the people who they are, either in a very biologically racist way of talking about them as “not white people” or in a culturally racist way of arguing that their culture was inferior to American culture.

Therefore they were poor. And so Malcolm overcame that in his movement to Mecca, where he saw all people from all over the world, from all different cultures, from all different races, and could then take an idea that he was equal. This is not a utopian situation because it is Islamic transformation. Women were not considered the equal of men in that context as well. So Islam in that sense has something to overcome as well.

[00:35:31.760] – Grumbine

It’s interesting because I’m late to the game, but Malcolm became a bit of a hero to me. I read just about everything I could get my hands on. Just a fascinating story and not just a story, but the lessons that come out are vital for everyone to learn from because of the fact that it is these subconscious beliefs that we have that oftentimes hold us back from being able to do truly great things.

It was brought to my attention – I’m a shameless fan of a band called A Tribe Called Quest and Phife, rest in peace, Phife and Q-Tip had an amazing flow, amazing vibe that nobody else had ever experienced. It was kind of like a mixture of fusion, of jazz meets R & B meets rap. And it was amazing. You can listen to it and you sort of get a feel for where they’re coming from, although you don’t know because I’m white and a lot of stuff they said were things – I can’t explain them, I wonder what they mean by that.

And this is from a white man’s perspective. There’s almost like a shared, “Yeah, I know what you’re saying. Yep, just keep your head down, keep moving” kind of thing. And some of the rap that goes on today goes back into that empowerment. People are throwing money around. They’ve arrived. And when you’ve had a boot on your head for that long keeping you down and you finally break through, I imagine that’s a pretty powerful thing.

The problem is, is that there’s only a handful of rappers in the world that have actually made it, a handful of NBA players that have made it. That’s it. That’s the hope. And the capitalists have pounced on that. They’ve manufactured shoes, that it’s not going to the African-American community. You look at weed and you realize that for years people were thrown in jail for this for no reason whatsoever. Then we’ve got laws that are changing and people are selling legal marijuana.

It is the same people that were putting people in jail that are now profiting from it. And the reason why I brought up a Tribe Called Quest is because I feel like there was this moment where you saw everybody enjoying the music. I listen to music all the time and it touches me, but it doesn’t touch me that way. There was something special going on. It was like a code that I can’t even tap into. And I wonder how we can bring about that kind of change, how we can leverage these tools for good?

Because the next part of what I’m going to talk about is the economic side of this. This has largely been socio. We’re going to bring the economic here in a second. But from a socio perspective, I can’t even imagine waking up every day knowing that somebody hates me right across the street. They were doing a remembrance at the Apollo for Phife, who passed away from diabetes back in 2016.

And Kanye, of all people, raised the point that you live in L.A. and everybody’s got a mansion, everybody drives a $500,000 car. And he realized that all the people that were living that way were the white people that had stolen the black man’s music and he said they’re sitting there in New York City where the real stuff is happening and they’re watching people just living their life on the corner, trying to get by. And the white man once again, is still profiting off of that product of black America. It was powerful and I never thought I’d say what Kanye did was powerful in that sense. But it was.

[00:39:07.900] – Tauheed

Yeah.

[00:39:07.900] – Grumbine

It was an eye-opener. And it’s like every aspect of the black experience has been stolen down to identity. I’m curious, what are your thoughts on the role of culture from hip hop and rap and things like that, expressing life on the street with reality? Is this a way of bringing about more of that Malcolm style? “I can do this.”

[00:39:33.580] – Tauheed

Mm hmm.

[00:39:34.390] – Grumbine

What are we getting from this? What is the primary point?

[00:39:37.910] – Tauheed

This is a wide-ranging, far-ranging discussion.

[00:39:41.390] – Grumbine

It sure is.

[00:39:42.520] – Tauheed

 You’re talking about a Tribe Called Quest, I would put that particular flow even before that, I think about Eric B. & Rakim Allah in terms of his flow, who was very much a mentor of people like Q-Tip and Phife, in terms of that flow. Now we get into that era in which we now call that conscious rap or political rap. And that process was flowing, if you will, through not only African-American social life but also the social life of whites in this country as well.

And the idea, the thing that’s put forward for the development of something like gangsta rap is that it is a process that came into place to disrupt that political consciousness and awareness that was developing not only in the African-American and Latinx community as hip hop and rap came out of New York, but it was also a way of creating a genre in which the white record producers could now get back in the game.

And in terms of African-American music, prior to that, you have the jazz scene, then you have the R and B scene. Motown was a different thing in terms of breaking into that popular music structure with an organization that was honed and controlled by African-Americans was eventually sold to Sony. But we get that movement from political rap, from conscious rap into gangsta rap.

And it’s promoted, it’s everywhere, and it kind of turns off people’s political way of thinking into more of an individualistic way of thinking. I think this theme of individualism is very important because it’s the idea that when people are coalescing, when they are “Bacon rebelling” against you [laughter], you have to do a divide and conquer situation, right?

We have to stop them from collectivizing, and turn them back to that individual selfishness and gangsta rap did that. It was all about the individual, particularly based around a male-centered theme, male superiority. And so I think culture in this sense, and by this we mean popular culture is extremely important because it is through popular culture that these micro institutional frameworks, that’s one of the major ways these habits of thought are propagated from one generation to the next.

And whoever controls that propagation can control the agency and the idea of collectivism versus individualism, and in controlling that, if they can make us believe that we’re all individuals and that our success is all our own, failures are all our own, then it prevents us from getting together, talking to other people and seeing that there is a social structure there, the sense of institutions that are designed to keep us in poverty, to keep us mentally in poverty, physically in poverty, economically in poverty, while some others can take advantage of that.

So, yeah, I have this idea that I tell my students in class that everything is connected to everything else. That makes life complicated. But I think everything in the social world is connected to everything else. What makes me an institutionalist is I think that the institutions can help us understand those connections.

[00:43:16.890] – Grumbine

That is absolutely incredibly powerful because I tried to keep this broad because the MMT angle that I frequently focus on, sometimes it’s without context. Sometimes people don’t really realize the power of public money. I would say 95 percent of the U.S. population, even with the resurgence that has occurred, in particular from Warren Mosler’s book, Seven Deadly Innocent Frauds, and more right here, right now, Stephanie Kelton’s, The Deficit Myth.

And this is such an easy concept. You play Monopoly. You already know the bank creates money out of thin air. [laughter] But the effect, that whole concept of how we view money, how we view credit, how we view legal relationships between people, that has been, I think, intentionally butchered. And a more gracious way of thinking is we just haven’t left 1971 behind. My thoughts here are the way we view money is one of these institutions.

[00:44:22.560] – Tauheed

Absolutely.

[00:44:22.560] – Grumbine

That particular institution of scarcity, the micro institution of “If I don’t mind my P’s and Q’s, I’m never going to make anything of myself. And if I need health care, it must be something wrong with me.” We touched on that a minute ago, but the insights of understanding that we have a free-floating fiat currency, non-convertible, not pegged to gold, that we’re just tied to the productive capacity of the nation. And there’s nothing our government cannot purchase, including reparations.

As long as it can be achieved and purchased in U.S. dollars, there’s nothing that we can’t do. It’s never a monetary phenomenon. It’s a political will phenomenon more in line with what we’ve been talking about here. It’s an institutional thing. I’m curious as to your take on within minority communities, what do you think would happen if, say, all of black America was to suddenly come into contact with yourself and Delman Coates and others that have worked so hard, interdisciplinary approach to economics, and pulled the curtain back and said, “Guys, you’ve been lied to.

There’s more than enough money to clean up those city streets. There’s more than enough money to make sure that these homes are not falling apart.” First of all, I guess where are we in terms of making that happen? How far away are we from an awakening? And secondly, what do you think the impact would be if people knew?

[00:45:52.140] – Tauheed

Well, to answer the last part, I think we are getting closer and closer. I don’t know where the tipping point is, but the growth of understanding or at least interest in Modern Monetary Theory, of course, has grown exponentially in the past decade. Much of that work, of course, is due to the outreach from people like Stephanie Kelton, who’s been a champion of that. Her new book is an expression of that.

And there is a large following out there on the general public. The UMKC blog that she started. There are other blogs out there that carry MMT type of content, the things that Professor Bill Black does, the stuff that Michael Hudson does, these are persons who are very popular in the popular realm, and so that puts MMT, Modern Monetary Theory, out there in a broad consensus.

And to the extent that that cannot be stopped, we are moving closer and closer to the general public understanding it and demanding the change that that would authorize. In the, quote, “minority communities,” we need to do better outreach. Reverend Coates’ ministry, if you will, in that direction is very much a positive thing. Let me say something because you’ve used the term “minority community.” For me, that is also a habit of thought. Some habits of thought conform with reality, but some are not.

African-Americans are a minority in the country, people of African descent. And I don’t want to use racial categories, but black, brown people are not a minority in the world. And so to the extent that we have a larger view of populations, then calling yourself a minority, in a sense, diminishes your sense of agency. Talking about Malcolm, this is something that Malcolm, of course, talked about when he was a member of the Nation of Islam and also, of course, when he left, that there are more people of color in the world than there are otherwise.

And so the term minority always bothers me. But I understand the context. We’re talking in the U.S., and there are minorities in the U.S. Then we have this strange term, majority-minority. By 2050, the country will be majority-minority, but that means it will be minority white, you know.

[00:48:15.030] – Grumbine

That’s right.

[00:48:15.690] – Tauheed

And so even continuing on calling us minorities diminishes the impact that we have. Now back to the idea of MMT and reparations. I’m a big supporter and admirer of the work that my colleagues Sandy Darity, William Darity and Kirsten Mullen have done in their book, From Here to Equality. I think they’ve set the right tone economically for reparations.

Most of the reparations movement work that’s been done, that’s been out there for decades, has been done from either the legal community or the activist community. And this is not the first economic work that’s out there. This book is very much built on work that was done by another black economist named Richard America. He wrote a book called Paying the Social Debt, I’m thinking in 1980 or something like that.

But Sandy’s and Kirsten’s book is getting lots of play. They’re doing lots of interviews. And they’re doing those interviews with regular people, not among academics, but with people out there in the community. And their estimate that the reparations bill, if you will, is somewhere between $10 and $12 trillion. That’s a lot of money. Had this book come out two years ago or even a year ago to this date, the idea of that $10 to 12 trillion would be an impossibility.

And then we had covid, we had a CARES Act that was over $2 trillion, the Federal Reserve Bank was authorized to create as much as $4 trillion in terms of its bailout program. So now we’re talking real money and people are looking at the Federal Reserve and understanding that they created these facilities to create no-interest loans for financial institutions.

And there was not an increase of one dollar in the federal debt as a result of doing that. And so in the practical world, MMT and what MMT had predicted and expected to happen makes it even more understandable by, quote, “the general public.” And so MMT has gotten a boost from covid relief funding.

And we are also, of course, going into other kinds of crises with climate change and infrastructure and these other kind of things that are going to take trillion dollar allocations in order to get those done. What we can’t do is allow people to say that we spend so much in covid relief now we can’t cancel student debt. There’s no money, right?

[00:50:59.230] – Grumbine

Mm hmm.

[00:50:59.910] – Tauheed

The idea now is that we can pay for anything that we can resource. If the resources are out there, we can pay for it. So there’s no need for unemployment. We could have a job guarantees program because we can pay for it. We can have a Green New Deal because we can pay for it. We could have Medicare for All because we can pay for it because paying for it is not the issue. The issue of Medicare for All is do we have enough medical professionals and facilities to provide the services that we’re going to need?

That’s the resource constraint. If we have no resource constraints, there are enough doctors, nurses, physician assistants and so forth, we can pay for it. And those persons who are poor and middle class who are struggling don’t need to struggle because we don’t have enough money. That’s not why they’re struggling. There’s an interesting thing that happened around 2004.

The Treasury Secretary whose name is Paul O’Neill, wrote a book about his experience in the Bush II White House. And he talks about this meeting he was in where Bush was wanting to spend more money on, I’m thinking, it was probably war. And O’Neill pushed back and said, “No, we can’t do that. We will increase the deficit.” And Dick Cheney in the book, O’Neill says that Dick Cheney told him that Reagan proved that deficits don’t matter.

So the wealthy and the powerful understand that money is not a problem and the money that’s spent in warfare goes to the military-industrial complex and comes back to Halliburton, Cheney’s company, and other companies. So that’s an MMT insight. Deficits create wealth in various places. What we want is a deficit that’s going to create wealth for ordinary people. And if you understand that, then money is not a problem.

[00:52:59.270] – Grumbine

It’s interesting because another belief that we’re up against is the deification of the wealthy, the idea that we need the wealthy’s money to afford to do nice things.

[00:53:12.050] – Tauheed

Right.

[00:53:12.590] – Grumbine

By that thinking, Delman Coates said it great in our national outreach call last night. He basically said, if you keep carrying that water for that lie, then that means that we need the rich to stay rich because we can’t fund anything without them. And I just thought, wow, now that’s a paradigm shifting concept. Hey, you want to keep the rich rich, keep deifying them.

What is your take, if you will, on the role of wealth in countries in general in terms of how we view what is possible and what is not? You’ve got so many rich guys so unbelievably wealthy, but if they died tomorrow and all their wealth vanished, it wouldn’t even impact us at all if we had a government that understood MMT, correct?

[00:53:57.500] – Tauheed

Oh, absolutely. If they were to disappear from the face of the earth and the money that they had was locked in the bank accounts because nobody knew the password, we’d just go on with our lives as if they had never existed. You know? There’s the scenario that I think about in terms of something like Social Security. So talking about a practical idea that we’re going to run out of money, we’re supposed to run out of money for Social Security in 2035 or something.

And I kind of think about this thought experiment. And let’s say we have the Treasurer of the United States, Secretary of the Treasury, who on one day at the end of December says “We’ve run out of money, we can’t make any Social Security checks in January. Can’t send any out.” And then some hacker from, let’s say, Anonymous, hacks into the Treasury and puts the billions of dollars necessary to send out the January Social Security checks.

Just puts that into the system. It’s just ones and zeros, as Warren Mosler has pointed out to us. You come back in January and you say, well, I thought we were broke, but here’s the money, let’s send it out. What happens in the economy? Nothing. On the other hand, if you say at the end of December, we don’t have any money. If you don’t send those checks out in January, what happens to the economy?

It falls into recession because persons who are receiving Social Security cannot buy the food, clothing, and shelter that they’re used to buying. And so what happens if you don’t continue to push money out into the economy is that the economy goes into a depression. And if you continue in this case, doing what you were doing before, even though your accounting says you don’t have money, you keep creating money and pushing it out, the economy continues on.

So it’s kind of the opposite of the rich. If the rich were to die and their money in their bank accounts were inaccessible, the economy goes on just as it was before. Nothing changed.

[00:56:02.540] – Grumbine

All right, I want to give you a chance to close us out. As an institutionalist, what would be some of the things you would tell our listeners to look at? What are some of the key insights that as we walk away from this broadcast that they might want to go digging into to help facilitate their growth and their ability to attack some of the problems we’re facing?

[00:56:27.130] – Tauheed

As we were talking, I wrote down something I didn’t get a chance to mention, you know. Adam Smith is always put up as the hero for the conservative point of view. But Smith was more complex than that. And Smith in the Wealth of Nations had a couple of things that would perhaps surprise some of the conservatives who think that he’s a hero.

One of the things that he said was “landlords, like all other men, like to reap where they do not sow.” So in other words, there’s a class of people, as we talked before, who want to get income for doing nothing. They want income just for owning things. And they don’t have to do any useful work to do that, but as long as they have the private property access, then they can get an income.

Well, the Marxian solution to that, I’m not a Marxist. I’m an institutionalist. The Marxian solution to that is that no one should have private property. But there’s another way you can think about this. Everyone should have private property and everyone should have enough private property to have the income that they need in order to live a good life.

So I think the idea and the possibility of, let’s say, the employee stock ownership process, or cooperative enterprise is something that will help us to understand that we can get the benefit of our labor. We don’t need the rich to get the benefit of our labor. And that wealth has power is also something that Smith indicated. And so the wealthy become wealthy because they want power. And then when they get power, they use that to become more wealthy to have more power.

If we want to distribute the power, the ability to make decisions and control your life, you have to spread the wealth out as well. And we had a discussion about reparations and reparations on an economic basis is about equalizing the wealth between African-Americans who are descendants of slaves and whites. That wealth gap is estimated at about $150,000 per person of significant wealth. And that’s a power vacuum.

African-Americans have less power to control their lives than whites because there’s a great wealth difference. And so reparations becomes not just an economic struggle, it’s always been a political struggle, but it becomes an economic struggle and it is certainly an issue of economic and social justice. And so MMT says that $11 to $10 trillion that is estimated as reparations bill can be funded very easily because we have a sovereign currency and we can create money.

[00:59:12.750] – Grumbine

That’s a great way to wrap this up. Linwood, thank you so much for your time. Where can we find more of your work?

[00:59:20.230] – Tauheed

Well, I don’t have Twitter. I suppose I should. I should get Twitter. I’ve been asked that question a couple of times recently. But right now, you can’t find anything anywhere, except I guess if you Google my name, I’ll show up with some articles and some papers that I’ve written, so I guess that’s the way to do it.

[00:59:38.930] – Grumbine

All right. Well, look, it’s great. We got to meet on a radio show ourselves.

[00:59:43.250] – Tauheed

Yes. Yes.

[00:59:44.420] – Grumbine

Sputnik Radio with Political Misfits.

[00:59:46.310] – Tauheed

Right.

[00:59:47.150] – Grumbine

I was impressed with you then. I’m even more impressed with you now. You’re just a wealth of information. This was a challenging interview, man.

[00:59:54.530] – Tauheed

It was. We went everywhere

[00:59:55.910] – Grumbine

But I felt like this subject required more scope. To be too narrow, I think would eliminate a lot of people’s ability to find a place in our discussion to latch on to. And I just felt like there were some opportunities there. And I really appreciate your ability and willingness to go there. So for me, this was a fantastic interview. I really appreciate it.

[01:00:20.690] – Tauheed

It was great. I really enjoyed myself. The topic was to be a wealth gap, but as I said, everything’s connected to everything else. So wherever we go, it’s all connected.

[01:00:29.450] – Grumbine

You got it, man.

[01:00:30.650] – Tauheed

Yeah. Yeah.

[01:00:31.650] – Grumbine

On that happy note, folks, my name is Steve Grumbine and I’ve got Linwood Tauheed on here with me as well. We’re out of here. Have a great day, everyone. Macro N Cheese.  See ya.

[01:00:48.410] – Ending Credits

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.

Mentioned in the podcast:

The New Jim Crow by Michelle Alexander

Hyman Minsky

Thorstein Veblen

The Saint Domingue Revolution

Toussaint Louverture

Declaration of the Rights of Man – France, 1789

“Liberté, Egalité, Fraternité”

The Theory of the Leisure Class: An Economic Study of Institutions (1899), by Thorstein Veblen

A Tribe Called Quest

Rakim Allah

7 Deadly Innocent Frauds by Warren Mosler

The Deficit Myth by Stephanie Kelton

Paying the Social Debt: What White America Owes Black America by Richard America

The CARES Act

Paul H. O’Neill

The Wealth of Nations by Adam Smith

Rent of Land by Karl Marx

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