Today’s “populists,”—both right and left—appear to believe that virtually anything the U.S. federal government does is an oppression of individual liberty, private rights and local control of resources and norms. Setting aside adolescent posturing—like refusing to wear face masks at the height of a national pandemic, or the will to anarchy generated by racist fears—there is a serious and legitimate side to these populist sentiments: Serious populism, it would seem, believes that getting the federal government out of the business of governing will enable local communities to grasp control of their own destinies and resources. Populism’s push to incapacitate the federal government, then, is a striving for local autonomy and control over a collective wellbeing.
Mark Bray, a historian and lecturer at Rutgers University who helped organize the Occupy Wall Street movement, was recently quoted in the Washington Post thus: “Broadly speaking they (the populists) want directly democratic, self-managed communities at the regional and macro-regional levels. They want decision-making from the bottom up versus the top down.”
If serious populism, then, is about empowering local and regional communities to directly engage in the decision-making about how they will manage their own collective wellbeing, there is another issue—a very important one—which populists need to consider. Let’s first, however, be specific about what we’re discussing: The idea of “managing the collective wellbeing of a local or regional community” means, among other things—but most important of all—paying local citizens and businesses to provide goods and services deemed necessary to achieve that wellbeing. Specifically, I am referring here to the not-profit-making goods and services which private commerce either cannot, or will not, provide. The important issue that arises, then, for the serious populist, is how to pay people to undertake the goals of populism.
For example, let’s imagine a local community decides through direct democratic process to clean up a river system that for decades has been poisoned and clogged by mine tailings and uncontrolled run-off from the operations of a global mining corporation—and wants to create and maintain a local fishery to boot that will provide food, recreation, and maybe even a boutique local tourism as well. A good number of under-employed citizens can be identified who would jump at the chance to do the work for a living wage. But who would pay them? Also, there is the need for technical advice and planning, for which the local community lacks the skilled engineers and biologists—to say nothing of the dredging equipment, filters, pumps, and rock-moving barges that will have to be employed. How will they be paid for? A bank-loan is clearly not possible because cleaning up the river system will not generate revenues and financial profits that can be used to pay the loan principal and interest.
Put aside, as well, the option of a charitable fund-raising campaign because this is not a wealthy community with deep pockets for local betterment. A diehard populist might declare the solution is for the community to create its own money—a local currency like the often-cited Berkshares in New England. Outside consultants and leasing companies, however, will not exchange expertise and equipment for a local currency—they want “real” money that can buy goods and services in their own communities (or can be used, come springtime, for federal tax payments). Until this need to start paying people is solved, then, nothing can be done to get the cleanup of the river system even started.
The irony of this fundamental populist dilemma is this: The only way the local community could begin paying citizens to restore the river system, hire the technical experts, lease the dredging equipment, etc., is by using fiat money issued and allocated to it by the only institution capable of doing so. And what institution is that? The national federal government the populists so fervently despise and want to incapacitate! This fact, it seems to me, goes to the heart of both populism and MMT progressivism—and profoundly links them together.
What I mean is this: if real populism has any hope of succeeding in achieving its goals, it must embrace, whole-heartedly and creatively, the processes of national democracy. Rather than decapitating the federal government, it should strive to take enough control of its processes to meaningfully participate in the allocation of fiat money to the not-profit-making goals of local communities.
This should be neither complicated nor ideologically convoluted. It is simply a matter of (a) understanding how modern fiat money operates, and (b) demanding that elected representatives debate federal spending programs and cast their congressional votes with that same understanding. That, really, is all that MMT is advocating—and it is the foundational structure of what could become populism for real.