The theory that dares not speak its name

Economic Summit, GB 1984

A Martian scholar of Modern Monetary Theory, monitoring the UK media from afar, would be tempted to think that economic enlightenment had yet to reach these shores.1 But they would be wrong, for not only has MMT most definitely arrived in the UK, it has been here for quite a while. Our imaginary extraterrestrial should be forgiven, however, for thinking otherwise. That’s because, despite the increasing frequency with which the components of MMT are being discussed, the theory itself is rarely named.

Nowhere is this more apparent than in the Guardian and the most inexplicable example of omission was an editorial, published earlier this year, entitled The Guardian view on a job guarantee: a policy whose time has come.2 The piece was in response to a talk about the Job Guarantee given in London by Fadhel Kaboub, a US academic and MMT proponent.3 The editorial describes how the government should be the ’employer of last resort to absorb economic shocks’ and how the UK, by virtue of having a sovereign currency, ‘has no real constraint on spending’. It goes on to cite Bill Mitchell and the Levy Institute, but there is no mention of MMT.

The Guardian has previous form when it comes to omissions like this. Phil McDuff is a freelance writer and has written eight articles for the paper which are either wholly about MMT and its policy prescriptions or look at wider issues from an MMT perspective. Most of these articles cite one or more of Bill Mitchell, Stephanie Kelton, Pavlina Tcherneva, Scott Fullwiler and Abba Lerner.4 None of McDuff’s articles mentions MMT.

Then there’s Larry Elliott, the economics editor and arguably the staff writer most sympathetic to MMT. Elliott’s hat-tip to Reclaiming the State by Bill Mitchell and Thomas Fazi probably got a lot of MMT supporters excited.5 But there is no mention of MMT in the article.6

The only reference to Modern Monetary Theory in the Guardian that I can find (bar a couple of letters and thousands of comments on CiF) is from 2013 when David Graeber named the theory in an article focusing on Irish debt.7 But two years later, when Graeber wrote an article about sectoral balances (and accompanied it with a short video), there was no mention of MMT.8

Now, it’s difficult for outsiders to divine what is going on inside the Guardian or in the minds of freelance writers.9 It’s possible that there’s a long game being played; it’s possible that MMT is not being named because that would highlight the obvious conflicts with other policies ‘whose time has come’. Whatever the reason, the paper is doing a disservice to its readers because they are being denied the opportunity for joined-up thinking. The readers won’t be able to make connections between the ideas, their originators and the wider context. The readers won’t know that MMT brings together all the ideas into a coherent and workable whole. The readers won’t know that the Job Guarantee is a creature born out of Modern Monetary Theory.

I am hopeful, however, that things are going to change quite soon. On Friday (5 October 2018) we will see the launch in London of the Gower Initiative for Modern Money Studies (keynote speaker: Bill Mitchell). GIMMS will act as a national hub, a central organising point for all things MMT in the UK. Their aim is to encourage the development of a flavour of MMT which is uniquely suited to the social, economic and cultural conditions here in the UK.

Which brings me neatly to the stamp at the top of this piece. It was issued to commemorate the 10th G7 Summit in 1984, attended by Thatcher, Reagan and a few other notables. Do you remember what came out of that meeting? No, neither do I.10 The trouble with international jamborees like this is that, despite all their promises to sort the world’s problems, they rarely achieve anything. As Larry Elliott, clearly influenced by Reclaiming the State, said last week:

While the nation state is far from perfect, it is where an alternative to the current failed [globalist] model will inevitably begin…The plan is to build a different sort of economy from the bottom up – locally and nationally. That’s not going to be easy but beats the current, failed, top-down approach.11

If we are going to build Elliott’s new economy we first need to make sure that everyone knows what money is and that will require a catalytic organisation like GIMMS. They, and movements like them, have greater potential for effecting real change than any get together of globalists. I wish GIMMS well in what will be a difficult endeavour.

And Larry Elliott can help too: by getting Modern Monetary Theory out of the closet and onto the pages of the Guardian.

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1. Critics of MMT are probably going to have fun with the Martian angle: ‘Yeah, it’s such a crazy idea that it might as well be from Mars’. And should they ever get the literary allusion in the title I can foresee some unpleasant comments.
2. See The Guardian view on a job guarantee: a policy whose time has come, 3 May 2018, The Guardian.
3. See The Case for a Job Guarantee in the UK: The Economics of Care, Dignity, and Prosperity, Fadhel Kaboub, 28 April 2018, City, University of London.
4. See (all Phil McDuff, The Guardian):
If big business is to thrive, it needs a strong welfare state, 17 March 2017;
What if we could stop exploiting people and cut unemployment at a stroke? 3 June 2017;
How to stop the super-rich looting our wealth: make it illegal, 14 November 2017;
A budget to increase national debt? That would be a pay rise for Britain, 20 November 2017;
The £50bn Brexit bill isn’t such a terrible deal – especially if we pay via QE, 1 December 2;
Eliminate the deficit? Eliminate economic hope, more like, 5 March 2018;
Chuka Umunna, there’s no excuse for unpaid ‘student placements’, 12 June 2018
Enough Brexit fairytales. In the real world spending must increase, 19 June 2018;
5. See Think our governments can no longer control capitalism? You’ve been duped, Larry Elliott, 14 December 2017, The Guardian.
6. I think that Elliott has been influenced by the book, but he is also influenced by a lot of other writers as well, including those who write about the virtues of a Basic Income and the perils of automation. If you think that you have seen that ‘whose time has come’ bit before it was probably Elliott when he said ‘Universal Basic Income is an idea whose time may well have come’. See Robots will take our jobs. We’d better plan now, before it’s too late, Larry Elliott, 1 February 2018, The Guardian.
7. See There’s no need for all this economic sadomasochism, David Graeber, 21 April 2013, The Guardian.
8. See Britain is heading for another 2008 crash: here’s why, David Graeber, 28 October 2015, The Guardian. I suspect that we won’t be seeing any more from David Graeber about MMT because his support for Basic Income and the success that he has had with his ‘bullshit jobs’ stuff doesn’t fit at all well with Job Guarantee.
9. The footnotes here seem to be turning into an index of all MMT articles published by the Guardian. So, for completeness, I may as well include the rest. Philip Pilkington has two, the first of which has the letters ‘MMT’ but no explanation of what they stand for:
Labour’s forgotten jobs guarantee, 7 June 2014;
Monetarism is the living dead of economic theory – let’s kill it off, 22 March 2014;
There are also articles published by the Australian wing of the paper. These are from Warwick Smith and none mentions MMT directly:
Repeat after me: the Australian economy is not like a household budget, 8 January 2015;
A sustainable budget surplus is beyond the government’s control, as Joe Hockey has come to realise, 11 February 2015;
The budget is the greatest moral challenge of our time? Bollocks, 31 August 2016;
Listen up, Scott Morrison. It’s time to bust the myth of the budget surplus, 6 January 2017.
Finally, there is Bill Mitchell’s sole contribution to the Guardian. It does not mention MMT either: Punishment dished out to unemployed is on par with our treatment of refugees, 24 February 2015.
10. Actually, I do now because I looked it up. There was a communiqué: Ronald Reagan: London Economic Summit Conference Declaration, 9 June 1984, American Presidency Project.
11. See The truth is that Trump has a point about globalisation, 26 September 2018, The Guardian.