A (Very) Oblique History of MMT (Wray, Institutional Econ, & other ramblings): Part I

As MMT has “taken off” its founders and others have begun to preserve and reflect on its history (1). That history will be well covered as it will prove to be central to (genuine) macroeconomic history one day. Leaving that to others, I enjoy thinking about subtle influences, intellectual links and lineages, that go less noticed. Here are some rambling thoughts on the subject.

By way of example, consider: Apparently the University of Denver had a somewhat unusual (for 1980s/90s United States) Institutional Economics background that influenced L. Randall Wray. Wray writes about the influence of his predecessor Fagg Foster (“whatever is technically feasible is financially feasible”) and before that studying in Bologna with Otto Steiger (who introduced Wray to his “alternative to the barter story of money that was based on his theory of property.”) Reading the short bios of either one of them can lead one down an intellectual rabbit hole of economic thought light years more important than anything the mainstream does, and perhaps quite different than the background readings one might delve into after learning of the importance of Knapp/Lerner/Godley/Minsky etc. (one might explore Kalecki and the Cambridge economists Sraffa, Kahn, Robinson, Pasinetti etc. but easily not stumble across Foster or Steiger).

[One personal example of winding connections: reading Fagg Foster’s bio I was pleasantly surprised to learn he completed his PhD at my alma mater, UT Austin,(2) and (important to his story) broke his arm playing football at SMU (Southern Methodist University in Dallas), where I also studied (I took night classes while a wine salesperson, leading to an MA in Liberal Arts, free to range widely through history, psychology, literature…). But most surprising of all: My grandparents grew up as East Texas farmers; as soon as they could, they returned to farming in the creeks/low hillsides just outside a (very) tiny town in North Texas, where I spent a great deal of time as a kid in the countryside. That tiny town is Blue Ridge, Texas, the obscure birthplace of…Fagg Foster.] (3)

As I will emphasize in Part II regarding Warren Mosler, and always of interest in history: it can be the “contingent” moments that matter. The fortuitous meeting of Mosler/Mitchell/Wray on the PKT forum will surely receive its due attention (Bill Mitchell has done amazing work rescuing the lost chats from their very random travels and near disappearance in computer crashes, and is curating them). But what made Wray’s Professor at Sacramento State, John Henry (background: McGill University; Dissertation: “John Bates Clark and the Origins of Neoclassical Economics”) push Wray to go to Washington University (St Louis) to study with Minsky? (And why was Minsky in St. Louis, for that matter? I have read a history somewhere, will link it in comments later.) These little moments are in retrospect momentous.


Good accounts of MMT generally list Knapp, Mitchell-Innes, Lerner, Minsky, and Godley as important predecessors. Of course, MMT itself plucked Knapp and Mitchell-Innes out of obscurity; in the new history of Econ they will now be well-known.

Two economists that in some ways remind me of Lerner are Gardiner Means (New Deal) and Leon Keyserling (post WWII). (I have no idea if they influenced any early MMT economists directly although Nathan Tankus mentioned Means recently; of Keyserling, it has been noted “It remains a mystery to me why job guarantee proponents point to Minsky as the patron saint of the job guarantee idea. It was, after all, Leon Keyserling who drafted the Full Employment Act of 1946, The Freedom Budget (1966) and job guarantee provisions of Humphrey-Hawkins (1976).”; I would think the milieu they helped create was influential somewhere).

Together Means and Keyserling remind me of Lerner and Beardsley Ruml in some ways: openly advocating public policies in the otherwise “business friendly” climate of their time, policies that by the 1980s/90s/00s would have been viewed by mainstream economists as beyond the pale (had they not been so busy ignoring them altogether). Anyway, like Lerner, they deserve a revisit, teaching new economics students how real economics helped America to prosper, a past we must reclaim.

I happen to mention Wray in this post; this series is not meant to be a post on each founder. It is more of a general ramble. However, the next post’s rambling will revolve around a few things regarding Mosler, and later around Mitchell.

(1) I have quoted from Wray’s How I Came to MMT. There are similar posts from Mosler and Mitchell I will come back here and add when I finish Parts II and III. Also, there is an important body of oral history building up as all three of them are interviewed and answer various questions in some detail. Mathew Forstater also contributes. I’ll link to more in Part II and III, and try to return here to add the links.

(2) Alma Mater may not be a good term, as I spent time studying abroad in Belize and Israel (U. of Haifa) as an undergraduate, and more to the point, transferred a full two years to UT-Austin from various Dallas County Community College District colleges, earned slowly while waiting tables. My heart really lies with the latter, where I had some amazing teachers in Logic, Art History, Biology (Dr. Gill-King) and other courses. The DCCCD system, at least then, was a real gem; almost free and of very high quality. I am eternally grateful.

(3) A little more on Foster. His bio mentions that “in courses at the University of Texas, notably those taught by R. H. Montgomery, Edward Everett Hale, and especially Clarence Ayres, he began to become aware of and to be interested in the world of ideas. This world was to be his life.” Several things: One, interesting to anyone who has studied any social science, is that Clarence Ayres was a significant influence and teacher of Talcott Parsons. Also, in looking into these three, the term “Texas School of Institutional Economics” came up, which I found interesting. I found the highlighted early writings of Foster at Texas to be especially interesting (below).
In this review of R.H. Montgomery’s 1929 “The Co-operative Pattern in Cotton”(He seemed to have expertise in price setting) it almost seemed like the phrase “buffer stock” for price controls was going to come up (a la Bill Mitchell and wool). Anyway, it didn’t 🙂

One last thing. The grandparents I mention above were East Texas cotton farmers, and had some interesting stories. They never complained, but they lived through the Great Depression, probably doing better than some simply because they already lived off the land (my grandfather did hitch a train to New Mexico and worked in the Civilian Conservation Corps; his worst memory? Being attacked by the “bulldogs,” private guards paid by the train companies to club “hobos” like him off the trains.) Anyway, this passage from Montgomery’s cotton co-op (1929) book above really caught my attention, and some of what still exists in the South, certainly when I was a kid ( I used to live in Mississippi also):

“a whole miserable panorama of unpainted shacks, rain-gullied fields, straggling fences, rattle-trap Fords, dirt, poverty, disease, drudgery and monotony that stretches for a thousand miles across the cotton belt.”

R. H. Montgomery, 1929

(Update 2020/21) I recently drove across West to East Texas (Dallas-Odessa-San Angelo-Luckenbach), on to West Louisiana (Cane River-inspired by and while reading Cane River by Lalita Tademy, not because of Oprah but from my grandmother years ago), and then Caddo Lake, staying in Uncertain, Tx, and up into central Oklahoma. A 2,600 kilometer round trip. Saw and did some nice things. But anyone who doesn’t know the South – I mean, really know it – doesn’t understand the extent of poverty there is still there (and among all ethnic/cultural etc. groups).
Completely random, but if you want a true glimpse into East Texas culture (I am a movie buff), you can do no better than watching this amazing documentary, Hands on a Hardbody (no, it is not porn lol). Trust me – if you watch it, you will not regret it. Even, in 2020, Esquire magazine and Quentin Tarantino rave about it. See also ‘Hands On A Hardbody’: How Did The Strangest Documentary Of The ’90s Make It To Broadway?
As long as I am rambling on rural Texas eccentricities (we have a lot), instead of far East Texas, far West Texas has A Murder in Terlingua, Texas, which a good Nat Geo series was done on, now at Amazon Prime. I first read about it in Outside Magazine in the breakroom at a DFW area REI where I worked.

5 thoughts on “A (Very) Oblique History of MMT (Wray, Institutional Econ, & other ramblings): Part I

  1. In the early 1990’s it was me, my partners Cliff Viner and Mike Reger, and other associates at our firm, along with our clients, and in particular Dave Mittelman and Maurice Samuels and their associates at Harvard Management who set up the 1992(?) meetings in Italy. None of us had any academic ties and all of what today is known as MMT came from a working knowledge of monetary operations and not from economic theory. I subsequently made the effort (which continues to the present) to promote our understandings with academics, which is where the above stories begin. And it is through their enormous efforts to spread the word that the understandings of MMT have, in my humble opinion, literally saved the world.

    Also, for the record, it was Monte Freidkin who set up meetings with politicians including the Daschle/Summers meeting and, later, the Al Gore dinner that included Cliff Viner. Graham Bishop of Salomon Bros introduced me to Charles Goodhart in maybe 1995, and he participated in our 1996 Bretton Woods conference on the euro.

    Liked by 1 person

    1. Warren – thanks for the history! I meant to get to your part of my “rambling discussion” months ago; various aspects of Covid prevented that (I didn’t get, I just mean econ/business/travel/family aspects of the quarantine etc).
      Also – I reached out to Mark McNary and we had a long chat. I planned on making it my first “podcast” sort of, but again I got interrupted. I wanted to document (and still do) the earliest moments of “MMT”.
      Would still love to do that, maybe with both of you talking even. What a time period

      [ Pedro Marcal and Art Laffer (“Rosa Californica” January 28, 1993 ).]


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