I have been interested in better economics for years, including MMT.
There have been a number of sea changes in recent years.
Starting sometime around 2019 came the flurry of high profile criticisms of MMT – always a sign that you are winning.
Then of course the well-deserved popular success of Stephanie Kelton’s The Deficit Myth (and the academic success and completion of Macroeconomics by Mitchell, Wray, and Watts).
Then with Covid, a change in general attitudes towards the capacity of governments to spend, even in the conservative EU, for example.
So overall, adoption of reality-based macro seems like it is happening.
There is still the depressing degree of outdated false macro being taught from deceptive textbooks (Mankiw etc) in non “elite” colleges and universities just by sheer inertia.
And the hold on elite departments by bad economists.
But overall, some room for optimism.
I am compiling a list of why reality-based macro (MMT) is still resisted, usually from the right but sometimes from the left.
Of course, especially in the “elite” universities, the (cruel but sadly true) saying about change only happening one death at a time seems to be only too true.
Although reading through #econtwitter depressingly shows that a lot of non-reality based young econ clones are still being produced, and worse still, are by far the most active in seeking jobs in academia. (That twitter hashtag is terrifying, honestly).
Off the top of my head, some reasons reality-based macro (MMT) has still not become ascendant in our universities and government agencies:
From the “right”:
Understanding MMT will lead to spending and thus inflation
Understanding MMT will lead to more government programs (Both actually political – how we use the system, not how it works).
The weird ones:
That it is not new (So? And as a full synthesis of reality based facts and processes—despite some previous parts of it having been thought of before [and forgotten/ignored in the extreme in mainstream econ]— it is new.)
That has no models or is not technical (as if neoclassical models serve any useful purpose)
Those that just don’t get that bond sales are superfluous (they just can’t grasp real government accounting because of their previous training).
Relatedly, those whose training has made them believe that interest rate policy is effective (and/or that fiscal policy is not).
Those who don’t like the “taxes drive currency” idea.
From the “left” – Those that believe MMT would foster bad economic activity (rather than degrowth; i.e., military or industrial development). Or Marxist or radical critiques that MMT somehow just serves to prop up the current system, rather than aim towards some utopian radical social change.
Anyway, I have written and blogged on most topics that interest me. Now I am more concerned about the bigger view: how can we finally get things implemented and why is there still resistance to basic facts about how government spending works that are irrefutable?
2 thoughts on “Whither MMT?”
‘Reality-based macro’. What a great alternative moniker! Really captures the essence of MMT.
Lars Syll has been running a series of blogs on how the mainstream neoclassical literally by design avoids reality altogether, mostly. Far too inconvenient for the construction of fancy ‘models’. Sometimes wonkish, but by no means usually.
Also Tony Lawson on Ontology : ‘
In any other discipline, they start with a problem and the context, they look at the nature of the problem being addressed, and they design methods to fit the task, the world, the context they’re dealing with. Economists, for the last 60 years, have started from the assumption, ‘This is the method. Give me the problem.’…
Economists don’t ask that question — ‘What is the nature of the task?’ For the last 60 years, they’ve insisted on the same type of tool for all jobs, all applications. Forms of mathematical modelling. As it happens, these methods don’t fit social reality very well at all, they are mostly inappropriate to its analysis’
http://www.economicsppf.com/tony-lawson.html great video/transcript
Edgy take: Somebody should come to power and enforce a “1776” style commission that Trump did but for Econ and abolish neoliberalism from the writing.