There are days when the most appropriate type of blog post are those that are full of policy ideas, and detail. There have been quite a number of those of late. That reflects much of what is going on in my work life at present.
But there are other days when the best thing to do appears to be to stand back and think. This post is of the second type. It is a reaction to the comments received on my suggestion that we should have dedicated bond products to tackle the economic problems that we have in our society, and the problems that they are creating, but it is also something more than that.
Breathe deeply and it is readily apparent that not all is well in our society.
100,000 Covid deaths tell us that. When so many were very obviously unnecessary, as evidenced by the fact that other countries have not suffered our death rate, something is quite literally terribly wrong.
Brexit tells us that too, because it is very obvious now that the problems it has created for a great many businesses whose access to overseas markets is now restricted or lost for good will have a serious consequence for the UK market.
That Northern Ireland is no longer what can really be described as a full member of the UK is astonishing, even if largely ignored.
Headlines now make it clear that the run down to Scottish independence is happening. It's now ‘when' and not ‘if' as far as the English press is concerned. The battle for independence is almost certainly already won.
The IMF now says that the world's economies can no longer survive without the support of governments, and if the effort is made to make them do so then the whole edifice of the financial markets might collapse.
Trump has gone. That populism can be beaten has been proven, but one victory does not suggest that the war is won as yet.
The ‘anti-woke' backlashes are vicious, real and indicative of prevalent fascist thinking.
Climate change is ongoing and ignored by many.
Young people have decidedly uncertain futures. What many might do is very unclear.
We have a government that by universal consent is the most incompetent in anyone's living memory. But the Opposition is not much better. Outside Scotland it seems that competent people are not being attracted into politics.
And underneath all those symptoms there are real people, many of whom are stressed to limits that they did not know existed by the problems that living with Covid have created. For some that is the quite reasonable fear of the disease. For others it is lost work, and income. For many it is home schooling. Many business owners fear losing their companies, and with it their livelihoods and those of the people that they employ. Others fear losing their homes as debt accumulates. Loneliness is a real issue.
A year ago none of this had really begun. Covid was a threat, albeit one that government should have taken much more seriously than it did. Now it has transformed life in a way almost unimaginable. What does that mean? And what, as importantly, might it mean when and if this ever ends?
Perhaps the most important thing to say is that whatever now happens in tackling this disease Covid has now indisputably changed things for good. Societies around the world cannot experience all this and then say ‘let's go back to where we were.' Not only is that not possible because too much has changed, it is not desirable.
That is because where we were was unsustainable. That is true literally in terms of the environment. But it was also true in terms of the economy, where 2008 had exposed all the failings within the system that we had. But, crucially nothing had yet been done to address them. And it is true within society, where inequality has been tolerated for too long, and has been been fuelled for political gain at enormous cost to us all.
It may not seem possible to address all this in one blog post and yet in a way there is. That is achieved by asking what were the assumptions that got us to where we are, and to then ask what we have learned, after which we can then ask what assumptions should drive us forward from here towards something that should work better.
So what were the assumptions? This list may not be complete. This is not an exercise that has been given many weeks of preparation. It's been very largely prepared on this morning's breakfast table. But I would suggest that they are that:
- Nature is ours to exploit at will;
- Those who can command the resources of nature can charge their fellow humans for them even if the person commanding them secures those resources for nothing;
- That those who did use the command of resources to back their creation of money were entitled to charge other for the use of that money, and that this hierarchy of monetary power is still justified in the era when relationship between money and natural resources has been broken;
- The resulting hierarchies of power are ethically justified;
- The resulting hierarchies of power should therefore be maintained;
- The market expression of those hierarchies of power remains valid;
- Markets are as a consequence of greater significance than governments in the hierarchy of power;
- Government exists to service the needs of markets, meeting their demands for the environment in which they can function but without being expected or required to unduly challenging the consequences of that trade;
- Markets are efficient if they profit maximise on behalf of the owners of wealth;
- The resulting market allocation of disproportionate wealth to those who are already wealthy is justified as a result;
- The maintenance of financial wealth through the control of inflation is the primary economic goal of government;
- The relationship between inflation and employment is such that high employment rates result in high inflation. Unemployment is the accepted price of controlling inflation as a consequence;
- That inflation management has been delivered through interest rate policy is without economic distributional consequence even though it is apparent that, overall, those with wealth gain from the policy and those in debt and with limited wealth pay the price for it;
- Inequality is a price worth paying for the achievement of economic goals. If some groups in society happen to be overly represented amongst the winners and losers that is an acceptable outcome.
I am entirely sure I have missed very real issues. Equally I hope I have written sufficiently openly to embrace very many aspects of this issue within the words I have used. That was my aim.
What have we learned? I suggest this, taking Covid and other factors into account:
- Nature is not ours to abuse;
- We are just a part of the global ecosystem;
- If we ignore nature it can bite back;
- There are no free gifts from nature: nature is there to be preserved, come what may;
- Charging for that which is costless to us, whether that be nature or the money that is created out of nothing, is a mechanism for reinforcing social hierarchies of power, but is not a reflection of fair economic reward;
- Jobs matter;
- Businesses are very largely dependent upon government to ensure their survival;
- Modern banking only exists because of government guarantees that it will meet its liabilities as they fall due;
- Hierarchies of power based on the command of natural resources and the ability to manage money are, then, perpetuated solely at the whim of the state;
- Those who have power based on these hierarchies have tried to capture the state to perpetuate their power;
- In the meantime global warning continues;
- For a great many the real quality of life continues to decline;
- The stress within government between those there merely to perpetuate the power of those outside government and the demand that those with the ability to exercise the power that government really has do so is becoming apparent;
- People now appreciate that government can create money at will. It is not a scarce resource, after all;
- If the ability to create money can be used to save banks and business it can also be used to save jobs and the planet;
- There is no inflation despite money creation: the myth that this would happen has been shattered;
- The myth that high employment creates high inflation has been shattered at the same time;
- People have had enough of living in fear, and most especially the fear if things that they now know government could, if it so chose, allay;
- The desire for change has arrived.
Again, I am quite sure that this list might be refined. My suggestion of it is that it is sufficient for now, whatever its weaknesses and omissions, to let me move towards what my conclusions might be.
So, what should we assume to be the basic building blocks of a post-Covid world? I suggest these things, knowing once more that they will, be incomplete and in need of revision from the moment I publish them:
- Nature is ours to enjoy, and work with, but not to exploit;
- The price of our enjoyment of nature is the work that we must do to sustain it;
- The enjoyment of nature is a common right, and not one for which charge should be made by those who have appropriated that legal entitlement for themselves;
- The idea that land might be owned has ceased to be useful; we are at best only ever its stewards, tasked with perpetuating its wellbeing;
- It is the role of government to oversee this stewardship and to secure that it takes place;
- The ability to create money has now passed entirely to government, and it alone has the right to do so now;
- The control of banking and finance, whose activities are now almost entirely dependent upon the guarantees of government, does not, in that case, create entitlement to special privilege within the economy or society at large;
- The ability to create money must be used in the interests of all in society, and not just financiers;
- The maintenance of low interest rates is a social good, but not one that should be delivered at cost to society within itself;
- The power to create money must, in that case, be directed towards social advantage, as must the use of money for the gain of society at league be encouraged by direct government action;
- The goal of money creation should in that case be to deliver:
- Sustainability;
- Full employment;
- Living wages;
- Greater equality;
- A social safety net for all.
- The ultimate goal of government is to deliver freedom from fear;
- The freedom from fear delivers opportunity for all without constraining their freedom to choose within the boundaries created by society, to be interpreted to permit personal expressions to the greatest degree that is consistent with those constraints;
- Markets have a very real role to play in this process: they can and do create the opportunity for people to work as they wish to produce products that society wants. But they are inherently flawed by their ability to unduly concentrate economic power and the command of resources in the hands of a few, which have not always restrained themselves in the exercise of that power. Markets need regulation as a result, and fair taxation, to ensure that they and the participants within them work in partnership with government and society to meet the aims of us all, rather than to exist in opposition to those goals by focussing upon the extraction of value for the advantage of a few.
There are, of course, many assumptions implicit within those I note.
But the greatest of all the objectives is in many ways that the ultimate goal of government is to deliver freedom from fear. This is what I think our government has very clearly failed to do, compounding the errors of so many governments that went before it. And it is that freedom, excerpted within the constraints of our planet and the understanding that we now have of our economy and the money that powers it, that it is now our duty to deliver.
I think we can do that, and all that goes with it. But we cannot do so without recognising that there are now very profound ideological boundaries within our society, which may be encapsulated in this thinking. How to address them is part of the issue that I raise. And yet we have to achieve that goal because as I see it this is the way out of this mess rather than its perpetuation. And that is a prize worth having.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Exploitation and the resulting alienation is the name of the capitalist game. Those in power, whether corporate or government, are relying on the apathy resulting from the apparent hopelessness that the disenfranchised of the earth feel, whether human or other living things. The protests and organisation required to change things for the better are enormous. While movements like Black Lives Matter, Extinction Rebellion and the other countless community groups, charities etc are making their voices heard, any progress so far seems so painfully slow.
The traditional anarchist, communist and socialist approaches seemed to have run their course without major change. Whether a new green communitarian social order can emerge from the corporate capital authoritarian dominance that exists at the moment can be changed is a very moot point. Until enough people realise that our very survival is at stake it will be a long haul until our hopes become reality and not a distant dream..
Excellent.
Instead, the Twatties (Tories) use fear to control, divide and contain because they know that after 2008, people would start to ask questions about where THEIR bailout was. The ability for Government to print fiat money to deal with a disaster is the genie that they try like hell to force back into the bottle.
And Labour and the Liberals who helped craft post war Britain have totally forgotten their role in the tackling the 5 Giants which is absolutely disgusting and disgraceful in equal measure. Shame on them.
The goal of money creation should in that case be to deliver:
– Sustainability;
– Full employment;
– Living wages;
– Greater equality;
– A social safety net for all.
Yip I’m voting for that.
The biggest hurdle is convincing politicians that it can be done. Too many are trapped in blinkered thinking about money and what it can do if we put our collective minds to it.
Certainly it’s very clear the Americans are having to deal with two viruses; a Covid one that attempts to shut down the body’s cooperative processes and a Trumpid one that’s attempting to shut down the body politic that depends on the democratic processes under-pinning the Rule of Law.
It’s hard though to pin down what second virus the UK is contending with and give it a name. There’s obviously a lot more cronyism taking place with the current Conservative government so you could say that “Cronid” is the virus name. But it’s not just cronyism its a host of other outlooks on life including “a born to rule” mentality that over-rides the recognition that you’re not actually very competent at it!
I was quite taken by discovering that the Washington Post in the United States which normally operates behind a paywall has for four years patiently collected all Trump’s false and misleading claims (amounting to 30,543 items) during his presidency and made them freely available:-
https://www.washingtonpost.com/graphics/politics/trump-claims-database/?itid=lk_inline_manual_4
Now compare that fact-checking journalistic dedication to the UK media! The lack of it hints at the idea that the second virus in the UK running alongside Covid indeed pre-dating it for a very long time is this lack of fact-checking in British society. What virus name though would you give this?
Perhaps I’m talking about the “de-factualisation” of British society. Certainly American Rule of Law democracy was rescued by its judiciary with 60 judges (used to doing “fact-checking” of evidence as part of their job) ruling the supporters of the Trumpid Virus had provided no facts (evidence) the November 2020 election had been fraudulent. Indeed if those supporters had bothered to check the facts they’d have realised that 41% of the votes that won Trump the presidency in 2016 had been cast before the November 3rd polling day and nary a peep from Trump on that occasion!
‘A Trumpid one’ – I like it.
I’m guessing that this is the very start of the process (the first step in a very long journey). I can’t disagree with any of it.
The biggest battle on this will be winning ‘hearts and minds’ and showing that the status quo is not the way forward and that there is a better way. That Government spending can be good, it can be beneficial to all (cronyism being a big exception).
Craig
You may well be right
But we have to start
And I felt it the right thing to do this morning to summarise why I felt it worth doing so
I suppose we should be looking at the system’s internal contradictions ( to get clues about the next crisis) and get possiblities for radical reform, and for spreading real understanding of how the system works and how it could be made to work.
Obvious ones ?:
– financial services becoming parasitic rather than facilitatory on investment in the real economy
– as Richard pointed out, banks and money are now a function of government – if this becomes widely understood. it could in principle give the mass of the population more political leverage?
– the ‘money tree’ exists – we can spend our way back into decent services, and decent public sector employment. If people understand this – again gives political leverage
– global monopolies in the digital economy..becoming defacto utilites which logically should be under trans national public regulation. There do seem to be moves in this direction?
– concentration of wealth generally – is it getting to the point where it is so obvious, so counterproductive, so tied up with the global ‘fraudoshpere ‘ that it will be reigned in?
– in US and UK etc. the half the population which has been relatively impoverished over the last thirty years doesnt have the economic leverage that the traditional organised labour force used to have
How does this related to Picketty’s idea that it needs a war or something similar (or a tax?) to stop the wealthy getting wealthier forever?
Piketty thought we needed a crisis to effect change
We have the crisis
Now we need that change
James K. Galbraith on Biden’s “American Rescue Plan”. Of interest to MMTer’s and British voters generally:-
https://www.project-syndicate.org/commentary/biden-american-rescue-package-by-james-k-galbraith-2021-01?utm_source=Project+Syndicate+Newsletter&utm_campaign=f70bcf1dbe-covid_newsletter_01_28_2021&utm_medium=email&utm_term=0_73bad5b7d8-f70bcf1dbe-107120125&mc_cid=f70bcf1dbe&mc_eid=0c13be2b20
It’s good
Helen,.
Yes a good start, my only worry with all this relief and celebration around Biden’s inauguration is that it all reminds me of the hullabaloo around Tony Blair’s arrival at No 10 in 1997…what could go wrong?
Things can only get better……Remember that?
We will tell in 4 years time.
Sorry to be so down beat, it’s the cynic in me. I really really hope that this is the start of a new dawn, Lord knows we need one, not just in America, there is a global food price hike and that never bodes well.
https://www.theguardian.com/business/2021/jan/29/covid-crisis-is-fuelling-food-price-rises-for-worlds-poorest
I wasn’t a great fan of Biden’s as the candidate, but Biden the POTUS seems much more radical than Blair – his response to the 6th January insurrection cited his grand-daughter’s tweet about the difference in policing between that and BLM: his understanding of climate change – the fact that Kate Raworth was invited to speak to his transition team… they all seem evidence of *actual* commitment… and there are grown people in his team who were aides in the Obama administration and saw how the GOP are pretty much designed to make sure nothing happens. So… absent some serious interference from right wing Dems (and for sure, they have their equivalents to Ian Austen or Wes Streeting), I think they’ll do things that will pave the way for real change here. We just need to work out a form of democracy in the UK that *actually* works….
If this is a party political manifesto then please sign me up. Cogent thinking like this would give us hope and faith in a political class that one could respect and trust. I fear that there is not a party yet that would have the courage to support this which is sad. Capitalism will devour this planet in pursuit of profit. There seems to be no change despite this crisis about understanding the need for radical change. Thanks for writing this.
It’s my manifesto
I am not expecting massive support
I wish there was
I agree with everything in your analysis and just hope that I live long enough to see these changes occur.
However, having said that I have to comment on the following paragraph from this post.
“Perhaps the most important thing to say is that whatever now happens in tackling this disease Covid has now indisputably changed things for good. Societies around the world cannot experience all this and then say ‘let’s go back to where we were.’ Not only is that not possible because too much has changed, it is not desirable.”
I subscribe to several websites and and speak with lots of friends and sadly see that people are becoming so worn down with the mess in their lives that Covid has wreaked and which has been exacerbated by government incompetence that all most people want to do is to “get back to normal.”
For a government with the full support of the media and the ability to distort the truth beyond the point of outright lying voices wanting a better future as you envisage are likely to be swamped by those who will benefit from the old order at the expense of those who suffer the most. And of course, sadly, this will be presented as the golden uplands for those who just want to get back to normal.
People may want ‘normal’ but I suspect that deep down they know that they will now accept something different as long as it is ‘better than now’
I wish that I had your confidence in people but my feed back is a clamour for that which they know rather than something different. Hopefully I am wrong.
Ther are going to be a lot of disappointed people come what may then
This article is way too fucking long.
My eyes glazed around halfway through the tome
Sorry….but what I chose to write and publish and at what length is my choice
Yes, sign me up.
A couple of years ago I started my d-i-y economics education with a mere desire to know what it really meant when someone said “the country must live within its means”. This quickly led me to MMT , and as I dug deeper, it has made me realise how economics, politics, finance, philosophy, history, anthropology and sociology are intimately connected, and Richard has perfectly elucidated these connections in his “manifesto”. For me it has been a fascinating journey and I still have much to learn – I have just enrolled on Bill Mitchells introductory MMT course for dummies like me that starts in June.
But I have also come to the conclusion that educating people in how our economy works , if we manage to do so, would be far more transformative than any of the current programmes of any of our political parties. This project is something that I believe transcends party politics, and precisely because of that, it also holds out the prospect of progressive political alliances, and maybe eventually some new party might be born using the principles Richard has set out. I grasp optimistically at this straw because I cannot see a future for the Labour Party ever getting a working majority wedded as it Of course MMT can be used in what we here would regard as harmful ways, but that is a risk we must take.
Thanks
My last sentences were supposed to be –
I grasp optimistically at this straw because I cannot see a future for the Labour Party ever again getting a working majority on its own – the demographics are against it, and particularly since I cannot see it ever relinquishing its embedded neoliberalism, as recently exemplified by Annelleise Dodds Mais speech.
Of course MMT can be used in ways that we here would regard as harmful, but if that is what we choose in the democratic process, then so be it.
Correction, Bill Mitchells new online course (free) starts in March.
BTW Richard, when one Googles for your blog, the first thing that comes up is Murphy Tax Lawyers of Melbourne. Are you by any chance related?
No, not at all
That never comes up for me. Are you in Australia?
No, Portishead, near Bristol! Just curious.
[…] This is the logic is use in sustainable cost accounting. It is also the logic I outlined in a blog post last week . […]