{"id":91662,"date":"2026-04-21T07:49:56","date_gmt":"2026-04-21T06:49:56","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=91662"},"modified":"2026-04-21T13:00:31","modified_gmt":"2026-04-21T12:00:31","slug":"economic-questions-the-richard-murphy-question","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2026\/04\/21\/economic-questions-the-richard-murphy-question\/","title":{"rendered":"Economic questions: the Richard Murphy question"},"content":{"rendered":"

This is one of a series of posts that will ask what the most pertinent question raised by a prominent influencer of political economy<\/a>\u00a0might have been, and what the relevance of that question might be today. There is a list of all posts in the series at the end of each entry. The\u00a0origin of this series is noted here.<\/a>\u00a0\u00a0<\/em><\/p>\n

This series has been produced using what I describe as directed AI searches to establish positions with which I agree, followed by final editing before publication.<\/em><\/p>\n

Why have I included myself in this series, writing about my own work as a third party? There are several reasons for doing so.<\/em><\/p>\n

Firstly, this series, as it transpired, refers to the work of 50 people who have influenced my thinking over the 50-year period since I went to university to study economics. It is in that context that it is relevant, I think, to note where that thinking has led.<\/em><\/p>\n

Secondly, several commentators, including my old friend John Christensen, with whom I have worked for almost 25 years now and whose own work is referred to in this series, suggested that it would be incomplete unless I did so. I have accepted their suggestion that I do something that would not have occurred to me. I do, then, continue in the style I have used for all others included here.\u00a0<\/em><\/p>\n

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Richard Murphy<\/span><\/a> has spent much of his career as a political economist exposing what he regards as one of the most damaging myths in modern political economy: that governments are financially constrained in the same way as households. This belief, he argues, lies at the heart of austerity, underinvestment, social insecurity and the failure to respond adequately to climate breakdown.<\/em><\/p>\n

Murphy\u2019s work draws on accounting, monetary operations and institutional reality to show that governments which issue their own currency do not need to \u201craise money\u201d before they can spend. They create money through the banking system, and taxation follows to manage inflation, shape behaviour and redistribute resources. Once this is understood, the central constraint on policy is no longer financial but real<\/span>: the availability of labour, skills, materials, technology and ecological capacity.<\/em><\/p>\n

This reframing has profound implications. It means that many of the solutions to the most urgent social and environmental problems we face are not unaffordable. They are unchosen.<\/em><\/p>\n

Hence<\/span>,\u00a0the<\/strong><\/span> Richard Murphy<\/b> Question:\u00a0If governments create the money that sustains our economies, and if we have the real resources to provide security, care and a livable future free from fear, why do we continue to organise society as if we cannot afford to do so?<\/strong><\/em><\/p>\n

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The myth of the household analogy<\/b><\/p>\n

Murphy\u2019s starting point is simple: a government that issues its own currency is not like a household. Households must earn before they spend. Governments spend by creating money and taxing afterwards.<\/p>\n

Yet public debate is dominated by the opposite belief. Governments are said to \u201crun out of money\u201d, to need to \u201cbalance the books\u201d, and to require borrowing before spending. These claims are not merely inaccurate. They are politically consequential. They justify cuts to public services, constrain investment, and create a false sense of scarcity.<\/p>\n

Murphy\u2019s challenge is direct: the limits we are told exist are largely fictional.<\/p>\n

Real resources, not money, are the constraint.<\/strong><\/p>\n

If money can be created, what limits government action? Murphy\u2019s answer aligns with ecological and Keynesian insights: real resources<\/span>. The question is not whether we can afford to employ people, but whether the people, skills and materials exist to do the work. The question is not whether we can afford a green transition, but whether we have the capacity to deliver it without generating inflation.<\/p>\n

This shifts economic debate from accounting to reality. It forces policymakers to confront actual constraints \u2014 labour shortages, supply chains, ecological limits \u2014 rather than hiding behind financial ones.<\/p>\n

Tax as a tool, not a funding source<\/b><\/p>\n

Murphy also challenges conventional views of taxation. In his framework, taxes do not fund spending in a currency-issuing state. Instead, they serve three primary functions:<\/p>\n