Getting all Tied Up (2)

This series considers Paul Mason’s “Risks are ‘a Thing’… and so is the Death of Capitalism”, a critique of MMT.

The previous post discussed Mason’s political doubts about tying the Green New Deal to MMT. Although that is evidently an urgent concern, by itself it has little theoretical implications for Marxists. The focus of this and the next posts are the two subheadings “What does MMT say?”, “What’s wrong with MMT?”, where Mason expresses his views on what MMT is.

Before proceeding, disclosure is in order. I claim no expertise on MMT. My level of involvement is that of an experienced hobbyist, which means that I have been following -- as a non-professional observer -- those I call MMT founders for some ten years and reading the material they make freely available online. Occasionally I’ve dwelt in the more strictly academic literature, but only that closely related to Marxist theory. In this sense I’ve written about the relationship between the labour theory of value and fiat money, about difficulties I find in the Kalecki profit equation and about the Confidence Fairy. In particular, I haven’t read the latest MMT texts.

If that more technical literature contradicts what I write here, I appreciate readers letting me know.

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Under those two subheadings Mason explains what, in his views, MMT says and where it goes wrong. His largely unfavourable assessment, however, is not my concern.

What concerns me as a Marxist is his claim that MMT has a theory of value. Out of several instances, this is the most elaborate and unequivocal expression of his belief:

“What the MMT-ers have uniquely done is elevate a theory of money into a theory of value: the state, by creating money, creates value. If this were true it would annul all the risks involved in the biggest peacetime borrow-and-spend programme ever attempted. It would also, as we shall explore below, provide a neat way to abolish capitalism without class struggle.”

That startled me because, in all these years following MMT, I’ve never seen any Founder ever making that claim at all, let alone making it “explicit”, as Mason writes somewhere else. Not once. To be clear: maybe individual Founders have their personal theories of value, but I’ve never seen one pointing to a set of theoretical propositions and calling it “The MMT Theory of Value ©”.

Perhaps the best example is Prof. Bill Mitchell, Founder whom I follow more closely. There’s no need to argue he isn’t a neoclassical: that’s evident. He also writes highly of Marx. That shows intellectual integrity. He refuses to pile up on Marx, although it is de rigueur in his milieu. Much more importantly, he is knowledgeable and understands key Marxist notions, including exploitation (see also).

All that must be credited to him. Justice demands Marxists respect him for that. But that doesn’t make a Marxist of him. In fact, I’ve never seen him endorse (or disendorse, for that matter) Marxism, especially its theory of value, or commenting on their compatibility or not with MMT, let alone him calling himself a Marxist. There’s nothing wrong with that, but it makes it risky to associate him with any theory of value.

The lack of a theory of value is not peculiar to MMT, it’s common to all post Keynesianism (larger school of economic thought usually said to include MMT as a branch). More recently things may have changed radically without my knowing it, but by 1998 it was no well-guarded secret that,

“Post Keynesian price theory has no real existence beyond the idiosyncratic writings of various Post Keynesian economists, its various renditions are theoretically incompatible to a lesser or greater degree, and it has not been entirely freed from neoclassical concepts and terminology.”

The author of that quote was the late Prof. Fred Lee, who in life taught at the University of Missouri-Kansas City (one of two/three top MMT academic strongholds).

If I were Mason, I’d give Lee the benefit of the doubt.

The next post shows where Mason took a wrong turn.

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A caveat is required. Economist Peter Cooper, PhD, whom I also follow regularly, is extremely qualified and he’s both a Marxist (specifically, a TSSIer) and an MMTer (see also). I don’t want to put words in his mouth, but he seems to believe Marx’s ideas, including his law of value, and MMT are fairly compatible (for what it’s worth, so do I).

That said, he’s what I call a MMT-enthusiast, not a Founder. As valuable as his views are, they are not the official MMT stance.

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UPDATE:

Fairness imposes a correction. There are some economists (which I failed to mention above), generally considered post Keynesians who -- much like Mitchell -- have high views of Marx. Like Mitchell, they also are knowledgeable about Marx’s theories. Normally they describe themselves as Sraffians. Unlike Mitchell, they unambiguously adopt a variation of Marx's theory of value, although it's unclear to me how much more of Marxism they retain. A blogger in this category is Robert Vienneau.

At least a member of this subset, Prof. Matías Vernengo, describes himself as a friendly critic of MMT.