Tuesday, 28 July 2020

So, I Actually Hate the JG, Who Knew?

This is not rocket science, Brian (see also).

A recent exchange I had with online MMTer Brian Romanchuk -- from Canada -- about one of Chris Dillow’s posts turned out to be full of unsuspected revelations. Readers may find it as enlightening as I did.

Dillow, following Michal Kalecki’s famous 1943 essay “The Political Aspects of Full Employment”, argued that full employment (therefore a Job Guarantee) is unlikely in democratic capitalism.

(Arguably, the priority for so-called Keynesian economics should go to Kalecki and not to Keynes, at least if one believes Joan Robinson – probably the second name in the pantheon of “Keynesian” economists and contemporary of both men – and Prof. Bill Mitchell, one of MMT’s founders.)

Bear with me.

This was part of my comment:
“Dillow’s point, which is Kalecki’s point, is that full employment is unlikely under capitalism, MMT or no MMT.”
Romanchuk’ succinct reply:
“I read Kalecki’s essay. From my perspective, Kalecki’s opposition is just him talking his book. Marxists have an innate reason to hate the Job Guarantee because it shows that we don’t need Socialism.
“Saying that a policy is impossible to implement has to be literally the worst strategy for campaigning for it. MMTers have read Kalecki, we can understand why some free marketers won’t like it, but that doesn’t matter if you win elections.”
Even the least perceptive reader can see that if Romanchuk read Kalecki’s essay, he didn’t understand it at all. Neither did he understand Dillow’s post and certainly not my comment.


But there are other things in his reply deserving comment, if scarcely more.

The first is his poor opinion of Kalecki: a (or even the) pioneering promoter of full employment through “Keynesian” policies must have been a rather dumb ideologue, for not seeing what’s evident to Romanchuk.

Let’s accept that, however, for argument’s sake. We are left with a question: if people are so susceptible to ideological biases, can we be as sure as Romanchuk seems to be of his own allegedly unbiased opinion?


To compensate for his underestimation of Kalecki, Romanchuk overestimates the powers of a benevolent MMT-inspired Government in a liberal democracy. This, I suppose, is how things are to pan out. Against Snidely Whiplash’s money, media, think tanks, politicians dirty tricks, Dudley Do-Right prevails on the technical excellence of his good ideas and becomes Prime Minister. He just had to reason and publish good books. Once elected, Do-Right applies his Job Guarantee without opposition, which ceases – POOF! – after elections. He’s wildly successful too. And Whiplash, witnessing Do-Right’s success, recovers from ideological madness. Everybody joins hands to sing O Canada. Semi-Happy Valley becomes Fully-Happy Valley forever more. THE END.

Romanchuk, no doubt, knows a lot more about Canada than I. Surely that’s how things happen over there. Somehow I doubt it would work like that in Australia.


But what really astonished me was the revelation that Marxists have an innate reason to hate the Job Guarantee, for I was not aware I hated it.

I actually used to think I much preferred the Job Guarantee to its alternatives (say, precarious employment at one hand, and the Universal Basic Income at the other). It took Romanchuk’s insightful reply for me to realise how mistaken I was!

And although I understand the reasons MMTers adduce to advance the JG[*], my preference wasn’t based on them. It was based on what I thought was a very good Marxist reason: under JG, workers remain, well, workers, with all the bad and good things being workers entails (MMTers may have read something different or understood what they read differently, but at least in my time, the working class was indispensable for Socialism).

UBI does not offer that.

In fact, mistaken as I might be, I suspect I’m in good company. I didn’t know it then, but I suspect Prof. Bill Mitchell (yes, the guy who invented the Job Guarantee and apparently the only MMT founder who has actually read Marxist literature) could feel devastated. At least in my delirium he seemed to write that the creation of jobs is important “so that workers would be aligned more strongly against capital”.

An everyday example that should speak to trade unionists: JG workers will need unions; UBI recipients will not. As a matter of fact, maybe I just dreamt the whole thing, but I thought I made that argument two years ago, almost to the day (But, do also see my exchange with one Kingsley Lewis: his question, my answer).

That coin has another side, however. Nothing of this is to say I’m totally immune to the allure of the UBI. When I take off my Marxist and union man cap, what remains is a bloke approaching 60. The only two things I have to show for some 45 years of labour are meagre savings for retirement (a situation more common than the Grattan Institute folks want to admit) and arthritic legs that make physical labour that extra bit more taxing.

A sufficiently generous UBI (in my case it doesn’t have to be particularly generous) would be a godsend to me and to those who otherwise will have to work until they drop dead, if they are lucky enough to find work. And, frankly, I don’t see MMTers – certainly not Romanchuk – taking that into account.

And, considering all that, I still prefer the JG. I take that red cap seriously.


One last thing about the JG. Things may have changed, but MMTers’ love for JG, implicitly unanimous in Romanchuk’s view, was far from universal a few years back. I even seem to remember this passage by one Cullen Roche (remember him?):
“Well, this [unemployment] is where we differ. You guys [MMT founders] see no need for unemployment. I do. I think it serves an incredibly important psychological component to any healthy economy. I’ve feared for my job and been unemployed. Those moments shaped who I am and what I’ve become. They were invaluable in retrospect. If I’d been able to apply for a JG job I might not be half the man I am today. Maybe it’s just personal entrepreneurial experience speaking here, but I know what it means to hunt and kill for ones [sic] dinner.”

MMTers invariably reproach those who criticise MMT without grasping its ideas. It’s a fair point, which would carry more authority if MMTers set the right example.

My advice? Don’t shoot from the hip. The likely outcome is to shoot your own foot.

And, really, you guys do need to read more and better.

[*] A JG should appeal to those worried sick with inflation, for it’s meant to provide a measure of counter-cyclical fiscal spending; it should also appeal to those complaining about wage stagnation. People like, say, Philip Lowe, the RBA Governor.

This is how it works: during an economic downturn, Joe Sixpack losses his job. Instead of becoming unemployed and receiving the incredibly shrinking dole designed to harass him until he finds any job paying him peanuts, Joe takes on a job for the JG. Joe’s pay increases fiscal spending, no need for special laws. Unemployment does not increase.

During the recovery, Joe finds a better job and quits JG. No need for harassment “mutual obligation”. Fiscal spending automatically decreases (much like Morrison wants), no need for special laws. Joe’s pay never fell below the level the JG paid: a wage floor.

There is something in JG, however, that may not appeal to Phil Lowe: monetary policy – the part of the RBA triple legal mandate the RBA really cares about – becomes superfluous.


  1. I am curious as to what you think of the replies, directed mainly to you, that I posted there - on misreading Kalecki and history. The problem is where you, Romanchuk, Dillow and Mitchell agree, not disagree - :-).

    1. Calgacus,

      Thanks for your comments at Romanchuk's blog.

      I found you mean well and are heading in the right direction and are trying to understand the situation. But I am not sure you got there yet.

      So, my advice is to read Kalecki with calm, an open mind and trying honestly to understand what he is trying to demonstrate.

      Now, just because Kalecki said something, that doesn't make it so. People, even brilliant people one admires, can make honest mistakes. (That goes for everybody: Jesus Christ, Gandhi, Marx, Mitchell, the Pope, whatever).

      Mitchell understands that. He admires Kalecki but is trying to poke holes at Kalecki's argument. That's not a sin. He is not trying to destroy Kalecki's reputation. One may disagree with someone one admires.

      Here, in this post Mitchell does that.

      Again: read it. Do that with calm and an open mind and trying honestly to understand what his arguments are. It's up to you to decide whether he was successful or not and to what degree he succeeded.

      Sounds good?

  2. Kalecky's ide is that Full EMployment policy (i.e. Job Guarantee) will be so succsesfull that there will be political rejection of it in enough time given. Funny that isn't it.
    Kalecky there have a wrong interpretation of two things How interest rate is determined in an economy and
    What is a businness confidence

    Since the Full employment was so succsesful that caused political opposition that changed such policy has allready happened and is still rulling in the world, there is no much argument about it there, except that any real solution to economic problems would end in such way. FULL STOP

    Interest rates to government borrowing are determined sollely by it's Central Bank, no other thing determines it. Sovereign or non sovereign country determines it by it's governor. EVen Greece did it in 2010 when they raised interest by temselves, not by foreign banks. Thier idiotic governer raised interest rates to their banks when borrowing from Government and as such did the banks follow suit and raised interest rates to thier goverment. Interest rates are determined by Central Bank raising interest rates to their own banks for borrowing from governmnet. Banks turn around and charge the same rate to the government.
    Pupulace does not land money to the government, only Primary dealers do and then it is distributed as much as private sector wants it so there is never preassure to raise interest rates. Primary dealers are requierd to buy Securities and then resell them. Selling Securities is only to drain excess reserves not to fund deficit. That is the MMT insight. Excess reserves come from too much credit issued and deficits spending. Excess reserves ruins the Monetary policy so they sell Securities. WIth paying interest on excess reserves that problem is solved. Selling Securities became the unecessery.

    Business confidence is a made up term to hide tha orders determine willingness to invest more mney into more prodution. No orders in crisis says that there is no need to invest more when wearhoues are allready full of unsold goods.
    Business confidence in full employment is determined by orders, not by some psychological quality of business leaders as presented here.
    Business leaders will not decline orders from government funded by taxes or by deficit. It is a mythology made up by those leaders but they never decline such orders, especially not in the crisis. That only fasist were able to make businesses accept orders from government is such a blatant lie. Look at Google that grew so big mostly thanks to the government orders to spy on users. Or Facebook, or Military industry. They all grew on government orders and funds. Ask Marianna Mazzuccato.

    Me personlay preffer JG and UBI in some combination because that both solve particular needs.

    P.S. Inflation is controlled by World supply of products. Yes, Sovereign governments use the supply of the whole world so money printing is not resource constrained but employment constrained. IF there is everyone employed then the inflation can show anything else will be imported without inflation.

  3. Hi Magpie.

    Still owe you a response. Here's a presponse. But could you be a bit nastier to me? Call me an idiot or something? :-) It's a bit patronizing to suggest I haven't read a paper which I had read many, many times. In fact, I had to because I found much of what Mitchell and even Wray was saying to be unintelligible until I read that paper, and I still find some of Kalecki's explanations far superior in every way, pedagogically AND theoretically to later ones, which should simply be discarded.

    My whole point was that it is Mitchell and many others who are putting words in Kalecki's mouth. Making him say things he isn't saying. Some of which I found stupid, unserious and pseudo-socialist sloganeering, very much against Kalecki's lifelong attitude. See George Feiwel's biography, available at the internet archive (Even freely and permanently downloadable, if you know how). I was puzzled to the point where I wondered whether youse all were reading the same paper.

    Well, then I looked at Kalecki's collected works, and found finds that there ARE several versions of the paper. Which explains some of this dispute. Some have clearly inadvertent omissions because they make an argument incomprehensible. Some have extra passages that give more support to Mitchell's arguments than the version he usually links to, which is the version I reread the most. But not enough in my opinion of course - :-)

    1. Hi Calgacus,

      First, let me apologise if I sounded patronising. It wasn't my intention.

      I have no reason to doubt you have read Kalecki's essay many times and in different versions as you write above.

      More to the point of you last comment. I am aware this essay appeared in different periodicals in at least two slightly different versions. The version I used (linked to above) mentions that, in several endnotes. The first one (note 1, that is) explains that there is an abbreviated Polish-language version and other translations, based on that version, in several European languages.

      The particular version I am relying on is the one Mitchell linked to in his post (the slightly longer version that appeared in Political Quarterly, 1943, not an English translation of the shorter Polish version).

      I may be mistaken in using that longer version, of course, but in principle Mitchell's recommendation -- implicit in that link -- is good enough for me. Do you have any objection to that version? If you do and have a more authoritative version, feel free to post a link to it. Now, I hope you will not take offence in my asking why a different version is preferable to the one I used.

      Equally, feel free to explain what precisely your argument is. What is it Kalecki really argued and how it differs from what he appears to argue in my version? Where did Mitchell go wrong? (It doesn't need to be a complete takedown: just a couple of examples would do.)

      Finally, and given that what is really crucial is the political feasibility of a Job Guarantee, in your opinion, and based on your reading of what Kalecki really argued, is the Job Guarantee easily achievable?


      Incidentally, I take it your reference to Feiwel's book is "The Intellectual Capital of Michal Kalecki: A Study in Economic Theory" (1975), which, although available through the Internet Archive, does not seem to be free of charge[*].

      [*] https://archive.org/details/isbn_087049161

    2. Ten days after I approved his latest comment, I am rather disappointed that Calgacus, who takes courtesy so seriously, has not deigned to acknowledge my previous comment.

      I hope nothing I wrote above offended or discouraged him.

    3. Hey, Calgacus!

      It's been -- what? -- five months? Have you got your response ready yet? I'm looking forward to it! :-)

  4. My apologies. Wasn't well back then. Not feeling great, again. I wrote a long reply and have it somewhere, once I find it I will probably add more, become dissatisfied and then not post it for another 5 months. :-) What I wrote at Romanchuk's blog explains some. I am against idiotic "accelerationist" anti-socialist socialism, which at times had been the mainstream of socialists and socialist thought.

    My point - and I assert this was Marx's main view - is that an MMT JG alone would amount to the hegemony of the proletariat. Would sufficiently constitute workers control of the means of production. And obviously so. So to oppose a JG, to oppose Keynesian / New Deal work programs - is & was to oppose socialism; and Kalecki did not. Unfortunately, this has been far from being always the majority view on the Left. Though always and everywhere it has been on the Right - it's what capitalists themselves say and think - rather know - but foolishly ignored by "socialists".

    The question of political possibility: It happened back then. So it could happen again. Hence the worldwide appeal of a Green New Deal now.

    On that book. You can download it with a free internet archive account. The borrowing period is 14 days, but there is a way around that. So I have an awful lot of books from there and elsewhere. :-)

    Bill Mitchell (yes, the guy who invented the Job Guarantee and apparently the only MMT founder who has actually read Marxist literature.

    Far from the case. Wray & Hudson & Forstater especially have. In my (probably unique) opinion they are all actually to the left of Mitchell. Forstater is the best read and most careful historian of the group overall. Hudson focuses more on ancient history recently. But he is a red diaper baby (born Huckleberry Hudson) and once personally held the copyright to Trotsky's works. Minsky was also one, a Menshevik like his parents. Minsky first met Lerner after Lerner returned from Mexico after unsuccessfully explaining to Trotsky that his biggest (and worst, but tragically most widespread to this day) theory - his polemic against "Socialism in One Country" - was wrong.

  5. I'm interested! I do know that Wray and Forstater have written interesting things on the labour theory of value (Wray) and primitive accumulation (Forstater).

    Is there more to it?

  6. Calgacus,

    I hope your health has not deteriorated further since your last post. I was actually looking forward to the reply you promised. :-)