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Activist #MMT - podcast

Dec 10, 2020

Welcome to episode 58 of Activist #MMT. Today I talk with Marxist academic and blogger, Jim Kavanagh (Twitter/@thepolemicist_). Jim has taught at Princeton, Carnegie Mellon, and Wesleyan Universities. He was also a regular guest on the internet radio show Loud and Clear with Brian Becker and John Kiriakou. He is currently an author at Counterpunch and editor at The Polemicist.

Jim wrote his first post on Modern Money Theory, or MMT, in January 2018, only one month before I discovered MMT. Here's a choice quote from the article:

In saying that taxation is not a funding source for government spending, this analysis puts the focus on taxation as a matter of political and social decision – a decision made from a position of power, not dependence. It allows us to make spending decisions without asking the rich for a damn thing. Imagine we’re in a meeting to decide on a new social program (‘cause we are), and there are two possible ways to set the agenda: 1) Let’s figure out how much tax we’ll have to collect from the rich. Or, 2) Let’s ignore those fuckers and do what we want. Which is more radical? To answer that question, you have to understand that the second agenda is possible. The radical possibility of budgetary decision-making independent of the rich is contained in the fact that money is created by a public authority—a fact that fundamentally undermines any “taxation is theft” or “government spending is parasitic” argument. This package holds powerful potential for leftists, if they’ll open it. Right off the bat, for example, it allows you to say: “Abolish payroll taxes!” Not a bad place for progressive class politics to start.

His second MMT post was written in September that year, which is how I discovered his work. The post, called "Taxpayer Money" Threatens Medicare-for-All (And Every Other Social Program), had a great influence on me in my early learning. It is now the final item in my recommended list of non-academic works to read for those interested in a brief introduction to MMT. Jim’s post lays out why the MMT lens is so powerful, by describing in great detail how detrimental the myth of taxpayer money really is.

Jim’s latest post, which serves as the bouncing off point for our conversation, is on the century long myth that Social Security can only be viable if its trust funds have sufficiently large numbers associated to them. In reality, the trust funds are useless, non-functioning, appendages

This means that eliminating the payroll taxes that feed the trust funds, can only cause problems for Social Security recipients, only as much as our federal representatives want it to be a problem. There is no inherent connection between the size of the trust funds and the viability of the Social Security program. As University of Texas at Austin economics professor, James Galbraith, says, "The exercise of linking future benefits and projected payroll tax revenues is an accounting farce, done for political reasons."

In other words, the Social Security trust funds (in addition to those attached to Medicare and even Bernie Sanders’ proposed Medicare for All) are an entirely-artificial constraint that serves to choke off benefits that could indeed be fully paid, with little to no financial or inflationary concerns. The trust funds also promote the insidious notion the basic human needs can only be met by paying for them. This implies that anyone who can’t pay due to centuries of systemic discrimination, is incorrectly characterized as somehow less deserving of basic human rights.

Jim and I also talk about his view as a Marxist academic, of Modern Money Theory. From his Marxist perspective, he believes MMT to be an accurate description of how the fiat money system works that provides a necessary but incomplete basis for a critique of modern capitalism. Unlike mainstream economics, however, MMT does not preclude those more extreme things from happening. As many Marxists believe, Jim wants to take the means of production away from capitalists and place it into the hands of workers. Although MMT’s job guarantee is, in a sense, a patch on our flawed system of capitalism, it is also a huge step towards empowering workers, who can then start considering different and more ambitious ways of utilizing that power.

Speaking of which, money is no less than a manifestation of power. As Jim says, we don’t need to take money from the super-rich because we need to use it to pay for stuff for the poor. We must take it because having that much money is not so different than having an atomic bomb. No one should have an atomic bomb.

The idea that the government can only waste money and do things inefficiently, is ideology, not reason. If we think of money as power, then we can more easily see this. If you yourself had the ability to create money in your basement, would that be a good thing or a bad thing? I know that I would use the money for good. Why then, is it guaranteed that "the government" would use that same capability, that same power, for bad, or incompetently? Perhaps the very power itself that has the potential to corrupt. Whatever the case, the reality is that this power is now and has always been in the hands of our government, not in our basement. It also must be said that having this power is indeed a burden, at least in the sense that you alone hold the key to preventing suffering and death for millions.

We as individuals want the ability to create money in our basement because we want more power. We instinctually believe this power to be a good thing, because we believe ourselves as individuals to be good. We believe in our own abilities to make good decisions. We have lost faith, however, in ourselves as a society and as a result, we have decided to neglect it – especially the very institution that exists to create some semblance of order in it. And yet, now we complain that "the government" has been taken over by the corrupt, and we use it as an excuse to neglect it further. As Jim told me, "Could it be used badly in another way? Yes it could. But it also could be used better."

There is only one option, and that is to take control back. The only way we have a chance of doing that is to understand the true nature of how it works. MMT is a large part of that reality.

A brief note before we start. You'll her Jim praise Marxist economist Michael Roberts. I have no comment on Roberts in general, and certainly none related to Marxism. In my strong opinion, however, Roberts' grasp of MMT is not great. You'll find a link to a paper written by Roberts, criticizing MMT in the show notes, along with some of my own comments regarding it.



For an overview of Modern Monetary Theory (MMT) with many reliable sources to learn more, here is a good place to start:

  • My large set of resources is a gateway to every known academic paper written by those who have developed MMT over the past quarter century, and is framed around my layperson takes. It is essentially a long-form FAQ, addressing many basic concepts and criticisms, and more.
  • On Facebook, the pinned post on Modern Monetary for Real Progressives contains a wealth of information.

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