Feb 4, 2021
Welcome to episode 66 of Activist #MMT. Today I talk with Asker Voldsgaard and Dirk Ehnts on their 2020 response to a paper criticizing Modern Money Theory, or MMT. Dirk is a PhD economist based in Berlin and Asker is a Danish PhD student in innovation and public policy, with a Master’s in international political economy and economics.
[Links to all other parts in this series: Part two and three with Sam Levey. Part four again with Dirk and Asker.]
Their paper is in response to a 2019 paper by Danish PhD mainstream economist Jeppe Druedahl, called “A Kinder Egg On MMT." It expresses primarily the mainstream concern for the long-term fiscal sustainability of government spending, and its corresponding debt and interest. Since MMT demonstrates that large amounts of new spending on public purpose is perfectly safe (not to mention desperately needed by millions) the criticism is essentially aimed at the MMT project itself. This interview and the mainstream argument inspired a lengthy post addressing the several assumptions on which the argument is based and why each of them are incorrect. A link to the post can be found in the show notes: The long-term fiscal sustainability of government spending (is a non-issue).
A major reason that Asker and Dirk decided to write their response was because Druedahl’s paper was written in what we consider to be good faith. By that, we mean that it cites MMT academic literature and treats its authors with respect. Too many so-called critiques do neither, pretending that MMT says something it doesn’t and then vehemently criticizing that made-up argument. They are also often snide and personally insulting to the MMT project and its developers and supporters, both as individuals and as a whole. I’ve collected several examples of good-faith arguments against MMT in a post, along with responses by MMTers, in this post: What are some **good-faith** criticisms of Modern Money Theory (MMT)?
Regardless of faith, the argument between mainstream and MMT is not occurring in the academic papers themselves but in the assumptions on which those papers are based. In other words, the argument is not taking place in the papers but in the world around them. Asker and Dirk’s response does not directly address Druedahl’s arguments but rather rejects its assumptions and replaces them with ones that reflect the world in which we actually live. After seeing Dirk and Asker’s response, Druedahl stated on Twitter, “this is a non-reply."
Especially with those critiques that are of less-than-good faith, they are not written in the spirit of learning or improving MMT, or the economics discipline as a whole. Rather, they are to convince the general public to dismiss MMT and its developers and supporters out of hand. MMT clearly has the more convincing argument and is also understandable by the general public. (It is convincing substantially because it is understandable by the general public.) The only hope mainstream has is to prevent the public from looking at those arguments or to its authors to begin with, and to convince them that if they do, they shouldn’t believe they’re lying eyes.
This episode is part one of a two-part conversation, and it’s also part one of a larger four-part series on the relationship between mainstream or neoclassical economics and MMT. Parts two and three are with Sam Levey on the core assumptions of mainstream economics, and part four is again with Dirk and Asker on the larger political context in which these issues exist.
And now, onto our conversation.
Resources
- Master's Thesis: Money and the Fiscal Space of Monetarily Sovereign Governments: The Case of Denmark, Asker Voldsgaard Ruge, Rethinking Economics, 2018
- Historical time and economic theory, Mark Setterfield, 2006