Building Alliances: Engaging with Economic Theories in Modern Monetary Theory
Modern Monetary Theory (MMT) has garnered significant attention with its unique approach to macroeconomic policy. However, transitioning from theoretical discussion to policy implementation is a path fraught with challenges, including ideological conflicts, political interests, and communication barriers. In this instalment, we explore how MMT can build alliances and engage effectively with other economic theories to overcome these hurdles.
Building Political Coalitions: Aligning with Progressive Social Values
To counter conservative arguments and align MMT more closely with progressive social values, it's vital to reshape the narrative around money and the role of the state. MMT can adopt a new meme for money, highlighting the importance of social control and nurturing activities over destructive impulses.
By aligning MMT with progressive social values and focusing on the availability of real resources rather than budget deficits, this new meme can help MMT attract a broader range of political actors and foster collaboration on common policy objectives.
Strengthening Arguments and Addressing Misconceptions
Effective communication plays a crucial role in bridging the gap between theory and policy implementation. MMT proponents can strengthen their arguments and address misconceptions by adopting key insights from economist L. Randall Wray:
The need to pay taxes drives people to work and produce.
A sovereign government can't run out of its own currency.
The idea of 'tax and spend' is more accurately 'spend and tax'.
Government budget deficits equate to savings for the private sector.
Fiscal responsibility means balancing the economy at full employment, not balancing the budget.
Increased exports aren't necessarily good, and increased imports aren't necessarily bad.
Engaging with Post-Keynesian Economics: Insights from Embodiment Hypothesis and Cognitive Linguistics
MMT and post-Keynesian economics share several core principles, such as the need for government intervention to address economic imbalances and the importance of effective demand. Engaging constructively with post-Keynesian economics can strengthen MMT's theoretical and policy framework.
Effective communication, incorporating key insights from Wray, adopting a new meme for money, exposing ideological motivations, and reframing the debate using insights from cognitive linguistics can all contribute to a more progressive and effective policy outcome.
Incorporating Diverse Economic Theories and Indigenous Insights
MMT has been successful in engaging constructively with various economic theories and critiques. It has effectively integrated insights from a range of economic theories, such as Knapp's Chartalism, Keynes' General Theory, Marx's focus on social class, Polanyi's concept of embeddedness, and the contributions of later economists like Minsky, Kalecki, and Gramsci.
MMT also recognizes the value of incorporating insights from traditional indigenous communities, such as Australian Aboriginal societies, where complex kinship systems play a significant role in governing social organization, relationships, and reciprocal bonds.
Looking Ahead to Part 10: Addressing Concerns and Reconciliation of Perspectives
In the next part of our series, we will address concerns about MMT’s nuance and empirical grounding, consider alternative perspectives on the nature of money, and aim for a reconciliation of perspectives. Stay tuned for the next instalment as we continue our exploration of Modern Monetary Theory.
In this instalment, we've examined how MMT can build alliances and engage with other economic theories to transition from theory to policy implementation. Through effective communication, strengthening arguments, and addressing misconceptions, MMT can make significant strides towards practical policy application. As we look forward to the next part, we'll explore how MMT can address concerns and reconcile various perspectives in the field of economics.
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