Posted on 4
Jul 2017
by David Fields
Epicurus supposed that even in
the midst of the void the atoms declined slightly from the straight line, and
from this, he said, arose freedom.
-Pierre Bayle, quoted by Karl
Marx
Money is no object.
-Stephanie Kelton
Viewed from afar, Modern
Monetary Theory (MMT) and Marxism appear opposed. Contemporary Marxists such as
Anwar Shaikh
reject MMT and, typically, MMT is disassociated from Marxism when presented to the public.
In truth, however, MMT and Marxism share an entangled history that thwarts neat
distinctions and oppositions.
For one, Karl Marx’s
intervention stands at the origin of critical political economy. Insisting that
the modern money systems that mainstream economics deem natural and
self-correcting are in truth politically constructed and destabilizing, Marxism
functions as a philosophical torchbearer for the heterodox post-Keynesian tradition
from which MMT arises. What is more, post-Keynesianism itself comprises a
kaleidoscopic conflagration of Keynesian and Marxist impulses, which cannot be
sharply dis-articulated.
In terms of direct influence,
MMT owes many specific insights to the history of Marxist thought. MMT relies
heavily on post-Keynesian theories of effective demand and stock-flow consistency,
both of which are traceable to the second and third volumes of Marx’s Capital.
Moreover, MMTers such as
Bill Mitchell,
Mathew Forstater, and
Peter Cooper regularly draw upon Marxist concepts and arguments in their
writings, paying express heed to Marxism’s ongoing relevance for MMT.
Meanwhile, post-Keynesian circuitist theory
has increasingly prioritized state credit money in their analyses of the
monetary circuit (M-C-M’) outlined in the first volume of Capital. Especially
interesting in this regard are European Marxist circuitists like Riccardo
Bellofiore who overtly mobilize MMT’s insights. Forging novel connections
between Marxism, post-Keynesianism, and MMT, Bellofiore and his followers
continue to uncover important genealogical and theoretical linkages among these
projects.
One might say far more about
the linkages and discordances that riddle heterodox economics. Here, I merely
wish to demonstrate the folly of treating MMT and Marxism as unrelated or
categorically opposed. To do so is to overlook post-Keynesianism’s paramount
role within the history of heterodox economics and to repress the contested
field of inquiry to which both MMT and Marxism belong.
Still, when it comes to
questions of social ontology, it becomes necessary to reckon with what
genuinely distinguishes MMT from Marxism and thus cuts through the genealogical
entwinements sketched above. Generally speaking, scholarly and public debates
skirt around MMT’s and Marxism’s competing ontological commitments. Instead,
they argue over the technical operations of political economy and the political
responses various crises necessitate. Upon closer inspection, however, it turns
out that tacit ontological divisions structure such contests from start to
finish.
Ontology is embarrassing. It
is embarrassing because it announces plainly what is uncouth to admit in
ordinary discourse. Yet it is especially embarrassing because it means exposing
the unexamined desires that drive everyday discursive struggles. For these
reasons, ontological claims are often met with skepticism, disavowal, or scorn.
Nonetheless, I wish to risk
articulating outright the underlying rift that cleaves MMT and Marxism. Marxism
attributes the greatest degree of being to immediate material relations and
imagines monetary abstraction as a necessary diminishment and volatilization of
said relations. By contrast, MMT treats remote obligations to a centralized
currency issuer as ontologically prior to any decentered association and sees
monetary abstraction as a means to at once socialize and enlarge relations of
production and distribution. Hence Marxism assumes that money is a private,
alienating, and crisis-ridden exchange relationship that ought to be overcome.
Yet MMT holds money to be a boundless public utility that, while by no means
untroubled, is well-equipped to actualize radical collectivist ends.
This ontological cleavage
becomes clearest in the ways that Marxism and MMT explain employment and
unemployment. For the Marxist, employment comes into being through private
wage contracts between firms and workers. Unemployment is then understood
principally as a negative relation, functioning as a constitutive excess that
reciprocally shapes capitalist production and exchange from the outside. For
the MMTer, however, unemployment is a positive relation that results from the tax
obligation. No unemployed person sits outside this public obligation and
government is ultimately responsible for determining the employment level.
As I have already noted, some
Marxists embrace chartalism’s grounding of money in centralized governance and
a handful of MMTers work in a Marxist idiom. Yet beneath this exchange of ideas
looms an irreconcilable split over political economy’s center of gravity. That
is, despite their shared histories and convergences, Marxism and MMT offer us
two very different Gestalts of the macro-economic order.
Perhaps the best way to make
sense these contrasting pictures is to take seriously the turn of phrase center
of gravity. For all its dubiousness, Marxism has adopted a literal and
curiously pious relation to physical gravitation. Strewn with gravitropic
metaphors, Marxist literature tends to subordinate the macro-economic reality
to material gravity, whereby far-flung abstractions always come down to
material interactions between particular individuals. Hence Marx’s
characterization of communism as the impulse to gather abstractly dispersed
social activities back to their immediate earthly origins. As Marx writes in The
German Ideology, “The reality that communism creates is precisely the true
basis for rendering it impossible that anything should exist independently of
individuals, insofar as reality is nevertheless only the product of the
preceding intercourse of individuals.” In Marxism, then, the fulcrum of social
reality is that place where physical gravitation brings bodies into immediate
contact and revolutionary praxis aims at expelling non-immediate or “ideal”
influences from these direct relations.
Eschewing Marxism’s
gravitropic metaphysics, MMT locates the center of macro-economic activity in
an abstract legal rapport between the currency issuing center and the body
politic that depends upon the currency to physically survive and thrive. On
this model, the totality hangs on money’s governing center and unfolds as an
interlocking cascade of mediation that conditions economic life as a whole.
“[T]he hierarchy of money can be thought of as a multitiered pyramid where the
tiers represent promises with differing degrees of acceptability,” explains Stephanie
Kelton (née Bell). “As the most acceptable money in the hierarchy, the
state’s debts serve as both a means of payment and a medium of exchange in
private transactions.” Despite its “ideal” status, however, money’s topological
hierarchy is no second-order phenomenon, according to MMT. Money is not a mere
“expression” or “representation” of aggregate private value creation. Instead,
MMT supposes that money’s fiscal backbone and macro-economic cascade together
actualize a shared material horizon of production and distribution.
There is no treatise on
physical gravitation in the MMT corpus. The term “gravity” appears nowhere in
MMT’s myriad publications, as far as I have seen. Yet a careful reading of
MMT’s texts reveals a subtle inversion in the topological relationship between
the ideal and the real that not-so-subtly downgrades gravity’s metaphysical
import for critical political economy.
Like Marxism, MMT grounds
value in the construction and maintenance of a collective material reality. It
accordingly rejects Neoclassical utility
theory, which roots value in the play of individual preferences. Only, in
contrast to Marxism, MMT argues that the production of value is conditioned by
money’s abstract fiscal capacity and the hierarchy of mediation it supports.
MMT hardly dismisses the pull of physical gravitation on human reality. Rather,
it implicitly de-prioritizes gravity’s causality in political and economic
processes, showing how the ideal conditions the real via money’s distributed
pyramidal structure.
As a consequence of this
inversion, MMT lends greater acuity to economic analysis. Still more important,
it radically expands the political horizon concerning what is possible under a
modern money economy. Indeed, by eschewing physical gravitation as the origin
and telos of politics, MMT keys the struggle for political power to a
commodious public abstraction, while refusing one-sided denunciations of money
as some inevitable fall from grace.
At last, this brings me to the
Marxist work referenced in my title: David Harvey’s, “Marx,
Capital, and the Madness of Economic Reason,” a talk based on his
forthcoming book of the same title. I have no doubt that MMT and Marxism will
have much to offer one another for years to come. What worries me about
Harvey’s latest project, however, is that it doubles-down the Liberal monetary
imagination. In so doing, it blocks the capacious macro-economic Gestalt that
MMT makes perceptible, along with the radical political possibilities this Gestalt
makes immediately actionable.
Rather than affirming state
spending as the macroeconomic backbone of production and distribution and a
powerful weapon for political transformation, Professor Harvey deems private
exchange the threshold of value’s realization and public money as mere
“anti-value” and “fictitious capital.” The result renders government money just
as flimsy and reckless as private speculation.
A number of passing claims
flow forth from these faulty macro-economic premises:
Harvey characterize debt as
lack of money or owing money rather than money itself.
He says fiscal policy is
operationally dependent on bond sales, abetting neoliberal fear mongers who
claim governments are beholden to bondholders.
He describes Quantitative
Easing as a process whereby federal government inflates the so-called “money
supply” instead of as a straight asset swap.
He collapses the difference
between the monetary powers of sovereign governments and international
financial institutions such as the IMF and the Word Bank.
He remarks that minimum wage
raises and Universal Basic Income policies are equally inflationary.
He reduces Keynesianism to a
narrow Neoclassical synthesis that begins with Paul Samuelson’s popular
domestication of Keynes under John Hick’s IS/LM model and
culminates with Paul Krugman’s deficit dovery in The New York Times.
Worst of all is the central
metaphor that anchors Harvey’s forthcoming publication: the water cycle.
Appealing to a punishingly gravitropic image, Harvey at once metaphorizes and
diagrams the monetary circuit as a water cycle that is spiraling out of
control. Drawing on G. W. F. Hegel’s terminology, he brands money’s endless
unraveling a “bad infinity,” an infinite regress that leads nowhere but into
further crisis. With this, Harvey surmises that our collective future becomes
like so many homes during the aftermath of the 2007 – 08 financial crash:
foreclosed.
In a sense Harvey is correct:
contemporary neoliberalism is grim. Seen through the eyes of MMT, however, the
future hardly looks foreclosed. Private debt can become a “bad infinity.” But
public money is the best kind of infinity and it constitutes the center around
which this forsaken system turns.
Marxism is a rich,
heterogeneous project that continues to bear fruit. Yet unless critical
political economy begins to relinquish its gravitropic attachments to a finite
Liberal money form, Harvey’s bleak diagnosis will almost certainly turn into a
self-fulfilling prophesy.
No comments:
Post a Comment