Sunday, December 11, 2011

MMT, history of thought, Locke, Berkeley, chartalism, free banking, and cooperative banking has a post on MMT's openness and political neutrality. See A Clarification on Political Openness.

Heteconomist: "I prefer to see MMT as an open framework (basically an understanding of the monetary system and national accounting) within which – or out of which – various policy approaches could be developed and pursued."


I’m no expert, but I decompose the monetary component of MMT into chartalism and endogenous money. These ideas are so old… you can go back centuries to find the origins of chartalism in Locke and Berkeley (money as a ticket, agreement, or sign). Endogenous money’s roots traces to the banking school of the 19th century. MMT doesn’t own these individual ideas… they are diffused into the general body of economics.

There are no intrinsic reasons why the ideas of Locke, Berkeley, and the banking school need be associated with a particular political slant.

The chartalist version of Locke/Berkeley’s token theory of money surely appeals to big government types on the left and right. This is because it finds in the all-powerful state the basis of the entire monetary system.

But you can have endogeneous money + Stateless Locke/Berkeley token money. The political form of this, on the left at least, would be social credit and the cooperative banking movement. On the right it would be some form of free banking.

So in sum, I wouldn’t idealize MMT as being a neutral super structure on which to drape your policy prescriptions. There is politics at the core of the chartalist rendition of Locke/Berkeley.


  1. Well, yeah, but we wouldn't have Locke w/out Plato.

    If absolute novelty were the hallmark of a school of anything, we'd have no schools.

    Not that I'm advocating for schools. Schools are worthless without students, and the markets have decided to like on schools, and hate on students.

  2. I like mmt because it opens tge way to think about a zero growth economy, if we ever need one.

    And it seems to me that mmt backs it's concept with an underlying asset, labor.

    Wish they'd just come out and say so.

    Markets trading school bonds, but no student labor bonds?

    What's an empty school worth?

    Students should be paid, not rented.

  3. I love your ideas about moony as an adjective, and yeah, I think mmt should adopt this, cuz it's implied as far as i'm concerned: use it or loose it when it comes to the underlying value of money things and their moneyness. And we're back to labor.

    Which brings up the question: What IS labor? And why doesn't money see some labor, yet is blind to other labor?

    So then aren't we back to the social contract as the final backing of money?

    So what's the central bank's assets worth without society, and it's societyness?

    Isn't all money fiat, ring fenced by the value of human beings?

    Or am I not getting it?

    1. Katie, I'll probably write something on moneyness and MMT (specifically chartalism) one of these days. For now, this post gives a flavor.