Sunday, 7 April 2013
Modern Money Theory - the economics of tyranny
Giuseppe Volpi would have loved Modern Money Theory. I picture him in some dystopic alternative history clattering across Rome clutching the incontrovertible proof needed to justify the corporate state. It seems that a theory that places the state - in the form of the central bank - at the heart of the economy provides just the set of tools that Volpi needed to build a corporatist utopia. No need to worry about where the money would come from to drain marshes, ensure the trains run on time and build a military machine capable of conquering Abyssinia.
The idea that currency sovereignty provides government with the means to control the economy is, without doubt, the economics of tyranny. I know that MMT merely describes how things are rather than proposing a substantively alternative economic model. But there is no doubt that tyrants everywhere would love the ability to print whatever money is needed and use tax or borrowing to regulate how the economy responds to that new money.
And this is the problem. It isn't a matter of whether MMT works (in narrow economic terms) but the social consequences. As an approach to economic policy, MMT fails the 'dictator test' - would the policy tools help or hinder some future totalitarian leader. And there is no question at all that the model - however much it fits with the current structures of central banking and finance - would result in the obscene situation where people are taxed for reasons other than the raising of finance for government. It is the rebirth of what Finer called the "oikos" state, a polity of de facto slavery where all work is directed to the interests of the state and that state provides, according to some plan, for the needs of the people.
The advocates of MMT - good people in the main - do not appreciate that the tools they propose provide the tyrant with more control than is healthy (assuming we wish to be free). This is not to criticise a economic approach founded on the reality of our current international finance system but to question the premise - that this international finance system is desirable. Put more simply, do we wish to have a system that allows government total control - that facilitates tyranny? It seems so appealing right now - reject austerity and simply print enough money to do all those things government wishes to do. But where is the end of that?
I'm sure there are wiser heads who can have the argument about the economics of MMT but on the wider question - the matter of liberty - we should fear a system that hands to the tyrant those tools he needs for control.