A Meme for Money, Part 3: Framing the Alternative Approach

By L. Randall Wray

In Part 2 we looked at the mainstream framing of discussion about money and about the economy and society more generally. Following Lakoff, my argument is that framing is important and that so far orthodoxy is winning all of the important policy debates because it has the better framing. Policy is always and everywhere a moral issue—not merely an economic issue and certainly not a technical issue. To win policy debates, we must—like orthodoxy—engage the moral issues. We can take the higher moral ground.

(Thanks for all the comments; I have just returned from Finland. I’ll get around to a few responses to comments tomorrow. A bit shout-out to the 300 who attended an MMT-infused conference on full employment policy in Helsinki to listen to my presentation! Little did I know that Finland is a bastion of MMTers.)

The approach that I take is the Modern Money Theory (MMT) approach. In the discussion that follows, I will presume that readers have a working understanding of MMT.[1] It goes without saying that I believe MMT provides a correct description of the operation of modern monetary systems, so it makes sense to base our alternative meme on the correct approach to money. However, this particular post is not so much concerned with a correct theory, but rather with developing a progressive meme for money—a story of money’s origins, nature, functions, and operations that can serve as an alternative to the orthodox story briefly presented last time.

There are several approaches to the history of money that are consistent with the alternative meme. I prefer the one I adapted from the great Cambridge numismologist Philip Grierson, who located money’s origins in the ancient practice of Wergild.[2] I find that story to be most consistent with what I understand about tribal society—but, again, what is important is the frame.

According to Grierson, money evolved as unit of account used to measure debts for the purpose of paying fines in compensation. This is inherently a social story, not an individualistic story. The purpose of the payment was social: to prevent blood feuds and to maintain social cohesion. Further, the fees were established by agreement in social assemblies, socially imposed, and payment was collectively enforced. There was no “higgling and haggling”, no “market exchange”, no thought to individual “efficiency”.

Further, the story begins with a debt—not a voluntary transaction between equals to satisfy personal preferences, but with a wronged party who demands compensation or else retribution will be taken. With the imposition of a fine, the social assembly turns the tables: the perpetrator becomes the debtor, the victim is the creditor. The debtor is finally “redeemed” by the payment of the fine. With that, the slate is wiped clean, restoring equality and social cohesion.

With that framing, money is not something that intermediates trade between self-interested globules of desire, but rather is part of an institutionalized practice designed to further the interests of the community—maintaining peace and justice.

To be sure, we do not know exactly how payment of fines “in-kind” (there was a specific payment to be made depending on infraction: a pig for this, a bushel of wheat for that; note also that the practice of paying “bride-price” to the family losing a female to marriage is also an example of a wergild “fine”) to harmed individuals were transformed into payments of money to the authorities (fines, fees, and later taxes).

Again, there are alternative stories. My favorite is that with the transformation from tribal society to a “civilized” command society, the authorities were able to first obtain a share of the fines paid and later to transform transgressions into “crimes against the crown” (later, against society) rather than against identifiable victims. It then made sense to establish a measuring unit (the money unit) to measure the fine and to value the things delivered in payment, and later to actually issue the means of paying the fine–a money “thing”, currency, to be used in paying fines.

Note that this reverses the orthodox sequence: first liabilities, then a money unit, then a money “thing”, and finally money prices and markets based on sales for money. Why did markets develop? Not to barter what you have but don’t want, but rather to obtain the means of debt (tax) settlement.

And while the “creation of money” as a means to move resources to the authority (in payment of fines, fees, tithes, and then taxes) was not initially a progressive development, with the rise of the democratic state the monetary system could be used to further the public purpose—including promoting peace and justice.

Of course, even the modern state also uses the monetary system to pursue war and conquest, and as well private interest that runs counter to the public interest. But for reasons we will discuss, use of money is—on the whole—a progressive development that supports economic activity in the public interest, in spite of the danger (often a reality) that money can be used in inimical ways.

In truth, the same can be said of the development of democracy.

What is important for our argument here is that we need to change the focus—away from money as cost-minimizing medium of exchange and to money as an institution, as Geoff Ingham has long argued (echoing the work of Dudley Dillard[3]). And leaving to the side all the ancient history and speculation on money’s origins and evolution, it is clear that our modern monetary system arose with the development of capitalism and the rise of the modern state. That is to say, the capitalist state.

In that respect, all the stories about barter are irrelevant for two reasons. First, production for “the market” bears no resemblance to hypothesized production for barter. Capitalist production begins with money, to produce commodities for sale, to realize “more money” (as Marx, Veblen and Keynes all insisted). Capitalists do not produce with a view to exchange for other commodities—they want money and if they do not get it, the production was a failure. And hence, there must be a credit system to supply the production process with the money it needs to start and to ensure that purchasers have the money (indeed, the “more money”) that validates capitalist production.

Second, in almost every case, the money of account is a state money of account—chosen by the state and sometimes backed by legal tender laws, but always backed by a tax system. Indeed, it could be said that currency issued by the government is “the means of tax settlement”. (Today, we should include central bank supplied reserves in the definition of currency—that is, high powered money, HPM—since taxes are paid for customers by banks whose reserves are debited.) Previous to the European Monetary Union, exceptions to what Charles Goodhart called the “one currency, one nation” rule were rare, usually limited to small states closely connected to another, or to currency board arrangements. And when a new nation was formed (usually by breaking up a nation), one of its first acts would be to create a new currency.[4]

So, modern moneys are “state moneys”.

The alternative frame must therefore stress this dual link between money and capitalism and between money and the (capitalist) state—as Ingham insists. The Crusoe-Friday meme is not useful either for understanding the way our system works, or for framing our discussion about how to use money to further the public and private interests.

To that end, we need to begin with the state and its money, that is, with the state and its treasury and central bank at the center of our monetary system.

On one level, that monetary system is a set of credits and debits: I Owe You’s and You Owe Me’s. One of our memes is: “money is what we owe each other”; or: “money is the tie that binds”.

These IOUs are recorded on balance sheets, with banks handling much of the record keeping. At the aggregate level, all the IOUs must cancel—there are always two entries, a debit on one account and a credit on another—but that takes away all the fun, all the action, all the power.

If I strike you, you are struck by me and so the two cancel but that does not mean there is no impact.

The credits/debits necessarily represent a social relation—the creditor and debtor are related in a social bond. While we normally think it is better to be a creditor than a debtor, throughout history both parties have always been thought to be tainted by this relationship. In any case, it is unavoidable in a society in which much of the economy is organized through and oriented toward the monetary system—which itself consists of layer upon layer of debits and credits.

While we can imagine a Crusoe-Friday barter economy, it excludes by assumption these credits and debits and the social relationship of creditor to debtor. Even if Crusoe and Friday decide to use seashells as a “money” medium of exchange there is no social relationship, no creditor, no debtor—just an impersonal relation with the commodity for which one traded. The seashell “money” is asocial—as befitting a theory that denies the very existence of society.

Note also that in the currently fashionable economic models that use a “representative agent” (ie: Real Business Cycle and Dynamic Stochastic General Equilibrium models) the debits and credits would be silly—you owe yourself—which is precisely why there’s no room for money, whether it is social or not.

Our alternative approach needs the debts, the power of creditor over debtor, and the threat of bankruptcy. It also needs the state in the center. We’ve already mentioned the state’s choice of the monetary unit. It is difficult to perceive how the haggling of a number of self-interested individuals bartering a reasonably large number of items could ever settle on a single measuring unit.

In any case, it is rather clear that today, at least, it really is the state that chooses the unit, taxes in the unit, and issues the currency denominated in that unit (again, we recognize the caveat that there are a few minor exceptions plus one major exception in which EMU member states chose to adopt a common unit and chose to constrain currency issue through self-imposed rules).

So while we can imagine a creditary system without the state at the center, it wouldn’t be our capitalist system with the “bourgeois” state (or democratic state, depending on one’s ideological orientation) pursuing the interests of the dominant capitalist class (or the public purpose depending on one’s political persuasion).

We could also imagine the capitalist state functioning without money, with only the private sectors keeping accounts in a mutually approved unit of account on the books of private banks. Rather than using money to move resources to itself, the state could use force to take what it wanted—from workers and capitalists. This would be a sort of command state economy operating outside the capitalist monetary system (perhaps a feudal system but with a modern state).

As Warren Mosler always jokes, in the old days you’d go to the pub for some drinks and wake up in the crown’s navy with a big bump on the head. From this view, the use by the state of the monetary system to exercise claims on resources is a big improvement as one can choose to sell or to withhold labor and other resources from the state’s use. Join the navy if you want, but drink freely in the pub tonight without worry that you’ll be in uniform tomorrow.

To be sure, however, this development of the monetary system to be used for both production and allocation is not without negative aspects. It is difficult to conceive how organized prostitution as well as illicit drug “markets” could have reached their current level of development in the absence of the monetary system. (While one could imagine some one-off “sex for coke” barter, sophisticated and violent long-distance trade based on complex production chains would be difficult to organize without money.)

As much of the “trade” in sex and drugs runs across national borders, it is unlikely that it would have been possible without well-organized currency exchanges and especially the international reserve currency in which illegal activities are priced. I’m sure the drug cartels thank Uncle Sam for providing the almighty dollar to lubricate their trade.

Still, on balance, the development of the monetary system must be beneficial. Government purchases what it needs and imposes liabilities (mostly taxes and fees today, not fines) to ensure a demand for its currency. In that sense we say “taxes drive money”. While taxes are largely an involuntary liability, sales to government are largely voluntary. Exactly what one does to obtain the means of paying taxes (“money”, although technically taxes are paid using HPM, with payment handled by private banks) is at least in part discretionary.

But, as they say, only death and taxes are unavoidable. Most people have to sell something to get the means of paying taxes.

 



[1] Those who do not can read my new book, Modern Money Theory, cited above. Unless otherwise noted, references to support arguments made here, as well as citations to literature mentioned, can be found in that book.)

[2] See Philip Grierson, The Origins of Money, London: The Athlone Press, 1977; also see L. Randall Wray, Understanding Modern Money: The key to full employment and price stability, Edward Elgar, Cheltenham 1998.

[3] See for example Dudley Dillard, “A monetary theory of production: Keynes and the institutionalists”, Journal of Economic Issues, 14:255-273, 1980.

[4] Charles Goodhart, “Two concepts of money: Implications for the analysis of optimal currency areas”, European Journal of Political Economy, 14:407-432, 1998.

26 Responses to A Meme for Money, Part 3: Framing the Alternative Approach

  1. Alex Seferian

    The history of money is important, but one should consider that the vast majority of any given population is not really interested in that history. This does not mean that efforts to set the records straight are not very necessary, but to the extent the past three excellent posts have been about developing an alternative “meme”, and winning the hearts and minds of millions of people, then it is equally important for MMT to develop a framework that is easy (I mean extremely easy) to comprehend.

    As exposed in these posts, part of the success of Mainstream is that it is indeed quite simple to grasp at first sight. The often repeated (and as we know erroneous) statement that “governments, like households, need to live within their means” is extremely powerful. How can one compete with that seemingly intuitive statement? Probably not with complex matters when it comes to the casual reader of newspapers, or to the people who watch and listen to commentators on TV: which is where the battle needs to be largely fought.

    I would argue that the key is to NOT make “money” initially central to any MMT argument. This is not automatic when the “platform” is named Modern Monetary Theory, but I still say that MMT must initially ignore “Money” and first and foremost focus on the Real Economy to drive home certain points. What would those key points be? I am not sure, but a list could include:

    1) The point that unregulated markets, if left alone, can wreak havoc and make a mess out of the process of allocating resources. This would not be about attacking the “invisible hand” outright, but about instead saying that “guidance” (like the guidance that parents provide) is necessary. Regarding this debate, a major advantage can be pressed given the current crisis and events post 2007/8.

    2) The point about the fallacy of composition. You have done so often, including here: http://www.cfeps.org/pubs/pn/pn0601.htm

    What I argue above is akin to recognizing that it is not in MMT’s interests to separate economics from politics. Politics has to be positioned front & centre, and key questions have to be addressed that move the debate away from tough to grasp concepts, or historical events, and towards the pockets of the average person.

    Once you get people to agree that a guiding hand is necessary and that it is in everybody’s interest to build a safe society by steering away from policies that just favor a few, then, and only then, do you begin to talk about money, but in the context that there is initially (and depending on the specific circumstances) no issue of affordability.

    Here is an excellent example in a TED talk regarding how to address some of the political issues. http://www.youtube.com/watch?v=cZ7LzE3u7Bw

    I think the above word “initially” is key, because if there is one critique I would have of MMT is that the inflation issue (potentially caused by budget deficits that are high) is too often only mentioned very much on the side by many MMT commentators (although I know not by you). Saying that the Government just needs to “click” money into existence, whilst technically correct, is the sort of language that is best reserved for late into the debates; because it makes many listeners automatically shut off and erroneously pre-judge that MMT is just about spending.

    My closing remark is to repeat that this battle has to be mostly fought in the living rooms of people; i.e. in TV shows and in the press. To that effect, I think MMT needs to build a set of intuitive, simple and correct statements, and in order to compete with the “we must live within our means” type of arguments. Perhaps a future post from someone could ask to generate related feedback.

    • Very well put. MMT’s messaging — or some part of it — has to be “living-room ready.” In fact, to make converts, I believe the core message has to be accessible, interesting, and compelling to the pure novice. Drilling down and arguing about technical matters must come way later — if ever.

      Lots of the favorite memes and quips of MMT veterans and experts are dead on arrival with the average citizen.

    • Alex Seferian’s comment is brilliant. Maybe the post is just thinking through the issues, but it all seems too complicated. Framing needs to be simple: “death taxes” rather than “estate taxes.”

      I am new to MMT, but I find the concepts sometimes hard to grasp, often because they’re so counterintuitive. Deficits are good? Surpluses are bad? Even grasping the zeroing out of the three sectors would be tough for a mainstream audience, I would think. Any framing has to come to terms with all this.

      And is it about getting people to understand the fallacies of money or the fallacies of mainstream economics? I would argue it’s the latter. People are being made to suffer because of lies told about public debt and austerity. It will take some brilliant framing to convince people that much of what they learned in Econ 101 is a fantasy.

    • This is a very insightful comment. I agree that the whole point of trying to understand the monetary system is so that we are not mesmerized by money illusion and numerical flim-flam, and can see through to the social and economic fundamentals that lie below the realm of money, and somehow we need to build the story from the bottom up rather than the money level down. One possibility is to try to focus on what our real limits are, and maybe better what our real opportunities are. Our real opportunities are grounded in our ability to apply work, cooperative activity and creative ingenuity to the real (non-monetary) resources we already possess to make our lives better. Our real limits are the constraints imposed by our finite nature: We only have so many resources; we can only work so hard; we only live so long, etc.

      When resources exist that are not being used, and when able and willing workers exist who are not employed in activities that improve those resources, and when people are suffering needlessly or living under more deprived conditions than they need to be as a result , then we are somehow failing as a society to seize our real opportunities, and have succumbed somehow to artificially imposed limits that are the result of that social failure.

      The monetary system is a system of institutions created by human beings as a public utility to help realize opportunity, and match opportunities for the creation of goods with the potential producers and recipients of these goods. It’s our monetary system, and we can do whatever we want with it to achieve our combined potential. There is no such thing as an inherent limit on the society as a whole based solely on the society being “out of money”. That’s like saying we can’t achieve a better educational level or a better level of human interaction because we have “run out of words”.

    • I think Alex makes some very good points:

      The history of money is important, but one should consider that the vast majority of any given population is not really interested in that history…It is equally important for MMT to develop a framework that is easy (I mean extremely easy) to comprehend…MMT must initially ignore “Money” and first and foremost focus on the Real Economy to drive home certain points… this battle has to be mostly fought in the living rooms of people; i.e. in TV shows and in the press. To that effect, I think MMT needs to build a set of intuitive, simple and correct statements, and in order to compete with the “we must live within our means” type of arguments.

      While one earlier commenter (can’t remember who) cautioned against emphasizing morality in developing and communicating an MMT meme, I think there’s a difference between speaking to people’s fundamental values and pushing on them moralizing messages that are likely to trigger defensiveness and negativity. I think we want to achieve the former while avoiding the latter.

      Though I’m no expert on Lakoff’s theories, I think this is consistent with his perspective on framing. Another point he makes is that many (most?) of us have internalized multiple values and frames, i.e., we’re “conservative” on some issues and “liberal” on others. So, as he explains, the key in frame-based communication is to trigger the desired frame rather than the undesired one, since the triggered frame largely determines how facts and statements are filtered, interpreted and integrated.

      With that it mind, here’s one stab at explaining what I consider to be a fundamental value/purpose of MMT.

      MMT explains how modern monetary systems can provide all citizens with the opportunity to thrive by providing value to their fellow citizens and the society in which they live.

      As I see it, this initial value-based (but not moralizing) statement leads directly to a discussion of the Job Guarantee (and related publicly-funded investments in training, education, etc.) as wise and broadly beneficial economic and social policy. This ties into Alex’s point that “it is not in MMT’s interests to separate economics from politics.”

      It also invites (but doesn’t require) a discussion of what comprises a “modern” monetary system, for those who are ready to digest and discuss the relevant economic principles. And, for those who raise the “we’ll become another Greece” argument, it opens the door to a discussion of why the current Eurozone system is, in key respects, NOT a modern monetary system as defined by MMT.

      While it’s intended to mainly trigger a “nurturing parent” framing, this statement also incorporates what I’d consider a relatively healthy version of the entrepreneurial-minded “take personal responsibility and take initiative” value framing that has been largely co-opted by the right, by emphasizing “the opportunity to thrive by providing value to their fellow citizens.”

      As a final note, I’d urge (as I have in prior comments) the managers of this blog to provide a dedicated space (e.g., a permanent and reasonably prominent home-page link to one or more comment threads) for ongoing discussions about how best to develop effective MMT communication strategies, including (and importantly) the development of effective MMT memes.

    • Much of the problem is semantics. We need another term/word for “the deficit.” As long as “the deficit” is called “the deficit,” we’re sunk. “Inflation” also has a terribly negative connotation, even though it isn’t normally a bad thing, and actually reduces obligations for debtors (most people).

      The goal of MMT from a political standpoint, as counter-intuitive as it may seem, should not be to focus on an explanation of the monetary system, but instead to focus on everything else that makes up our economy.

    • “The often repeated (and as we know erroneous) statement that “governments, like households, need to live within their means” is extremely powerful.”
      Living within one’s means is the central mantra of Angela Merkel’s Germany where you have election campains based on the sole slogan: No more debts ! This points to an understanding of the statement you cited like households cannot afford to spend more than they actually earn and that governement too should only spend what it “earns”. In reality households can afford to spend more than their actual income and the way to do this is debt of course. Living within one’s means then only means that you don’t have to take more debt than what you are able to pay back. This is a statement we all can agree with.
      If we now take the popular standpoint that government has to finance itself or by taxes or by borrowing then we can agree from that last statement that the government too should only borrow what it can afford to pay back. And introducing the notion that the government always can pay back we can agree with the statement you cited as a whole.
      The government being always able to pay back the popular standpoint about the necessity of taxes and borrowing is wrong of course. But here’s an important point: When creating frames you must be aware that the picture conferred by frames and the technical reality don’t have to match a hundred percent. It’s the same as with representations of religious beliefs: There are different “versions” (pictures, poems, songs, metaphors, original text ecc.) of the truth according whom you talk to, but all versions cover the truth well enough to get the central message through.
      So for the central message of MMT in order to get through it’s quite sufficient to stay within the popular frame of government financing as long as you insist on the possibility of debt both for households and for governments.
      The possibility and usefullness of debt as a social concept of trust and reliability should therefore be the central frame for MMT. No child would survive without getting indebted to the care of its parents. Everytime you ask me a favor you get indebted to me and this creates a social reciprocity. If you take away from families the possibility to get indepted on a mortgage because wages are too low you disown them twice. All our social relations if they are worth while create debt of some form. If you’re not indepted to anyone anymore than you’re very poor person indeed (no debt and you’re dead). In the christian view you’re even indebted to God owing your life to his creation. And the debt you owe him is not merely to pay back what he gave you but to make good use of your credit, Matthew 25:14.

      If the basic argument that households have to live within their means states that Households shouldn’t borrow more money than they can afford to pay back the statement you cite is not so erronous after all. Government too of course shouldn’t borrow more money than it is able to pay back. that has two possible meanings:
      1. Households cannot spend more than their income or
      2.

  2. To that end, we need to begin with the state and its money, that is, with the state and its treasury and central bank at the center of our monetary system.

    The greatest economic expansion in US history took place without a central bank.

  3. Paulo Garrido

    I recall that the word ‘meme’ was proposed by R. Dawkins to name an information career in the cultural domain analogous to ‘gene’ in the physical one. There are memes in a memetic system as genes in a genetic system. Brains host memes and memes direct the operation of brains including their own reproduction. In this perspective evolution of human culture is the manifest evolution of an ecology of memes. In this ecology progressive and non-progressive memes coexist.

    Progressive memes make up for human development in societies, and their results are rather impressive. Human beings are estimated to have surpassed 7 billion and the data collected the 3-valued Index of Human Development, roughly income, life expectancy and education, show that there have been and globally there are impressive gains as of today on Earth with respect to times in past, say one century ago.

    Yet, progressive memes have not evolved to the point of delivering resilient and continued development against non-progressive memes. The effect of these ones is to stop and to revert human development to past more primitive stages. Ironically, paradoxically or dialectically, in the last years, this happened and happens more clearly along the ‘developed countries’.

    What this means is that a new set of progressive memes creating a new framing is to be generated in order to substitute the old ones that became exhausted, lost or or degenerated.

    It is clear that central to these are the ones making for an alternative framing of money, consistent with a progressive social view, capable of being highly disseminated to the point of changing policy in the developed countries and being for all countries more resilient to the conditions generated by development itself.

    That progressives

    - recognize the memetic interpretation of cultural (in the wide sense) evolution
    - acknowledge that the memetic battle against non-progressives is being lost
    - realize that new progressive memes are to be generated

    is imo a very, very, very positive development!!!

    To which I can contribute the following

    i) We quite do not know what the progressive memes that are needed actually look like.

    What we know is that such memes should be able to achieve high rates of reproduction in people’s brains, in particular in the fraction of population that conditions political decision in macro-economic management.

    Moreover, we know that such memes should be so good as to be able to overcome the anti-progressive bias of MSM.

    ii) In line with the ‘genetic’ interpretation of memes, a ‘genetic’ process for meme development can be envisaged:

    - generate and recombine; test and select; generate and recombine; test and select…

    iii) My personal take for new memes on money and the social fabric is the fact that the vast majority of humans being alive depends on a quite developed and specialized technological production system of goods and services.

    To see this, one notes that at the beginning of the twentieth century human population was barely above 1 billion worldwide. Now it is above 7 billion. If all the technological developments and equipment acquired since would disappear, it may be readily understood that societies would collapse and deaths would be in the number of billions.

    Therefore, it should be clear that people should concentrate on improving the technological system of producing goods and systems under the restrictions of

    - moral improvement of such systems both for people in the role of users as for people in the role of producers (or for clients and servers to use a www terminology)
    - using money as it is also clear that one has not viable good ideas to keep the system going without the procedure of assigning natural numbers to goods and services.

  4. “But, as they say, only death and taxes are unavoidable. Most people have to sell something to get the means of paying taxes.”
    Taxes are unavoidable, yes, but they need not be income taxes.Taxes could be fair and equal, taxes could also help control the currency from hyperinflation. I use the word hyperinflation so as not to confuse the issue of inflation which in itself is a necessity in a growing society.
    What if “money ” were to be taxed upon issuance ? You need money, OK, how much at 2% for 36 years?
    Could you imagine if the “private for profit banks ” were mandated to become solvent at 100% margin and needed $100 trillion to balance ? That would produce an income, revenue stream for the Monetary Sovereignty of $5.5 trillion a year. Guaranteed with no inflation, but they money must be put back into the economy so as not to create deflation.
    As Keynes,Minsky, DeSoto, and many others have stated, “Separation of “private for profit banks”?
    Most of all, Frederick Soddy, “The Role Of Money”.”Money now is the NOTHING you get for SOMETHING before you can get ANYTHING.”
    The society use that currency (n o matter what form) to distribute the society’s wealth.
    “Justaluckyfool”

  5. My sense of the process of the origination sort of spurs off at one point in history and different time wise in different locations up to a point. Part of this comes through in jamming together at least three books, and then essays by Michael Hudson regarding wergeld. Leslie Kurke’s close interpretation of Herodotus’s history which you also reviewed. Then Aden and the Indian Ocean Trade by Roxani Margariti, and the a lesser degree Before European Hegemony which both described a long standing network of city states around the Indian Ocean, And then the Persian view of the origin of the Persian empire. In each case the commons established in each of the merchant cities were “customs houses” operated by the local state and probably temples. Kurke described essentially the democratization of trade, particularly in the advent of retail level trade through the use gold coinage, versus the Mycenaean oligarchic “gift”/tribute economy. The customs/commons houses were apparently a long standing bit of economic service by whomever sponsored these utilities. Here the wergild extended as a means of clearing debts both within and then outside of the customs houses. the invention “democracy” at least in the eastern Mediterranean area is connected to the use of coins to clear debts in ports of trade such as Athens, and not to the tribute economy. In Aden particularly by its isolation from other landed settlements served as a trading commons which was regulated and taxed by the current hierarchs. The Persian Empire grew out of a string of oases and trading settlements along the Silk Road, and the taxation to support safe zones for trade against banditry and of course the current opportunities toward fulfilling Gresham’s curse. Aside from the taxation to support a fair and safe trading place. Using the coins to pay the military and support services and then taxing the merchants would create a positive cycle and a commoning. There is also some evidence of this sort of process being used by the Phoenicians and Phoceans prior to 600 BCE as well in the apparent remains of customs houses but no clay tablets of accounts. It would seem that reclaiming history in new narratives of commoning is also a way to reframe the invention and use of money. Kurke did an admirable job actually, though it caused her to be virtually exiled from the field of classical languages. The meme concept as applied by Latkoff has a certain utility, and it seems to ignore the impact of history and inter-cultural contact. There is substance enough to assume the establishment of commons domain utilities as a beginning point, including both a taxation and services to support a commons rather than an end point. The Aden history as derived from the Geniza archives and projected backwards in time provides a commons narrative and role of the state.
    Pressing a commons “meme” as an alternative framing can also be established in other ways. I am still tracking this piece down and I’ve heard mention of the English town of Bristol accepting the local (Transition Town) “community” currency in payment for local taxes. This represents an elevated use of community currency as an element of the local commons, which should be encouraged. I would expect that Bristol would be soon pressed to also intervene in various dispiutes based upon transactions of the Bristol Pound much the same as it would for the English Pound. I understand that Latkoff in popular in certain quarters, and it has always seemed like weak sociology rather than operating from the point of recalling social capacities. The history recounted of the rural economies in the American colonial period by Arendt seems to me to be a better approach. The objection to taxation in that time was also that no services or support for the general community was provided other than to seize land and cattle in lieu of available British currency with which to pay taxes. The Whiskey Rebellion was a nearly exact reproduction of that dynamic, again actually remedied by the currency that was brought into the region through provisioning the “watermelon” army occupation by George and other eastern land speculators. This not, I believe, a significant deviation from the progressive “meme” as you have sketched.

  6. New piece by Lakoff: http://readersupportednews.org/opinion2/277-75/14854-why-its-hard-to-replace-the-fiscal-cliff-metaphor
    Chuck: You focus on a diversion. the CB is an office in the govt; it is immaterial whether Treas performs all necessary function or if you split functions between a CB and a Treas. We certainly had a Treas. Also note that the period you refer to was in an important sense “pre-modern”–and in any case you’ve got your growth data wrong. The best growth was early Post WWII.

    Paolo: good points. The conservative framing is indeed regressive in several senses of that term.

    Lucky: Agreed income tax is not necessarily best; indeed it cannot “drive money” from inception because it works only if economy is already monetized. Best tax is on cubic foot of dwelling space.

    Tadit: interesting stuff.

    Others: These meme blogs ARE NOT MEANT FOR LIVING ROOMS. They begin a discussion among progressives on how to frame the discussion we will then have in living rooms.

    • “These meme blogs ARE NOT MEANT FOR LIVING ROOMS. They begin a discussion among progressives on how to frame the discussion we will then have in living rooms.”

      Silly me, I mistakenly thought we were having a discussion about how to begin the discussion among progressives to frame the discussion we will then have in living rooms.

      • Alex Seferian

        The living room comment was not meant to be central. The main point was to offer a humble recommendation, and that is for MMT to not build up arguments starting with money, including its history. This may be counter-intuitive given what one of the M’s stand for in MMT, but I frankly think it is too uphill a battle otherwise; Mainstream is too entrenched, and simple, seemingly intuitive comments such as “we must all live within our means” are just too hard to attack head on when it comes to a vast majority of the population… people who at most have a 5 to 10 minute attention span when it comes to these sorts of issues.

        Instead, I argue that:

        A) An MMT “meme” should use as building blocks arguments that have to do with more down to earth concepts. For example, that markets are imperfect and greed is a main driver; that large financial institutions can wreck havoc if too unregulated; that income inequality is on the up and is not good for society; etc. I believe there is a golden opportunity to drive home these sorts of points post 2007/8.

        B) That same “meme” should then introduce the Public sector as one that is ideally positioned (as long as its representatives are not corrupt mind you) to plug holes, provide a guiding hand, etc. Key arguments to support this claim would have to do with the simple “fallacy of composition” concept, and the fact that some public goods are indeed best provided by the public (e.g., infrastructure projects).

        C) A “meme” should finally introduce money when the issue of affordability arises, to explain that the only constraint faced by an issuer of its own fiat currency is inflation.

        I think that the history of money is interesting, and important, but 99.9% of the population will switch off if an MMT “meme” starts with that. In fact, that is probably the battle field that Mainstream economists want Progressives to be on, and in order to blow out of the water all those who argue against “sound fiscal” discipline. Instead, MMT should pick a new battle ground, and in that respect I believe that implies introducing money quite late in any debate or “meme”.

    • “Lucky: Agreed income tax is not necessarily best; indeed it cannot “drive money” from inception because it works only if economy is already monetized.
      ” Best tax is on cubic foot of dwelling space.”,LRWray.
      Perhaps the best tax would be “The payment of interest on the mortgage”
      What if QE4 were to be $100 trillion available for residential and commercial loans with a rate of 2% for 36 years ? As the Fed has proven they can purchase all the assets they wish (to control the quality and quantity of the currency, even in this case to increase jobs and employment. Mandate 100% reserve on all present mortgages held by banks, with the option to sell all to the Feds at fair market value plus 3% to cover part of their cost or profit if they have any. All loans would then be modified w/ @% rate for 36 years assumable mortgage.. Allowing for 85% of all homeowners that wish to stay in their homes to stay and pay. What would that do for stabilizing the housing sector, increase of jobs, with no inflation and price stability?
      And what a “hat trick”. Taking away from the 1%, from the “private for profit banks” a profit of $100 trillion, or should I say, “The right to tax us on our own money for a selfish gain of $100 trillion for 36 years. (or $200 trillion as they would surely average 4% as they should to maximize profits for their shareholders.

  7. Is this the end? No part 4? I’m underwhelmed. I don’t see how even universal acceptance of this meme about the history and development of money will help with acceptance of MMT, or what it has to do with any morality or moral high ground, even the particular morality of the Progressive movement.

    It is not because people believe money evolved from barter that the evil ones conspire to impoverish the common man, and enrich themselves. I don’t think they care at all how money evolved, nor do their victims. What possible difference can it make? Maybe I’m missing something important, and you can state it more directly?

    The morality that matters is that as the sponsor of the monetary economy and sole issuer of the money, the government has a moral obligation to manage the money so as to offset, as much as possible, the ill effects of the capitalist system they have sponsored, namely unemployment.

    There are important ideas that MMT has to incorporate into the consciousness of the society, replacing others, such as that monetarily sovereign governments are not like households, and can’t go broke, but the meme about the origin and history of money just isn’t one of the important ones. IMHO.

  8. I really like this approach based on the concepts of debt and mutual obligation. But it runs into conflict with the schools of American thinking that find the concepts of obligation, debt and the rule of law to be some kind of awful tyranny.

  9. The question remains, Is there a type of money that consensus accepts as preferable? because regardless of the type of money we have, we will wish for and sometimes act as if our holdings and debts are in a preferred currency or commodity. Acting out simulates the perception of a set of values and can be viewed as symptomatic of an existing meme.To the extent that acting out acquires all that is necessary and allows for fail safe surplus and enhances the sense of well being confirms the meme. This is the casual premise recognized to be the proven limit of rationality holding the library of memetic equations that our ability as a species hasn’t predictably evolved in an estimated 50,ooo years. I sense some humor in Dawking’s choice coining this term as a variant of gene and simultaneously suggesting a unspoken essential relation to the word mimetic. This anecdote is easily reinforced simply looking at the disambiguation clause on wikipedia, where either term Memetic or Mimetic is explicitly stated as not to be confused with the other though it’s apparent they may be required to function symbiotically in any final analysis.
    At this point in the presentation of this thread I’m beginning to think that a general restructuring of parts 2 and 3 need major revision to carry the argument to any conclusion of undeniable value. At the same time it’s obvious that this discussion is essential and look forward to seeing it develop. The sense of incompleteness sensed in parts 2 and three seems related to the efficacy of using the verb framing. There are oppositions beginning to arise that are as specific as the distinction of framing a picture and framing a house. Perhaps both are needed to carry the thread successfully which is why both an expansion and simplification of these sections may be required to fulfill the terms and goal of this process.

  10. The problem MMT is the same problem suffered by all memes that require sufficient thought and evidence in order to understand fully. I think Terry Goodkind summed it up nicely in his “Sword of Truth” books. Namely, the Wizard’s First Rule:

    “Given proper motivation, almost anyone will believe almost anything. Because people are stupid, they will believe a lie because they want to believe it’s true, or because they’re afraid it might be true. People’s heads are full of knowledge, facts and beliefs, and most of it is false, yet they think it all true. People are stupid; they can only rarely tell the difference between a lie and the truth, and yet they are confident they can, and so are all the easier to fool.”

    A large amount of people will believe something without evidence or further reflection because they want it to be true (Global Warming deniers, Birthers) or because they are afraid it might be true (Anti-vaxxers, TINA subscribers). People believe these things on little to no evidence or even in spite of overwhelming amounts of evidence.

    MMT suffers a compounding problem in that, unlike something like AGW or vaccination, we cannot succeed in getting a majority of academics to agree. In those other cases, the debate is between the informed and the uninformed. MMT, however is still widely unaccepted by even the informed. I applaud the actions taken by Randy and Stephanie et al. in gaining grass-roots support, especially in Italy and Finland. However, I don’t see MMT becoming a widely accepted paradigm unless we can convince some of the opinion leaders amongst the Deficit Doves. Getting a Paul Krugman or Warren Buffet or (insert popular deficit dove here) to see the light would do much more for this movement (?) than an army of anonymous internet followers. Even getting someone like John Stewart or Rachel Maddow could have a significant effect.

    Concerning framing the message, I think you (and the rest of the MMT crowd) have been very successful. You need to just keep hammering the main points. While there are several I see 2 main points:

    1) Government can never go bankrupt therefore
    2) We should judge the success or failure of government programs based on their impact on society (using metrics like unemployment, inflation, GDP, GINI, etc) not on their impact on some accounting number.

    All the other points and policy proposals can be debated if and when you can get people to agree on 1 and 2. Job Garuantee? Well, affordability isn’t a contraint so lets do it. Did it work? If so, continue, if not, drop it.

    If I recall correctly, it was somewhat later in the MMT primer that you brought up the concept of Functional Finance. From my experience this is a topic most people haven’t heard of, but rings true with both conservatives and progressives (I dislike the word liberal to describe the opposite of conservative) . It seems to me that FF could be worked a little more clearly into the main body of MMT. Preferably somewhere toward the beginning.

    Sorry for the long rant. Hopefully you can get something useful out of all that.

  11. This is such a fascinating process: to see a theory being born and brought up and even having an opportunity to engage in its development. When it is fully matured, we will have something very valuable. Thank you all.

  12. I see no potential for creating a new “meme for money.” It’s nearly impossible to reach adulthood within the developed world without acquiring a strong, intuitive notion of what money is. Most everything of value besides air, sunlight and (sometimes) human companionship has its price.

    Money is the power to demand goods and services from others. Full stop. That’s the practical experience we all have… and since nearly everything of value is subsumed within the economic system, money is, in all but the most literal sense, the power to live. You can’t change that, short of changing the entire structure of our society.

    We need a new meme for government—in particular, for government as an economic actor. It’s the default working assumption that government is just like any other economic actor, only bigger and less efficient, that is so destructive.

    At minimum, a useful framing must make it intuitively clear that the “Federal deficit” is an empty concept. Deficits really don’t matter. Federal spending and Federal taxes matter, but each individual policy has its own effects, all of which must be understood on their own terms and in the context of the current economy. Lumping them all together to calculate a deficit throws away all the useful information and produces a meaningless number. The inconvenient corollary is that—like many aspects of public policy in the modern world—an accurate, useful understanding of the details of fiscal policy is not going to fall within reach of the armchair pundit.

    It’s difficult to replace something with nothing, but I see no other choice: the Federal deficit does not tell the average person anything useful, and there is no alternative that will tell him what he thinks the deficit tells him. We must disabuse people of the notion that they can draw valid conclusions about macroeconomics through simple metaphors, a few really big numbers and so-called “common sense.” (Even the concept of taxpayers’ money needs to go, when talking about the Federal government. That one is going to be very difficult to uproot.)

    From the armchair (where I am, too), the first step is to recognize that we know very little, and certainly not enough to warrant reaching sweeping, theoretical conclusions: therefore, it’s safest to concentrate on observable results. I think that is a place where MMT and its cousins might strike more effectively. We need to see that MMT explains and predicts things traditional theory cannot before we start listening to you over, say, Paul Krugman or Joseph Stiglitz. We need to see that you give us answers that work better than those of mainstream economics. That will motivate us to pay attention; I don’t think anything else will (aside from a few, like me, who are just innately curious). I’m unsure if that’s possible, though, because macroeconomics is so complex that just understanding what has been predicted, what has been observed, and whether the latter confirms or contradicts the former is typically beyond anyone but the experts: and even they often don’t agree.

    One other thing: look at Paul Krugman—not as an economist, but as a writer. I rarely find one of his columns daunting; he makes his points clearly and succinctly. Even when some of the details are beyond me, I can usually read through them (with the understanding that I’m taking those points for granted as he states them). For some reason, most exponents of MMT seem unable to write anything that isn’t 2,000 words long, with all the appeal of an unpleasant classroom assignment.

  13. Very good points Coises. Bouncing off what you say (and thinking out loud): What is the point of the meme? Isn’t it to get people to see that, in a down economy, federal-government debt isn’t a problem, and is in fact helpful? So shouldn’t the meme address the interplay of the three sectors? Something like (as a starting point): “Government debt is your income.” By cutting the debt (in a downturn), you’re cutting your income.

    I think the meme should be moral and should play to people’s self-interest. Again, “the death tax”: somehow they convinced people with no estates that their “death” would be taxed. And in any event, that it’s wrong to tax death. Of course, we’re hobbled by the fact that, unlike them, we want to be truthful. I also think “debt as social cohesion” is too historical and abstract to resonate with people.

  14. I was discussing MMT with a very conservative reformer (electoral) friend of mine. We frequently don’t agree on non electoral reforms but value our friendship more. And it is a challenge to find the overlap on issues. I’m a centrist, but comfortable playing a progressive. Obviously, he is resistant to MMT. I finally started to make some progress with… If we were back on the gold standard, and continue a huge trade deficit, we by definition will run out of money. Since we are not on the gold standard we issue currency at least as fast as it leaves the country. We have no choice. (He was not an advocate of going back on the gold standard, or abolishing the Fed) And, of course, he started to acknowledge that it is better that the world sends us all their cars and stuff, and we give them 0s and 1s that devalue on a scoreboard at the Fed. Good work if you can get it. We left the conversation with the lack of demand for products and services, after discussing why Japan with a 250% debt to GDP ratio still can’t reinflate their economy. That’s a tough one.

    In the book the Tipping Point, there need be collectors of data, answers, and people in small groups of 150 to tip an idea. I’m interested in answers. If you have any, please post them on aGREATER.US. I am pleased to hear comments on my “answers”. That is the only way we can refine the pitch.

  15. I have been reading some money stories and have changed my mind a bit. I was certain money was related to labor but now believe it originated as a token or receipt. For someone to accept money would mean it had local utility and be enforceable. Tokens as receipts for stored goods would be a very simple concept for the holder to grasp and we know everything as a commodity decays, if only that it can be stolen. Supplying grain to a central protected storage facility for safe keeping would make sense and using the token to pay taxes normally paid in grain would make sense. It would not be too much of a stretch to offer tokens on credit to pay taxes with grain yet to be harvested. It fits the meme that money must be backed by something of community value and the meme that credit makes a claim on future labor or output (Real Goods Doctrine). It also fits the meme that the tokens must be original enough to prevent counterfeiting and could be constructed of valued metals (hard to counterfeit) because all the tokens would be returned eventually. The eventual conversion to gold or silver in standard amounts would give tokens (coins) universal credit status wherever gold had value.

    I have a ledger from a Florist Shop on Broadway NYC from 1880. Half of the sales were booked as store credit, usually paid within two months. The ledger served as a record of the transaction and the debt. In the beginning before money, credit might be offered to complete a transaction when it was convenient, with the buyer returning later with exchange goods. After a while the buyer might be required to leave grain tokens as collateral and later the tokens circulated as collateral and payment, always with the understanding that they could be redeemed for something useful.

    The Chinese apparently used both paper and metal. We know they accepted gold and silver coins from the Portuguese, melted them into sycee (ingots) and then used sycee to buy opium from the British who melted them into their own ingots and coins. The point is that the gold did not back paper. The Chinese had a very different culture and their money roots were different. The loss of gold had no impact on the economy although the opium did. Our fetish over commodity metal backing paper was in a way local to the West. We are just now catching up to the Chinese money management practice of using fiat centuries ago.