By Rohan Grey
[If you are interested only in the substantive analysis of the debate, skip directly to Part II]
On July 4th, the New York Times published a profile written by economics journalist Annie Lowry on former hedge fund manager and maverick economic theorist Warren Mosler. The school of thought Mosler subscribes to, known as “Modern Monetary Theory” or “MMT,” has been covered by a number of journalists (see, e.g. here, here, here, and here). MMT purports to combine insights from a range of historical monetary theorists with an understanding of contemporary monetary operations to construct a progressive meme for money that drastically differs from most standard economics textbooks.
Lowry’s article suffered from a number of factual errors and questionable use of journalistic discretion, prompting an as-of-yet unaddressed request for correction by Mosler and additional rejoinders by other proponents and sympathizers (see, e.g. here, here, here, here and here). On the other hand, Lowry somewhat redeemed herself by, in a rare if not unprecedented act for the Times, supplementing the article on the Times’ Economix Blog with a detailed reading list of Mosler’s own writing.
Among the links provided was a public debate that I helped organize at Columbia Law School between Mosler and and Robert Murphy, a well-known adherent of the Austrian School of Economics. The debate was conceived as part of a new, global student-led learning initiative, the Modern Money Network (or MMN, pronounced like “Mammon”), which seeks to promote a functional, realistic understanding on the legal-economic dynamics that shape money and finance, and to foster a space for the transdisciplinary study of money as a social technology.
As moderator and CNBC NetNet editor John Carney noted at the conclusion of the debate, the event was historically significant as it marked the first highly publicized and in-person clash between the two schools of thought. Nevertheless, it was panned by some viewers for being too open-ended, too unstructured, and not lively enough.
While there is certainly merit to these critiques (although with regards to the third, I suggest those seeking entertainment next time go for pro-wrestling rather than a debate on macroeconomics), I would argue that the debate nevertheless achieved exactly what it was intended to do.
Why do I think that? Three reasons:
1. Seeing the Forest: A lot of economic discourse between competing schools of thought, both in journals and on blogs, consists of individuals either speaking past each other, at cross purposes, or focusing on minor points of disagreement without explicit acknowledgment of deeper conceptual differences. Not so in this debate. Instead, the (admittedly unsexy) topic and atypically fluid format allowed the speakers to avoid the shallow analysis and petty showmanship that characterizes so many public debates, and zero in on the crux of the theoretical disagreement between their respective schools.
2. Strange Bedfellows: Perhaps surprisingly, the debate revealed a high degree of consensus between two schools of economic thought that many view as sitting on polar opposite ends of the economics spectrum. As explained below, the only major clashes (to the extent they could be called clashes at all) were over questions of political and legal theory, rather than macroeconomics per se. Indeed, I would tentatively suggest that the level of agreement between between the two participants on operational and technical details of the monetary system was greater than either would have been likely to find with any randomly selected member of the mainstream economics profession.
3. Acknowledging All Voices: While MMT and the Austrian School enjoy a growing lay following thanks to the equalizing force of the internet, they are both professionally marginalized and are regularly derided and dismissed by their orthodox brethren. This is ironic, given those same professionals’ collective failure to predict the largest crisis of their generation in any meaningful way, and the fact that, particularly in the case of the Modern Monetary Theorists, those criticized are among the handful of economists that got it right.
By choosing a representative for the Austrian School rather than a more well-known member of the economics profession for our first clash, the debate functioned as an explicit rejection of the view that “There Is No Alternative,” and the only ideas accepted by the mainstream of the profession are worthy of serious engagement.
But the symbolic implications are deeper than that. As a student learning network – particularly one with progressive leanings – we believe it is crucial to not only promote an understanding of money that is legally and historically consistent, but also to encourage engagement with the ideas of other marginalized groups, even if we may strongly disagree with their beliefs or methodology.
In politics, there are real, irreversible risks associated with cooperation between opposite sides of the ideological spectrum against the hegemonic center. In education, however, there are few, if any, risks associated with expanding one’s scope of awareness to more properly understand the ideas of those with whom we disagree. In fact, I would go so far as to suggest that, in true Habermasian style, genuine and respectful engagement with all marginalized voices is vital to maintaining the integrity and emancipatory power of free and open discourse.
In keeping with this mission, I have put my debate hat on and, in the spirit of an extension speech in British Parliamentary Style, penned a response designed to summarize and build on the central themes raised during the Mosler-Murphy clash. For the sake of convenience, I have divided my summary into two parts, followed by a constructive extension of Mosler’s position from the perspective of a law student. Any thoughts, comments, or critiques are welcome.
Addendum: while I highly suggest you watch the whole debate, I have made liberal use of what I consider to be the (pardon the pun) money quotes in order to accurately represent various speakers’ positions. I apologize in advance if that is not your preferred mode of communicating. Also, while some quotes have been rearranged for the sake of flow, I have made a good faith attempt to be faithful to their contextual meaning and not misrepresent each speaker’s position. If anyone believes I have failed at this, please let me know and I will make revisions where appropriate.