By Dan Kervick
Bill Mitchell has a really great piece up today at his wonderful blog, billyblog. After briefly discussing the Modern Monetary Theory (MMT) emphasis on the operational realities of the monetary system, and asking whether or not it is important to situate those discussions of operations and macroeconomics in broader debates about ethics and morality, Bill lays out his own view:
The “operational reality” is factual and sufficient is one view. Just the massive loss of national income is a sufficient political motivation to do everything possible to avoid mass unemployment.
According to this narrow view, no further discussion about the other personal and societal costs (damage to physical and mental health; family breakdown; increased incidence of alcohol and substance abuse; increase crime rates; skill loss, and the rest of it) is needed and only leads to the accusation that MMT is mired in a contest of values rather than being about the cold, hard operational reality.
The alternative view that is expressed is the tolerance of mass unemployment and the pain and suffering that accompanies it is immoral and unethical and is a significant extra dimension that should inform the policy debate.
Why should we disavow our “bleeding heart” views? Why should we be defensive about the fact that we seek to use our understanding of the cold, hard operational reality of the monetary system to truly expand human potential?
Why should we be uncomfortable with our view that we think full employment, for example, is good and moral and an expression of our view that suffering from unemployment is bad?
Why is it politically naive to deny all of that and fail to educate the popula[ce] that when we think of the self (thereby denying the “other”) then we really, without knowing it, reduce our own capacity to grow as humans and prosper in a moral sense?
I strongly recommend the whole piece, which includes some important philosophical reflections on power and violence in social relationships, and on the ways in which we conspire to ignore and rationalize the reality of suffering. I have written in the past on the moral outrage of systemic mass unemployment and the suffering it causes, and Bill Mitchell’s writing and research were part of the inspiration for that writing.
The phenomenon of joblessness and the violence of unemployment also cannot be separated from questions of political and social philosophy. Issues concerning the level of employment and unemployment in society, and concerning the quality of employment in addition to its quantity, are inextricably entangled with questions about the ownership and social control of the resources that are available for production; about the decisions that are made over how those resources will be mobilized into productive enterprises; and about the political processes that determine how choices are made over the ownership and management of those resources. I don’t believe that we can ever get full employment by relying on private enterprise alone. Nor do I think we can assure full employment by attending only to aggregate financial or monetary phenomena, such as the size of the federal government deficit. If control over resources and enterprises is too unequal and too concentrated, and if the government supply of monetary and other financial assets to the economy is too accommodating of those existing inequalities and power relations, then the provision of additional assets will only accrue to the balance sheets of plutocrats while leaving the workforce stuck with persistent unemployment and underemployment, and with a raw deal for many of those fortunate enough to have work of some kind.
A plutocracy will always find it economically convenient and efficient, from the point of view of the plutocrats’ personal economic goals, to leave large numbers of people unemployed and to concentrate their labor investments only in that portion of the workforce that happens to serve their specific and limited ambitions. The more concentrated is the power of capitalist ownership and finance, the more limited those ambitions will be in the aggregate, and the less adequate they will be to the task of delivering broad and equitable prosperity. From the point of view of the owners of the means of production, the actual size of the population and of the available potential workforce is an external variable whose value is meaningless beyond that level that they choose to employ. There is absolutely no reason to think that a plutocratic system based solely on the concentrated private control of productive capital will ever achieve full employment of the surrounding population in which that plutocracy happens to be embedded.
So one thing that is needed in order to end involuntary joblessness is a national commitment to full employment, with the public standing ready to organize and provide work opportunities for all people who are willing and able to work, and whom the system of private enterprise has left unemployed. The permanent availability of work, along with the normal benefits that should go along with that work – a decent income, competent and equitable health care, secure retirements – must be guaranteed to all citizens. Not only will such a public system address the most acute personal problems of the degradation and misery of unemployment, it will also greatly improve the bargaining position of labor in our society, and compel employers to reduce the return that currently goes to financial investors and their most highly compensated employees, and to deliver a higher return to the workforce. This is part of the point of what MMT’s developers have called a job guarantee program.
But while such a program is absolutely necessary, I don’t think a job guarantee program is in itself sufficient to get genuine full employment and a social system in which all of our people are working in a way that really lives up to our potential, secures everyone a full and equitable share in the output of the country, and takes a long view of sustainability over time. We need to be more ambitious than that, and recognize the further role of government and an economically engaged democracy in the economic development of society. We need to shake off the neoliberal obsession with private enterprise and markets, and become more aware of the need for vigorous public enterprises playing an expanded role alongside private enterprise, and helping to set the strategic direction for the nation – and the globe. That’s why I’m so excited to see that L. Randall Wray, one of the leading lights and founders of the MMT approach, is now working with Mariana Mazzucato of the University of Sussex, and author of the new book The Entrepreneurial State, to help bring the MMT focus on operational details and macroeconomics together with Mazzucato’s interest in the historical importance of state involvement in growth and innovation.
Think about what happens when the government credibly announces it is building an interstate highway – as it did frequently in the 50’s and 60’s – and announces the route of that highway. Following the announcement, everybody knows that there will be a a new market for rest areas, restaurants and hotels along that route. They know that locations within easy access to the highway will be good places to live and commute, and so investment in housing and community in those areas is unleashed. A similar mobilization of national energies and development of national talents was driven forward in the 60’s by the space program. When the government takes the lead and sets a strategic direction, and also invests in the most expensive and key infrastructural components of that strategy, it reduces confusion, guesswork and risk in the private economy, and liberates the productive potential of private enterprise. Another beneficial result is that the key infrastructure is left lying in public hands, rather than the hands of private profiteers who then extract perpetual fees for the use of that infrastructure.
Without a resurgent public sector animated by an newly engaged democracy, we are headed for years of economic stagnation, and will see the perpetuation of many outmoded and globally destructive forms of organization in the way we relate to our environment, meet our energy and transportation needs and educate our people. Without vigorous public intervention, these decisions will be left in the hands of the wealthy stakeholders in the antiquated order. And with that stagnation we will see persistent unemployment and underemployment, further erosion of democratic social norms and the creation of new caste systems based on cruel hierarchies of economic dependency.
Here in the US during our most recent period of history – a neoliberal period of national decadence and social fragmentation and degradation – Americans have been encouraged to think that we Americans are too smart for all of that state intervention, and that progress, justice and prosperity can be assured by adhering to our brilliant laissez faire ethos and hatred of government at all levels. Only those poor developing nations on other continents, it was said, must resort to a significant state role in national development and progress. Hopefully the crisis of 2008, with the many forms of economic unraveling it has revealed, has cured many of us of those illusions. There is no fundamental difference between developing and developed nations, and we in the US have begun to see ourselves falling behind in one category of social achievement after after another as we have neglected public investment in community, long-term prosperity, social solidarity and grand economic strategy in favor of a riot of radically self-interested and destabilizing profit-seeking. The “developed nation” complacency is a fraud. We are all developing nations and need to think that way again.
Cross-posted from Rugged Egalitarianism