Marianna Mazzucato’s Rethinking the State Video Project

The 2 videos below are from Marianna’s project. The first features Pavlina Tcherneva discussing employment and labor market issues. The second features L. Randal Wray discussing money and reforming the monetary and financial system.

Pavlina Tcherneva (Levy Economics Institute of Bard College), co-editor (with Mathew Forstater) of Full Employment and Price Stability: The Macroeconomic Vision of William S. Vickrey, discusses the implications of the Great Financial Crisis of 2007 for employment outcomes and fiscal policy. She argues that the current view of Keynesian ‘fiscal policies’ is based on a misreading of Keynes. Only boosting demand – through trickle-down fiscal policy – is not sufficient to promote inclusive growth: Keynes originally called for a targeted approach (‘directed investments’ that result in a trickle-up effect) – including ‘on the spot employment’ – as the means to achieve full employment and sustainable growth.


Randall Wray (Levy Economics Institute of Bard College), prominent Post-Keynesian economist and author of Modern Money Theory, argues that rethinking the State requires rethinking the relationship between the State and currency. His analysis starts with the observation that money is based on State power (‘currency sovereignty’): it is an ‘IOU’ (‘I owe you’) from the State – a liability – implying that fiscal constraints are in fact artificially created. In this sense, the State cannot run out of money, as it creates and enforces its own IOUs. Governments could – and should – afford to invest more in innovation and technology development to promote the capital development of the economy, as long as the monetary and financial system are reformed to remove those artificial constraints.

2 responses to “Marianna Mazzucato’s Rethinking the State Video Project

  1. Over here in the Uk we are developing a community-controlled currency that credit those who contribute to our community’s common good. So rather than being spent into existence it is earned into existence, thus encouraging pro-social behaviour and incentivising communities to solve their own problems.
    So it is very similar to the IOUs that Mr Wray is talking about. Inflation will be avoided since the currency is to strictly controlled and only issued for behaviour that produces goods services and experiences of value to the community as a whole. For example, teaching, giving or learning.
    An ethical peer to peer marketplace will enable partners in the community to exchange the goods services and experiences that they have produced for other goods services and experiences they need, using the community-controlled currency as the means of exchange and unit of account (which is time-based).
    The model helps businesses too. They will be able to dispose of excess stock or spare capacity through the marketplace using a blend of £sterling or community credits – set at a level that optimises their sales flow. Their brand will be strengthened because the credits that were once earned for pro-social behaviour are now with the business and can be used as evidence of CSR and social impact.
    And the beauty of such a system is that it links contribution to entitlement so that in the end everyone gets what they deserve. It’s the polluter pays principle.

  2. While I understand the concept of an IOU, I think that the public would have difficulty with usage of the term and conclude it is morally wrong or bad behavior for the government to issue IOU’s. However, the concept of coupon gets across the same idea without the stigma. So I like to think of dollars as coupons by the government that can be used to pay taxes.

    I contrast this with private fiat money which is based on a receipt system. Initially private paper fiat was a receipt for gold or silver. Then of course unscrupulous goldsmiths started making more receipts than they had actual gold or silver in their vaults which produced fractional reserve banking (which at its core is a fraud based system).

    Coupons are different. The only way a coupon can be fraudulent is to have it not be redeemed. But the government will always redeem dollars for taxes so that the system is inherently fraud proof.