This post contains a large collection of examples demonstrating the MMT view of class conflict/class struggle, and where specifically MMT addresses it.
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Disclaimer: I am a layperson who has studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for MMT. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.
Absence of class
Another example of this behaviour in Palley’s paper relates to his accusation that:
Noticeably absent in the MMT discourse are the issues of income distribution and class conflict. Consequently, from an MMT perspective there is no economic need to address income distribution, and nor does class conflict pose a problem for government’s ability to do as it wishes regarding spending and taxes.
He is trying to place himself in the same camp as the Marxists who criticise our work and I addressed some of their issues in this blog post – The conga line of MMT critics – marching into oblivion (March 7, 2019).
One doesn’t have to search very hard to see that in my own work class struggle has been an important organising concept.
For example, this blog post – We need to read Karl Marx (August 30, 2011).
Several academic articles I have published and – Full Employment abandoned (Edward Elgar, 2008) and Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) all consider class as a major organising framework, within which, one should situate Modern Monetary Theory (MMT).
Our new textbook has a lot of discussion about class conflict and its implications for the distribution of income.
The Chapter on Inflation builds a theory of inflation based on class struggle over the distribution of national income.
There is a section in one chapter on theories of profits and this discussion is explicitly conducted within the context of class struggle.
Here is a sample of the index [below]. If my eyes are not deceiving me it looks like there is discussion about “class struggle”, “crises”, “capitalist production” etc.
The textbook is recent but contains material that draws on decades of work by Randy Wray and myself (with help from Martin Watts).
In many of my articles I construct an understanding of the monetary system within the context of the struggle between labour and capital. My Phd centred on that struggle. My early 1998 article on Modern Monetary Theory (MMT) considers class and class power.
Palley either hasn’t read my work or deliberately avoids citing it. That is not the behaviour of a person acting in good faith.
Aside from flexible exchange rates (see page 32 in this 2020 paper by Randy Wray), the job guarantee (addressed below) is the most important policy prescription of MMT. ZIRP is second. Implementation of ZIRP would “euthanize the bondholder class.”
One of the funniest things that has come out of having to take seriously Henwood’s “sound finance socialism” schtick is the notion MMT is an apologist for “paying rich people to lend to the government”. MMT advocates for zero interest on government debt! The whole point is to euthanize the bondholder class and eliminate the massive subsidies interest payments represent. But when you point that out to Dougie, his response is “ZIRP is incompatible with capitalism so it cannot work”.
Well, I’ll happily stipulate to the first part of that! But wait, I thought the whole problem with MMT was that it *wasn’t* challenging the underlying power relations of capitalism, either through asserting the superiority of public finance over private finance or through the JG which would eliminate the reserve army of unemployed.
So which is it? Are we apologists for capitalism, or do we advocate policies that, if enacted, would fundamentally undermine capitalist relations? Surely i’m not the only one who sees the internal contradiction in claiming that “MMTers are apologists for the rich and dont have a theory class struggle but they also advocate for policies that are fundamentally incompatible with capitalism and therefore are utopian”.
I mean, is the claim really that MMT isn’t revolutionary because it doesn’t challenge power relations, and the reason it doesn’t challenge power relations is because what it is trying to achieve is not possible without changing power relations? Really? And the somehow more ‘realistic’ alternative, grounded in a more Marxian understanding of class struggle and power relations, is “tax the rich to pay for shit”. Really?
From the 2015 paper The Rise of Money and Class Society by Randy Wray and Alla Semenova:
“…the origins of money are to be found in the origins of inequality…”
Randy Wray, in 2013: “You set the tax on the rich and make it high enough so that they’re not rich.”
Link to tweet
Regarding the above quote by Wray.
Using the knowledge of MMT, even on the local level.
Doug Henwood’s so-called critique of MMT (wherein he says “A few computer keystrokes and everyone gets health insurance, student debt disappears, and we can save the climate too, without all that messy class conflict.”) and responses by MMTers Pavlina Tcherneva, Nathan Tankus, Rohan Grey, Scott Ferguson, and Raúl Carrillo, and Randy Wray.
An entire chapter on inflation in the 2019 MMT textbook, where inflation is inherently class conflict (that can be ended, or not, by the central government).
The second sentence in the introduction of chapter 17, entitled “Unemployment and Inflation”:
“In this sense, we cast inflation within the general distributional struggle or conflict is characteristic of capitalist economies, between workers seeking to maintain or achieve a higher wage and firm seeking to maintain or raise their profit rate.”
Finally, the MMT-designed job guarantee.
“Any private operators who cannot “afford” to pay the minimum should exit the economy.”
The JG empowers workers, which by its nature is a strike against those who wish to disempower them.
The JG would substantially end poverty. This means that, relatively speaking, millions upon millions would suddenly be much wealthier (conversely, not desperate). That’s quite a big strike against those who benefit from poverty and unemployment.
MMT and class conflict: We don’t need to go through the rich, we can go right around them.
The only thing scarier to a rich person than
“You want to take my money to pay for your stuff!!!”
“Wait. You don’t NEED to take my money to pay for your stuff???”
Yes, take most of their money, but not because we “need it.”
MMT renders the rich irrelevant.
MMT has, and will always, receive massive resistance from people in power and their economists. It will always receive support from many average people.
The biggest statement of all made by MMT on class conflict, is the very existence of MMT.
Senate Resolution 182: “A resolution recognizing the duty of the Senate to condemn Modern Monetary Theory and recognizing Modern Monetary Theory would lead to higher deficits and higher inflation.”