Along with ZIRP and a flexible exchange rate, the MMT-designed job guarantee (JG) is one of the three policies prescribed by Modern Money Theory, or MMT. This post contains confirmation from most of its original developers that MMT and its job guarantee are inseparable. The JG is not an optional add-on or accessory to the MMT project but a core element. In other words: MMT does not exist without its job guarantee, and its job guarantee does not exist without MMT. (Of course, “job guarantee” in this context means the one as designed by MMT economists. I call this the “MMT-JG.”)
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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.
- What is the MMT-designed job guarantee? (with sources)
- The three policies recommended by MMT: floating exchange rate, job guarantee, and ZIRP
L. Randall Wray: MMT and its JG are insperable
Page 31 in Wray’s July, 2020 paper The “Kansas City” Approach to Modern Money Theory, Unser the section “9. CONCLUSION: MMT AND POLICY” (emphasis added):
Some critics claim that the job guarantee is not essential to MMT. They see it as, at best, an optional policy that some progressive proponents of MMT have unnecessarily added. This is false. All of MMT’s developers (including Warren Mosler, as well as the Newcastle approach of Bill Mitchell) have included the job guarantee from the beginning as one of the fundamental policies. MMT sees the job guarantee as the most important policy to regulate the value of a sovereign currency.
More by Wray can be found in this 2019 New Economics Perspectives post:
Only a JG can ensure this human right—the right to work…. Yes, MMT does have another tool to maintain price stability. It is the JG approach to full employment. It has always been a core element of MMT.
Bill Mitchell: MMT and its JG are insperable
Original MMT developer, Bill Mitchell, at the nine minute mark in episode 11 of MMT Podcast: The job guarantee “is not just an optional add-on policy preference, it’s a central core part of our theoretical structure.”
Bill again, from his May 15, 2019 post called “The Job Guarantee misinformation campaign – UBI style:
I note that some self-styled MMT experts… are still claiming that the Job Guarantee is not intrinsic to MMT. They simply fail to understand the role the Job Guarantee plays in the conceptual MMT framework.
And again, from this video (with thanks to Stanley Coal on Modern Monetary Theory for Real Progressives):
If you go out and you’re arguing in social media that the job guarantee is peripheral to MMT, well, then you don’t have a clue. It’s a central core component that replaces a central core component of mainstream theory that’s done so much damage. And you can’t also conceive of the Job Guarantee as just an employment creation program. In MMT, it’s a macroeconomic stability program…. Full employment and price stability. It’s not just a job creation program, it’s a specific job creation program that has a buffer-stock mechanism, and has a fixed-wage, and it allows the government to transfer workers from an inflating non-government sector into a fixed-price Job Guarantee sector without causing unemployment. Whereas the current orthodoxy, the NAIRU approach, transfers workers out of an inflating sector into unemployment, into an unemployment buffer-stock. In MMT, we think it’s better to transfer workers out an inflating non-government sector into a fully-employed Job Guarantee sector. It’s core to our attack and our alternative vision in macroeconomics.
Pavlina Tcherneva: MMT and its JG are insperable
Original MMT developer, main JG developer, and author of The Case For A Job Guarantee, Pavlina Tcherneva, in this February 2019 article, responding to Doug Henwood’s so-called critique of MMT: “Henwood’s discussion of the Job Guarantee (JG) is a bit more charitable, probably because he believes (incorrectly) that the program is accessory to the MMT project.”
To be clear, here’s the definition of “accessory,” according to the American Heritage® Dictionary of the English Language, 4th Edition:
Stephanie Kelton: MMT and its JG are insperable
Original MMT developer and author of The Deficit Myth, Stephanie Kelton, from this March 2019 post in response to Paul Krugman: “MMT would establish a public option in the labor market — a federally funded job guarantee — thereby ensuring full employment across the business cycle.”
Scott Fullwiler (and Rohan Grey and Nathan Tankus): MMT and its JG are insperable
Original MMT developer Scott Fullwiler, Cornell Law School Doctoral Fellow and Modern Money Network (MMN) founder Rohan Grey; and Notes on the Crises financial blogger and MMN Research Director Nathan Tankus, in this March 2019 post on the MMT view of inflation: “Indeed, our principal policy recommendation is a Job Guarantee…”
Bill Mitchell, L. Randall Wray, and Martin Watts: MMT and its JG are insperable
Finally, the MMT-lens introductory textbook, written by Bill Mitchell, L. Randall Wray, and Martin Watts, called Macroeconomics. Chapter 19, “Full Employment Policy,” page 295: “As we demonstrate, a job guarantee (JG) is at the centrepiece of MMT reasoning.”
Retired macroeconomist Ellis Winningham on the Macro N’ Cheese podcast, June 2019: The Job Guarantee is Core MMT