These two questions have fueled my dilettantish but somewhat obsessive study of Modern Money Theory (MMT) for the past few years. But I’ve struggled for a way to concisely explain what MMT is, and why you should care about this (decreasingly) obscure economic theory.
Much of the MMT literature is focused on an intra-discipline fight within Economics. This is a worthy battle but creates an extra challenge for the non-economist, who must first learn a bunch of econ speak just to be able to understand the arguments for unlearning it. The below essay is my attempt to bypass that step and explain MMT directly in language accessible to such a reader. If you find it helpful, please share. Criticism is also welcome.
Many thanks to Mike Konczal, who had the idea of looking outside academia for an MMT explainer, and invited me to write this piece.
The World According to Modern Monetary Theory
The New Inquiry Vol. 27, April 11, 2014
Too often the origins of our economic ills are cloaked by a mystical reverence for some autonomous money spirit. The economists behind Modern Monetary Theory (MMT) seek to lift money’s veil by studying the specific actions that occur as money is created, circulated, and destroyed.
For those seeking a grand, unifying sociopolitical economic theory, MMT will disappoint. But as an analytic tool, MMT clarifies who holds genuine power—sovereignty—within society, and how they organize the money system to serve their interests. Unsurprisingly, this is often a story of tremendous cruelty and exploitation.
But the revelation that the rules of money are not immutable laws of nature but are instead created and constantly modified by people opens up possibilities beyond the scope of our current political imagination. The questions become: What sort of society do we want? Do we have the physical resources to support that society? And finally, how the hell do we muster the political will to get there?