Many people want to change the world. Depending on the direction they would like to go in, they need to select a suitable strategy.
Speaking for myself, my desired change is to return to a free market in money and credit. So, I founded Monetary Metals, to make it profitable to invest in the gold standard. We provide capital to productive businesses and pay savers gold interest on their gold. We make money while helping the world. The strategy depends on a voluntary choice by all participants, which they make because of their self-interest.
However, many want a different kind of change. Not a system that benefits everyone, but free goodies and the power to dispense them. In other words, a flavor of socialism.
In order for Joe to get something for nothing, then Mary must get nothing for something. Obviously, Mary will not volunteer for the role of sacrificial animal. Therefore, the aspiring socialist cannot start a business that makes money by accomplishing this kind of change. There is no equivalent of a Monetary Metals for a socialist cause.
The truth needs to be said only once, but a lie must be stated and restated endlessly to reinforce it. The same is true for an unjust and dishonest policy. A socialist policy needs a diverse group of promoters, to sell it and the lies on which it is based.
Let’s look at modern monetary theory (MMT) as a case study. MMT is based on some frivolous assertions. I will shine some sunlight on them, but my focus here is not on debunking MMT. It is to look at the social movement that sprung up around MMT.
Socialist ideas are not new. Indeed, the world does not want to go back to Karl Marx, Joseph Stalin, Mao Zedong, or Adolf Hitler. Or the twentieth-century economist whose book was praised by Mussolini, as a “useful introduction to fascist economics”: John Maynard Keynes.1
At least not under those banners. If a socialist policy is to gain traction today, in America, it has to be given fresh new branding.
Step one is therefore a seminal paper, authored by someone of sufficient gravitas to get away with it. It could be a well-positioned professor emeritus. In the case of MMT, it is successful businessman and elder statesman, Warren Mosler. The paper plus the body of work that builds on it, serves as the base of the platform for a new, revitalized socialist social movement.
The seminal MMT paper is “Soft Currency Economics” by Warren Mosler, in 1994 whose foundations are built upon a swamp of debunked ideas.
But this article is not about debunking magical thinking or bad economics but how a movement forms around a socialist idea like MMT. Step one is to have a Noted Person, with sufficient gravitas, write the seminal paper. Step two is when other academics create an aura of respectability around it.
So far in the process, the idea is not understandable by the voters. And hence, it is not of interest to the media.
They need to go to step three, to form a cadre of court economists. These are soldiers for the movement, and their job is to sell the propaganda—not to the public—but to those who influence the public. In war, real soldiers are willing to sacrifice their lives for their country. In socialist propagation, the ideological soldiers are willing to sacrifice their reputations for their agenda.
Most court economists don’t have the eminence of the elder statesman. So, even if they could devise new arguments, they would be called out for it. However, the movement does not need original thinkers at this phase. It just needs more promoters. And there are lots of willing hacks.
The seminal paper has to offer at least a façade of intellectual rigor. The academic followers rigorously refer to that paper and the body of work they create around it.
The court economists generally pay lip service to this material. But, in step four, the popularizers come on board the movement. The popularizers are talking heads, celebrities, politicians, etc. And they are freed from any such constraints. Indeed, the cash value of something like MMT is that it gives them carte blanche to indulge their worst policy fantasies, such as the Green New Deal.
The popularizers cash in on their association with a darling theory, whose packaging is emblazoned with a starburst saying “New!” Just taking the Green New Deal as an example, is it really a new idea to subsidize companies who cannot make a profit?
As a social movement, the MMTers commit a kind of informal logical fallacy. They can promise a seemingly magical benefit such as unlimited energy from unreliable wind power. Their theory gives it the credibility of science, if you don’t examine it too closely.
And when things don’t work out, the theory—and therefore the movement—gets immunity from the backlash. The academics can just say that the academic MMT literature does not propose these policies.
That may be true, but it’s extremely disingenuous. As a movement, MMTers are arguing exactly this. The MMT upper echelon—the elder statesman himself, the professoriate, and the cadre of court economists—are aggressively indifferent when the popularizers are out there publicly promising magical benefits.
Those who fight MMT policies in the political trenches may find that they are fighting a Hydra. They can cut off a head, but then two more spring into the battle.
For example, they may say that the MMT policy of printing trillions in the wake of Covid has led to inflation. Then, the MMT upper echelon retorts that the present administration is not an adherent of MMT. And besides, they claim that MMT is a theory, not a policy prescription!
The MMT academics provide intellectual cover for the MMT popularizers, with their eminent reputations. And the MMT popularizers give cover to the academics, by their apparent separation from said academics. It is the division of labor, applied to a socialist social movement. It is like organized crime, when the police arrest the soldiers, and the head of the organization is safe.
Whenever Senator Elizabeth Warren or Representative Alexandria Ocasio-Cortez need to gussy up their vacuous ideas and destructive policies, they will trot out MMT and an MMT court economist. They can count on the MMT upper echelon not to object. No, these eminences will reserve their protestations, for when the predictable consequences come, and people direct their ire at MMT.
“Oh, no, MMT isn’t about that.”
1. James Strachey Barnes, Universal Aspects of Fascism, Williams and Norgate, London: UK, 1929, pp. 113-114
