As an initial note, I write about a pretty narrow bit of macroeconomics, what I call "bond market economics." The sort of things that end up in the purview of fixed income analysts, even though they are of more general interest, for example, inflation, unemployment, fiscal and monetary policy.
Although the initial iterations of MMT outreach were pretty much exactly in that domain, the MMT academic community is embracing the concept of multi-disciplinarity: there were presentations by anthropologists, political activists, and even professors in the fine arts. This meant that much of the discussion was outside my narrow field of interest.
Relations With Post-Keynesians?The relationship between MMT and Post-Keynesian thinking is currently the largest area of awkwardness I see with respect to MMT. The special issue of the RWER seems to provide evidence for that assessment.
(I have found that my browser was very unhappy with the website that was showing up in search results; issues with the security certificate. This is the link for the article, which is #89: http://www.paecon.net/PAEReview/issue89/whole89.pdf. The link will probably fail when new issues come out, as I believe that you need to a free membership to get back articles. The security alerts meant that I did not dig too deeply on the website.)
I am supposed to be editing my volume on recessions, so I did not read the entire issue. And from what I saw of excerpts on Twitter, I have absolutely no desire to read many of the contributions.
I think the contribution from Marc Lavoie gives a good overview of the relationship between MMT and other post-Keynesians, and I will focus on that piece.
In the second section of the article, Lavoie writes "MMT, to me, is just part of post-Keynesian economics. I would classify MMT advocates as Institutionalist post-Keynesians, because they are very much concerned with monetary and financial institutions, and in particular, the institutional links between the government and the central bank."
In a sensible world, that would be the end of the entire issue on MMT in the RWER. Guess what?
Professor Lavoie then raises some issues. One concern that Lavoie has is with the dreaded concept of the consolidation of the central bank and the government. He cites others' concerns, with Thomas Palley in particular. One needs to spend a lot of time in academia to care about the realism of the consolidation of the central bank. We no longer live in a world of the gold standard, with private banks acting as central banks. Central banks are de facto under the legal control of their governments, except in the euro area, where governments decided it was a good idea to hand over the control of the central bank to unaccountable bureaucrats.
From an analytic standpoint, consolidation is the most natural way to look at economic analysis, and in the real world, it makes no difference. Stock-flow consistent models painfully recreate intra-governmental accounting, but those intra-governmental transactions have no observable effect on the non-governmental sector. The only time they really matter is when the possibility of default is raised, or the government decides that it wants to peg its currency to another. In which case the central bank is acting as an agent to implement a policy that MMTers argue is misguided.
Sigh, CitationsOne other complaint is that the MMTers do not cite post-Keynesians enough. Lavoie notes about the Mitchell-Wray-Watts MWM textbook that "I lacked time to give the book a really good look...," but then he jumped to see who and what was being cited. (Which is exactly what I believe most academics do.)
I cannot comment on who should be cited whom in journal articles; I luckily gave up worrying about that a couple decades ago. However, I do not see that as being an issue here. The MWM is definitely an undergraduate text, and citations are limited. There is no comparison to the massive bibliography in Lavoie's Post-Keynesian Economics: New Foundations. (To be clear, this makes Lavoie's text somewhat more useful to me, as I do not have access to an academic research library, and so my best method to dig up citations is from an advanced textbook.)
I grabbed a chapter at random (Chapter 23), and there are only 13 references in the printed text (one of which is Marc Lavoie!). Of those, around half are descriptive documents from central banks, and not really indicative of any school of thought (e.g., there are no MMT-associated authors in those 13 citations).
He notes the general lack of references to "post-Keynesian thought" in the index. If we accept that MMT is part of post-Keynesian economics, and the entire textbook is supposed to be MMT, then citing "post-Keynesian economics" in the index seems redundant. (MMT itself has 7 index entries.) There is a very short section on the history of heterodox thought, which quickly outlines how post-Keynesian economics came about. This is far less material than the 72 dense pages that Lavoie devotes the discussion of heterodox economic schools of thought that is Chapter 1 of Post-Keynesian Economics: New Foundations. That said, I certainly would not recommend that anyone new to economics read those 72 pages; I think they need to have a basic grasp of the field before they should spend time worrying about the sub-divisions of academic tribes.
The reason why MMT is a success is that it puts forth an internally consistent post-Keynesian story that has obvious policy implications. If I were to put my academic hat on, I would agree with Lavoie that academics ought to attempt to cover the squabbling divisions of post-Keynesian economics if we want to do a proper survey of the field. However, people in the real world do not care what each school of thought says about each academic point of disagreement: they want an internally-consistent story that tells us something useful. The only way for post-Keynesian economics to escape its self-imposed exile from the real world is to offer a consistent narrative. It would make no sense for the MWM textbook to distract readers with long discussions of arcane dissents.
The Other Contributors...I saw some excerpts on Twitter of other contributions to that special issue. I don't think my cardiologist would want me to comment on what I think about some of them.
These "contributions" underline the structural problem with some post-Keynesians: they have habituated themselves to sniping at mainstream economists, and in doing so, they have lost the habit of focusing on constructive advances. The rise of MMT just gives some of them a new target, and one that will generate more interest on social media.
It is rare for economists to agree with each other. I understand that MMTers do not agree with other groups of post-Keynesians on a number of issues. However, people need to focus on things that actually matter, not theoretical will o' the wisps like consolidating the central bank. I have seen a lot of sniping at MMTers by self-declared Post-Keynesians over the years, but I have only seen a few concerns that matter. Furthermore, the actual points of dispute are policy view divergences that will never be amenable to being proved "correct."
Concluding RemarksI write popularisations of economic theory. As an ex-academic, I feel slight tinge of duty to cover all bases when citing sources. That said, I need to come up with a story that is internally consistent, easily understood, and offers some insights to readers. Although I am a big fan of Marc Lavoie's approach, the reality is that some of the post-Keynesians sniping at MMT are not producing research that I see as worth my time to cover.
Meanwhile, things are going to get harder for Post-Keynesians going forward. The Financial Crisis has had the side effect of shattering whatever consensus there was among neoclassical economists. Right now, you can take pretty well any policy story, slap some optimisations in there, and boom, it's neoclassical economics. Although this incoherence might appear to be a weakness from the viewpoint of a purist theoretician, this flexibility also means that neoclassicals will not herd into mistaken policy views. It will be much harder for heterodox thought to make an impression amidst meaningful debates between highly-credentialled mainstream economists.
(c) Brian Romanchuk 2019