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Thursday, May 6, 2021

A Rant About Mainstream MMT Critics

I ran across a text written by an anonymous author who gives the air of being a neoclassical academic. I prefer not to link the article, as I do not want to draw attention to it. However, I just want to point out some salient features that seem to have become the stock response to Modern Monetary Theory (MMT) by at least some neoclassicals. From the perspective of the philosophy of science, this is perhaps interesting.

The key substantive planks of the MMT critique is roughly as follows. Since I am not linking the source text, I accept that one could argue that these are straw men versions of the argument. 
  • Invocation of the survey of mainstream economists about their opinions on theoretical questions that allegedly represented the MMT position. The possibility that none of the questions were good faith representations of MMT is not considered.
  • Citation of the Mankiw book review of the textbook Macroeconomics by Mitchell, Wray, and Watts. This is the closest to a citation of a neoclassical that critiques the MMT academic literature. However, the version of the Mankiw piece I saw was flawed, given that it is based only on a handful of largely out-of-context quotations from a textbook aimed at undergraduates. If we were to apply the same standard to neoclassical economics -- attacking all of neoclassical macro via a few cherry-picked quotations from an Economics 101 textbook, neoclassicals would rightly object.
  • Citation of one of Thomas Palley's articles as authoritative, without taking into account any rebuttals. Whether or not Palley has legitimate points, if we consider taking all representations within a single heterodox article as being a standard for the determination of the truth, it would be easy to invalidate all of neoclassical macro (and given the infighting, most of heterodox macro as well).
  • There were appeals to authority (Krugman, Summers).
  • What I think was missing was the dozen or so critiques of The Deficit Myth by mainstream authors that popped up. No matter what one thinks about The Deficit Myth, it is abundantly clear that it is a popular book, albeit written by an academic. If anyone wishes to dissect Professor Kelton's book, they are free to do so, but we cannot necessarily say that any issues discovered reflect the primary literature.
The end result is a largely closed intellectual system: MMT is declared "unscientific" based on a handful of references and authorities, with the only one that even references the primary literature being Palley. 

The question is: how representative is this mindset? It is possible to find a handful of neoclassical papers that have made an effort to discuss MMT, and it is entirely possible that the number will grow (given the herd-following trends in academics). So we should not tar everyone with the same brush, since that punishes anyone who does make a good faith effort to critique MMT.

In any event, I think that the way forward for MMT in this context is to try to change the subject from "what is MMT?" to very specific economic debates, where MMT proponents can say "This {other analysis} is incorrect because {reason}, whereas MMT says {something else}." This is the only obvious way to change the subject from "What did the survey about MMT say?" to "What does the primary MMT literature say?"

(c) Brian Romanchuk 2021

5 comments:

  1. I presume you've seen Asker and Dirk's response to Druedahl: http://www.bondeconomics.com/2021/05/a-rant-about-mainstream-mmt-critics.html

    That's the best I've seen following the approach you suggest. Ultimately it boils down to a difference in ontology.

    MMT proposals ensure that a modern economy can generate more output at stable prices for any given interest rate, than competing beliefs. And we have a simple experimental test for that - get the central bank to offer to purchase any spare labour at a fixed price. If central banks can pick a magic interest that guarantees full employment in the economy then nobody will turn up.

    NeilW

    ReplyDelete
    Replies
    1. No, I missed it. I'd need to pour myself a shot of rye before I sit down and get through that one.

      I'm somewhat stuck on that unlinked critique. I really think there needs to be a focus on very contained theoretical debates that can be hashed out without relying on policy experiments (unless there is a strong chance that the policy might be implemented).

      Delete
  2. Brian,

    Your "rant" is more or less senseless to read without a reference to the source text.

    ReplyDelete
    Replies
    1. As I wrote, I had no desire to link the source.

      Delete

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