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Wednesday, April 19, 2023

Silly "MMT" Drama

If I were smart, I would skip mentioning this, but there has been some drama between “Richard J. Murphy” and MMT proponents. Since I mentioned him recently, I blundered into creating a moral obligation to dip further into this mess. I do not really know who Richard J. Murphy is, but he apparently is high profile among some section of British progressives, which is the source of the drama. As a crotchety old school Canadian Prairie Populist (who is inexplicably stuck in Montreal), intra-left drama is not something I find surprising nor interesting. The issue here from my perspective is that Murphy is attempting to commandeer “MMT.”

His latest salvo is publishing an article that is his version of “MMT.” It is basically what you get if you read a bunch of MMT primers written by MMT economists and paraphrase them, and inject random political bits. It has no references, nor is there any reason to believe it is reliable. (About the only reason I will read a MMT primer again is if I write a new edition of my “MMT books,” so I am not interested in wading through the text to find issues.)

The reason not to read it is found in this paragraph at the end:

However, this paper does not accept that this idea [the Job Guarantee is a core tool in MMT that will remove inflationary pressure. The academic thinking that suggests it misunderstands the relationship between work and taxation. That same thinking also fails to understand the causes of inflation, by suggesting that it can only be caused by a government refusing to spend enough into the economy to employ all those that the proponents of the job guarantee suggest are made unemployed solely because of the imposition of taxes. There is no economic logic to this claim. There are many causes of unemployment, but imposing taxes is not one of them.

This passage demonstrates that Murphy understands the accounting side of “MMT operations analysis” — not a big ask for a part time professor of accounting — but does not grasp economic theory nor its context. If literally everyone who has studied economic theory and is sympathetic to MMT states that the Job Guarantee is a core part of MMT and you do not understand them, the correct response is to reduce your ignorance, and not write a primer on MMT.

Richard Murphy attempting to re-invent MMT is not a problem for me — I’ll just go back to ignoring his output. I doubt that he could get anything past peer review in a real economic journal, so this is not really a concern for academics either. The only people that seem to be affected are MMT activists, and the “information space” on social media is going to be polluted with yet more incorrect descriptions of MMT. I would argue that this was a somewhat inevitable development, and people need to re-think “branding” around MMT. If you are branding yourself around an abstract theory, you are going to end up splintering over arcane theoretical points sooner or later.

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(c) Brian Romanchuk 2023


  1. > I doubt that he could get anything past peer review in a real economic journal

    Sadly, peer review is sufficiently subject to groupthink that the same could likely be said of a lot more well-informed MMT articles, no?

    1. (This is Brian.) I have a pretty low opinion on the modern academic system, but it is still pretty hard to get a primer with “I disagree with something I can’t explain” through the process.

  2. Hi Brian, thanks for those thoughts. It seems the wider MMT community and chief proponents (Bill Mitchell, Randy W, Stephanie Kelton etc.) have, perhaps wisely, opted not to wade into Murphy’s disagreements with them. I find those disagreements hard to accept myself. Quite apart from the fact that he is disputing the MMT architects’ take on certain aspects of MMT, do you see anything persuasive in Murphy’s challenge to Mosler (and Mitchell) on the fundamental sequence of the currency issuer spending and then taxing?

    1. (This is Brian.) I don’t know what Murphy has to say about it, but my view is that spending-tax-spend is a cycle that is hard to define a “before” and “after.” You need to go back to the “beginning” to truly define a before and after - and pretty much every monetary system replaced a previous system.

      It’s a popular way of introducing MMT, but I do not think it is too significant for the theory. People like Murphy spend way too much time obsessing about wording in primers aimed at a mass audience.


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