Money on the Left

Inflation & the Politics of Pricing w/ Nathan Tankus

June 19, 2019
Money on the Left
Inflation & the Politics of Pricing w/ Nathan Tankus
Chapters
Money on the Left
Inflation & the Politics of Pricing w/ Nathan Tankus
Jun 19, 2019
Money on the Left
We talk with Nathan Tankus about the historical, political, and rhetorical complexity of inflation and pricing.
Show Notes Transcript

In this episode, we talk with Nathan Tankus, Research Director of the Modern Money Network, and Research Fellow at the Clarke Business Law Institute at Cornell Law School. Nathan recently co-authored an opinion piece in the Financial Times with Scott Fullwiler and former MoL guest Rohan Gray about MMT’s position on the causes of inflation

Link to the piece: https://ftalphaville.ft.com/2019/03/01/1551434402000/An-MMT-response-on-what-causes-inflation/  

In the conversation, we ask Nathan to expand upon and deepen his engagement with the inflation question in all its historical, political, and rhetorical complexity. More specifically we discuss the different historical approaches to inflation; how the Post Keynesian MMT perspective diverges from those approaches; the vital contributions of economist Fred Lee to the foundations of Modern Monetary Theory; as well as how we ought to be thinking about issues of inflation and growth as they pertain to the Green New Deal. The conversation is as compelling as it is challenging.



Speaker 1:
0:06
[inaudible]. You are listening to money on the left, the official podcast of the modern money network humanities division or mmn h d. Today we're talking with Nathan tankers research director of the modern money network and research fellow at the Clark Business Law Institute at Cornell Law School. Nathan recently coauthored and opinion piece in the Financial Times with Scott FAU Weiler and former money on the left guest in gray about mts position on the causes of inflation. It's an excellent read and we highly recommend you check it out if you haven't and this episode we asked Nathan to expand upon and deepen his engagement with the inflation question in all its historical, political and rhetorical complexity. More specifically, we discussed the different historical approaches to inflation by the poster Keynesian MMT perspective. Divergence from those approaches, the vital contributions of economists, Fred Lee, to the foundations of modern monetary theory as well as how we ought to be thinking about issues of inflation and growth as they pertain. Conversation is as compelling as it is. Thrilled to share it with you. Thanks to Nathan for joining us and as always to Alex Williams.
Speaker 2:
1:33
Thank you. Welcome to money on the left. Happy to be here. So we've asked you to come talk to us, um, about the question of inflation, uh, and also some of the micro economic thinking surrounding MMT that um, isn't always, uh, as a let's say, well advertised as the, as the macro economics, uh, in MMT and what occasions this discussion is not only uh, let's say some concern, uh, in the, in the discourse and the debate about I am empty regarding inflation. Uh, but then specifically an article that you cowrote and published along with, um, Scott full Weiler and rowing gray, uh, for the Financial Times titled and MMT response on what causes inflation. And I guess just to kind of set this up and start, I'll say that, um, in my own learning about MMT, I think the very last thing, the last kind of obstacle for me to really get on board and, and for MMT to really make sense to me was overcoming what is essentially a kind of sublime terror of, of the threat of inflation.
Speaker 2:
2:59
That I can tell you that, um, very thoughtful, reasonable people who, who I know who are, you know, academics or leftists or both, um, you know, there'll be sort of onboard, uh, when I'm talking to them about MMT, but at the end of the day they kind of, uh, they, they won't fully commit because, because they're terrified by, um, what happens when we start talking about using fiscal policy, uh, in suppose in excess of what, uh, what we normally so called normally use it for. So maybe to get us going, I think it could be helpful to paint a picture for our audience about what it is that, what it is that the Orthodox discourse assumes when they're talking about this thing, this process that we call inflation.
Speaker 3:
3:54
I think for me, the key to understanding the Orthodox position and really getting inside that mindset is actually to connect it right back up to their conversation and discussion of money. Because if you go back to the beginning, the beginning of those writings in the 19th century, the essential you know, component that makes everything fit together is that there's these other processes that are determining this aspect of prices called relative prices, which isn't the actual monetary amount that you will pay for a good or service, but is that price in ratio with another price or even all other monetary prices. And it's that the, and that ratio is equivalent to the ratios that you would get in barker in that, in that natural relationship. And that there's fundamental forces of supply and demand that are the same as bordering that determine these relative prices. So if money can't determine relative prices, um, and, and, and we, we, and you know, we've put on quote, establish that.
Speaker 3:
5:08
Then there's a question of what does money do? Well then where you get to very quickly is that there's a price level and it's not just, you know, produced by some government statistical agency. It's really just this fundamental force in the world that agents inherently understand. And that money determines that price level. You know, this is where money printing causes inflation, you know, m rises and p rises. It has to be that way in this system, barring, you know, how, you know, frictions and imperfections might, um, get some other mechanisms going. It the fun of this fundamental basic framework must hold for a to, to keep underlying apparatus. The, the, the barter or real or real money, the nonmonetary production economy framework. Okay, it's in March. And all these people talk about that, that that has to be the fundamental backup. And so I think that is the essential way to understand is that money printing has to inherently, um, lead to inflation.
Speaker 3:
6:22
We're in the short run and the long run inflation is just, you know, this, this, you know, inherent, you know, price level, um, that is, is, you know, a social, you know, a political, it just what is out there in the world. It's, you know, when you ignore all that other human cramps that, you know, this is the fundamental of what the fundamental forces of supply and demand are determinate. Um, that's the, that's the key to the framework and why it's so easy to bring up the inflation boogie man, um, because the processes, because you have this whole framework that they've built up deductively that, uh, abstracts from all the other different processes that are going on and especially if the processes that are going on in their modern monetary production economy.
Speaker 2:
7:07
So just to, uh, paraphrase and clarify, it's starting with money as a, a natural barter exchange relationship that has little relationship to government, uh, that then essentially, uh, renders any government spending, uh, in excess of, of the natural supposedly natural forces of that relationship. Uh, a threat, right? Or a, an a fundamental imbalance.
Speaker 3:
7:43
Well, it's even more fundamental. It doesn't even have to be government spending, like any sort of curation of money at all that, you know, goes through the system that has a velocity as it work, you know, back to the gravitational metaphors, um, that it's any sort of money that starts flowing through the system. The only thing it can do is increase prices because there's no other room for, uh, for it to accomplish anything else. Um, that matters now in the perf, in the kind of quote a perfect system. The, this of course, you know, and of, you know, uh, Orthodox economists will be very quick to bring up all the exhilarating assumptions to this basic framework. These like in perfect information and perfect competition, sticky wages, blah, blah, blah, blah, blah, sticky prices. This most famously, they may have all these other frictions that you know, that, you know, put seen in the wheels that allow money to do something for, you know, the, to the, the term of art is, um, allow money not to be neutral, but fundamentally in the long run, you know, over the long course of, or not even history.
Speaker 3:
8:57
Um, what all that money can do is, is create info, is creating inflation. Maybe it has, you know, create some other inefficiencies in the system, but it has no productive capacity outside of these edge cases.
Speaker 4:
9:16
Well, given your understanding and reading of the, the kind of fundamental misconception of money at the, at the center of this fundamental miss understanding of inflation, um, could you kind of take us up to narrow or a Nehru the non accelerating inflation rate of unemployment and then maybe kind of say, well, what heterodox economics and specifically MMT does to critique that.
Speaker 5:
9:42
Okay,
Speaker 3:
9:42
well, from this point of view, from what I'm saying, the narrow, um, the not accelerating inflation rate of unemployment is kind of in index of the frictions in the system. Because, you know, of course, you know, if, if the system was running perfectly, there would just be truthful employment, quote unquote. But there is all these, you know, factors, whether it's search frictions, um, you know, if you're Milton Freeman, whether there's unions or minimum wage laws or any sort of protections for workers whatsoever, but none of that, whatever it is there, they're all these reasons that, that you don't have, that the quote unquote price mechanism isn't perfectly allocating resources. And thus at any given time, you have a certain, uh, rate of unemployment among the population that is quote unquote consistent with inflation, uh, with, with inflation not accelerating. And then if you get, you know, a per, if you get down to a percentage, uh, too, too low unemployment, say 4%, say 3.8, 3.5, whatever unemployment rate it is next year, who, you know, what the, what it has been so far that at some point it's the, the inflation process is supposed to start taking off and accelerating into the stratosphere.
Speaker 5:
11:04
And so in an interest of fully sketching out this sort of orthodox view, you seem to mention that, um, neoclassicals viewed sort of any money creation in tandem with a price level increases. I was wondering if you could outline how then they consider a bank lending. Um, obviously I think we'll get into more detail about indogenous money later, but, um, just to sort of tell our listeners how they conceive of the relationship between bank monetary creation and the economy.
Speaker 3:
11:40
Well, one thing is I would say is I think there's always been two different views. Uh, broadly speaking here, there is one view that sees that since the system and all of the fundamentally important things are determined without money, sees the intrusion of money on to capitalism. As weird as that is as, um, a kite, a fault, a a screw up. And so this is where you get things like the Chicago plan, you know, a hundred percent reserve money. The idea that if you just require there to be a dollar of reserves for every dollar of bank liability, that there is outstanding, that you can neutralize the, the powerful forces of, uh, of money in the economy. But that also because reserves determine, uh, the supply of money that um, the government is ultimately responsible for anything that that goes awry in terms of the private agents in the financial system.
Speaker 3:
12:42
Um, and, and if you take a natural rate of interest point of view, they're also responsible for everything going on with non bank financial entities because of keeping interest rates too low. So that's one view. The, the, the kind of money as intrusion on their, on their perfectly operating system view. And then I would say the second view is, um, a view that basically, um, money is, this is this passive thing that's necessary but is not a productive in itself. And thus, you know, as long as you don't mess with the banking system, the banking system isn't gonna mess with everything else. So you, you, you have this framework where either money is this passive accommodating thing that is merely not disrupting the kind of nonmonetary forces as it were that were going on. Or it is money is forcing itself money and especially, you know, particular actors, um, and their money creation, power of process powers are forcing himself on the economy and causing disruptions to it's perfect functioning. And obviously that reads is, it's an extreme, um, you know, a lot of Austrian, uh, of views about the banking system. But you have this struggle between these, these two polls. Um, that I, that I don't think he is really a resolvable one because of, um, the, because of, of, of the fundamentally nonmonetary vision that they have, especially, you know, quote unquote over the long run. Um, th that's, that's how I would, I would put that together.
Speaker 2:
14:26
All right. And maybe just one more question about fleshing out the orthodoxy turning toward critique. Um, let's just spell out, um, what are the consequences, right? What, what are the, the social, political, um, historical consequences of this, this Orthodox viewpoint that most people adopt? Um, uncritically
Speaker 3:
14:55
I think, um, it leads to a sort of fragmented worldview where when you're talking about budgeting and about a fiscal policy, that the banking system disappears from view. And it's not part of how you think about this, um, this whole system and how you think about, you know, quote unquote government money creation, uh, or you think about deficit spending. It just becomes this, you know, we were extracted from that. Um, so we don't, we don't need to think about that because we're thinking about budgeting. And then on the flip side, when you bring up the financial stability or the financial crisis or the banking system, the banking system is isolated from all these broader questions of fiscal policy. So often you get, you know, the big critique of the of the banking system is that they didn't get out there and lend money after, uh, after the financial crisis when they should have.
Speaker 3:
15:55
And that's what they were quote unquote supposed to do with the equity purchases that the government made into the too big to fail bags. Um, but because we don't connect these two conversations, it, it doesn't dawn on anyone that the financial crisis and the collapse in lending by the making system is actually a huge opportunity that that essentially, quote unquote pays for what could have been a huge program of government spending because you don't have the output that is being appropriated by, uh, whoever the making system lends to. You don't have that output be being devoted to these, uh, finding to the purposes that, uh, that the people who receive bank lending come up with or receive finance come up with private finance come up with, um, you instead can to devote those resources to public purpose. But the way that this, um, this conversation about inflation and money from the main stream perspective has managed to segment it.
Speaker 3:
17:03
And completely break these two conversations where we have an impoverished zero sum conversation on one or another. Like if people could have a connected view where they saw money and finance throughout, you know, all of our economic policy discussions, then you could, the banking system could in bankers could never threaten us with a collapse of lending by reason, capital requirements. Because if people had a fuller fiscal policy view, they would just go, oh, what you're saying is we get to spend even more money without raising taxes or cutting spending elsewhere because you know, you'll be lending, you won't be lending as much and the people that you're, that you're not lily to will be denied the ability to hire a bunch of people and buy up a bunch of, not of machines and, you know, use up a bunch of oil to go on whatever venture that they're interested in going on. Um, and I think that one of the underestimated, you know, parts of out MMT is the, is connecting these conversations back up with each other. And I, and that's one of the motivations behind the FTE. Op Ed was really connecting these conversations and, um, making people realize that there are, that even from their particular points of views, there are more positive sum games, uh, than are generally real.
Speaker 5:
18:35
And I think this point is crucial because it, it actually informs the sort of historical terrain that I think this conversation is taking place on in that coming out of the financial crisis, we see a real paradigm crisis of, of, you know, what an economy is and how it relates to a banking in governing structure. And so I don't think it's a surprise that we see the rise of, um, MMT in popular consciousness and, and scholarly discourse during this period, which makes the FT article that, um, you cowrote and you just, uh, cited, uh, more, you know, more intensely applicable to this question of inflation because it's with this rise in the popularity of MMT that as Scott mentioned, we see the rise in the inflation bogeyman and yet as you suggest, we, the interconnectedness and the interconnected argument that you outline seems to fit perfectly into, um, the model as an answer for how to address this boogeyman historically and, and for the paradigm crisis. So I was wondering if you could actually outline the arguments and sort of what we're calling the MMT view of inflation for our listeners.
Speaker 1:
19:58
Okay.
Speaker 3:
19:59
So where I would start with this, um, is I mentioned briefly before that there is this view that in the mainstream, it's associated with new Keynesian economics, which, uh, we can broadly speaking is that it is an attempt to show that there the efficacy of countercyclical fiscal policy, but within the constraints of if he's these highly mathematize. Um, general equilibrium models that without inserting a bunch of frictions, don't have any room for countercyclical fiscal policy. So it's a little bit of a, you know, maybe even schizophrenia view in the sense that you're starting with a model that has no room for countercyclical fiscal policy and that you're building in the frictions and they give, um, kind of countercyclical fiscal palsy, some room to breathe. But because the model is still must converge to end equilibrium, you can't, uh, have these forces go, go through the quote unquote long run.
Speaker 3:
21:05
So, um, it's a very, it's a view that that isn't very easy to keep all the different, uh, opposing viewpoints in your head all at once because it's really serving more of a tractable, tractable mathematical purpose then a practical purpose. Yeah. But the, the key kernel, uh, in that, in that idea is really is it starts bringing up the question of the price setting process itself. How do businesses set prices in, in the new Keynesian view? They're supposed to be these adjustments as there are in the perfect model. But because firms have some power, they are able to, to wait and slowly adjust to quote unquote demand shots, uh, or cost shocks rather than, um, having to respond immediately. But from a post Keynesian from a head troche from an but especially from an MMT point of view of the, there are concrete price setting processes that uh, businesses have institutionalized over many decades over and centuries based in accounting frameworks which are socially constructed.
Speaker 3:
22:23
And these frameworks are designed for reproducing those business enterprises. They're, they're designs to make sure those businesses exist in the future. And when you think from that point of view, from the point of view of what is the best way to reproduce a business, um, this, this system, this a concept of these constantly oscillating prices, uh, responding to, uh, supply demand doesn't just not fit the facts of how businesses set prices, but it doesn't make sense for them. You know, businesses don't want to be in a position where they are facing prices that don't cover their costs and they might be forced to you because of, um, you know, because of a competitor who you know, has, is, has better from access to finance or uh, has lower costs to set a price that threatens their reproduction, but they're not gonna do it on their own.
Speaker 3:
23:27
And so when you very quickly get to from the MMT heterodox view of the pricing process is that, um, the, the non-responsiveness of prices two shifts in demand and the the or structured process to changes in costs and only two changes in costs that are persistent, um, isn't some flaw in the, in the business enterprise that, you know, we can quote unquote fix with better policy. It is some, if it is a strategy that makes sense for their reproduction, um, and once he gets that point of view, um, what that very quickly opens up is the idea that business is that if businesses, you know, are in general not responding to demand when they're setting prices and that they are responding to, to uh, to cost, but only persistent costs, then you, than prices can't do this job of allocating resources of clearing markets. They can, in other words, they can't do the job.
Speaker 3:
24:41
They can't do the job that has been assigned to them by this border role of establishing ratios between prices. Um, and you know, making some hunter gatherer choose to, uh, produce, you know, one item over another. But instead, if it does this whole, this whole other role of reproduction and that in the context of all of that, uh, it means that fiscal policy is much more, has, you know, much more positive benefits and the, the capacity for Resource Corporation, um, and the capacity to, um, to fundamentally transform the system, uh, than it does in that other framework. Because now a fiscal policy can change. Can increase the resource utilization over the long run, it can, uh, it can drive the creation of new resources over a number of years. Um, and, and it can, it can do all these things while accomplishing social goals as long as we, you know, are organized and can organize around, uh, making sure such processes of curation happen. Um, and that is a, is a big, and that is a very different view in a view that now more than ever is vital in the, uh, in the context of climate change. And in the context of recruiting new deal. Um, because I think you, while you can make a case for the green new deal from in Orthodox with frictions perspective, I think from the fundamental methodological and, uh, theoretical premises of an empty heterodox view, the possibilities of agreeing to deal are much more obvious and natural.
Speaker 2:
26:37
So I want to get to the green, new deal and the larger consequences. Um, but a couple things before we get there. One is, uh, to have you reflect a little bit more explicitly what I think you're implying here. Uh, it's the converse of what we were talking about with the Orthodox point of view, which is that money has an active, productive mediating role, uh, in the economy and that changes everything. And then maybe from there you can walk us through some of the more detailed arguments that, uh, you and your coauthors are making in the FTE piece, uh, in response to very specific kinds of critiques.
Speaker 3:
27:23
Um, so to, to try out the money as having this treaty of, um, mediating function. Well, I would say is that because in the, in the Orthodox view, these prices, and they're not really monetary prices, but they're really just ratios between goods and goods, um, that, that are, are determining how the production system works. As a, as you know, got to, in the beginning there isn't a role for money in, uh, to allocate resources. Once you break out of that worldview, that money suddenly does have a role for allocating resources. That money decides, you know, what, uh, what quantity of what goods and services are being produced. And now you can have shortages, uh, of particular goods and services. Um, but that those shortages are, rather than being, you know, some big system failure, there are actually things that, um, can drive the system forward.
Speaker 3:
28:29
Obviously not if there's systemic shortages of everything that can cause problems, but say, you know, you have a particular good service where there are, where there are shortages and the, the business, the business enterprise suddenly has an incentive or even other business enterprises have an incentive to figure out a way to make sure that a much more gets produced with the resources that they already have. And if they don't have the capacity to do that, they have the incentive to install more capacity to expand their, uh, productive ability to produce more. And this doesn't necessarily mean I'm, it doesn't even often mean that less resources go into other places, but it's actually pulling in resources. You know, one obvious way is unemployment. Um, but other thing is just literally, you know what Joan Robinson called disguise unemployment. People who were in low ph in activities that weren't very socially useful.
Speaker 3:
29:32
But, uh, it was easy for some business to hire them to do that because they had no other opportunities. And so they were sort of just picked off literal Ilo idleness and put into what you might say it's like figurative idleness, but it still forced I on this the whole time. So there all of these ways big and small in terms of um, this the point people from different activities to coming up with new ways, new technologies in the sense that like, you know, a technology is just a, a different recipe for producing a similar kind of output to get more out of out of our system. And then when, when you look at the Times where you've, we've, you know, the only times where we, where we unleashed the productive, the creative power of money, uh, wars. You, I think you see this very clearly that these, that this power of production is, uh, unleashed and, but, but, but you know, that must be put in the box of for finance.
Speaker 3:
30:42
You must emphasize all the, the social disruptions that really come by the speed by which the economy has to adjust for up to war rather than, you know, high demand in and of itself. Um, but what MMT is essentially saying is that, that, that socially productive, that creative power of money is something that we can also have in a peace time economy. Um, because it's just fun. It's fundamental to the nature of our system and, um, social production itself. The last thing I would say on that is that another important empathy to emphasize about money is it has the power to overcome, uh, capitalism, capitalists, um, desire to not engage in those kinds of socially trans transformative processes. You know, the capitalist ideal position is to consistently make profit in the future. Um, never implement a new technology. And if they implemented new technology, um, be out in front in implementing that new technology and have control over the process of its introduction.
Speaker 3:
31:57
Whereas a, US, a high pressure economy generated by a fiscal policy, um, no longer puts businesses in the driver's seat and also pushes them to unleash the, the transformative, the creative power, um, of, you know, of our Social Libor because it is, you know, quote unquote in their interest. But more generally the, the incentives of a high pressure economy change and also the political ramifications, uh, of, you know, sabotage in the, in the Linnaean sense of, uh, of, of disrupt, disrupt these things. [inaudible] and disruptive PR, uh, productive power simply because you have the property, uh, rights and the authority to do it, um, becomes more challenged than it is in normal times.
Speaker 6:
33:13
[inaudible] Ooh, yeah. Ooh. Tappings you get [inaudible] put it together and look at it. [inaudible]
Speaker 2:
33:45
I mean, all that's really helpful. I guess I'll say, um, more explicitly, you know, the framework of the article seems to be a response to, uh, critiques of MMT on inflation, which seemed to start from the presumption that what we're arguing would MMT is arguing is that ex post taxation, uh, legislated by the federal government will do all the work of uh, so-called soaking up, uh, excess in the economy. And it seems like that's what the FT article is taking on and really problematizing and then offering alternatives to in terms of very specific kinds of approaches, institutions and mechanisms, agencies, etc. I was wondering if you can just kind of spell out, you know, in a kind of bare bones way, uh, that,
Speaker 3:
34:45
yeah, where I would start with that question. I think, I think it's important to motivate. What is the thinking behind these kinds of claims about MMT and what I think the motivation or the, or the thought process behind it is still this view of thinking about fiscal policy in terms of quantities, um, and we, and where you climbed to think about this way. Because if fiscal policy seemed like the Obama stimulus is talked in terms of $900 billion, this is that, you know, discrete or mounts. And so this, this, what this thinking comes from is this idea of, of thinking of taxing in quantities. Meaning that like if you have a sort of MMT view of money, uh, refluxing throughout the economy, you know, money gets sent in, has all these processes in which it is, um, sucked out or siphoned off in, uh, in seeming that the basically, you know, any sort of attempt to have a sort of reflux of using fiscal policy, um, doesn't really work because you, as he said, you have to like post you're, you're seeing that the economy is overheating and you're trying to impose more taxes, um, after the fact.
Speaker 3:
36:06
Um, there's a number of ways where, where you can approach that. One of them, one of the more basic ways is that saying we're at a fundamental level. We're approaching, uh, we're, we're approaching this by challenging the current CBO process. The current CBO process already has a process for, you know, offsetting a whatever spending initiative that you want to do or tax cuts you want to do with, uh, a quote unquote pay for it. Just that, that system isn't very good. It's thinking in dollar terms where $1 of taxes pays for $1 spending rather than in demand terms where you might need a pay for. Um, that has a much larger dollar size of it's tax is if it's taxes or no dollar size in terms of revenue, if it's, uh, some, some form of regulation, whether financial or otherwise. Fundamentally from this point of view, this, uh, this, this quantities view of thinking about what MMT is trying to say.
Speaker 3:
37:07
Um, what did, what it's missing is that taxes in the modern era are always in all of these ways. Bigger, small, um, based on these other forces growing and tricky and the economy, you know, most obviously, you know, at property taxes are based on the, the, the, the valuation, the appraisal of the monetary value of the property. But also, you know, most fundamentally, you know, our income and our payroll taxes are based on the income that we are actually receiving in, in money terms and um, you know, to a certain extent corporate taxes as well as sales taxes most obviously, you know, based on the value of the, the monetary value of the PR of the products themselves. Then when you take that, you know, when you look at the system from that way, we've fundamentally transformed our fiscal apparatus to be able to reflux money based on the state of the economy.
Speaker 3:
38:12
You know, there is, you know, there is a literature on this including mainstream economics called, you know, automatic stabilizers. Um, but automatic stabilizers, he's sort of this technical topic. It's not part of the public's fundamental thinking about fiscal policy. And you can tell that because you know, when 2009 at tax revenues dropped off and spending increased, people were talking about, oh, the deficit is exploding. Rather than talking about like, well, these are the guard rails on our system that makes sure that the system functions. Um, so what you, what you, what you, where, what comes from that is we don't necessarily need any discretionary, um, policy at all to have a, uh, fiscal policy that adjusts to whatever our new spending programs, uh, are. But even on top of that, nonetheless, that that is much less necessary than is that commonly conceived, certainly politically conceived.
Speaker 3:
39:18
Um, because of a underemphasis or, uh, forgetting of automatic stabilizers. What you get from our point of view is we're still, you know, suggesting to have this CBO processed this congressional budget office process, but just fundamentally reform it so that you are x anti before the fact deciding on what spending programs you have estimating, you know, you know, how much resources are under your lies, how many, how much new resources can be generated over the next decade and deciding on your pay fours, your tax increases, but also, uh, financial regulation and environmental regulation than other, uh, regulations to, uh, you know, reduce resource use and elsewhere does employee resources so that they can be, uh, reemployed, um, the [inaudible] no part of that. Are we suggesting tax increases after the fact that this is sort of just been this sort of a narrative invented while MMT is fundamentally talking about a fiscal policy take, uh, be in the driver's seat.
Speaker 3:
40:27
So it must mean, you know, tax increases that happen, like a interest rate increases. And that isn't the case from our, from our point of view. I'm not saying that it will never ever be necessary to have a tax increase after, after the fact, but we want to design a system that avoids that as much as possible, as much as everyone else does. It's just that we see much more possibility in having a, a much better budgeting process, a budgeting process that we also think is more attuned to the kind of economy in society that people want. Um, and also how, you know, design, uh, and strengthen, uh, the, the reflux mechanisms we currently have, the, our automatic stabilizers we currently currently have so that we're, uh, we, we are less in need of, of that CBO process. Uh, getting things right. Um, yeah.
Speaker 4:
41:35
Great. To, to backtrack just a little bit and talking about firms and price mechanisms, could you talk a bit about the importance of the work of Fred Lee, um, and the NMT micro perspective in those regards?
Speaker 3:
41:51
Yeah, I think Fred Lee really doesn't get the attention he deserves. Um, I would say especially from critics because of course, you know, all the NMT economists know his work, but Fred Lee was, you know, there's this big hiring period, um, in the late nineties at UKC where Matt for statter, Stephanie Kelton and Randy Ray all get hired at the same time and you know, Transform, um, the Human Casey Department overnight. Well, around the same time Fred Lee was actually also hired and I don't think it is, you know, is saying anything about the others to save that Fred Lee was in many ways the most fundamental transformation of that department. Because if you think about in economics education where there is macro and there is micro, you know, Matt, where macro is treated as basically, you know, like half the subject area. Having a perspective that is MMT consistent and has something to say about micro economics and doesn't rely on neoclassical microeconomics in any fashion, uh, is first of all rare, but also crucial to having a holistic perspective.
Speaker 3:
43:13
Um, and I, and the many people who came for MMT, um, got deeper into the project of NMT and heterodox economics as a whole through engagement with friendlies project. And he taught, um, at UKC from that time for 15 years from that time to his untimely death in 2014, uh, from cancer and for, and so I think he's a real critical part of the, of, of this literature, which deserves more attention. Um, and towards the last decade of his life, he worked hard to more and more integrate MMT, uh, into his framework formally, um, and certainly saw himself as contributing to the [inaudible] project. And I think he does have something very fundamental to contribute to it. Um, and, you know, the whole, the whole discussion I had around from setting prices around it being, you know, these prices are about their reproduction and that they have these administrative apparatuses that are designed to determine prices and precisely designed to not to respond to short term.
Speaker 3:
44:33
Um, that is what I learned from Fred Lee. Um, that's what I learned from reading first. His Book Post Keynesian price theory. That's what I learned. Talking to him, reading his other papers, um, listening. And in fact, I was lucky, fortunate to listen to you lectures, uh, that, that he did graduate lectures on Heterodox microeconomics and then he's textbook, uh, uh, microeconomic theory, a heterodox approach. Um, so this, this for me. Um, and of course, you know, the m and t economists are grounded in this too and you know, had many, I'm sure fiery conversations with a lead themselves. Um, but for me, this is a fundamental piece of, of the MMT project and, uh, wive writing that op Ed, uh, with, uh, Scott and Rowan came so naturally to me, I think because, uh, having that sort of understanding of, of the, the micro structure, uh, the, the institutional structure that, uh, leads to individual price setting, which, you know, bubbles up to fees, price indexes, um, and the price system as a whole, um, is, is fundamental for designing these kinds of, these kinds of, uh, policies and for, uh, you know, taking a shot at reforming budgeting processes like the, like the CBL.
Speaker 3:
46:07
So to me, friendly is absolutely fundamental. And, um, when you start attacking the barter theory of money and, uh, and making claims about, uh, monetary production economy, um, when you create a quickly get to, is that more fundamental than uh, attacking the ignoring of money, uh, is attacking the price mechanism. The idea that there's this law, like functional relationship between price and quantity, that there's these price ratios, these relative prices that determine how the production system works. Then if you don't take a fundamental swing and attacking Matt, you might, you know, initially, uh, when some blows on the macroeconomics and the Orthodox monetary theory, uh, that's around, but it will ultimately survive you if you don't attack the price back in aneurysm. And I actually see, think we see this very clearly in inflation discussion, um, that MMT makes these basic claims about how monetary sovereigns work about, uh, the government, uh, of government finances.
Speaker 3:
47:22
Um, and you know, there are some, there are many orthodox economists who of course, you know, struggle these claims and tried to deny them as much as, as much as possible. But once you break through all of that, what you get back to is this idea of, of you know, deficits of deficits, spending of um, access, demand, uh, and aggregate demand driving, uh, prices, the price level and inflation. And it's that fundamental last barrier of talking about, um, well, once you reach a certain point, you're back into the world that is, um, that the, that the monetarist pointed out so many years ago. And maybe the question of em, of, of what variables are in, is a little different, but you're still fundamentally in that world. Um, still limits the possibility and imagination and the capacity to see curration, um, in, in, in, uh, you know, in our economy and in, in our society. So to me, a friendly is absolutely fundamental to the project of building, uh, in alternative economics and alternative political economy to a mainstream orthodoxy and the liberal orthodoxy.
Speaker 5:
48:48
And, and, yeah. So it seems like, you know, what you're calling into question through, um, through his work is really a fundamental cat, the category of causality and agency and in economy. And I was wondering if we can concretize, um, these, these theoretical questions in, um, in the sphere of antitrust policy and perhaps talk about the ways in which, um, the relationship between governance and law and firms takes on a different, um, orientation when we consider Fred Lee's, um, understanding of pricing and, and how we can integrate those things together to really get at, uh, antitrust policy that isn't a panacea for, for really an, a whole economy, but a compliment to a broader, um, suite of price management policies.
Speaker 3:
49:53
I mean, w I think the first thing to say, uh, towards your question is that there is a, in Orthodox conception that the, that you know, the problem with whatever, um, imperfections that exist with large corporations such as they are, is the disruption of that fundamental price mechanisms. So in the same way that, you know, the, the money cracks look at the, um, the money system and see that as a disruption of this. Um, the, you know what I, what I've termed it in other places, the antitrust can't cracks see the same thing with corporations. That it's just sort of this unnatural. You know, interference of law into the functioning of the price mechanism and you know, antitrust policy through breaking up companies can get us closer to that framework. Um, you know, obviously Lee would reject that kind of perspective, but that doesn't mean he would reject antitrust policy or more generally, you know, challenges to corporate power because from, you know, a, a legal and analytical perspective.
Speaker 3:
51:15
And I would mentioned, uh, people like St to Paul and Sandy, he said, who are carrying these projects forward, um, in a tremendous way. Um, but this is also a leap, fundamentally elite perspective. Um, is that the question of corporate power is a question of the agency and the decision making processes of corporations. And it's not that, uh, you know, Cha, you know, challenging restructuring corporation or corporations democratizing them or um, granting prices, uh, pricing power to, uh, and price coordination rights to, uh, associations of people would get us closer to a price mechanism, but that it would change and challenge the, uh, the governing processes that lead to the reproduction of our current, you know, inequities and, uh, and democratic structures. So to, to, to, to bring that more concretely one way is just go around breaking up companies and, uh, washing our hands, but still denying, uh, pricing power to loose associations, you know, notably, uh, Uber drivers who are classified as independent contractors.
Speaker 3:
52:44
Um, and another way is to strengthen those forms of democratic coordination and restrict, uh, and regulate, uh, undemocratic coordination really, you know, most fundamentally, uh, uh, corporate consolidated decision making, uh, that is hierarchal and, uh, and makes decisions that are, uh, completely against what any sort of conception of the public purpose, which is kind of, it reaches its most extreme forms with say, you know, insulin prices that go up a couple of hundred percent. Um, that, that, that re that restructuring process is about creating a new governance order, um, and giving different actors, um, perhaps less Plath, illogical actors, more agency than, but the actors that, that currently have agency rather than trying to, um, squeeze agency out of the system. So you get, you get back to some imagined, ideal ideal type that uh, that makes, uh, in some sense a perfect or ideal decisions or even, you know, most ideally no decisions at all.
Speaker 2:
54:12
So we've talked a lot about the MMT lesion, uh, perspective on inflation, uh, and how it breaks with the, um, various breeds of, of Orthodoxy. But now can we step back a little bit and, uh, compare this NMT lesion, uh, approach to agency price coordination, inflation with the way that Carl Marx and some Marxists, uh, have historically treated, treated some of these same questions and where, where is their influence in convergence? Where are there places where perhaps we need to make a distinctions?
Speaker 3:
55:01
This is a really good question. Um, where, where, where I would point to, uh, is, um, first of all, if you have a grounding in, um, volume three if of capital, a big part of that is talking about these prices of production. Um, and they're not very different from the, you know, what would, when earlier periods, you know, by saying by Smith are called natural prices. And when way you can see that as not very different is that there's this whole tradition of quote unquote classical Marxian economics that carries forward the study of, uh, all of these, all, all these ideas and fundamentally talks about as a, as a, as we've talked about a lot, Scott, uh, the, the idea that, you know, prices gravitate towards these fundamental positions and there's this gravitation process that leads prices to reach their natural prices or the prices and production.
Speaker 3:
56:03
Now in some ways, this framework is, uh, it's still a lot better than the neoclassical economics that Paul's at because those prices of production are fundamentally grounded in costs. Um, although sometimes it's unclear whether they're monetary costs or some sort of other conception price, a denture adjustment that existed at the time. Um, but still, even though that their quote unquote costs determine prices, the fact that a, this thing there isn't really described the description of the actual price setting processes, um, involved. Um, but also that, that there is no room in these arguments, uh, for each agency in the markup. I, you know, despite this decision making by, uh, by businessmen, by managers, by capitalists over the markup, uh, makes it different from Aaliyah. And I would, I would say, uh, or Leah or him, empty frame, uh, framework. All right. MMT emergent, heterodox framework.
Speaker 3:
57:19
Um, and I think that is, uh, one big place that, uh, that there's divergence. The others. The other place that I would point to is despite a lot of the discussion around, uh, the social construction of economic categories, which, you know, run throughout many Marxists, uh, traditions, both, uh, in economics and outside of economics. Um, because the discussion of cost accounting is so fundamental to their understanding of the Labor theory of value, um, for example, or, or the, the socially necessary labor time theory of value. For example, the idea that, uh, the only value that machinery, uh, contributes to production is the value that is, you know, embodied it's purchase price. And thus it's depreciation is exactly equivalent to its east value production, which is exactly what marks denies about Lieber. Um, that, that building this, this system with these fundamental, uh, ideas in them, um, makes the, the concept of the social construction of, of accounting and of the account of the, of the specifically the managerial managerial accounting processes that firms use in their decision making in the price setting, in their, you know, evaluation of other economic opportunities, I e investment decision making.
Speaker 3:
58:57
Um, that this also, uh, is challenging too. A lot of Marx's perspective, although I wouldn't necessarily say all. Um, and you know, in the one way of putting this is that Lee really, you know, built a framework from the ground up that has social construction all the way down. And there are, you know, specific arguments that people are attracted to in Marx and Marxism that aren't necessarily necessary for what I would say is the most fundamental points of marks. Um, but nonetheless, they're, they're attracted them because the, the, the process of theory creation you'd have to go into to reject these certain parts, um, is uncomfortable. And you know, he's a staffer of uncertainty that I think people struggle with when they grasp onto Marx, Marx and Marxism as a way to understand faith, to understand a world that they fund, that they otherwise feel like they don't have. Uh, a grounding to understand, especially, you know, in the place of, of, of processes of, of capitalists decision making
Speaker 5:
60:15
and to sort of, um, elaborate on this point. You know, I think how it's so crucial to consider inflation along with all the other pricing mechanisms that you talk about as socially constructed. And I think also what, what's really helpful about your answer to the, to the question is that it really highlights the ways in which there is domination at the center of this social glee constructed system, specifically the way we consider the relationship between inflation and um, and the racialization of unemployment. And I was wondering if you could take apart, um, inflation as a, as a category perhaps even deconstruct it in order to get at that question in to how we as a society have constructed this racial domination at the heart of the way we consider pricing.
Speaker 3:
61:17
I think this is really fundamental. Um, and I think the question of, of prices and pricing in the price level is again, a place where there's a naturalization process that goes on with mainstream economics that you have to relook, look really, really hard to see. Um, because in their framework, price levels are a theoretical variable. Um, that is understood apart from the, the, the, the philanthropic or the government measurement of prices and, and construction of price indices, price levels exists, exists. And then we approximate them with our you index construction processes, which are imperfect, but the, you know, they get close enough to where basically we can treat these pricing disease as approximating just prices out there and not having a fundamental socially constructed purpose themselves and not being fundamentally socially constructed themselves. Uh, and that once you really, really get deep into a friendly framework, and I would say this, this isn't a place that you also connect up, uh, with, uh, the legacy of Charles and cause someone like nap.
Speaker 3:
62:46
Uh, also, you know, didn't go as deeply as, as Lee, but looked at the, this price level literature with skepticism. And, um, and challenge the idea that, um, price levels, you know, we're basically just the inverse of the value of money, even if they measured the value of money in any fundamental sets. Um, that, that once you, once you get to this, the socially, this socially constructed place where it is a question of, of, of politics, of economics, of ideology, then you get to see processes in history that you aren't able to see otherwise. So one way to, one way to to tackle this problem is, um, we look back on the seven of these. And as much as there's this talk of stagflation of high inflation, the inflation that we see when we look at the current measures, um, is lower than the inflation that they saw at the time.
Speaker 3:
63:54
Uh, and the reason is because they had a different methodology. Well, there's a number of places I can point to. But one fundamental place I would point to is that in the 1970s price indices, as contemporaries experienced, that home prices were part of those indexes. Interest rates were part of that index, which of course matters it extraordinarily. Because when Volker raised interest rates, a lot, it fed through into of this the CPI, the pricing index that they experienced that you know, that, you know, social security is adjusted for and so on, that tax rates are adjusted for now. Um, so from their point of view, inflation was much higher and this, that is a big part of what the discourse of inflation, uh, at the time was, is this constructed process which was more, uh, vulnerable to, you know, the fluctuations of, you know, when you might call like idiosyncratic variables.
Speaker 3:
65:02
And the other thing I would mention, the other thing I would point out about this social construction process is it's not, it would be if it was a question of distribution, if it was question of like, Oh, the PR, uh, um, the inflation rate is high above us. You know, some people are really losing out. Um, it would be a political question, but it would not be a political question that was bigger than say, um, what was going on with our social safety net? It wouldn't be a bigger question than the question of what's going on with the minimum wage. It wouldn't be, it wouldn't be a bigger question than what's coming on with working conditions. Otherwise. In other words, it wouldn't be a bigger question than the actual social ailments that people are facing. It's not merely that prices are changing and that, you know, some people have greater access to the social provisioning process and some people have less.
Speaker 3:
66:01
It's the idea that prices are a Radek, that there are volatiles that they're going everywhere at once. Um, it's, it's, it's the metaphor of losing control of a sort of prometheus's fire. Um, that is what captures, uh, people's imagination and their terror. Um, and what makes inflation such a highly political issue. Um, because there are other ways of measuring, uh, prices of talking about what's going on in the prices of the economy, which emphasize stability and MPO emphasize, uh, how overwhelmingly, uh, the system we have is stable and structured by these administrator administrative process, the administrative processes that, uh, preserve their stability, uh, even in an adverse environment. So, you know, if you, if you instead look at it from the point of view of what is the average or the median frequency of price change, then prices are a notch, are not changing that often.
Speaker 3:
67:19
Um, you still have prices that are, that change every three months or so. Even in countries that we think of as these like, you know, high inflation basket cases because we are, we're so used to thinking about price in disease. You know, a country like Brazil, um, you know, for, for many, many years there, um, median price change was say every two and a half months, every three. Um, that's a, that's a smaller, uh, that, that's, you know, a more frequent level of medium price jeans than say the u s which at a retail level gets stuff four months. Um, you know, at a, at a wholesale level, it gets, you know, up to eight months a year. Um, these, these sort of measures of price stability, what I've called medium priced, uh, stability after Gardner means, um, who did a lot of the groundbreaking work in this area.
Speaker 3:
68:19
That creates a whole different vision of, of the, of the price system and what's going on with prices. So it's a whole different way of conceiving of what's going on in the economy. And it also emphasizes, um, the corporate structure of the economy. You know, when, when prices are fluctuating, it's easy not to see the power that's behind those fluctuating prices, meaning the price indices. But when you see endemic stability, but you also see, um, you know, these periodic sustained sometimes large price increases, then the corporate power, the structuring process behind it, um, becomes obvious. And I think this is where the fun and where the fundamental question of social construction comes in to get to that latter point about, um, the way this becomes a racialized process, um, is that I would say that there's a few different elements here. One is simply that by constructing price indices rather than price stability indicators, oh, we generate, you know, a quote unquote crisis and prices that doesn't necessarily exist there organically and are thus able to, you know, motivate this fundamental conception we have of, of uncontrolled, uh, money or uncontrolled government processes.
Speaker 3:
69:57
Uh, disrupting the functioning of the economy. And that process always courts the most marginalized as disproportionately hit by high unemployment. And the, and also less able to, uh, work through, uh, the system and work through raises when, you know, employers have the pick of the litter, I. E the pick of a white man. Um, what you all but, but the, the other piece of course is that, um, this process of being uncontrolled I think, and this, you know, just this sort of losing control of, of the, of the price system is also, uh, keyed up and connected to losing control of the society as a whole, as a whole. You know, or you know, a riot and inflation become these things that are metaphorically linked together. Um, because they are both these, you know, uncontrolled processes led by liberals gone amok. Um, and you know, you know, the, the idea that a liberal, that a conservative is a liberal who's been mugged by reality.
Speaker 3:
71:17
Well, th th the mugged by reality is being mugged by both inflation and a black man that, that it's both at once. Um, and I think if you, if you read aesthetically, so, so the, the though media of the time, both, you know, film and literature elsewhere, um, okay. That, that uncontrolled process of, of inflation of stagflation is tied up with this idea of uncontrolled crime that's going crazy. And, you know, as an extension, uh, this uncontrollable underclass. I mean, when, when one of the most interesting things to me, and you know, this is says a lot more about me than it really does about the movie, although I do think it says something about the movie is in taxi driver, when, uh, he goes to see a politician talk, the politician is talking about stagflation and stagflation and it's activation becomes part of his warped mindset of the society out of control.
Speaker 3:
72:31
Um, and it just beats, it becomes another piece of evidence. I'll, you know, there's, you know, there's all, there's this, you know, these uncontrolled animals running a muck. And you know, there's also speculation that's doing it to, um, uh, stack Felicia that are in a real fundamental sense is this like, is this metaphorical, uh, mugging, um, black man wandering the streets of New York City. Uh, and, and so I think that, that, that racialization process happens at that all these levels and of course that, that these processes of, uh, of, of crime and social, uh, collapse are connected with unemployment and from another point of view, also the demand for full employment. Um, and the challenge to, uh, macro economic decision makers in their priorities, um, between, uh, between inflation and unemployment and not, uh, focusing on how to both complicate, uh, accomplish full employment, uh, and accomplish whatever we call all of the goals we have in terms of prices, in terms of oil, uh, et cetera.
Speaker 3:
73:40
I think it's just, it's just, it's, it's so rooted together. Um, and it's, it's, you know, it's the massive mass incarceration is because a p piece of, uh, of austerity, not just that it's about managing this, you know, now more and more under, under, uh, unemployed, underclass. But it's also the, the, the process of gaining, of regaining control over, um, things that have fallen in that way. The, the, the Volcker shock and the rise of mass mass incarceration, a specialty, you know, taking off, uh, in the 80s, uh, under Reagan, but also among the Democrats who give up, who give up any last vestiges of social democracy, um, that, that re control process is, is of a piece with each other. Uh, and thus, you know, unfortunately the two Tutu, I think really fundamentally to attacks the, uh, the mythical monster, uh, of race in America and of, uh, racialization. You also, uh, at a fundamental level have to attack the mythical monster of the population.
Speaker 6:
74:58
This is America live in, no, you don't get your flipping now what? I'm whipping now. This is America that come live in now. Only be tripping now. Yeah. This is America. I got this draft. Oh, I got it. Carry on. Yeah. Yeah. I'm gonna go into this. Yeah, yeah. This is go real low. Yeah. Yeah. I'm going to go get the bag. Yeah. Yeah. Or Am I get the bad [inaudible] we don't know yet. Oh, [inaudible]
Speaker 2:
75:55
yeah, absolutely. I really appreciate this discussion and it, it, um, it's interdisciplinarity, uh, is striking where we're, we're bringing together macro economics, micro economics, legal studies, governance, but also alongside questions of identity, racialization, um, and, and art and cultural production. Um, and, uh, you know, it, I think the project that we're interested in on money and the left and also in our individual, uh, scholarly pursuits is, you know, thinking critically about the history of culture and the history of aesthetics from this, from this viewpoint. And, and, and, and really making the argument that it can open up a questions both present and past in new ways. Uh, so I, I, uh, as you were talking, I was reminded of, um, the work of a, a historian named Michael O'Malley, who's written about the greenbacks, uh, that, uh, the Lincoln administration produced, uh, in order to eventually, uh, fund, uh, the north, um, in its, um, uh, military efforts against the south during the civil war. Uh, and it was during that moment when the relationship between pricing, inflation, money, its productivity and race was actually very, very vividly on display. Uh, when I just read, uh, some lines from, from O'Malley, he says, critics of Lincoln's decision claimed that it raised colored soldiers to a level of equality with whites. They argued that blacks lacked the basic qualities of discipline, courage and intelligence necessary for battle. They saw the soldiers as inflated, valueless. I'm curious if you have any response to that quotation.
Speaker 3:
78:08
Yeah, I think that is absolutely really fundamental and true and something I definitely see. Um, and my own work. Um, there's a, there's a, there's a paper that, you know, I, uh, I've carried with me and then it's been part of Saipan, you know, the teaching road teaching Rowan and I have done, um, by an author, Shane Shane White, uh, called freedom's first con about, uh, changing bank notes in Antebellum New York City. And one of the, one of the really interesting ways in which you think about this process of that there were, you know, all these different, um, paper monies, you know, issued by individual banks and from different regions is, um, it became, uh, a very personal, um, individual relational process, uh, to give these banknotes value in any given transaction. And that made it a fundamentally gendered and racialized process. Um, and talks about these, these very vivid incidents of, uh, of, uh, uh, black owned businesses, oyster bars or you know, black individuals, um, dealing with this system, uh, and you know, getting safe, threatened by a white patron over not accepting their crappy or fraudulent, um, bank note from a distant land.
Speaker 3:
79:37
Um, and, and, and the negotiation process on, um, at sale local store and not just being over the price of the goods, but also the price of there that where the exchange rate of their monies themselves. And in that sense, the green Mac not just was this, this, this vital source of freedom because it freed, um, it was part of the process in which, you know, slave persons went on general strike, but that also it had the ability to, um, to break or at least loosen the constraints of these very personal relational, uh, forms of exploitation that they experience through having, you know, what essentially a non fungible form of money that abstractness and abstraction was a source of freedom, um, on, in the monetary sphere. Um, also in, you know, in these, in these other spheres, you know, abstractions, freedom as well. Um, and I think that, that, that, that fundamental process and that fundamental, you know, struggle, ideological struggle carry carries itself, uh, carries itself forward.
Speaker 3:
80:52
And, uh, and, and the idea of, of, of, uh, of a constrained money being tied to the psychological characteristics that supposed to exist than white men that also existed in their sexual behavior. Um, that this, this, I, this, this dichotomy between the controlled, the constraints, the inhibited and, um, and, uh, and, and powerful a white guy. You know, because, um, compared to, especially black, but also other minorities, I would mention also Jewish, um, in that earlier period at least, um, groups who were uncontrolled were Venal, um, where, you know, liable to, to, you know, attack white women had random, um, and that would dirty them. Uh, the, the social relations through any entering these fungible processes, most notably, you know, quote unquote white slavery or relationship between black or Jewish or other, uh, other types of foreign men with, uh, with white and white women and, uh, sex work. That I think there really is a very, very deep and longstanding connection here. Um, which, uh, W W which has not been broken yet and which needs frontal assault by the left, uh, in order to reach a, uh, a place of liberation.
Speaker 4:
82:39
Certainly. So I think one of the ways I think we would all agree the most exciting or promising paths to conduct that frontal assault and to kind of confront this history you're talking about and to reclaim, um, and, and re recognize and represent the social construction and the power dynamic that and the creative dynamic of money behind it is the green new deal. Um, and you just recently participated in a, uh, an event at Harvard with some others where you were on a panel, uh, about managing inflation. Um, could you talk a little bit about the green new deal, your, your take on it, the inflation question, and then also a little bit if you'd like about growth and d growth and the question of the limits and, and constraints that we might face moving forward.
Speaker 3:
83:31
Uh, well first of all, I would just say I'm excited about the green new deal. I think the greener deal opens up this conversation, this rhetorical space, um, that hasn't existed widely, uh, in the society and that, so that must be the fun. I'll start that. The idea of resource creation, of, of transformation, of the, the qualitative changes that we need to have a sustainable injustice. It be out in the forefront of American politics is incredibly exciting. And the measure of how exciting is, is how crazed the, the right place is in talking about it. Um, because they, they have an innate sense of its power in a way that, you know, even most of the democratic establishment doesn't really seem to yet. Um, what I would say is as, as, as good as it as it is for it to be had this, you know, wide rhetorical, open space.
Speaker 3:
84:29
I, uh, I am interested in getting more to more specifics and getting more, more other stakeholders, uh, in this process committed to specifics, especially I'm committed to a specifics, uh, that the Greenlee deal is about spending and the edit that to the extent that we rely on other, other tools. Um, it's more about discouraging the Reese, you know, resource use that is contrary to the broad goals of, uh, the green new deal. Uh, and not so much doing, doing them through our traditional processes. Um, you know, there are scattered mentions of saying the reconstruction finance corporation, uh, around, uh, in discussing the social transformations we need. And I don't think that, uh, upbeat that president Hoover created vehicle is a good way of, uh, running our public policy through and I think connects that. I think, um, and, and this sort of interest, the sort of other background discussion of, you know, the Greeley d o m and t being America first policy, um, which I think, you know, even just the money on the left is, is, uh, evidence against that.
Speaker 3:
85:53
But more specifically, I'd like to see a lot more discussion of what we're going to do with the technologies and, uh, and knowledge created by, uh, the green new deal and a clean job guarantee. I want, you know, to get more specifics, you know, uh, our colleague Ron Gray is, uh, kind of, I think been a visionary in this respect of having a longstanding interest in copyleft and patent left, um, meaning, uh, having, you know, structuring whatever intellectual property event that come out of these public processes such that, uh, they, uh, they're given away at no monetary costs under the condition that whatever, any modification, modified forms of intellectual property that come out of come out of them are also given away at no monetary cost. And I think this, this, this gets a new, uh, urgency and importance, um, in the context of the green new deal where climate change is a global process and the single most positive thing that of the United States can do in the world in terms of contributing to the broader global processes.
Speaker 3:
87:14
Giving away de-carbonization technologies for, uh, for free and especially, you know, through structured do our on our quote unquote free trade, uh, structure as well, ensuring that, uh, other countries also have to, uh, let those technologies propagate for free. Um, and I, I'd also liked to see more discussion of how are we're going to change our, our budgetary processes. Um, and you know, our administrative agency, uh, system to manage these, to manage, uh, the ongoing transformations of the green new deal and, and, and make it more of a dialogue between different stakeholders in the green, new deal conversation rather than just sort of, um, uh, an an important and eh, uh, but singular voice coming from, uh, from MMT scholars. Um, but I'm optimistic, but I'm optimistic that in a lot of ways we're still early in that conversation and then we have a lot more to go.
Speaker 3:
88:28
But, uh, and I look forward to those changes and evolutions in the conversation. But, um, more than anything else, I'm just excited about, uh, resource creation being on the table. Um, in terms of questions of growth, um, obviously the green new deal brings up these questions. Uh, very fundamentally, I think some people, um, involved with the green DTO conversation may kind of believe in, uh, in a green growth vision. Um, and that of, you know, there are people who are taking or who are attacking that from my point of view, um, the question of growth, uh, is a little complicated by the lack of clarity of what people mean. I think for the laymen entering this space, um, growth is, this is literally just about throughput. It's about just literally, you know, the weight, the mass of output. And I think a lot of Lee's feet, a lot of the people who are, who, who are, who are attract to this conversation, who are and who are attracted to rhetoric about the insanity of infinite growth on a finite planet.
Speaker 3:
89:41
Imagine that, uh, that these fundamental constructions of, of economist, you know, the GDP and, uh, pricing indices on top of that are really about, you know, measuring some fundamental mass that if they're, if they're conceived of as contributing delivery standards, that they must also be concerting to, uh, environmental devastation by definition. And thus, you know, we must, we must attack growth to, um, get to see sustainability. Um, but from a Lee Heterodox MMT point of view, um, the fundamental, the idea that we have this fundamentally socially constructed process that's measured in dollars and has all these, um, imputations, which don't, don't have even a reference in any underlying transactions at all in GDP. And that we're smashing on top of that, um, uh, price index, um, choosing, uh, in, uh, an unclear base here in which to crowned our estimates, um, means that there is no underlying physical biophysical reference for GDP to be measuring.
Speaker 3:
91:06
And that without that GDP doesn't really tell us anything at all about what we need to do about, uh, living standards. And also doesn't tell us anything at all about what we need to do, uh, in terms of our economy besides, you know, maybe some financial considerations where, uh, negative nominal GDP growth is associated with financial crisis. Um, but that, that, um, that, that from the sense that this, that we're talking about these two social constructions on top of each other with, with fluctuating and complicated methodologies means that I'm unwilling to treat, you know, GDP as either a measure of quote unquote growth or quote unquote [inaudible] growth in that, in the GDP sense that makes me attracted to in a growth being agnostic towards growth. But that doesn't mean that we need, we don't need to reduce the throughput of our, of our economy, that we don't need to, you know, literally shrink the massive stuff that we produce and that we don't need to move towards a carer economy and an economy that's not just caring in the individual sense and the child fair and elderly care signs, but an economy that uses reusable tools, um, where you only, where you only, or primarily meat Libor to, uh, produce the, the services that, uh, that our society fundamentally needs.
Speaker 3:
92:40
That, that, that, that, that transformative process that we need doesn't necessarily have any relationship to any specific path of nominal GDP or real GDP. Um, and thus, you know, we should sort of value that, that shouldn't be the center of our decision making, but also that that doesn't necessarily also doesn't necessarily see anything about living standards at all. Um, that I think the, the processes, uh, that we, that we have now for economic, for [inaudible], you know, for ecological devastation, haven't, you know, brought, know happiness or good living to most people. And even people who live in suburbs where they have many rooms and there's a lot of resource consumption happening, um, don't necessarily have socially fulfilled lives or don't feel the pressure of, um, these bills and economic insecurity bearing down the on them such that I'm a, I am skeptical, uh, and unwilling to join narratives that, uh, paint our social questions as one of needing, you know, resource austerity, um, so that we can, uh, deal with climate change. And it's not necessarily that I don't think certain processes of, of suburban sprawl or sustainable, but it's that I don't think, I don't think that, uh, densifying and moving to a sustainable economic processes really is going to be some big burden in a, in a living standard sense on people. Although it might be, you know, psychologically disruptive, uh, in terms of, you know, having to rapidly change but qualitatively change how they live.
Speaker 3:
94:56
Well, Nathan, this has hugely illuminating, thanks so much for joining us. Thank you for having me. Pleasure to be on money on the left that contribute to my own listening and give me something back to listen to because I'm always looking for more podcasts, audio to listen to. And, uh, you know, Molly on the left is one of the best, brightest stars on that, uh, horizon in the last year.
Speaker 6:
96:55
[inaudible] [inaudible] [inaudible].
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