The Ministry for the Future

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Modern Monetary Theory was in some ways a re-introduction of Keynesian economics into the climate crisis. Its foundational axiom was that the economy works for humans, not humans for the economy; this implied that full employment should be the policy goal of the governments that made and enforced the economic laws. So a job guarantee (JG) was central to MMT’s ideas of good governance. Anyone who wanted a job could get one from the government, “the employer of last resort,” and all these public workers were to be paid a living wage, which would have the effect of raising the private wage floor also to that level, in order to remain competitive for workers.

MMT also reiterated Keynes’s point that governments did not experience debt like individuals did, because governments made money in the first place, and could create new money without automatically causing inflation; the quantitative easing (QE) after the 2008 crash demonstrated this price stability despite major infusions of new money. So MMT recommended robust stimulus spending in the form of carbon quantitative easing (CQE) as well as a job guarantee. Both were to be directed to the effort to decarbonize civilization and to get in a sustainable balance with the biosphere, humanity’s one and only support system.

Critics of MMT, who sometimes called it “Magic Money Tree,” pointed out that Keynes had advocated deficit spending during economic contractions, but also the reverse in times of expansion, governments gathering in enough in taxes to fund things through the next crisis. To ignore this counter-cyclical necessity and regard money as infinitely expandable was a mistake, these critics said, because there was a real relationship between price and value, no matter how distorted that got by various historical forces. Also, if governments offered full employment then they were in effect setting the wage floor, and if that caused inflation and governments then stemmed that inflation with price controls, then government would be in effect setting both wages and prices, thus taking complete control of the economy, and at that point they might as well dispense with money entirely and go to the Red Plenty solution of computer-assisted production of everything needed; in other words, to communism. Why not just admit that and go there?

There were some who responded to that question with: yes, why not?

The MMT advocates replied that they hoped to retain what was empirically useful in conventional economics as a social science, for purposes of policy analysis, while re-orienting economics’ ultimate goals to human and biosphere welfare, thereby changing its policy perspectives and monetary theories, leading to recommendations for actions that would help get civilization through the narrowing gate of their crisis. Economics was a tool for optimizing actions to reach goals; the goals could be adjusted, and should be. So the MMT crowd admitted they were proposing a move to a new political economy, rather than merely adjusting capitalism. It was not just Keynes Plus, nor just the ad hoc theory or rather praxis that had gotten them through the 2020 crash, nor just the theory or praxis that had bolstered and ultimately paid for the Green New Deal, that early shot in the War for the Earth. It was more than that: it was trying to think through how to do the needful in the biosphere’s time of crisis, while orthodox economics failed to rise to the occasion, and stayed focused in its old analysis of capitalism, as if capitalism were the only possible political economy, thus freezing economics as a discipline like a deer in the headlights of an onrushing car.

Enough governments were convinced by MMT to try it. That it influenced so much policy through the late thirties was regarded as a sign either of progress or of desperate fantasy solutions. Similarly split responses had of course greeted Keynesian policies exactly a century before, so for some observers the interesting thing became to watch the next steps, and see whether this time around, having reiterated in this realm the twentieth century’s thirties, they would manage to avoid reiterating its forties.