NetNet’s John Carney spars with Bob Wenzel at Economic Policy Journal over MMT and the Austrian view. He concludes,
At the level of theory, Austrians and MMTers have a lot in common. Tactically, an alliance makes sense. Intellectually, bringing together the descriptive view of modern monetary systems with Austrian views about the structure of production and limitations of economic planning (as well Rothbardian respect for individual property rights) should be a fruitful project.
So, as I said last time, let’s make it happen.
{ 11 comments }
Doug-
Any attention drawn to the Austrian School is a positive; however, Wenzel has responded to Carney’s post here: http://www.economicpolicyjournal.com/2011/12/rejoinder-to-john-carney-on-mmt-and.html
And in a second post here:
http://www.economicpolicyjournal.com/2011/12/mmter-on-carneys-view-of-austrian-mmt.html
I do think it would be highly beneficial for an online debate between an MMTer and an Austrian- it would help the Austrian school grab some of the online momentum MMT has right now. I thought I remembered Murphy mentioning this a month or two ago.
In liberty-
Michael
“Austrians and MMTers have a lot in common.”
How? I’m not even hardcore Austrian and the way I see it, the MMT’ers seem like crazed inflationists.
Isn’t MMT highly positivist relying on some tautological equations?
Yes. The MMT position seems to think accounting tautologies imply causality.
I am in there with J Cortez. The political alliance between the MMT crowd and the Austrians is unholy as the scientific principals basing these concepts are completely different.
The most important teaching of Austrian Economics is that of the three ways for humans to interact: 1. Gifts, 2. Mutually Beneficial Exchange and 3. Theft. Austrians believe that an economy that has more of type 3 interactions will experience two separate phenomena:
1. Theft through direct taxation will cause a long term loss of growth and wealth directly from Socialist Calculation Problems.
2. Theft through creation of fiduciary media will create Business Cycles.
In either case the end result is the destruction of society from the collapse of wealth creation. My only addition to this is that the ultimate phase of this pain is the collapse of society into Totalitarian Fascism. And the only way out of the eventual collapse is to stop the theft by reducing aggression and increasing the respect for private property rights.
I have searched several web sites dealing with MMT and have not found a single instance of the word “property” much less the term “private property”. Even Wikipedia does not mention property nor does it mention the word theft. Any adherence to an economic theory that does not base itself in non-aggression and private property rights will eventually lead to collapse as the people managing the economy will not be able to escape Socialist Calculation Problems and/or Business Cycles.
Well as an economic theory it does not need to show bias for non-aggression. One wonders how analytically useful it is if it does not, however. Perhaps next to zero.
As someone who is neither MMT nor Austrian, but knows a bit about both, may I say you two have nothing in common. You are about as far apart as I could imagine, and still be on the same planet. Only Marxists would be more different from Austrians (though MMTers are definitely not Marxist). MMTers are more Keynesian than Keynes, from the Austrian POV. Just for starters: contrast Menger and Knapp on money. Fritz Machlup panned Knapp’s book.
I agree with Nick Rowe. The only thing MMT gets right is the actual operational mechanism by which the Federal Reserve manipulates the supply of money. The theoretical foundations of MMT and Austrian economics couldn’t be farther from each other.
The linked CNBC article is pretty thin gruel.
It makes light of Austrian insistence on defined terms (is capitalism so hard to pin down?) and describes the positivism of MMT as simply attempts to describe what exists. I’m relieved they see a potential danger of inflation, but that hardly qualifies them as philosophical allies.
Here are a few articles worth reading regarding Austrians and MMT’ers (A.K.A. Post Keynesians/Chartalists/Minskyites):
http://mises.org/journals/qjae/pdf/qjae2_4_5.pdf
http://mises.org/daily/2787
Austrian Economics – Capital Theory – Dynamic Analysis + Faith in Politicians = MMT
In other words, MMT, like other forms of Keynesianism, represents a narrow specific, unrealistic (due to the unfortunate addition to the formula above) case within the more comprehensive general theoretical framework of Austrian Economics. It is also the latest euphemism for Greenbackism. There’s nothing “modern” about it.
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