The Philosophy of Money with Graham Hubbs

Graham Hubbs speaks with Scott Ferguson and Andrés Bernal about the relationship between Modern Monetary Theory and philosophy. Associate Professor & Chair of the Department of Politics & Philosophy at the University of Idaho, Hubbs convened a conference panel on Modern Monetary Theory at the annual meeting of the American Philosophical Association in January 2021. He invited Editorial Collective members Bernal and Ferguson to join him on the panel, where they shared and discussed his original paper, titled “The Promises & Challenges of Modern Monetary Theory.” In this episode, we present the full audio of Professor Hubbs’ presentation, as well as Scott Ferguson’s response and reflections. A very engaged question and answer period follows, rounding out this special episode.

Thank you to the American Philosophical Association for sharing this audio with us, and to the Philosophy, Politics, & Economics Society for creating space for this important panel at the meeting.

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The following was transcribed by Richard Farrell and has been lightly edited for clarity.

Andrés Bernal: I’m an adjunct professor at CUNY, Queens College in the Department of Urban Studies, and a PhD student at the New School in Public Policy. I have been a policy and political advisor for the last two years with several campaigns, which brings us to the topic of today’s panel. I had no idea when I started to join policy campaigns that one tricky little question was going to have such a huge impact on the political debates, the possibilities, and the limits, and that question has been: how are you going to pay for it? In the winter of 2017, I was working on an outsider campaign for a young woman from the Bronx named Alexandria Ocasio-Cortez, and she asked me to find innovative and interesting perspectives on how to advance her progressive policy agenda. That was when I came across the world of Modern Monetary Theory. Today, it seems like MMT is everywhere in the discourse. Some say that it’s a paradigm changing lens. Some say it’s alchemy. And that’s what we’re going to discuss today. What we do know is that policies such as the Green New Deal, the Federal Job Guarantee, a Housing For All plan, a Green New Deal for Housing, and so many other ambitious policies are now being debated within the lens of Modern Monetary Theory. And increasingly, the group of elected officials known as “The Squad” are turning to this lens and perspective.

So we have a very, very interesting and fantastic panel today. We have Professor Graham Hubbs, who’s an associate professor and the chair of the Department of Politics and Philosophy at the University of Idaho. Professor Hubbs uses ontological methods to study topics that lie at the intersection of philosophy, politics, and economics. He’s given a number of presentations on the social ontology of money, and works on a neo-Aristotelian framework, both to analyze money’s ontology and to systematize the various positions and debates about money’s ontologies over centuries. In addition, we also have Professor Scott Ferguson, who is an associate professor of Film and Media Studies in the Department of Humanities and Cultural Studies at the University of South Florida. He is co-director of the Humanities Division of the Modern Money Network. His research includes the history of aesthetics, digital animation, and visual effects in action-adventure blockbusters and video games, as well as bringing the political economic insights of Modern Monetary Theory into generative dialogues with humanities scholarship, continental philosophy, and media theory. So without further ado, we can begin with Professor Hubbs.

Graham Hubbs: Thank you, Andrés. I appreciate you being here to lead this. Scott, I’m glad that you’re joining us on this panel. A special thanks to the Philosophy, Politics, and Economics Society for allowing us to have this session, and to Geoff Sayre-McCord for his leadership in the society creating an open space for dialogues on all manners of PPE topics, including MMT. So I’m going to share my screen. I have a PowerPoint presentation to run. Is everybody seeing that? Can I get a nod from Andrés or Scott? Great, okay. I call my presentation, “The Promises and Challenges of Modern Monetary Theory.” I’m going to provide an overview sketch of what I take to be the basics of MMT, and in particular, its ontological underpinnings, because that seems like the kind of topic that’s appropriate for an APA meeting. In particular, the ontology of money will be our focus here. And then I’m going to raise some challenges at the end of the presentation, which I’ll then hand off to Scott to address. So let’s get into it by saying what is Modern Monetary Theory?

For anyone who is unfamiliar with it, the book that I think will be the go-to for the years to come is Stephanie Kelton’s The Deficit Myth, which came out last summer. It presents, in readable form for the unfamiliar person, the basics of Modern Monetary Theory. Modern Monetary Theorists present their work as a descriptive project, which is to explain how money is created in modern states and what the creation of money entails for macroeconomics. Randy Wray jokingly says that “modern” means the way that money has been created for the last 4000 years, and that what is being discovered at the ontological level about money creation is true for as long as humans have been making money to organize the activities of distributing the goods that they produce. But the real focus on “modern,” here, is in a more familiar sense, which is focusing on states that issue sovereign currencies. So a sovereign currency is, roughly, a currency that is not pegged either to the currency of another state, or to a precious metal commodity. So when states went off of the gold standard over the course of the 20th century, several of them became sovereign with respect to their currencies by producing fiat currencies whose value floated on the open market. The United States and the dollar is the example that will concern us here when we’re talking about a state with a sovereign currency.

How does Modern Monetary Theory relate to progressive proposals like the Green New Deal that Andrés spoke about at the beginning? Well, a Green New Deal would involve a massive federal jobs program. And if MMT is right, funding it is not a problem. We can just “print the money.” Of course, this doesn’t actually involve printers churning out dollar bills. But the metaphor suffices for getting the idea that the state can just create it seemingly ex nihilo. And if MMT is right, the effects of this on the deficit are not necessarily a worry. That’s hence the title of Kelton’s book, The Deficit Myth. How have people reacted to MMT? Well, the Committee for a Responsible Federal Budget, which is chaired by Mitch Daniels, the president of Purdue and who used to be the Governor of Indiana, has not reacted, let’s say, approvingly of the introduction of MMT into public discourse in the last couple years.

The quote here: “A fringe economic philosophy known as Modern Monetary Theory (MMT) has recently gained traction and is being used to justify massive new borrowing. While MMT is a complicated theory and is in many ways a moving target, at its core, MMT argues that there is little or no cost to running a large budget deficit unless the economy is experiencing high inflation. Many iterations of that theory also suggest a new paradigm whereby the federal government essentially prints money to fund its borrowing, and politicians–rather than the Federal Reserve–are charged with preventing runaway inflation. Fortunately, mainstream economists on both the left and the right have pushed back against this misguided theory.” And the committee recommends these as the top five readings to get clear on what’s wrong with MMT. You’ll see names there on the right, including Michael Strain and James Pethokoukis. These are folks at the AEI. Then, there is Larry Summers, Kenneth Rogoff, and of course, Paul Krugman. Summers and Krugman definitely further to the left.

But wait, there’s more. And reading some of these titles will give you the sense of how people have reacted to MMT. It’s a threat, it’s upside down, it’s not new, and it’s not helpful. The emperor has no clothes. So you get this sense that MMT is simultaneously very spooky, very mystical, very magical and very, very dangerous. Now, I return to the original quote here from the committee’s report. And I want to highlight this bit, because this will be the focus of our talk: “Many iterations of the theory suggest a new paradigm whereby the federal government essentially prints new money to fund its borrowing.” They’re talking about this guy here. Modern Monetary Theory argues that this is not new, but rather simply a description of how money is created, and that what we want to do is properly understand money’s creation, and then harness that power in an effort to do things like improve the conditions of society by ending unemployment, and saving the planet through something like a Green New Deal. Opponents argue that this is, again, simultaneously crazy and dangerous. Behind all of these are philosophical assumptions and views on the ontology of money.

So for the next 10-15 minutes, I’m going to go into that aspect of the ontological underpinnings of MMT to focus our discussion. So the basic ontological question that one confronts when thinking about money is: what is money? That’s arguably the basic ontological question that one confronts when thinking about any kind of thing–what is it? This is a $100 bill. Well, it’s a picture of a $100 bill. And if we were to probe the physical features of this $100 bill in an attempt to find its moneyness, we would come up short. There’s nothing about its color, its shape, the images printed on it, anything like that, that makes this a bit of money. And in fact, as we move further and further away from using cash, we arrive at a point where money has almost no tangible existence. It can’t be completely gone. There have to be electrons in computers somewhere keeping track of the debits and credits in your bank account. But in practical terms, money becomes invisible and intangible to us as we use our phones and credit cards to scan and pay for things. So if there’s nothing in the materiality of money that confers its moneyness, on to that thing, where does it get it?

I think that the right way to think through this, and as Andrés said, I approach this in a neo-Aristotelian way, is to ask about the kinds of things that Aristotle describes as the four causes of artifacts. So we might ask about its telos, or its final cause. What is the purpose or function of money? If we can answer that question, then we will get some clarity on what its ontology is. What properties does money have that allow for it to perform these functions? And how does money get these properties? The second question, I argue, can be likened to the kind of thing that Aristotle is interested in and talking about: formal causality. And the third question, straightforwardly, is a matter of efficient causality. So if we can answer those kinds of questions, we can get some clarity overall on the ontology of money. So we might start by giving a functionalist account of money. I think that this is a nice place to start because the two predominant views on money’s nature. Schumpeter said, “The only two views worthy of the name, ‘a theory of money,’ are in rough agreement about what money’s functions are.”

So the first of these functions is as a means of payment. And let me pause before I go any further and say, I’m presenting this as three textbook functions. If you read 19th century economics textbooks, you’ll see these listed as four functions. I’m going to combine, in line with what many textbooks today do, two of the functions under one heading. And the two functions that I’m going to combine under one heading will be the means of payment function and the medium of exchange function, both of which involve using money to pay for stuff or to settle debts. So the means of payment function makes it easier, or perhaps even possible, to pay for things, or again, we can add to settle debts. An example of this idea is the use of coins and banknotes as a medium of market exchange. The second textbook function of money is as a unit of account or a measure of value. This is the use to which we put money when we specify the payment for the amounts of goods or obligations, for example, prices, fees, fines, or taxes. 

Now, it’s worth noting here, and I don’t think that this is often presented as cautiously as it should be, this function is provided by the concept of money and not concrete instances of money. If you’re trying to sell your house to me and want to sell it for half a million dollars, and I want to determine whether or not it’s worth a half a million dollars, we don’t get out a giant value scale and stick your house on one side of it and then dump a half a million dollars of notes or coins or something on the other side and see if that value balances out. We assess the value simply using the concept of money, attach a price to it, and negotiate it without having any money in hand. When we settle on the amount that it’s worth, all these things take place, we might say, at a conceptual level and not at a concrete level. So the pricing function of money does not depend on, in any given instance, the use of any material instance of money. Rather, it’s the concept of money that allows us to set prices.

Finally, the third function of money that we’ll put on the list is as a store of value. The function is there in the name. It’s to store value. Some theorists would leave this off of the list of functions. The economist John Smithin says that money is a notoriously bad store of value, and so it ought not be included on the list of functions. But I think that it’s a useful function to include and to maintain in our investigation because it allows us to ask the question: what is this primary sort of value that money stores? Simply saying that money stores value begs the question, if we’re trying to understand its ontology, we need to know what monetary value is in the first place if we’re going to make any sense of what it is that it stores. And that gives us an entry into the two different theories of money, that again, Schumpeter says are the only two deserving of the name.

So the first, the orthodox account, says that the value of money is the value that it has in market exchange. So here’s a market. There’s people presumably using money. It looks like they’re buying cheese and sausages and so forth. Ludwig von Mises and Friedrich Hayek called theories of market exchange, “catallactic.” So following them, I use the word catallactic as the descriptor for this theory of money and call it the catallactic approach, or the catallactic theory of money. You’ll commonly see it labeled the commodity theory of money. But I think that that’s misleading, because the theory is not committed to the idea that money itself is a commodity. Rather, it’s committed to the idea that its value comes out in the pricing of commodities, and then the use to purchase and sell commodities. So as to flag that money itself need not be a commodity, I call this the catallactic theory, or the catallactic approach. So here are the basics. In barter, goods have a value that differs from what they are used for. Call the former the exchange value and the latter use value. For anyone who’s ever read Adam Smith or Karl Marx, these terms will be eminently familiar and so will the following story.

If I go to the market with something that no one wants, no matter what the use value of the thing I have is, it will have no exchange value within that market, and I won’t be able to use that thing for trade. If only I had something that always had exchange value, because people always wanted it, I would never face this problem of not being able to buy the stuff that I want in the market. And if everyone had this magic stuff, then everyone would be able to buy the things in the market that they want. Marx gives us a really nice phrase for what happens at this point. In the creation of the money kind, he says that in gold–it needn’t be gold–but historically, he thinks “gold crystallizes out of the process of exchange.” And when gold is used to price all other commodities, it has then taken on the money form. Let’s take this account, the catallactic account of money and run it back against the three questions that I introduced as the sub-questions for studying the ontology of money. So what according to the catallactic account is the purpose or function of money? It is to ameliorate the inconveniences of market exchange. It’s a pain in the butt to buy stuff when you don’t have money in a market. If money doesn’t exist in the market, once you’ve got a market with money, it’s a lot easier to buy things.

What properties does money have that allow it to perform this function? Well, the basic property is the general willingness of market participants to accept it for payment. So the ontology here is social more than it is material. People need to be generally willing to accept gold if gold is the thing that is being used as our money stuff in the market in order to buy things. However, on most of these accounts, you’ll see an enumeration of some of the physical properties that precious metal has that made it especially good in the good old days of coin to serve the various functions of money that we outlined at the beginning. Schumpeter derisively finds these listed in Aristotle and says that they’re repeated in some of the tritest passages of 19th century economics textbooks. We won’t concern ourselves with this aspect of thinking about money’s materiality here. The important part for how money gets its use, according to the catallactic theory, is that people are willing to accept it for payment. And how does money get these properties? Well, the key parts of the story for the catallactic theory is that it emerges out of market activity. First, there are markets. It’s a pain in the butt to trade without money. Money crystallizes out, using Marx’s language.

The alternative view, the heterodox account of the ontology of money, the second of Schumpeter’s two accounts deserving of the name, claims the following: the value of money is its value to claim or to discharge debt. In the state theory of money, Georg Friedrich Knapp labeled this view, chartalism, or cartalism, after the Latin root, charta or carta, meaning token or ticket. Now, chartalism does not require that the tokens or tickets or debts that are emitted and need to be repaid be determined, set out, and set by the state. But as you can tell from the title of Knapp’s book, The State Theory of Money, he’s most interested in debts that get determined, announced, and then collected by the state. Those are the kinds of debts, and so the kind of chartalism, that’s going to be most interesting to Modern Monetary Theory. It will be the chartalist theory that will concern us here. Here are the basics of this theory. When large-scale civilization came into existence, namely Mesopotamia, there were many modes of collective provisioning. Bartering was not particularly significant. Other forms of collective provisioning included lending, neighborly gifting, and central management at the temple. As far as the latter is concerned, this required complex accounting and bookkeeping. But that’s not the only thing that the temple bureaucrats and temple priests did. They also needed to develop a system for assessing fines and punishments.

So for example, if I accidentally kill your cow, and I don’t have a cow to give you in return, and we’re going to keep peace in our state, I need to give you something in return for the cow that I have killed. How do we make the incommensurable commensurable? We need to come up with something that I can give you for repayment of your cow. This is a legal matter. This is a matter of justice, and retributive justice in a sense, repaying you for the wrong that I have done you. How do we determine how that’s going to go? That’s something that the central authorities are going to have to decide as well. The claim then is that these pressures lead to the need for a universal unit of account making all things incommensurable commensurable. And that once this universal unit of account was defined, the unit could then be used for private, that is, market transactions. Sorry, the last bullet point is important here. According to the state theory version of chartalism, both the state and money are prior to the existence of markets with prices. Money does not emerge out of market activity, but rather enables market activity in the first place.

So on the heterodox account, what is the purpose or function of money? Primarily, it is to denominate debts with the concept of money and then represent specific obligations with physical manifestations of the money. The concept is prior to the physical manifestations on this account. So this is one way in which the chartalist theory inverts the story that one finds in the orthodox account. And the state theory says specifically that the kinds of debts that we’re interested in here are state denominated debts. So that money exists in order to aid the state in managing economic and legal activity. What properties does money have that allow it to perform this function?

According to the state theory, it’s the power of the state to demand taxes, fees, and fine payments in its own currency. It’s this legal authority that is the source from which monetary value arises. And how does money get these properties? Well, by however the state obtains and enforces the power of the law, specifically, the power to tax, charge fees, and to fine. So according to this theory, the ontological account that we want to give of money is actually something that follows from our more general account that we give of the power and authority of the state to coercively get its members to do anything, or maybe non-coercively get its members to do anything. But the power that money has is ultimately an expression of the power of the state. So we do our political philosophy first and understand the nature of government and its power, and that will tell us where the power of money comes from, and not the other way around. So let’s compare these two accounts on one specific phenomenon that is particularly relevant to MMT, and that is on the nature of taxes.

So the orthodox view of taxes proceeds as follows. First, when we’re thinking about taxes, we think about what money is for in the first place. And money, in the first place, is used to pay for stuff in markets. The government has to pay for stuff just like the rest of us, so the government has to get money just like the rest of us. Now, one of the basic ways that the government goes about getting the money it needs to pay for stuff, just like the rest of us, is taxes. So the function of taxes is to collect the money that the government needs in order to finance the activities that it wants to perform. I’ll go ahead and flag here that this story, I think, is the story that you find in Locke’s “Second Treatise of Government.” If you watch the way that he proceeds in explaining the creation of property through his labor theory at the beginning of chapter five, money comes out at the end of chapter five for the reasons that Smith and Marx flag. It makes commerce easier than it would be without it. The creation of property and the creation of money come before the creation of government. Locke famously argues that the whole point of government is for us to protect our property rights better than we can in the state of nature. So if property and money are prior to the existence of government, then governments are going to need to get money in order to get the property that they need to do the stuff that they want to do just like the rest of us. So the kind of account that I’ve given right here, I think, is one that comes naturally out of a pretty straightforward reading of Locke’s second treatise.

MMT tells a different story. As a matter of ontology, no government has to get money like the rest of us as a matter of law. So let me backup for a second there. It is a choice according to MMT that a government makes as to whether or not it will provision itself in ways similar to the way that we provision ourselves when we go out and work for money or steal for money or do whatever we end up doing in order to get our money. The government can choose to hamstring itself this way through the laws that it creates, but it’s up to itself to rewrite those laws, and if it wants give itself a sovereign currency. So as a matter of law, a government that does give itself a sovereign currency, that government does not in fact have to go out and get money like the rest of us. A government with a sovereign currency does not use taxes for financial purposes in order to provision itself to perform the tasks that it wants to perform. It uses taxes to destroy money in the private sector, rather than to collect it for use. When this sets in, and I think that this is the part that in my experience in talking with people about post-Keynesian theories in general, of which Modern Monetary Theory is a species, or Modern Monetary Theory specifically, where people really kind of step back and say, “Whoa.” Because this is, I believe, a “Copernican Turn.”

For states with a sovereign currency, the function of taxes is not, and moreover, cannot be, as an ontological matter, to finance its activities. Whatever taxes are for, it’s something else. This new paradigm on taxes is in fact not new at all. Beardsley Ruml, the chair of the New York Fed in the middle of the 1950s, as the world was beginning to go off the gold standard, realized this and said that, “Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or for some other commodity.” Ruml then goes on to talk about the sorts of things that you use taxes for, but none of those functions are the function that the orthodox theory would have us believe, which is to finance government activities. And it turns out that this was recognized back in colonial America as well. Farley Grubb has written extensively on the ways in which Virginia’s paper money in the middle of the 18th century was burned when it was collected for taxes. Many other colonies had this policy and it wasn’t always followed. But nevertheless, they realized that their paper money, after it had served its function of getting the kind of economic activity that the state governors wanted, or prior to states, that the colonial governors wanted done, it might as well be burned, it doesn’t have any sort of intrinsic value. I think the argumentative upshot of these examples is that what chartalism says is true as a matter of theory is in fact borne out by history itself.

Okay, so that is what I want to say to orient us on the chartalist theory of money that underpins MMT, or the social ontological account of money that rests at the bottom of Modern Monetary Theory. Now, I want to go through some complaints against MMT, which will set the stage for Scott’s presentation. So can we do it? Here’s the first complaint. Why think that history is relevant? You’ll note that the account of money that I gave on behalf of the chartalists, and in fact, the account of money that I gave on behalf of the orthodox catallactic theory, was presented as a history. First, there was this problem under certain social settings. Then, this technology money arose to solve this problem, and forevermore we were better because we had created this technology. Thomas Palley, a persistent critic of MMT, has said that the appeal to the history of money that MMT makes, and one could level discharge against other versions of post-Keynesianism that rest on chartalism, say that the history of money is a red herring and is essentially rhetorical. All of this fussing about money’s history and what money really is, is of no relevance to the kinds of contemporary policy debates that Andrés was talking about at the beginning.

So one complaint is that MMTers, and again, I think post-Keynesians more generally, make a big deal about the history of money, but it simply doesn’t matter one way or the other. Second complaint, and if this is the first time you’ve heard about Modern Monetary Theory, I imagine this has crept into your mind at some point along the way when you saw the poor guy just cranking out the money machines, veins popping out of his head, is that won’t this cause runaway inflation? A simplistic version of this worry is simply: won’t creating all this new currency cause runaway inflation? I call this simplistic because the historical record shows that under some conditions there’s a correlation between an uptick of currency creation and inflation. And in other conditions, there’s not. On the orthodox theory itself, the creation of a whole bunch of new currency, money is supposed to be an invisible veil to the real economy. So prices should eventually settle out and match the amount of money in the economy. Thinking that simply creating a whole bunch more money is going to lead to runaway inflation presupposes that the value of money is determined by its scarcity. And that simply begs the question against the chartalist view.

So there’s a lot of things that one can say immediately pointing at economic history and thinking just a little bit about the ontological presuppositions about money to ward off this charge. But there are real concerns that one ought to have about the possibility of inflation under MMT specific policies. And these complaints come even from within post-Keynesian circles. So there’s an internecine debate. Smithin argues, for example, that raising the overall tax rate is going to be necessarily inflationary. So if part of the MMT solution for controlling inflation through the creation of quite a bit of currency is to use taxes to vacuum money back out of the economy if it’s getting too hot, Smithin argues it can be easily demonstrated that that’s going to lead to inflationary pressures on themselves. I bring this up to note that there are complaints about the inflationary consequences of MMT, both inside and outside of post-Keynesianism. A third complaint against MMT is that it’s too socialist. So when you hear about something like a jobs guarantee, that the government is going to guarantee a job to every person who wants one in a given state, if you don’t like the sound of governments employing people for any number of reasons, this is clearly going to strike you as too socialist of a proposal.

That complaint is straightforward. I’m not going to go into it in any detail. It has struck people on the left that MMT, on the other hand, is too capitalist. Modern Monetary Theory, it’s complained, works only for the most powerful, developed capitalist states. It’s hard to see, some people complain, how MMT could work for developing nations, and so it favors the rich. MMT also does leave an awful lot of economic activity up to the markets. And in fact, it sets up the job guarantee in such a way to encourage entrepreneurs to find more innovative ways to use the labor force that exists in a given state. So if that all sounds too capitalistic for your taste, then you might have a problem with MMT. And finally, the last complaint that I want to raise, and this is the one that I would invite us to be most concerned about here, since this is a philosophy conference as opposed, to say, an economics conference, is that the central priority claim of MMT is simply false. The central priority claim that I have in mind is the idea that governments, government activity, and governmental authority is prior to markets.

So the Lockean view that I presented earlier, of markets and property as being prior to governments and that the function of government is to protect property rights, the complaint that I’m imagining here takes a Lockean or a neo-Lockean position and simply says that’s wrong. That’s just backwards. Look, there’s international trade out there and international trade isn’t governed by any external authority. It takes place using money. So if international trade is possible, and not only possible, but makes use of money, why think that governments need to exist in order for money to exist. You might point to the historical record and say that precious metal itself, before the advent of coin, was used in interstate trade. Merchants got by with precious metal prior to the existence of coins in order to trade between states. That too makes it look like one could point at the historical record and say that market activities have been outside of, and so were, analytically, logically, or definitionally, depending on how you want to characterize it, prior to the activity and authority of states.

There are black markets. They go on, they make use of money outside of the authority of the state. Doesn’t that count as a counterexample to the idea that states are necessary and the creation of state money is necessary for market activity to take place? What about markets involving private cryptocurrencies? The markets that use Bitcoin that have specifically been designed to avoid the, from their point of view, intrusive reach of the state. Those markets go on. Bitcoin is used as a unit of account to price goods and to pay for things. Doesn’t that demonstrate that money can exist outside of the authority of the state and be used in accordance with all the functions that were listed earlier. What about prison camp markets in World War Two? The famous 1945 paper by R.A. Radford shows how cigarettes were used as a unit of account, as a medium of exchange, and that emerged out of a non-governmental setting. Doesn’t that show that markets can come up, and a money-like commodity can come into existence that doesn’t presuppose the authority of government? When we take all these examples into consideration, and the ways that they seem to provide for markets using money or something money like outside of the authority of a central government, why should we believe in MMT? Scott, I’ll hand it to you.

Scott Ferguson: Great, thanks so much. That was a really helpful presentation. Andrés, thank you for chairing this panel, and Graham, for putting this together and inviting us. And thanks to everybody for showing up on this last day of the conference. So I think what I’d like to do is offer a few quick responses to those critical claims that Graham concluded with, that are much more, I would say, in the wheelhouse of kind of your basic MMT 101 discourse, and then pivot from the last, “This is false, markets are first,” question to take on some broader conceptual problems that are coming out of my own work.

So first of all, the charge that history is irrelevant I find shocking. History, I would argue, is always a contested ground that’s always caught up in contemporary epistemological, ontological, and political economic debates. And the way that we approach history, the way we imagine history, and the assumptions we bring to history, can never be wished away. You look at the major canonical contributors to political economy and economics and many of them have written histories. I mean, Milton and Rose Friedman wrote a gigantic monetary history, and it is a way of shoring up their own politics, their own ontology, and their own epistemology. So I would say that it feels nonsensical, to me, this claim that somehow history isn’t relevant. Everyone uses history to make sense of the present and future politics and policy. The second claim about hyperinflation, first of all, an MMT economist will tell you that the mainstream, or the neoclassical interpretation of inflation, and specifically hyperinflation, has the causality precisely backwards. Hyperinflation is a function of political catastrophe and the collapse of a productive infrastructure. A government can create all kinds of credit and try to circulate it in an economy. But if it does so in the face of, say, decades and decades and decades of colonial rule and exploitation and export led production, or after a major world war in which your country happens to be paying massive reparations payments and the majority of your productive infrastructure has been destroyed or confiscated by your opponents, you’re likely going to see hyperinflation. 

So the MMT point of view rejects the so-called quantity theory of money, which imagines this kind of equilibrium that commodities, or goods and services, come first in a marketplace. And that money is this kind of neutral, passive reflection, or veil, that needs to be somehow in tune with those ontologically primary goods and services. MMT would argue that, no, credit actually comes first–money as credit–and you need money as credit to generate these goods and services in the first place. And for that, you need massive macro- and mesoscale governance projects, infrastructures, and institutions. Also, there’s a kind of mythos around the MMT community about how we argue inflation should be controlled. This simplistic version is, well, we’ll just use taxes, and congress will be in charge of, essentially, extinguishing debts, or pulling money out of the economy, in order to check runaway inflation. This is a gross simplification of what the MMT community has worked on and has argued. We argue for thoroughgoing macroprudential regulation, which includes the private sector, and runaway inflation in the financial sector, on Wall Street and in all kinds of capitalist enterprises that are producing far more speculative bubbles than any measly congressional appropriation might be doing.

So our argument is to have certain kinds of automatic stabilizers and certain legal and institutional structures that are keeping inflation in check. Basically, what that means is making sure that public and private investment is going toward productive, socially and ecologically valuable enterprises, rather than speculative leveraging, essentially. To the charge that MMT is too socialist, I would say that some MMTers are socialist, and I would include myself in there, but I think that the MMT project really does, as Graham says, bill itself as a description. We say in the MMT community, there’s no such thing as “doing MMT.” It’s a way of understanding the way that money works, the way that political economy works, and the way the world works. It’s not “doing socialism” or “not doing socialism.” If we’re going to talk about doing MMT, we would just simply say, “Well, everyone does MMT all the time. It’s just they don’t think that they’re doing that.”

The charge that MMT is too capitalist, especially from the left, to me MMT is not capitalist. And certainly, as a tool, as a framework, as a foundation, as a set of assumptions for understanding the world, sure, you can mobilize this framework in so-called capitalistic ways, for private enterprise, for private profit, in exclusionary ways that exclude women and brown people from major centers of participation and power. You can do that. But you can do that according to the status quo as well–the neoclassical understanding of money as well. Then, there’s this notion from some in the progressive and leftist critiques of MMT, that geopolitically, MMT is too capitalistic in the sense that it is too America-first and neo-imperialist, and that it requires the United States to be the world reserve currency. To this, we would say, no, this is not the case at all. We would say that it reframes postcolonial political economy and geopolitics according to another framework that is more capacious and more insightful. We don’t say MMT solves colonialism, postcolonialism, or neocolonialism. We don’t say that MMT solves everything. We don’t say that domestically and we don’t say that internationally. We say it opens up the problems–and sometimes they’re really hard and very, very intractable problems–but it opens up the problems in new ways that allow for different ways of engaging, different ways of politicizing, different ways of proposing policy solutions, and different ways of mobilizing political movements.

Now, the last claim that it’s simply false, that markets must be ontologically prior because they exist outside of nation-states, maybe I’ll say a little bit about this before I then come back to some work that is more particular to me. What I would say is, just like there’s a kind of deliberate and even somewhat cheeky looseness about the way Modern Monetary Theory defines “modern,” which is actually a quote from Keynes in his A Treatise on Money, where he says that modern money, for the last 4000 years, has worked in this chartalist way. I think we would say the same thing about states. And not all MMT economists are as concerned with clarifying this, but I think there’s a number of them, and then the fellow travelers, like myself, Andrés, and Graham, we would say that we shouldn’t narrowly understand this as the modern nation-state. Instead, we should be understanding this claim, the chartalist claim, that money is a systemic form of social obligation of settling debts, that it is a public project, and that it is a governance project that requires macro- and meso-level institutions rather than a micro-project that bubbles up from barter, that bubbles up from exchange. So you can have all kinds of macro- and meso-governance projects that don’t look like a modern nation-state.

Graham, I think, mentioned a Mesopotamian temple provisioning structure. One could talk about the high medieval Catholic Church and the Holy Roman Empire. Both of them were centers of tax receivability, and actually didn’t even issue their own credits, their own money, but they were central governance projects with massive reach. That local meso-level, and even micro-level activity, were embedded within. So that would be my first response to this charge that, well, there’s micro-markets out there or in prison camps or black markets or Bitcoin. The narrow definition of the state seems to make the argument crumble. Instead, I would want to focus on a nested, interdependent understanding of the way that these governance projects work together in these very complicated hierarchies. I’ll just say, in passing, that I don’t think it’s any accident that Bitcoin gets priced, usually, in dollars. It demonstrates the way that Bitcoin is embedded in a much broader, you could say, American payment system, with its vast infrastructure, its legal infrastructure, and its banking system, etc–for all of its fantasies about wanting to be outside. 

Now, I want to turn to some of my work, in particular. I’m a media studies scholar. I think a lot about media as shaping and organizing our world. And one of the key arguments we make in media studies is that media is never a neutral veil, media is never a transparent window, to use a famous metaphor from the Florentine Renaissance talking about Renaissance perspective. It is always generative. It is always constitutive. It is always actively organizing the world. When I came to MMT around, let’s say 2012 or so, as a media theorist, I immediately thought to myself, “Oh, wow, this is a major contribution to media theory.” Because I had been working, even though I’m so keen on seeing the constitutive nature of mediation, in, especially, motion pictures, because that’s my expertise, and in visual culture, I kind of just took for granted that, well, money is just an expression or reflection or neutral veil, and that what’s really going on is this content, this exchange, this private, micro-exchange. And money isn’t constitutive in that way. Money is sort of a problem. So that, from my own training and my own project, has really shifted things for me. And I felt like it opened up all kinds of new questions.

Now, full disclosure, I come out of the the tradition of critical theory, continental philosophy, from the German Idealists to the Frankfurt School, Marxism, poststructuralism, and beyond. And what I found is, this understanding of money as a constitutive, generative organizer of political economy, of social production, of participation, and of distribution, it radically opened up a lot of the questions that are asked by the traditions that I had become something of an expert in, in new ways, and in ways that, to be honest, I don’t feel like I’m a card carrying member of those traditions anymore. They’re in my bones, so to speak, but I really found myself not applying MMT to them, but taking MMTs provocations, which, as Graham is pointing out here, are actually ontological. I mean, they’re pretty radically unmooring provocations, and opening up what I would call problem spaces based on teasing out the threads that these questions are opening up.

So one of them is media and mediation. Coming out of critical theory, I have an acute sense of the way that political economy and money as a medium acts as a kind of meta-medium for all other media. And one cannot have, let’s say, motion pictures in the 20th and 21st centuries without the medium of money. It’s somehow always there, but we treat it in a very particular way in critical theory as an exchange instrument that is necessarily alienating, or at least ambivalent, and highly problematic. And it frames the way we take on the history of any given media with a set of given presuppositions that I’ve begun to challenge. Now, there is the question here, which Graham has been really good on, about the ontology of money, and I’m saying that it’s also a media question, a question of the ontology of medium, of media as such, as constitutive, but also the money medium.

But in my own work, I’ve gone back in the history of modern Western philosophy, and I feel like I’ve been pushed there by these problems. I’m a modernist. I studied the 20th and 21st centuries. But I felt like, as I was following these threads, I was pushed back further and further and further, at first, to the kind of classical Liberalism of John Locke, Ricardo, and these sorts of authors. But then even further back, because what I think MMT does, but doesn’t actually have the philosophical equipment to fully flesh out–and to no fault of their own, they’re economists. They’re lovely, they’re my colleagues, but they’re economists. They can do things I can’t do and I can do things they can’t do. They don’t have the philosophical equipment to think through the underlying ontological suppositions of the claims that they are making. And I don’t just mean about the ontology of money. I mean about ontology as such. I mean at least about social ontology.

So I’ve gone back to the late scholastic debates between the Thomist tradition and the Franciscan tradition. And these are notoriously fraught and messy debates, but just to very quickly gloss, they were debates about ontology, the structure of being, the nature of being, and the nature of knowing being. And to simplify, I think that the Thomistic vision of being is that being is a holistic, interdependent, and hierarchical system in which there is no outside to it. And being is irreducible to individuated being. So what this means is that relationality, or mediation, the organizing of relations, can never, from a Thomist point of view, be just simply a micro-ontological question. It’s never a question of fundamentally, ontologically dissociated beings–creatures, God, angels–somehow meeting up in micro-ways, in micro-contingent encounters or contracts or agreement, and then going on their merry way. So this is very much a rebuke of avant la lettre, of social contract theory–even the most sophisticated social contract theory.

Whereas, the Franciscan understanding of being is that being must be individuated. It must be externally individuated such that there can only, essentially, be beings, and God must be understood univocally as one being among beings, such that the encounter with God can be a contingent one, and a contingent one of two or more wills meeting or going on their merry ways. And this, I would argue, as many have, but not thinking about money at all, created the conditions for the private exchange approach to money that we see arising through Franciscan political economy, through the Florentine Renaissance, and the internationalization, or you could call it a globalization, of Renaissance thinking, and Renaissance political and economic practices, and then eventually to the physiocrats in classical political economy. So I locate the origins of this von Mises-Hayek approach to money as really having origins in this much older debate about social ontology. I’m not a Catholic. I have no stakes in shoring up the church. I approached this as a critical theorist, as a philosopher, and as a leftist. And I’ve been pulled toward these questions in new ways.

So what I would say in response to these questions about markets existing outside of states so markets must be first, I would say, well, a philosophically informed MMT point of view would respond that macro comes before micro. Now, it’s not a zero-sum situation. Micro is embedded in macro and participates in macro, but it can’t ever be outside of it, and it certainly can’t be prior to it. So that would be my ontological argument in a very breezy form. The last thing I want to say, just to give a little taste of my work, here’s a little plug, this is a book I published a couple years ago, Declarations of Dependence: Money, Aesthetics, and the Politics of Care. One of the claims I make in this book is about the modern philosophical and then cultural and artistic project of what comes to be called the aesthetic. As most of us probably know here, the term aesthesis was used to mean sensation by the ancient Greeks. What we call aesthetics today was understood according to different categories, like poetics and other terms. With the rise of certain British philosophies, empiricisms, and sentimentalisms, but then, of course, specifically German Idealism, Kant, Schiller, Hegel, and beyond, the study of the aesthetic and the problem of the aesthetic comes into being and is constituted as an historically new domain, and an historically new set of possibilities and limits and problems.

And the way that the story often gets narrated, especially from a critical theory point of view, is that it arose as a bourgeois project in continental Europe, and the UK to a certain extent, and it was implicitly and explicitly variously pitted against, essentially, the domain of political economy. These were antinomies. And the aesthetic project was meant to be a kind of antidote to, or a refuge from, the ambivalences, alienations, and violations of private commerce understood through this kind of contracted, micro, and private monetary imagination. And this starts to orient art practice and cultural practice, especially once we get into the 19th century. It also gets radicalized by various socialists and artists and modernists and avant-gardists. And that strain of aesthetics starts making the argument that we should not have the aesthetic project, which promises social and sensual fullness and communion as opposed to the alienation of the marketplace. We should not just treat this as a refuge. Instead, we should get rid of it, we should we should sublate it, or whatever term we want to use, we should move beyond the private money economy and money as such, and we should have an abundant, communal, sensuous, socialist or communist society.

And then, the way that this plays out is essentially a kind of tragedy, or a fall story, where the forces of capital through commercial culture and the society of the spectacle, or simulacra and simulation, pick your critical author, basically, subsumes the aesthetic project and enlists it on the side of capitalist alienation, exploitation, and domination. And what we have by the postmodern, or late 20th century period, is this collapse of what is often imagined as a dialectic. And my claim in my book is that, well, first of all, most of my colleagues know that there’s something too simplistic and actually false about this whole story. But what they don’t have is a way of refiguring the story, or getting out of it. Most of my colleagues suffer from the symptoms of the structure of this story, even if they’re able to say of course that’s not the case, or, of course, money and art, or money and aesthetics, were not antithetical to one another. That’s absurd.

But my claim in the book is to say, if we start from an MMT, chartalist, public money, governance, macro- and meso-project framework, then we can see that, actually, this whole antinomy was false to begin with. That, in fact, the aesthetic project is a symptom of the reduction and contraction of money from a public utility into a seemingly private, micro, for-profit extractive enterprise. And that, instead of a bourgeois philosopher feeling ambivalent about money, or as a radical philosopher wanting to transcend money in order to install some kind of sensuous abundance on the model of the aesthetic project, these things should have never been opposed in the first place. And that, actually, money is what I call a proto-aesthetic instrument. It’s required for any kind of social and sensuous cultivation and communion, or any kind of project, and that we have to reckon with money as not a necessary evil that I’m ambivalent about, or the root of all evil, but as a public utility that is political and that can always be organized in another way. So with that, I think I’ll stop and we can maybe open it up for questions, comments, and thoughts.

Andrés Bernal: Great, thank you, Scott. And thank you, Graham. Excellent presentations. Let’s take some questions.

Graham Hubbs: Andrés, it looks like people are putting their names in the chat. So maybe you’ll call people out of the chat to ask questions.

Andrés Bernal: Yes, sounds perfect. Justin.

Justin Holt: Thank you. This is very interesting. Thank you for the presentations. Really fascinating. I come at MMT from reading it for many years and looking at it from more of an Anglo-American, Rawlsian perspective. That’s what my work has been mainly on in relation to MMT. But I have a question about thinking about the place of ontology. It’s very productive, but this is really addressing the question of thinking about Locke. And we could think about, perhaps, the labor theory of property coming out of Locke. But one thing that’s always troubled me about this is, the Lockean project, even in Locke’s second treatise, it falls apart in the sense that Locke wants to say, “Okay, we’re going to establish states in order to preserve property.” But then, Locke goes on, and this is the great thing about Zoom, because you can be at home with your books, and in paragraph 140, he says, “Still, it must be with his own consent, the consent of the majority, basically, to levy a tax.” See, everybody’s at home with their Locke, right? So this is great. So in paragraph 140, he basically says, “Okay, we can levy taxes if the majority wants to levy taxes.” Now, Locke doesn’t push all the way and doesn’t realize you can set the tax rate at anything then. So you can basically set confiscation rates if the majority says so. And, of course, the notion is, in the previous paragraph, he says, “You can’t take people’s property away unless they say so.” He doesn’t say majority there. But then he goes on to say that the majority can tax.

So the Lockean project seems to fall into the institutional theory of property, that property is instituted and regulated and created by the state. And that’s what we need the state for in the first place. Property doesn’t exist without the state. It’s the only way to arbitrate claims and to say who owns which side of the river. You can’t do that on your own, you may have forgotten your agreements. So the consideration here is that the state creates rights and fabricates claims. It creates property claims. So when it comes down to money and thinking about this, and thinking about many of the examples that Graham gave, yes, market interactions exist between people, or interactions exist all the time. And some of these are rather unformalized, like “Well, I’m going to help my friend fix his car, and then he’s going to do something nice for me, like baking me a cake.” All these things exist. Now, when it comes to MMT and thinking about this, they have the interesting example of saying, “Okay, colonial governments were able to basically get natives to do work by putting a tax on them.” This is the example that they utilize. Of course, these indigenous populations had their own networks, their own economies, and their own interactions, but a tax was imposed. Thus, the state was able to get something built like a road. So there’s this notion that states are able to create and fabricate property. So I feel that property ultimately gets subsumed into some type of state apparatus.

I’m going to add just one last thing. I can’t remember who says this. I think it’s Randy Wray. Randy Wray would say anybody can make money, but the key is getting it accepted. With this notion, I think there’s a chimera here. There’s a falsity about a natural theory of property. There’s a falsity that markets occur first before all of this, but seemingly, the state subsumes and encompasses and creates and regulates all forms of property. Yes, we can make anything that we want, but can we turn a Bitcoin into $1, because, ultimately, we have to turn it into $1 to actually make anything work for us in a lot of different ways. And ultimately, of course, to pay our taxes. So this is more of an example, but I’m really skeptical of Locke’s chapter five version of property, because I think Locke kind of undoes it all when he talks about taxation and majorities in states. I’m sorry, I wish it was a more clear cut question. But it’s more about saying, perhaps, that the labor theory of property is just false. It falls apart, and the institutional version structures it. Thank you very much.

Andrés Bernal: Great. Let’s take one question before we start answering. And I believe the comment by Wray is from his former professor, Hyman Minsky, about anyone can create money, the problem is getting it accepted. Mitchell.

Mitchell Silver: Hi, first of all, I want to thank both presenters. I thought they were interesting and clear. My question will probably be quite naive. I’m new to this discussion. But I’m wondering, the market approach versus the state understanding of money, while they’re clearly alternative accounts, they both struck me as compelling and it was not obvious to me that there wasn’t a reconciliation possible. So the first part of my question is have there been attempts to reconcile them, or is there a story that can be told that incorporates both of them? Because they were not in obvious conflict, or what seems to make them in conflict was claiming that there was an ontological truth here, that there was a correct ontology. And that you had to get the ontology correct to understand money correctly. But it’s also not clear to me that there is an ontology that’s independent of pragmatic considerations, in general, let alone in this particular case. So might we approach this by trying to think of it pragmatically, such as, what are our goals here? What problems are we trying to solve in thinking about money? And to what extent does one theory or another theory allow us to successfully approach those goals so that ontology then becomes just a practical consideration or inquiry in terms of what do we need to quantify over to make the kind of statements that we want to make? With the kinds of statements we want to make, ultimately, their truth really depends on where they get us in relation to where we want to go.

Andrés Bernal: Great, thank you. So let’s pick it up from there. Responses?

Graham Hubbs: I have quite a bit to say in response to Mitchell’s question. Scott, do you want to say anything in response to Justin’s first?

Scott Ferguson: Okay, I’ll speak to Justin’s. I strongly agree. The Lockean account of property is, I would agree, false. To put it one way, it deconstructs itself. I will say that this is all predicated on the state of nature story, which gets retold in many, many different ways during the Enlightenment, and it imagines an immediate encounter between a laboring, industrious individual and the natural world without the mediation of governance or law. I think what Justin was pointing out is that, it might not be a modern nation-state, it might be something more messy and complicated that we’re not used to thinking with that doesn’t conform to so-called “Westphalian” political theory. Property is never prior to law, it is constituted in law. Sure, a state can constitute that property. Sure, property can come about informally, at first in informal interactions, but I would always argue that those informal interactions and coordinations are always embedded in and dependent upon larger systems. They are not flatly determined by those systems, but they are participating in them and embedded in them and in a dependent way.

I’ll use this to pivot to my own very brief response to Mitchell’s question, or at least part of it. I don’t read the two versions of the story, the market based story and the state based story, as actually arguing according to the same assumptions. It’s the exchange story that wants to exclude the state as ontologically coeval. The state story wants to say, “No, the state is constitutively and actively involved. And yes, of course, there’s private markets. Of course, there are all kinds of hierarchical degrees of money’s moneyness, or acceptability and enforceability. And that’s always caught up in contestation and crises and forces outside of people’s control. Sure. But I would say that MMT reconciles the two. It doesn’t say the market doesn’t matter or that it doesn’t count. It just says that, “Well, actually, where the private marketplace gets the credit in order to produce goods and services and sell at a profit comes from a legally licensed banking system that has been endowed with federal and state power to create credit on behalf of the public.” So that’s how I would respond to that.

Graham Hubbs: Well, my answer dovetails with Scott’s and picks up from there. The idea that for many people, the orthodox account, the catallactic account, has a political purpose, is true. It may not be true of everybody, but certainly when Menger writes his theory of money, it has the purpose of establishing what we described earlier as the Lockean order of things, where first there’s property and markets and then government comes along later, and is meant to be constrained somehow by natural property rights. So there’s a political purpose to the account. It may not be true of all market theorists, but it is at least true for some of the catallactic theorists. To your question, are there accounts out there that seek to resolve both of them? Since we can do show and tell here, there’s a debate between Geoffrey Ingham and Tony Lawson in the 2018 Cambridge Journal of Economics on precisely that question. I’ve learned more from Ingham about this stuff about money than anybody else. And as a bit of intellectual history, Stephanie Kelton, who is one of the foremost economists in MMT, studied at Cambridge with both Ingham and Lawson. Part of where MMT has historically gotten its understanding about the ontology of money was Kelton’s time at Cambridge, studying with Lawson and Ingham, and then bringing it back to the States.

Ingham is a neo-chartalist. Lawson believes he’s got a way to reconcile the two and has a middle path through chartalism and market theory. In that 2018 exchange in the Cambridge Journal of Economics, Ingham says that Lawson, in spite of his best efforts, ends up being what I call a catallactic theorist, or what other folks would call a commodity theorist. I think Ingham’s got it right. But to your broader point, Mitchell, of why do we even need to see these theories as competing in the first place, one reason is the fact that each gives its explanation of money’s ontology as a history. Each is keen to tell an origin story. And something that I’ve been working on is asking the question: why is that necessary anyway to understanding the ontological order of the various functions of money? Can we dispense of the historical account itself as a history, and re-understand it as giving an order of priority for the functions of money? I think that that’s the best way to do it. And there, you actually do get two accounts that can be brought into opposition with one another. But I think the real conclusion that we should derive from this is pragmatist in a way.

I don’t know if Quine would be my hero as much as Sellars, but we all got brought up in 20th century American philosophy here. I think that what we should do away with is the idea that money would have an essence in the first place. Asking what money is presupposes that we’re trying to uncover an essence. Well, do away with that assumption. Instead, look at the various accounts of money and locate money-ish features, characteristic features of money, or something like that. Then, we can say, is Bitcoin money? Well, that’s a stupid question that presupposes that there would be an essence to money to determine whether it is or isn’t one. Bitcoin has some money-ish features. It’s used as a unit of account. It doesn’t work very well, because its value fluctuates wildly against the basis of the dollar. It’s used as a medium of exchange. Those are money-ish features. Is it money? Legal theorists, courts, and the government need to decide that for regulatory purposes. So there needs to be some legal definition of money that then decides whether we treat Bitcoin as a commodity or something else. So somebody has to get an answer to the question, but thinking that behind that there is a ontological essence that answers the question, that’s a mistake. But that doesn’t mean that we should just dispense of theorizing altogether. Digging into the theories lets us think more clearly about these issues.

Scott Ferguson: Can I just quickly follow up? I both kind of agree and would want to complicate what you’re saying. I’m sitting here saying we need to ask ontological questions, and that those are social ontology questions, not just money ontology questions, and so I feel implicated in this critique. But so, what I would say is, going back to the Thomist and Franciscan debates, I would reject, in line with what I think you’re saying here, a univocal essence that can be positively articulated. I would say ontological questions are important if approached in what Thomas would call an analogical way. Which is, you still have to theorize, you still have to use the evidence, figure out what’s going on, and have pragmatic considerations of what you want to get done. And you can analogically approach a way of getting a handle on the ontology without creating some kind of rigid, and thus brittle, ontology that you’re then going to put out in the world and have everybody show you all the examples of the ways your univocal ontology falls apart. So I would say, I think we agree, but we use different terms, and I’m willing to use that word ontology in an analogical way.

Graham Hubbs: You’re hanging out at an analytical philosophy conference, Scott, you’ve got to talk about ontology.

Andrés Bernal: Great, Martha.

Martha Beck: Okay, so I’m actually trained in ancient philosophy, so now everybody’s gonna have to switch. I just want to throw out a whole lot of stuff back to the four causes. I mean, obviously, money is the material cause, but that’s not the main cause for Aristotle. It’s the formal and final cause. So it sounds like these big disagreements are more about what Aristotle would call the efficient cause, which came first. But that’s not the main cause. The main cause is human nature, which is flourishing. So he goes on this switch from the family, mere survival, to the village, which is economic exchange. Then, he says, there was this sudden shift in consciousness, where we realize we live for the sake of a high quality of life. So I would say that everyone in the world functions at some theoretical level, at that higher level. People want a middle class. People understand the need for things like education and healthcare. It’s not just a village. Does that make sense to people?

Because, honest to God, Charles Koch and these guys want to make the world into a village. They really want to believe that capitalism will solve every problem. And I’ve been reading about Koch. I mean, he has an ideology that he brainwashes his employees with–market-based management–he really believes in that. That’s the power of ideas. First of all, philosophy matters. Second of all, they’ve got the wrong idea. Because, the individual profit maximization, that is not the way people live. If you want to understand why there is all this animosity, so many parents are willing to give up so much so their children can have a better life. And if you can’t convince people that one monetary policy rather than another is going to give their kids a better life…the monetary is the tale. It’s not what’s driving human behavior. But I did want to go back to the two main issues that I was aware of 55 years ago, environmentalism, and the need for culture to integrate with nature. And that goes back to Scott’s thing.

Actually, what made St. Thomas Aquinas different was Aristotle. All that holistic stuff, that came from the Aristotelian side, because Augustine was another one that emphasizes just free will. There’s God and I, and I just achieve salvation in relation to the world. Then, Locke took that into economic calculation. So Locke’s view of reasoning is what the Greeks would call calculation, which, greed, if someone who desires money or power only has that kind of reasoning, you’re in big trouble. So the big mistakes in enlightenment were that we could look at nature as an endless source of wealth, basically, money. And we just use our reason to exploit it ad infinitum. And that was wrong. So that has to do with your money issue also, because knowledge is power and power is wealth. The other thing was that human psychology was a blank slate. If only we could just manipulate it enough, but we can’t. So now all we have is a huge chunk of our economy dedicated to stoking pleasure and fear, fantasies and phobias, at the basic, instinctual level. So does that make sense to you that all of this stuff has to come in within the context of these two monetary policies? Because what people really are underneath…anyway, just take whatever you want to. But I think all that stuff has to be taken into account.

Andrés Bernal: If I could also add a bit to Martha’s comments, a big part of what we do in policy debates through the MMT lens is engaging in matters over perceived ontological scarcity. While the way we’ve designed the system and monetary economy keeps exploiting and accumulating, the people that participate in it are operating under this village lens that, at any moment now, they’re not going to have enough. So if we invest into the immigrant community, if we provide healthcare for everybody, for those that fall outside of the conventional, patriarchal, white, middle class model, then they’re going to lose what they have. So it’s a zero-sum game of, how do I make sure my little village is accounted for and not the people that I see outside of that? Scott and Graham, I don’t know if you all want to touch a little bit on that as well?

Scott Ferguson: Graham, do you have thoughts?

Graham Hubbs: I was gonna say some things about Aristotle, in particular. They might be a little bit tangential. So Scott, if you want to pick up the thread, go for it.

Scott Ferguson: I thoroughly agree with the thrust of Martha’s comments. I would say I have quibbles with certain things I heard. But in the service of the overall sentiment, one is that, we in the MMT community, would insist that money is not equal to wealth. Those are not synonyms. Money is a governance project. And it’s also a care project that we could argue, right now, is careless and not working well. But it is a cultivation and generative care project, and it has to be politicized as such. So if we want to take care of our ecosystem, if we want to take care of the oceans, if we want to take care of our climate change catastrophe, then we need money. We need a lot of money. And we need to tap into our public capacities to not just create money, but to mobilize our imaginations and our skills and our capacities to change what’s going on. So I really want to get past the idea that money is just simply power–private power and private wealth–and to really shift the frame to say that, actually, it starts with the public, and it’s been privatized. So to not naturalize those things. The other thing I will say…

Martha Beck: It’s the material cause. The modern world emphasizes the efficient and the material, whereas the ancient world emphasizes the final and the formal. So to say it’s the material cause is to say it’s secondary, that’s all. Does that make sense?

Scott Ferguson: I guess, I would say that money, as a public utility, is irreducible to material and efficient cause.

Martha Beck: Okay, but it’s driven by values, or ontology.

Scott Ferguson: Of course.

Martha Beck: Yeah, that’s all I mean.

Scott Ferguson: Oh, no, no, same page. Absolutely. I think I’ll just stop there. I’ll let Graham respond.

Graham Hubbs: Yeah, invoking Aristotle on these issues, specifically, there’s a nice paper by Stefan Eich that points out two famous passages where Aristotle talks about money. It gets into the weeds of Aristotle on money. That’s what we’re talking about, and I think it’s interesting. In Politics Book I, Aristotle gives an account that sounds an awful lot like what I’ve called the catallactic theory, what’s commonly called a commodity theory. Oh, there’s trading and it’s inconvenient. Wouldn’t it be handy if there was some precious metal that everybody could use to trade properly. And what Stefan points out in that paper is that, in those passages, Aristotle’s using the term chrēmata to talk about money. But there’s another term for money in the Aristotelian corpus, which is nomisma. That’s the term that he uses in Nicomachean Ethics Book V, which is dead center of the discussion of justice. And there, money isn’t the same as, but it looks a lot more like, what the chartalists think money is. So in Aristotle himself, if we’re reading him carefully and are attuned to these differences in the Greek, and the first time I read Aristotle until I read Stefan’s paper, I was blind to that, because translators over the centuries in English washed it out just by calling both of those terms indistinguishably money, which really makes Nicomachean Ethics kind of mind bending to read on its own terms. The richness of some of these distinctions and debates is already present within the Aristotelian corpus itself.

Scott Ferguson: And if you understand Aristotle as having what I like to call a “nested ontology,” where any kind of micro-situation is embedded in a larger polis, I think these two are reconcilable in a chartalist way.

Martha Beck: The goal is for your mind to be a microcosm of the macrocosm. So the way in which you run your household and your economy is you meet necessary needs, not excess needs.

Andrés Bernal: Let’s move to Vasfi.

Vasfi O. Özen: Can you hear me now? Okay, great. I have a couple of questions for the presenters, and anyone should feel free to jump in. First of all, I find these presentations quite interesting. I have a question about the problem of inflation. So monetarists believe that just simply printing money would always, or most of the time, generate inflation. And I’m interested in, and you can correct me if I’m wrong, the MMT perspective. They suggest that the government can increase taxes anytime they think it’s appropriate to remove money. This brought to my mind, perhaps you’re familiar with the works of Silvio Gesell. Silvio Gesell was an economist and social activist. He wrote a book called The Natural Economic Order. I’ll introduce his ideas, and if you’re not familiar with him, I think you may find him interesting, because Scott told us that he is incorporating continental approaches. I just thought that he might be interesting and contribute to your project. So Gesell has the idea of a negative interest rate policy. He has this idea of free money reforms or free land reforms. And the free money reform of Gesell is to make it impossible for people to hoard money, because the face value of money is depreciated regularly. So money is losing value if you don’t spend it. So I’m just curious whether that kind of approach can be incorporated within the MMT perspective? That’s one question I have.

The second question is about COVID. So during the COVID period, I’m just curious what kind of implications the MMT perspective can have? Because we’re talking about stimulus checks. So I’m just curious about both Graham’s perspective on that and Scott’s perspective on that. I’m just curious what MMT implies during the COVID era. And the third question is about how Scott introduced the curious idea of money as a proto-aesthetic instrument. Without being too critical, because he told us that he wrote a book and I haven’t read that book, but this idea tends to be overly optimistic and loses sight of potential risks to me. I understand that money has all these creative potentials, but at the end of the day, it depends on how you are using the money, right? So I have a hard time understanding the idea of money as a proto-aesthetic instrument. Maybe you can elaborate on that a little bit? And for my last question, both presenters talk about the criticism that MMT is too socialist or too capitalist. It seems to me that MMT is a neutral perspective. So, and correct me if I’m mistaken about this, it seems to me that the money generated by adopting MMT policy can be used to spend on hospitals and infrastructure, as well as nuclear weapons, right? I mean, I might be absolutely wrong about that. I just wanted to have some clarification on it. But once again, this was really quite interesting. Thank you.

Graham Hubbs: Thanks, Vasfi. Can you put the name of that text in the chat? The Natural Economic Order? The author’s name, I didn’t know how to spell, so if you would type that in that would be great. I just have a few quick things to say. And then I’ll hand it off to Scott. I think one thing when looking at the COVID stimulus is an MMTer might say, “See, yeah, we told you.” This has always been possible, and put under conditions of the duress, we realize the potential to harness the power of money creation to try to help people survive. So that would be a quick straightforward thing to say about that. Something I’m going to echo that Scott said earlier is that MMT, at its base, is a descriptive project and not a normative project with the question of is it too capitalist, is it too socialist, etc. I think that MMTers would do themselves a bit of service to be a bit more careful about when they’ve got their descriptive hats on and when they’ve got their normative hats on, because many MMT folks are not merely interested in describing money creation and how macroeconomics works, but more in getting involved in the sort of stuff that Andrés does. So the fact that it all gets lumped together under one heading creates understandable confusion. But yeah, I don’t know if it’s Kelton who says it, but the US has MMT for the military. There’s always enough money to buy more bombs. I think that addresses that point.

On the point of interest rates, this is another one of those spots where you get internecine battles between post-Keynesians. So MMTers call for a 0% nominal rate of interest. John Smithin, who I mentioned earlier, who’s another one of these post-Keynesians, and who doesn’t go all the way with some of the MMT proposals, thinks that that’s necessarily going to create speculation, that we should be guided by the principles of Islamic banking that are anti-usurious, and that do not create conditions under which financial speculation is possible. But then, to achieve that, you need a real rate at 0% interest, and not a nominal rate. And the real rate is simply the nominal rate minus the rate of interest. Don’t let “real” and “natural” confuse you. Nobody believes that there’s a natural rate out there. But the real rate does take into consideration inflation. And if you set the real rate at 0%, then you achieve what MMT wants to achieve in blocking the speculative possibilities, whereas if you drop the nominal rate to 0%, we should all just be taking out as much money as possible and buying houses and stuff like that. So those are the debates within post-Keynesianism about those kinds of things.

Scott Ferguson: Thank you for the kind words and the thoughtful provocations. Yeah, I feel as though I have many things to say in response. Maybe just starting with a COVID response, there are actually active projects and proposals out there that my colleagues and I have been working on. Probably the most visible is Congresswoman Rashida Tlaib’s ABC, Automatic BOOST for Communities Act, which calls upon the Treasury to mint $2 trillion coins, and to do so as needed in order to provide all Americans, that means non-citizens as well, with $2,000. And then, I think it’s something like $1,000 a month until a year after the crisis. It also sneaks in a public banking function that would distribute cards and apps, and would suddenly bank every single person that could get their hands on this. And essentially, it would create the infrastructure for a massive federal public banking system. And then, along with that, in the Act, they’re calling upon various teams employed to go out in the community and make sure people are doing okay, and making sure they’re healthy and getting access to this financial infrastructure and the payments themselves, rather than routing them through other private situations. And employing people in a moment of under- or even mass unemployment. So a colleague of mine is behind that ABC Act. 

I am more directly involved in a proposal that hasn’t been put out by a politician, Congressperson, or anything like that, which would enable public universities in the United States to issue credit on behalf of the Fed. And our argument is that we have a financial system that is actually inefficient, unequal, and destructive given that it is through the private banking and financial sector. It is atrocious. As imperfect as the neoliberal University is, I would much rather empower those public systems to create credit, to finance themselves and community projects and research led investment in their communities in ways that are plugged into the needs of communities, rather than to keep giving legal licenses to private banks. So we’re working on that project as a kind of emergency measure to shore up the funding of public universities, which is going into the pooper right now. Although, things are changing because of the election.

Another thing I’ll say about it is, from the MMT world point of view, we would say that there’s this whole nonsense choice between opening up the economy and shutting down and experiencing recession or depression, which I call the Jaws meme. It’s the mayor from Jaws who has to decide whether he wants capitalism to keep going or he wants to protect the safety and health of the people visiting the beach. This is total nonsense. As they have in the UK and elsewhere, you can pay people and it’s their job to stay home. That’s one thing you can do and that’s still part of the economy. In the United States, we don’t have enough people who are trained to deliver vaccinations. Back in spring, we should have taken all the service workers who suddenly didn’t have jobs at Starbucks or wherever, and trained them to be part of this massive health and caretaking project. So the whole idea that you have to choose between employing people or economic production versus health and safety is absolutely nonsense.

I just want to say something about inflation. It’s important to note that inflation, as my very brilliant colleague, Nathan Tankus, would point out, is not a natural phenomenon that we just go out and look at with our eyes. It is a function of the way that we elect to record various processes and phenomena in our economic activity. So inflation is based on price indices, and these price indices have changed over time. And those choices of what goes in the price indices are political, and they matter. And they skew things. So we could talk about hyperinflation on Wall Street right now or for the last 40 years, but nobody talks about that. Nobody says there’s Weimar Germany on Wall Street, because our indicators are not set up to reveal that sort of thing. You could talk about hyperinflation in health care, in education, in almost everything but media, technology, and media consumption. Everything is hyperinflated over the last 40 years, at least in the United States, but nobody talks about it in that way.

So I would just say that, and also that printing money or creating money is not an exception, it’s the rule. It is not in excess of a natural system that is finding equilibrium in its own natural way. We are constantly printing money. This is what banks do. Every day, they issue credit to somebody. They don’t recycle money from one place to another. They have a license to create money. So I would say, Wall Street is printing way too much money. It’s Weimar hyperinflation. Let’s put away the wheelbarrows filled with digital money that are skewing all of our values, and start printing money toward productive communal and ecological purposes. I will say, I am happy to look at the Gesell argument. I’ve had vague encounters with that discourse. But I’d like to look at it more and I appreciate the nudge.

And lastly, with the proto-aesthetic, so here’s the thing, I’m coming from the left. The left throughout at least the modern Western world, as far as I can see, the dominant tendency has been to radicalize bourgeois ambivalence about money, which I think is already ill founded, and to turn it into Satan, to turn it into the worst technology ever and and to suggest that we cannot have justice, we cannot have collective caretaking as long as this medium mediates our political economy. So my move is not to say money is happy and rosy and always the best! Neat-o! Let’s treat it as a purely good, wonderful, rosy thing. No, no, no. I’m pushing hard in the other direction to remind us that it has these capacities to push back against all this Liberal, radical, Marxist, and anarchist ambivalence and rejection of money in order to open up money as a problem of collective cultivation, as a difficult problem. It is not all rosy.

What I would suggest is, if we want aesthetic production, we have to recognize the way that aesthetic production is financed in the first place, and radically change the way aesthetic production is financed. And also recognize that, I’m sitting here in my house in Tampa, Florida, and I’m having a sensory experience that involves this room, the fan whizzing around me. I’m talking to you all, mediated through this technology, and this is all a sensuous experience that has been variously conditioned by money. So it’s not rosy, but it is the ground that I would argue we need to start from.

Andrés Bernal: Thank you. So we’ve hit our time boundary. We’ve even gone a couple minutes over. So I want to thank everybody for participating with us here today. It was an absolute pleasure. Graham and Scott, thank you so much. If anybody else has any other comments or questions, please reach out to us. We’re on Twitter, or email us, anything like that. And the last thing I will say is, I have a special appreciation for philosophy as a discipline and philosophers as a philosophy undergrad. One of the major reasons I even gravitated to MMT was because of these questions that I was trained in during my philosophy education, which absolutely changed my life. So thank you all. We need to appreciate our philosophers more in this country and society. So with that said, thank you for coming here and keep it up.

* Thanks to the Money on the Left production team: Thomas Chaplin (audio editor), Richard Farrell (transcription), & Meghan Saas (graphic art)