Mat Forstater joins Money on the Left to discuss the origins of Modern Monetary Theory (MMT), the vicissitudes of heterodox economics, and the challenges of building alternative institutions in and beyond the academy. As one of the principal architects of MMT, as well as teacher and advisor to many of the more recognized MMT scholars and advocates today, Forstater is perhaps the best equipped heterodox economist to give us the details on the innovative assumptions and arguments that created the firmament for what we now know as Modern Monetary Theory. More importantly, how Forstater came to shape the project greatly defamiliarizes popular assumptions about MMT, which tend to reduce what is in truth a rich intellectual and political movement to a narrow and technocratic set of truisms and just-so stories. From experimental poetry and Black political economy to the problems of futurity and invention, Forstater’s circuitous path reveals MMT’s origins to be far more interdisciplinary and heterogeneous than it is often understood to be by opponents and advocates alike.
Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure
Music by Nahneen Kula: www.nahneenkula.com
The following was transcribed by Richard Farrell and has been lightly edited for clarity.
William Saas: Matt Forstater, welcome to Money on the Left.
Mathew Forstater: Thank you. It’s great to be here.
William Saas: It’s so wonderful to have you finally with us. To get us started, we’d like to ask a bit about your professional and personal backgrounds and how they kind of end up leading our guests to what they became. Can you do that for us and tell us how you came to be involved with heterodox economics, maybe what brought you down that path, and what maybe influenced you the most along the way?
Mathew Forstater: So I guess, at some distance, I can say that I was something of an unusual kid. I was a big reader growing up, and I was very interested in Black history in elementary schools, finding books about Martin Luther King, Harriet Tubman, whatever you could find, and all that kind of thing. Actually, all the way up until I went to college, people thought that I would go into the humanities. I won an English award in junior high school. I wrote, I was not a math and science person. I certainly wasn’t taking any personal finance courses or anything like that. A big moment in my development was when I had gone to public school from kindergarten to the end of 10th grade, and I had been not doing well in school in 10th grade–I always did well in school. So anyway, long story short, I went to an alternative high school for my last two years. And I’m sort of the generation that was alive during the 1960s, but not old enough to participate in it, but old enough to be aware of what was going on. I have older brothers and I watched the Watergate hearings with them.
So I went to an alternative school. It was run by very progressive minded people, you call the teachers by their first names, and there’s no rules practically or whatever. I looked at the classes that I was going to pick from my first semester, and there was communism, eastern religions, and transpersonal psychology. I was just in heaven. This was just like the greatest thing. A course that I ended up taking for two semesters that maybe had the biggest influence on me was conceptual art. It just opened up a whole world for me of art, theater, poetry, the borders between fantasy and reality, audience and performer, and all these kinds of different issues. I was always motivated by social justice issues. I was very concerned about the world, especially after Reagan was elected and was talking about the Soviet Union as an evil empire. It seemed very scary. It really was for me. So I decided, instead of going to college, I moved to a farm. It was actually like a Homestead School.
So there was a group of us on this property. We were growing organic food and learning about solar energy. Our goal was to try to be as self-sufficient as possible. Then, the Three Mile Island nuclear accident occurred. It was just 11 miles away from the farm. It was a big deal, because the radiation doesn’t stop at the gate of the utopian commune. The message that I realized was that you can’t separate yourself, or at least I didn’t feel that you can just go and find some place to make your imaginary utopia. There are still these problems in the world, and you’re not going to be able to fix them here. So after that, I left the farm. Then, I lived on the west coast for a couple years and pursued poetry. Finally, I made my way back to the east coast and registered for my first college course. It was “Introduction to the Black Aesthetic,” taught by Sonia Sanchez, who was a well known poet, certainly in the Philadelphia area. She’s like an institution, but she’s someone who was not as well known as Nikki Giovanni or some other young poets that were part of the Black Arts Movement. But now she’s pretty recognized. In any case, it was just fantastic.
I was able to develop a nice relationship with the professor and we all did some type of performance at the end. This course, at that time, was being offered in the department of Pan African Studies. The department at that time was a very interesting department because one of my professors was Vietnamese. There was a very global, third-worldist view and a lot of emphasis on the connections between Africans in the diaspora and on the continent. So I just started taking different courses in Pan African Studies. In the meantime, I was taking introduction to this, that, and the other thing because I really didn’t know what I wanted to major in or what I wanted to do. Finally, I settled on Pan African Studies. The name changed in the middle of my time there to African American Studies, and some of the faculty changed. Temple University became a center for Afro-centric thinking and an African-centered worldview, laying out the methodology and philosophical foundations, and, of course, the critique of Eurocentrism was a big part of the curriculum and what my focus really became. I started to look at issues both in the US and the anti-apartheid movement, which was also going on at that time.
So the relationship of race and class is what I was grappling with. How much of what we see is due to class and how much is due to racism, and what’s the relationship between capitalism and racism? Then, I also tried to bring gender into the analysis and the picture as well. So I was introduced to political economy by an anthropologist, actually. I only had two economics classes as an undergrad. There were one or two heterodox professors at Temple, but not anymore, one left. I only saw a little bit of mainstream economics in my introductory class. The teaching assistant had to take me aside, I think, after the second day and say, “You’re right about everything you’re saying, but I have to get through this material. Here’s a bunch of professors, you might like their classes.” I’ll tell you, I took a lot of his recommendations and they were all just fantastic. I was very fortunate to have some fantastic professors even just in these introductory courses. They have a required course for all undergrads called “Intellectual Heritage” at Temple, and it’s taught by dozens and dozens of different people. But somehow, just picking a section because of my schedule, I ended up having some wonderful teachers as an undergrad. I was getting into studying, the library, and researching things just on my own.
So I felt like I wanted to systematically study political economy. Somehow I heard about The New School and saw their course descriptions and said, “Okay, I can go there. I can try to catch up on the technical stuff that I don’t have a background in–the stats, maps, and all that. But I can also take these courses in economic history, the history of ideas, and political economy.” In those days, you had three courses that were all Marxian economics, two introductory, one advanced, and then there was another advanced one that was not required. But we really delved deeply into it. This was the time when the mode of production controversies were going on. I got really interested in that because I was interested in economic development, and I was interested in Africa, but sometimes things affect the trajectory of your career where it can seem somewhat arbitrary. At The New School, the faculty is very small. There’s only really one faculty member for each field area. So there’s one person in international trade, one person in labor economics, and maybe one person in money and banking. If we were lucky, we had all these covered, but if a faculty member would leave–which is what happened, the development economists left–then it took them two years till we had a replacement. And by that time, you had to keep moving on.
I was very fortunate because even though development wasn’t available, race and class was being taught by Rhonda M. Williams. And it turns out that she was only at The New School for two years. I used to say I’m the last person who did a field in race and class with Rhonda Williams. It might have been the first and last. There were maybe three people who actually were able to do it. But in any case, she was doing a lot of really exciting work. One of the things about heterodox economics is that there’s different ways of being heterodox and there’s different ways of being orthodox. So we had some heterodox economists who methodologically were extremely conventional, like almost the crudest type of positivism in terms of just their view of science. It wasn’t really any different from mainstream economists saying economics is a science. People who are heterodox in content, but not method, maybe we could say have a very similar idea of–and we see this in some brands of Marxism–the idea of science and so on.
So there was Rhonda Williams, and also another newer professor, Will Milberg, who is now the dean of graduate faculty, but he was a new faculty member then. Both of them were very early explorers of kind of postmodernism in economics. This was the aftermath of Deirdre McCloskey’s book, The Rhetoric of Economics, which raised a lot of methodological issues and kind of reinvigorated a reflection on methodological issues. So that resulted in all of these different cottage industries opening up in different aspects of methodology. That was very important for me. And the professors, despite the remarks I’m making about methodology and so on, were brilliant. I learned a ton. Before, when I heard things from out of economics, I had a gut feeling that something was wrong with these arguments, but because I didn’t know the language, the models, the terminology, and all these things, I really couldn’t engage with it in a very strong way. So this is what I was doing there. I was learning the language.
At the same time, African American Studies is, by its very nature, interdisciplinary. It is very historical in its approach. The critique of Eurocentrism, I would say, is another part. So anything that would come up, if I would see reference to sociological economics or economic anthropology or whatever it was, and then out of this sort of postmodern turn, finally, reaching economics, that also opened up. With Marx and political economy, there were a lot of ways to engage in cross disciplinary thinking, collaboration, and so on. In the end, I had taken a job for one thing, without even having my dissertation topic approved yet. I was at Gettysburg College in Pennsylvania, and there was a fellow from Malawi, Derrick Gandwe, who was in that department. He had got his PhD at Manitoba which still does kind of have a heterodox PhD program way up north in Canada. So he kind of became like a mentor of mine. But you’re working full time and you’re trying to finish your dissertation. So a lot of my motivation for starting the institutes was to provide students with PhD funding so that they didn’t have to work and do the dissertation at the same time if possible, because it’s important for students to have at least one year to devote to their dissertation.
What I’ve always wanted for students was for them to have the same opportunity that they do in the mainstream departments. I would say it’s pretty unheard of for people to pay their own way through a PhD program. Most of the time, if you’re getting to that point, there’s a good chance you’re going to be offered some type of support. So heterodox economics has never really had that, except on a very, very tiny basis. I really began to see how it was going to be necessary to talk about institution building in heterodoxy. This was also a time when there was a debate about “big tent” heterodoxy versus all these different subfields or paradigms. You have Marxists over here of one type, and Marxists there of another type, and post-Keynesians of one type here, and post-Keynesians of another type there. And some really felt strongly that you couldn’t mix schools of thought. Heaven forbid, we should do something like that. I mean, it really was kind of incredible thinking about it now, because how else do we move forward unless we are grappling with, improving, and modifying? That means learning from other insights and so on.
William Saas: What years are we talking about right now?
Mathew Forstater: In the 80s. I was at The New School physically from 87 to 92. The word heterodox, you never even heard that in the beginning part of that time period. Maybe just toward the end of that time you started to hear it because Fred Lee was over in England, and he was starting the Association for Heterodox Economics and other things. Before that, post-Keynesianism kind of served a similar purpose in that it was, with some exceptions, less dogmatic and more open. People have made these arguments, and there was a big period where critical realism was all the rage in post-Keynesian economics. It’s this idea of open ontology. In any case, it was more open, and therefore, of a certain humility, because I never saw any one of these schools as having all of the answers. Feminist economics and ecological economics started to emerge. You already had Black political economy back from the 60s and so on. You had these different heterodox professional associations, like social economics, evolutionary economics, and the others.
Post-Keynesians never had a professional organization, which did have some repercussions, because, for example, at the big meetings, in order to sponsor sessions, you had to have an organization. So the social economists, the evolutionary economists, the feminist economists, and historians had their sessions, but post-Keynesians, because they didn’t have a professional organization, they would have their own conference. Those became very important for MMT, because UMKC started sponsoring these conferences. And they were very international and very well attended. Very early on, before the term MMT even came out, a lot of these ideas were being debated at these summer schools. There weren’t just conferences. We would have graduate students and young professors, or people early in their careers, who would come, and do three to five days of hearing from all different speakers. Then, at the end, there would be a full two or three day conference. So these are great experiences, and the Institutionalists started doing one as well, which we also sponsored, and some of these were explicitly interdisciplinary.
William Saas: How did you get from Gettysburg to UMKC?
Mathew Forstater: Yeah, so I wrote my dissertation with Robert Heilbroner. Then, I had my third year review. These days, forget it. If you’re getting one year to finish, that is it. I haven’t heard of people getting more than that these days. So for me to go three years, I mean, really… Anyway, I got done in time for my third year review, but I spent all my research time writing my dissertation. So I felt like I needed to focus on some research and publications, and I applied for a research scholarship or whatever with the Levy Institute. It turns out now, Pavlina Tcherneva, who had been an undergraduate student at Gettysburg, obtained a prestigious fellowship with the Jerome Levy Forecasting Center, which is no longer associated with the Levy Institute, but in those days it still was. So she came to Levy and then Randy Ray had a long time association with the Levy Institute, because Minsky had been his teacher and Minsky was the chief kind of face of the early years of the Levy Institute. His former student, Stephanie Kelton, then Stephanie Bell, had been doing an MPhil at Cambridge, and the Levy Institute and Cambridge had an exchange program. So she came as a Cambridge scholar to Levy. So we all converged on the Levy Institute.
Wynne Godley was there as well. His name isn’t brought up so much these days, but sectoral balances was really kind of elaborated by Wynne Godley, and he was a big supporter of ours in terms of all the stuff on money and everything. He was not as enthusiastic about the job guarantee, but he was on the money and budgeting side. So Randy was on leave from the University of Denver, I was on leave from Gettysburg College, one year turned into two years, and all during this time, we were organizing sessions at conferences and had visitors. Bill Mitchell came from Australia and some others. Basically, we were talking to everybody we could possibly talk with. We were submitting papers to the heterodox journals, of which there are many. And we were going to various meetings. We were sponsoring our own workshops and conferences. We used to call them workshops, but if you look at the lineups of our conferences, it’s unbelievable what we brought together. What we had was funding. So we could say we will bring you here, we can fly you from Europe or Australia, we can put you up, and all that kind of thing, and even for US-based people.
Each conference would have a different theme. We had one on Social Security. Several of the people from the National Jobs for All Coalition we invited participated in that–Trudy Goldberg, Helen Ginsburg, and Sumner Rosen. I hate to say it, but unfortunately, and now I can say for myself as well, heterodox people are not getting big invites all around the world to present their work, share their ideas, and so on. I soon figured out that heterodoxy has created a kind of parallel institutional structure. You won’t let us into your journals? We’ll have our own journals. At one time, there was concern that people’s careers could be affected, because if you only published in these heterodox journals, they weren’t ranked as high. Well, I’ll tell you this, it’s not like I’ve been at Ivy League schools or whatever, but I have never seen a non-economist, Dean, provost or anybody question the journals. They’re refereed journals. A lot of them have been in existence for decades. They have editorial boards, people with prestigious records, and so on. But that’s not a completely satisfactory solution.
Scott Ferguson: It’s a strategy. So you’re talking a lot about this institutional coalescing around the Levy Institute and everyone sort of on leave, and it’s an extended summer camp, maybe. Then, you’re talking about the way you start inviting people and staging these events, and it’s all very exciting. Is this all “big tent” heterodox? Where is so-called MMT emerging? How is that coalescing? Are there certain topics, problems, and shared social values that are coalescing here as well? Or is it just, “Well, we’re all in the same place and we’ve all got different ideas?” What was that kind of primordial soup like?
Mathew Forstater: So that’s a great question. In some ways, there was a certain kind of iterative process to it. But I used to jokingly say, in the early years, I should be writing a book or an article on the socialization of professions, or the sociology of knowledge, like introducing a new paradigm, what that entails, all the different things that happen, and what are the tipping points or whatever. So we did not all just go to the Levy Institute and say, “Oh, we’re all kind of post-Keynesian,” and then next thing you know, MMT happens. It was an organized thing that we would all converge on the Levy Institute. Pavlina had done an internship with Warren Mosler between her junior and senior year. And as a result of that, she did a crash course in post-Keynesian monetary theory. Her assignment was to write a critical review of Mosler’s “Soft Currency Economics.” She did that, and then she also worked on another paper, which was like a math model type paper.
She was able to participate in the 50th anniversary of the Bretton Woods Conference. There were only three economists at that conference, Randy Ray, Charles Goodhart, and Basil Moore. Everybody else was from the world of finance, hedge funds, or something, but Goodhart was working on the paper that became the two concepts of money. He introduced chartalism and metallism and that whole thing. He was working on that paper, and he even incorporated some of the African Studies references about the colonial tax and that stuff into at least some versions of that paper. Then, Randy had started to work on the book that became Understanding Modern Money. That was published at the very end of 1998, I believe. He and I both had working papers starting in 1997. He had one on the government as the employer of last resort, one “Money and Taxes: The Chartalist Approach,” and then one on functional finance.
I forget what it was called, but basically, he covered what at that time we saw as the three main areas: the history of money and the nature of money, different contending theories of money, the government budget, deficits, national debt, and all of that, and then full employment and the job guarantee, which then was referred to as the employer of last resort, or public service employment, you’ll see that as well. So some of these things had different names for a while. With chartalism, some people really didn’t like that name. I never really saw what the big deal was, but in any case, the bottom line is, we were introduced to “Soft Currency Economics” in the summer of 1996. Then, when Pavlina came back from her internship when she was a senior, she took my seminar in macro and monetary theory, and she did an honors undergrad thesis on these ideas.
There was this post-Keynesian email listserv. Instead of blogs or podcasts or whatever, in those days, it was listservs. And a lot went on on those listservs. There were incredible discussions and debates and dramas. Warren Mosler found his way there. That’s where I first saw his name. That’s where he saw my note that I had a student who was looking for an internship. Randy, and then Bill Mitchell, that’s where I first saw his name as well. These ideas, like tax driven money, that the deficit is just accounting information, and these basic sort of cornerstones or whatever of modern money, I mean, each one had to be completely unpacked and thoroughly examined. And what we started to find out is that these were not completely unique ideas. There was a long tradition in each of these areas. Now, maybe finding them all together in quite that way was new.
But one of the things that I did was look for evidence in the history of economics, and beyond economics, to find evidence of people who had recognized that money could be tax driven, because at the beginning, one of the things that people always assumed is that we were arguing that all money that there ever has been, or ever could be, was tax driven. Or our critics would exaggerate our claims. Instead of saying that in a certain institutional context, then, the monetary system or the budgetary system can be managed in this way. But not saying that under any possible imaginable institutional arrangements this is how it is. That gets into a lot of things about what is money and there were plenty of discussions about this.
Maxximilian Seijo: I was thinking, before we perhaps open up that rabbit hole, I wanted to hover on what you briefly mentioned there, which are your contributions. Because, I think, if listeners haven’t already heard, your background in Black studies and poetry and then coming to economics later offers perhaps a bit of a unique intellectual background that led you to this point on these listservs, and then, importantly, as you mentioned in the institutional context of post-Keynesianism and heterodoxy more broadly. So with reference, perhaps, to this sort of lingering background, what do you feel like your primary contributions to this moment and to this coming to be of MMT were, and how did your background inform the shape that they took?
Mathew Forstater: Right, that is great. So I came to the Levy Institute. My stated proposal was to conduct a historical and interdisciplinary analysis of employment and budgetary policy. In fact, I’m still a research scholar on the website of the Levy Institute. And if you click on me, it still says that that’s what I’m doing, which is fine. My colleagues were taking a super macro look at the economy, and you could state all of the main things about money and so on in these kinds of sectoral balances levels. There are three sectors: domestic, government, and the International sector. But I came out of a tradition within post-Keynesian economics that is sometimes called structural post-Keynesianism, institutionalist post-Keynesianism or post-Keynesian institutionalist. Basically, instead of only looking at things in the super aggregated way, the economy is looked at as a set of linkages among industries. Let’s take labor. Movements of workers between different firms and industries, and the different amounts of activity in different industries and so on, was part of both unemployment, and also that understanding, or that level of analysis, had to be part of full employment policy.
So I did a paper on how full employment policies must consider both effective demand and structural and technological change. And this was actually a little bit controversial among my colleagues, but where one of the interesting parts of this comes in is that what was behind me going into this work was the constant bringing up of the Kalecki article about full employment and why full employment could never be in capitalism. I thought that what was kind of missing in a way from the post-Keynesian tradition, or Keynesian tradition, that you had with Kalecki and Marx was recognizing the functionality of unemployment and excess capacity. So this is the ironic thing, the job guarantee actually addresses those issues, whereas, if you just try to have generic government spending, deficit spending, to pump the private sector up to something close to full employment, if you could even get there, then it would create all kinds of problems because of the loss of the functionality of unemployment and excess capacity. So I did publish a couple papers in this area, but my main interest has always been what we could do with this.
And for myself, like you were saying in your question Max, what are the implications for the goal of environmental sustainability? What are the implications of this knowledge that we have now, of how money works, how the budget can work, how a job guarantee program, looking at all the different programs, what their obstacles are? What if all these jobs were helping the environment? What I came to was the first point is that public sector activities should not be judged on the same criteria as private sector efficiency criteria. People, politicians, or the media are always saying how inefficient the public sector is, and that we should have the private sector do it because it’d be better. Private companies seek to maximize profits and minimize their internal costs, but sometimes, we have other goals that are broader social and macro goals. So the public sector activities are not for profit, and therefore, minimizing internal costs is not the goal. The goal is to perhaps find a cost effective way of achieving independently given goals, or goals that are the outcome of a political process.
That means that we don’t do a cost benefit analysis and say, “Oh, well, guess what, slavery is really efficient,” or these kinds of things. Sometimes something is done because it is the right thing to do. And that is independent of cost in just purely dollars and cents. Open things up. Public sector activities should be geared towards other things. That led to green jobs stuff, functional finance, ecological tax reform, and the idea that people have all these different definitions of green jobs. A green job is a job that is not harming the environment. It doesn’t have to be explicitly performing an environmental service. Of course, some jobs will perform an explicit environmental service, but some like caregiving and the library or whatever it is, practically pure services that use very little natural resources and don’t pollute, they’re not producing carbon. So there’s that piece.
Then, with race and class, on the one hand, I got into the colonial tax and colonial money topic using the example of Africa under colonialism and the way that the colonial monetary system, and how the government used the monetary system to promote the growth of market activity to the wage labor, and all those kinds of things. And on the other hand, I did some stuff on African American issues, rediscovering Martin Luther King’s writings on the job guarantee, Bayard Rustin, the A. Philip Randolph Institute, the freedom budget, and so on. I was like, wow, this is great. In the last few years, one would think that MMT was all about social justice and the environment. But it really wasn’t always that way. So I feel like I was able to, first of all, show how we could be thinking about the use of these policies and this knowledge, and opening up some different lines of research.
The one other part was going back and finding all of these statements that are clearly about tax-driven money in writings by like Adam Smith and all the neoclassicals. It’s unbelievable. And, of course, in Marx I found that stuff in there as well. The thing that became clear was that they all were emphasizing how it’s in a specific institutional setting rather than how a government money can be managed. That part started to come through. Of course, there’s a million more discoveries. All the time, people were sending me things like, “Tolstoy was a chartalist!” But the crazy thing is that there’s a lot more awareness, both within and outside of economics, of tax-driven money than previously thought. And there was a lot more support for a job guarantee type program in history than we knew about. The interesting thing about working with a small group of people on something that seems like new is that you’re talking all the time, discussing and debating, somebody says something and somebody else picks up on it or whatever. It’s really difficult to exactly pinpoint the origin of a certain notion. People like Randy often say at the beginning of their books that this is the result of a group, the research of many people, and the work of many people. It really is true.
So our first real target was to thoroughly introduce these ideas, present them, get them discussed and debated among all the different heterodox groups, and to publish our work, for it to go through the standard refereeing process and all that. Then, the opportunity at UMKC opened up toward the end of our second year at the Levy Institute. And basically, we all went to UMKC. They had a PhD program–an interdisciplinary PhD program. It was very successful. We had to show that our students were going to be able to get jobs. So many wonderful colleagues that we have had came out of UMKC’s program. I’ve said this quite a bit, but when I was younger, I always thought education was one of the greatest sources for peaceful social change, but it takes so long. But now that I’m older, I realize that you can have a tremendous impact over a 20-30-40 year career of supervising students. We’ve got dozens of students around the country who are teaching, publishing, organizing, and leading. We’ve got Pavlina, Fadhel, and Stephanie. They’ve gone beyond, but they started out as our students.
William Saas: So the capsule version of your contribution early on was the question: “what can you do with this?” Underscore under the “do.” That’s something that, I think, a lot of us in the editorial collective have connected with MMT over the years. What are the possibilities that are presented by it? I love hearing every time you talk about the history of MMT and tell this story. But I think that I’ve also encountered other versions or angles on it, thinking specifically about Fred Lee’s History of Heterodox Economics posthumously published in 2009 with Routledge. That “what can we do with this?” as a question is interesting, then you run into “how do we do it?” as a supplement or a second order question, and that’s where you seem to run up against institutions and the limits of one’s own capacities at that moment. Returning to Lee’s book, one of the things that I’ve found interesting and also a bit confounding, is where he ends up–and of course, this is 2009, published posthumously–which is we need to basically win out in the academy and that will be our most direct path to potentially affecting policy in a way we heterodox economists have not been able to get to at this point. And we do that by making sure that our journals count equally with mainstream journal publications and things like that. And we build PhD departments.
And really, a lot of it is institution building within the confines of conventional institution building. So it’s almost as if the theory is that we need to match and overcome what orthodoxy has accomplished, but through the very sort of means that they have accomplished what they’ve accomplished. The part of what continues to be compelling about MMT, and you’ve alluded to this by referring to the students, the second generation, is that it seems to me that transcending, operating, or building institutions outside of conventional institutions has become maybe a bit more part of the story, and especially in the recent decade and a half. I don’t know if you could say a little bit about how you understand after we’ve got the heterodox conferences, we’ve got the heterodox journals, we’ve got Levy, and we now have a PhD department, and then, in the last 15 years, how do you sort of see the institutions of MMT having taken shape and evolved, and maybe in a way that people wouldn’t have expected back in 2000?
Mathew Forstater: Right, I think one thing that has to be brought into it is that, as we were focusing on getting the ideas out there and publishing and establishing the department and those things, the real economy continued to make people’s lives miserable. So the global financial crisis and Occupy Wallstreet, I mean, that was huge for MMT. That’s how this patchwork of chartalism, the job guarantee, functional finance, and sectoral balances became MMT. It is really because of the global financial crisis, the most recent pandemic crisis, and so on. And especially, think about the impetus to MMT just as a result of people seeing the amounts of money that were spent during the bailout in 2008, and then with the pandemic, and the impact that even giving people a couple thousand bucks has on their lives and all the other issues. It connected the academic work with the activism. I really feel like social media was important.
We had the proliferation, at the same time, of Facebook and Twitter groups emerging in this way. I would say the Modern Money Network was a total surprise. We’ve got some law students who are interested and started to hold some events at Columbia. Because the thing about the law schools is that Harvard and Cornell have heterodox people in their law schools. So they have a platform. They’ve got the prestige behind their messages. That was a very important piece as well. Then, you had the activism. You had Alexandria Ocasio-Cortez and the Sunrise Movement with “Green Jobs for All” shirts on in front of Pelosi’s office. It’s crazy, I couldn’t believe it. And Stephanie was working with Bernie Sanders and all that brings–lots of media coverage. Things start to have a life and a momentum of their own that propels things. Of course, you get in all different directions and things as well. I feel like it’s great. I have the opposite feeling of anyone who wants to keep…
William Saas: Keep their cards close to their chest?
Mathew Forstater: Yeah, keep a secret to myself or something. If I insist that I’m going to converse with people who agree with me 100% of the time, I would be sitting alone in a room. Are we going to try to find places where we can build alliances and bridges? There were always some people who had sympathy with part of our project, but not necessarily all of it. And I never viewed this as a problem. That’s just the way things are. We’ll continue to have conversations and so on. You should want to have a pretty broad MMT tent. That is what is healthiest for moving things forward. With the doctoral dissertations, I feel it’s great when students do something different with the material. Zdravka Todorova took feminist approaches on household debt with sectoral balances, chartalism, and post-Keynesian and came up with a very great piece of work. There are dozens of examples like this, such as applications to certain time periods. The amount of work that remains to be done is just so much. We just scratched the surface. And you see now you have got to get to work. That’s why it takes resources. This is where funding students is so important. Of course, we’re not like a department of MMT. We do a variety of things, but they’re mutually supportive of one another.
Scott Ferguson: One of the many reasons why we wanted to bring you on the show is this idea you’re very much playing out, which is, in the name of getting certain MMT lessons out there, there’s been an effort to streamline them and to make them into idioms or easily repeatable sayings. And that’s fine, that work needs to be done. Then, there’s the inevitable misconstruing of all of them and things like this. When I see certain resistances to MMT on the left, and in a certain kind of intellectual left that is in some ways in and out of the academy, or working in like literary magazines or whatever, is they don’t have any sense of this kind of rich interdisciplinary history, which includes the present. There are PhD students, Sunrise organizers, and all these people taking up what I often like to call a shared problem space in different ways, going to work on it, and being like, “Yeah, but we haven’t thought about this deeply important feminist problem of the organization of domestic labor under patriarchy.” I really appreciate the way you’re bringing that sense of richness and heterogeneity that often gets lost in certain more dominant discursive spaces to the table.
Now, I have a question to maybe help wrap us up. So you gave a talk that we invited you to give, a keynote, at our first Money on the Left conference. This was a few years ago back at the University of South Florida where I teach, and you did a lot in that talk. It was kind of performative. It was multimedia. You played a lot of hip hop music clips and you yourself engaged in some poetic practice. I don’t want to put you on the spot, but I’m curious if you could revive some of the ideas and impulses of that talk. Ultimately, at least conceptually, could you talk about what you were doing with what I would call futurity, or a kind of practice, research, a method, a modality, a social dynamic that is oriented toward the future in a particular way?
Mathew Forstater: Yeah, first of all, I appreciated coming down to your university and meeting your students and colleagues. It was a fantastic conference. Your colleagues’ presentations and students’ presentations were incredible. You’ve got a fantastic program going on down there. I’m a big fan and supporter of everything that you’re doing with the podcast and the movement. So the methodology for public policy that I worked on in my doctoral dissertation, and that I’ve published some stuff about, approaches policymaking from this idea that we have to begin with a vision of the sustainable and just society that we want to create. And that, analytically, we work backwards from the vision of where we want to go to find a path that connects that future with where we are now. So the idea is that this kind of working backwards invites the imagination to discover policies that would move us in the direction that we seek. That has always been an important part of how I view things. Adolph Lowe, who was Heilbroner’s teacher, and whose work I was examining in my dissertation, he promoted this idea he called instrumentalism, instrumental inference, this working backwards idea. One of its most appropriate applications is when it comes to the environment, because if we know that the assimilative capacity of the environment has the ability to deal with, say, X tonnes of a certain emission per year, then that gives us the strain, in a sense, that we cannot go beyond. Our goal, then, is given to us by that scientifically informed political process. If we would have just worked forward, then there’s no telling if the amount of emissions would be consistent with the sustainability,
Scott Ferguson: We might work through cost benefit analysis instead of this, right?
Mathew Forstater: Yeah, cost benefit gives the goals. That’s how the goals are determined–if there are even any goals determined and we’re not just wandering aimlessly or whatever. That opens up the whole envisioning aspect of things. And because I draw from outside of economics there’s so much rich material that we can engage with. It turned out that Abba Lerner, because he was also at The New School and a colleague of Adolf Lowe, he participated in this conference that was evaluating Lowe’s argument. Basically, Lerner stated that functional finance was perfectly consistent with Lowe’s idea. It also works very well with what I was talking about earlier with a slightly disaggregated analysis from the super macro level stuff. So part of what the methodology work that I did and that I’ve used, it examines things like following a hunch or guessing things that don’t appear in scientific papers. They sit uncomfortably somehow in a scientific paper, but if you go to scientist’s diaries, letters, autobiographies, and journals, then they’re talking all about this kind of stuff.
So the role of the imagination–C. Wright Mills’ sociological imagination–that fits very well with this kind of thing. The economic imagination, the ecological imagination, however you want to describe it. That took me to all these literatures which are about discovery. And even in the presentation down at University of South Florida, I brought up a Sherlock Holmes quote or whatever, because he’s talking about working backwards. Then, I discovered a few other little interesting things. In the appendix to The Sociological Imagination, C Wright Mills talks about the researchers file. It’s not just a file cabinet full of articles, or now files on the computer, but it’s snippets of conversation that you heard, something you read in the newspaper, a dream you had, etc. All of these things can be part of the discovery process. So the whole process of discovery, of diagnosis, of detection, the main kind of issue that came out of it is that a lot of times we feel things are presented as though it’s just by chance.
Like the eureka moment comes because you poured the wrong liquid into the thing. Those things can and do happen, and we can look out for those happy coincidences or whatever, but the part that I was focusing on was there are things that we can do to enhance our powers of discovery. I got really interested in that and sought to apply it, because, in a lot of ways, there is more than a certain content of heterodox economics, or even interdisciplinary heterodox economics. More than a certain content, for me, it was how do I go about investigating a problem or identifying a problem worth solving, to be able to consciously and intentionally make everything a potential source of reflection or consideration? With all these literatures about entrepreneurs and their powers of discovery in finding profit opportunities or whatever, I see no reason why policymakers shouldn’t be able to use the same powers of discovery to come up with innovative ways of dealing with the most vexing problems that we’re facing. It’s hard to get up every day, it’s so overwhelming. It is part of my lifelong grappling with certain core questions, the relationship between materialism and idealism, and some type of rapprochement or whatever in terms of recognizing material and ideological aspects of society, or what the Germans called the problem of freedom and order.
We can have a sustainable world. We can have eco-fascist people on every corner making sure you recycle or whatever. Well, that’s not satisfactory. And now, with the word freedom, people think it is a violation of their freedom to be told to wear a mask during the pandemic or something like that. But inspiration is so important to me. I find the arts and the humanities very inspiring, especially music and performance. So I’ve had some fun over the years. We kind of had a tradition where I would do poems at the end of the summer school. When you get tenure and promotion, then you can go up to the lectern with your guitar or whatever.
Maxximilian Seijo: I’m sure the expansive grappling will continue. But I can’t think of a better place to sort of conclude this conversation. Matt Forstater, thank you so much for coming on Money on the Left.
Mathew Forstater: Thanks so much for having me.
* Thanks to the Money on the Left production team: William Saas (audio editor), Richard Farrell (transcription), & Meghan Saas (graphic art)