Economic Democracy with Pavlina Tcherneva

Money on the Left speaks with Pavlina Tcherneva, Professor of Economics at Bard College and leading scholar of–-and advocate for—Modern Monetary Theory (MMT). Many of our listeners will be familiar with Dr. Tcherneva’s contributions to MMT, especially her book, The Case for a Job Guarantee (Polity Press, 2020). She is also Director of Open Society University Network’s Economic Democracy Initiative, instrumental to the publication of a United Nations report on the job guarantee, titled “The Employment Guarantee as a Tool in the Fight Against Poverty.” We speak with Pavlina about her work, and also get her perspective on the causes and conditions of MMT’s movement from the margins of economic discourse toward the mainstream of political economic thought.

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The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Billy Saas:  Pavlina Tcherneva, welcome to Money on the Left.

Pavlina Tcherneva:  Thank you for having me.

Billy Saas:  We’re very excited to have you, of course, a very accomplished author and researcher, and respected MMT principle theorist. How did you get here, where you are today? And how did you come to MMT?

Pavlina Tcherneva:  Oh, how long do you have? It is true that perhaps your audience knows me most with my work on the job guarantee and the recent book that came out in 2020 The Case for a Job Guarantee, but I didn’t actually quite start there. I would say that probably like most MMTers, certainly the initial group. I, too, was caught up by what Keynes called “Babylonian madness”. We all were provoked to look at the history of money because we realized early on that there was one research project that was not fully developed even in heterodox theory. That was the project of understanding money as fundamentally a public institution and as you well know, heterodox theory has long talked about money as a core analytical category in understanding a monetary production economy, a capitalist economy, a market economy. Orthodox approaches had no finance, had no money beyond some very simple kind of assumptions about it being a numeraire. But Post-Keynesian Institutionalists, too, didn’t really have a rigorous program, looking at money as a public institution. We had a lot on endogenous money, on financial instability, on how unemployment is a monetary phenomenon, on all of the important things of capitalism, except I would say the state. This work did exist out there, but I would say that with our work and our introduction to Warren Mosler, getting together with Randy Wray, Matt Forstater, Stephanie Kelton, the familiar names, this is when we all started thinking: well, what’s missing here in the analysis? And there’s one very basic, fundamental, stylized fact that every student knows. Every student knows that the currency is a public monopoly. It’s probably the purest form of monopoly, and yet the profession didn’t have much to say about this. So when I did my internship with Warren Mosler in ’96, that was really the first question: what are the implications of a currency being a public monopoly? In economics, you might find something in mainstream theory, mainstream literature about competing currencies, the efficiency of the chosen numeraire, these kinds of frameworks. Then you will find something about the state usurping power over the monetary unit because it comes from gold and market exchange, all of this really unfounded in history and anthropology and sociology. Nobody tells the stories except economists. But that’s the extent of what we would find in Orthodox theory, that the currency monopoly is somehow the state taking over some innovation that the private market came to. The other thing you would find in mainstream theory is to say, Well, if the government decided to then print its own currency, then of course, it naturally will inflate it, it will abuse it, and can’t do anything good with it. That is just a very thin analysis. But there are deeper, I think, questions to be answered. Some of the very first things that I did, and almost in a playful way, when I was working for Warren was to say: okay, well, can we model this? What could be some of these implications that if the state is the monopoly currency issuer, what are some implications from that basic stylized fact? The very first one is the one that everybody associates with MMT: the government can’t run out and that’s obvious. I think we got to go deeper than just the very obvious that we can’t run out of money. That’s clear. Well, if you’re a monopolist, then you have some unique powers. Pricing power is an important one. I think that is still under-researched, in terms of the MMT project. We have statements, we have made certain claims, but I feel like the literature needs to develop on that front. One of the pricing powers is that you can set the price of money itself. That is, of course, the interest rate. We know very well that the government can do that. The central bank is the one that can set the price of money. The other one is that you can also set the price of how the currency exchanges for other things. You can set a conversion rate. So, if the state is the one that imposes some kind of tax liability, and people need to earn the currency, then what do they need to deliver in exchange and what price would be paid for whatever they deliver? So, those were kind of macro, they were modeling questions, they were as theoretical questions to me, they were very interesting questions because one of the things that I showed with the math model is that if the more you pay as a currency monopolist, the fewer resources you’re going to attract, given a certain tax liability. That was kind of counterintuitive. The more the public sector injects it to the private sector, the fewer resources it might be able to attract given the tax obligation. So that was the first question, but then the second was: Well, how could the state inject currency into the economy? Could the state do it in a way to just always employ unemployed labor? Again, the job guarantee initially was, for me, this very much of a macro question, is there a way for the government to spend in a better way, in a way that it can secure full employment? Very quickly it was clear that full employment and price stability were not competing goals. That, in fact, they were very much part of these inherent powers of the state. So the job guarantee emerged as this alternative to the NAIRU. Heterodoxy, for a very long time, had criticized the NAIRU. It had very thorough, rigorous critique, but I would say, probably not an alternative policy proposal. I think, for me, that very quickly was quite obvious that certainly you can use your pricing powers to anchor prices of a very fundamental, most essential input of production. You can do it to create full employment, and then, of course, you have other tools to deal with inflation and price stability. So as I said, for me, the MMT project was about identifying some kind of essential principles behind the currency rather than some accidental, if you will, aspects to the monetary system, and how we can utilize the monetary system to create more economic stability and full employment. Over time, this project became quite personal. It became personal when I did my dissertation because I was able to observe how a job guarantee or program inspired by the job guarantee proposal was implemented in Argentina. When I was able to visit and see how the program was run, the impact on women, on poor mothers, on communities, I mean, that’s when everything changed. It became just as important that we have a framework for thinking of how macro policy can be implemented, but also to understand the on the ground effects of macro policy. If there is one theme that I think runs through my work, is the question of how can we do things better? That ranges from how to do fiscal policy better, how we can improve on what we’re doing currently, how we can do monetary policy better, and the like. So I would say that that is really the overarching theme. Not so much “Can we pay for it?” Yes, of course we can. But now that we can, what shall we do with these fundamental powers?

Scott Ferguson:  Very often, I hear from folks, sometimes well-meaning, sometimes not well-meaning, that MMT is just a warmed over or a reboot of so called Keynesianism and there’s no attention into, let’s say differentiations in the history of what’s been called Keynesianism, no recognition that what came to count as Keynesianism in mid-century was highly influenced by neoclassical modeling. I want to give you an opportunity to tell our listeners about your research in your readings of Keynes, and in your view, how MMT is related to Keynes’s work?

Pavlina Tcherneva:  Keynes’ own writings are really a treasure trove of information. You can dig in and dig in, and it’s fair to say that what we find in the textbook has very little to do with his overall approach. And I would argue that they stand apart, both on theoretical and methodological grounds. So what we typically get in the textbook is this kind of hydraulic version of Keynesianism, which says, the private sector has some kind of flaws, imperfections, sometimes they could be shocks, and the public sector can step in, to smooth out those cycles. There is a notion that when there’s a shock to demand, to spending and investment, then the public sector just needs to boost its own expenditures, and bring us back to our growth path. Then there’s something about multipliers and what is the effectiveness of that spending? Is it really the right way to go about this, could monetary policy do the job? There’s a whole bunch of discussion there of which policy tool is the more effective one. Well, Keynes was very clear on this matter, monetary policy is not a way to stabilize an unstable economy, it’s really the fiscal authority that can do the job. But the way we go about it is also very important. Keynes almost never spoke about aggregate demand. He never talked about aggregate demand management, he will talk about aggregate measures trying to figure out aggregate activity, because he was trying to separate the macro economy from the micro economy. But he mostly talked about public investment. He mostly talked about public works. This was not because he just preferred public works, but because he was very interested in the connection between spending and employment. For him, this was the cardinal measure for figuring out the effectiveness. It’s not whether you smooth out this business cycle. It’s not whether you bring the economy back to some growth path, it is whether you can create full employment, and by full employment, we mean people who need work. And he has very clear statements that when we think about people, we’re thinking about people who are newly entering the labor force, we’re thinking of people who might be underemployed, disguised unemployment, the whole life. Even his methodology in the way we measure economic activity was based on two units, and those were wage units and labor units. So you see, the entire framework was grounded in, I would say, this kind of humanistic approach that the economy is there to serve people to serve the concrete needs of society. The way we measure our economic activity is by what we do. So from there, fiscal policy would need to provide public employment and public investment to create a well-run economy. Keynes used to say the two outstanding faults of economic society were the failure to secure full employment and the arbitrary and inequitable distribution of income. From the point of view of policy, these are connected. If you fail to secure full employment, you are going to have an arbitrary and inequitable distribution of income. There may be many other reasons why inequality might be increasing, but labor income is critical for the more equitable distribution of income. So I have an article called Permanent On-The-Spot Job Creation—The Missing Keynes Plan for Full Employment and Economic Transformation. In that article, I make a case that, actually, the original Keynes proposal for full employment very much resembles a kind of job guarantee or employer of last resort proposal, because for him, it was quite easy to get the economy to work at let’s say, 90% capacity, but the remaining 10% were much harder to achieve and that meant full employment. For him, it was better distributed demand, hiring people in distressed areas, having a policy of Public Works that will be on standby, that will be permanently implemented, so that it absorbs new entrants, job seekers as needed; that those projects will be implemented in areas that have the greatest economic need, the greatest level of unemployment; and that this policy will not be a stop gap measure the way we normally do fiscal policy. We have crisis and fiscal policy steps. It is something that is permanent infrastructure, so that folks have an unemployment safety net, some kind of security and we minimize the huge impact from mass layoffs. We always have a public employment option. The Keynes plan was very clear: it’s very difficult to fluctuate big infrastructure projects in short order. What you have to be thinking about is direct public employment. But we normally associate Keynesian policy with building bridges and mass infrastructure investment. All of this is well and good, all of it as necessary, but it’s not a way to achieve full employment. For Keynes, of course, the greatest socialization of investment was very important so that there will be major projects that will be under public auspices. I would call them economic rights. You can think of healthcare, you can think of education, you can think of housing, you can think of various public services, but of course, infrastructure too, and still that will not be sufficient. We still will need to have a direct employment program, and that will be a kind of policy to address community needs. He has these marvelous quotes, he says: There are things to be done. There are people to do them. Why not put the two of them together? Why not put people to work? The country is not a finished proposition, far from it. It’s crazy to sit puffing one’s pipe telling the unemployed that it would be most unsafe to find them any work. I just love it, and everything that you read, you see how he had a very strong social concern. Something that I don’t know if people normally associate. He had a concept of the good life. And I think that that motivates a lot of his writings. He says that goodness is never really the problem, it’s cleverness. We just need to devise the means, we have to find new mechanisms to secure full employment. For me, the job guarantee very much falls in the spirit of this Keynesian approach. The contemporary fiscal policy is this very much top down hydraulic approach, where we just provide mega contracts to the mega firms with mega profits. Firms that, as we know, thrive on predatory labor practices, predatory pricing practices, and that is an upside down kind of approach. We count on this to stabilize our economy and bring full employment, which of course it doesn’t. So then we redefine the problem. We say, well, there’s only so much we can do, we have to live with some level of natural unemployment. That was an anathema to Keynes. I can go on and on, but I would say that Keynes does preempt the NAIRU debates in his own work, because he is very clear that the closer you get to full employment, the more you attempt to secure it by generalized means, by aggregate expenditure, the more income will go to the capital share, rather than the labor share. And you’re already going to be creating income inequality through these aggregate measures, by directing them to sectors that are already saturated, that are operating at maximum capacity, and you’re just going to feed the profit share. This work is then, I’d say, augmented by Minsky’s own analysis, which also informs my own work, where he talks about how the there is an inequality within the labor share, because we tend to stabilize the employment chances and opportunities of those who are employed already, and those who are high wage folks. The current paradigm is very inequitable, so we go back to MMT and say, Okay, we clearly have extraordinary spending powers. What should fiscal policy do? Should it mimic private sector investment behavior? Should it try to stimulate investment-led growth? Or should we find a kind of bottom up policy that acts as a robust, automatic stabilizer that stabilizes wages at the bottom and secures full employment over the long run?

Scott Ferguson:  My next question, I think you’ve already begun to answer it. But I want to be more explicit about this question. And it has to do with politics and power. Certain interpretations, especially on the left of Modern Monetary Theory, usually verbally linked to accusations that MMT is just warmed-over Keynesianism is that: well, MMT is merely technocratic. It’s offering a bunch of technocratic fixes, but it has no analysis of power and has no relationship to power. Of course, we at Money on the Left do not believe this at all. But we want to give you a chance to respond to that kind of criticism.

Pavlina Tcherneva:  In some way, I understand where the criticism comes through. My proclivity is to get some of the macro right. But that is not to say these policies, as we articulate, are a shoe in for our political landscape. It’s almost like a doctor, you need to know the medicine that’s right. Whether that is going to work really depends on the patient. It depends on the social circumstances. It depends on the context within which we’re practicing. It depends on so much of the social reality. I think that the second thing to say is that MMT really makes very clear that money in and of itself is a political project. That it emerges within the context of some exclusive powers and those powers, whether it is the power to tax, whether the power to compel somebody to work, whether it is the power to command resources, all of that, you need to have a political analysis and historically contingent analysis of how a monetary system would work. I would say MMT, long before the critique, was the one that developed a kind of a spectrum, I would say, for sovereignty. We began with, in fact, studying a non-sovereign regime. A lot of our work began by looking at the Eurozone, and that was a political project. That was a project that chose to integrate Europe via structural adjustment. I would say from the very beginning, we zeroed in on these political forces that created a very dysfunctional framework, which then deliberately constrains the capacity of the state to act. So I would say that in all of our work. I think at core, our focus has been on how to emancipate the state from not just myths about government spending, but from this kind of neoliberal logic that the state can’t act. We need private actors. We have to solicit large private capital to do social investment. I mean, this is really the reason behind our insistence that the state has capacities–capacity to spend, capacity to act–because we, at bottom, would like to have a more just, if you will, democratic order. Very often it’s true that we say that the MMT precepts are there for the taking. Autocrats can take them, right? Authoritarians can take them and they do often. So we want to be able to articulate a vision of what a democratic social order might look like, and this is where we might disagree with what are the objectives of a public policy. We will indeed insist that full employment will be front and center. Not full employment as an abstraction, but as a real thing. What does it mean to have full employment? What does it mean to have decent jobs? What does it mean that every person should have access to dignified employment opportunities? In some ways, I’d like to skip over the question of how we will pay for it so that we can start talking about the difficult questions. Should we have an economic system where some people are denied employment? On what grounds and bases do we deny them? I think the politics are very much wrapped into these myths. We can’t really put a stake through current political, I would say institutional obstacles to doing public policy, until we shed some of these myths about jobs, about the state, about its funding capacity, etc.

Billy Saas:  Talking about power, I think it’s interesting to reflect on the recent history of MMT. As an aside, warmed over Keynesianism is pretty good on reflection when Keynes is such a great writer. And you can go back and find so many beautiful quotes and so much evidence of his literary and philosophical sophistication and the inseparability of its theoretical, economic insights with the normativity of those insights and his kind of normative preferences. A long aside there, but just a shout out to warmed-over Keynesianism on its own. We had a great episode with Matt Seybold, host of The American Vandal podcast a couple months ago, where Matt talked with Scott and Rob about the literary character and interest and emphasis of Keynes writing. The recent history of MMT is of great interest to me and something that I have written and researched quite a bit about. I want to simultaneously do two things: one, run my understanding of that recent history by you and see if I can get a verification, and maybe correction, but then also ask you to kind of reflect on as, especially over recent years, there have been more numerous and I think, very interesting, sometimes difficult encounters of MMT with power. Y’all have gotten very close to it. Right? In terms of the body of theorists and the discourse of MMT has been in the mainstream press a lot. They’ve been in the conversations and important policy discussions. So two-parter. MMT we got here rough and ready. It starts in a listserv, as a conversation between a number of people across the world, the post Keynesian listserv. It starts to take off in the early 2000s, and late 1990s, through your own research through Randy Wray’s writing, through the publication of Stephanie and others. Then the blogs happen. And that takes off in its own little way. But it’s not until the financial crisis that the MMT narrative really kind of takes shape, and gained some popularity in the blogosphere and on social media. Of course, Bernie Sanders’ ascension as a kind of figure of interest on the left, and Stephanie’s proximity to him, brings that narrative more to the mainstream. I think, what I’m interested in as a communication scholar, is the rhetorical strategies and how they’ve sort of evolved over time and talk about power, in the context of economics. It is notoriously concentrated in a few departments, with PhD programs, and then they train students who go out and spread the gospel of neoclassical or orthodoxy and whatnot. So part of the story of MMT is, and this has shown up a lot, I think, in the work of your own and others, reflection on what has worked in persuading people to see the world and the economy in the way that y’all see it. You talked about the myths that are constantly presenting themselves, they seem to never die. They’re just always there. They’re incredibly resilient about balanced budgets and so on. There’s a long list. The way I sort of see it now, and again, more interested in your response to this than my hypothesis, is that those hang ups, those myths and the rhetorical strategy of MMT scholars and the MMT community generally, to focus on debunking those seems like there might be some limitations to it that I think you’re acknowledging, right. You talk about, we need to sort of outline and have the difficult conversations that come after answering the simple one, which is you pay for it, because you have the money in every case. So when we’re having the conversation that we’re having right now, in 2024, MMT has had some really big moments. It’s come under controversy in the context of inflation. I guess, to wrap up my very, very long question, do you agree that what am I missing, and then narrative of the kind of history of MMT and the importance of thoughtful rhetorical strategy, which y’all wrote about and talked about a lot through the blogs. Here’s what we’re doing, to now where we seem to be at a kind of, and maybe have been for a moment at a pivotal point where the strategies are they working, as well as they once did? And what needs to happen next?

Pavlina Tcherneva:  That’s a really great question. I hope I can give you some satisfactory answers. But strategy, I think, clearly has to evolve for the moment that you’re faced with. In some ways, we stumbled upon a strategy early on, because so much of what we were saying was different from the mainstream, that we had to be very clear. Sometimes when you pare down a concept to its bare essentials, it was provocative, right? Taxes don’t pay for federal spending, it gets very provocative. And it’s a double edged sword. Because, you know, when you look at the institutional analysis, when you look at how we’ve constructed our laws, how our entire polity is surrounded around the question of a taxpayer myth. It is a really big challenge to communicate to folks that operationally, taxes don’t technically fund the government. But the clarity of the statement has been also effective because it’s attracted attention. Oh, what are those folks saying over there? Why are they even saying such a preposterous thing? And then what we’ve done is we have done the hard work to show the operations and to show the technical aspects of government finance. This without a doubt is MMTs strong suit. But as you say, just because you can demonstrate the technical aspects, doesn’t mean that folks might be convinced that that’s good enough. I think the other strategy has been, and here, you know, the economy offers no shortage of teachable moments, is that we have been able to articulate what is happening in the face of major crises, to offer a fresh perspective. It is unfortunate that crises lend themselves to concentrating the mind, and getting folks to acknowledge what is happening. I think that, in my work, I have tried to articulate how this new paradigm of whatever it takes financing is really the perfect illustration of some of the things that MMT has been saying. MMT has never been advocating whatever-it-takes financing, MMT has been articulating how the mega support that big monetary policy provided to the banking sector will not do the job. It won’t pull the economy out of a crisis, and it won’t stabilize the financial sector. Now we’re looking at mega fiscal policy, right? We have the return of Big Fiscal policy. In some sense, it’s a little silly that MMT is blamed for the return of fiscal policy. Because I think we just learned our lesson that monetary policy didn’t do the job. We slogged through the greatest jobless recovery, and now that we embrace the fiscal tools, voila, we have the fastest postwar recovery. So MMT has been there front and center, articulating what is happening and that there are ways to do things better. Even when the mega fiscal packages were being passed, very early on in March 2020, it was saying, Look, you need to have a concrete mobilization and employment and investment strategy, not just spend the money. As a communication strategy, I would say that we are using these moments to offer, I think, new ways of thinking about public policy. What is next, I think, is, well, we are now seeing the return of big industrial policy. In a way, I feel that fiscal policy has morphed into that. Fiscal policy provided reasonable economic security for folks during a very uncertain, devastating time. We had child allowance, we had income support, expanded healthcare. We had a moment in which we saw what could be done, and then that quickly disappeared as the policies expired. That is being morphed into like another big government policy, big industrial policy, but it’s again, wrapped in this neoliberal logic that we need to get private equity and investment funds to mobilize finance for the purposes of the green transition. One strategy is to always connect to what is happening, because, even though we’ve seen the return of the big three, we don’t exactly have a fundamental structural transformation of the economy. Folks are still experiencing the same problems that they were experiencing, prior to 2008. So this connects me more to what’s the next step? I do think that articulating the vision is essential. It’s not just the technical aspects. We’ve been there. We’ve explained that. If folks want to take an honest reading of what we have done, then all we can do is remind them that these last 20 years clearly demonstrated that the pay for question is bogus. It is clear, and I think that we shouldn’t entertain for a moment, reasonable economist talk of the old talk, but austerity is back with a vengeance, right? Budget cuts back. We are already reneging on climate commitments. Yeah, I’m talking about globally, right in Europe. We certainly don’t have a bold green agenda. Now, where did that energy go? I think that the return of Big Fiscal and Big Industrial is what took the air out a little bit of that energy. That we have seen things we hadn’t seen in a very long time. Now we are seeing bold Keynesian policy that we hadn’t seen in a long time. We’re a little bit, and I don’t mean we, I think the progressive movement is regrouping. Where is the next kind of major battle for our future. MMT, here, maybe I’m wrong to assume that we have won the pay for question, but to the extent that these old frames are being weaponized, it means something else is missing, right? It’s not just the technical analysis that needs to be clearly articulated. I can show you endless balance sheets and show you how with coordination without coordination, the bills are paid. But it clearly is not sufficient. I think one of the things that MMT can do is articulate maybe a little more clearly that we need to have a lid on government spending, not a lid as like budget debt to GDP ratios and deficit to GDP, but a kind of a conception of what is too much. Because I think that this is one thing that MMT unfairly suffers from, that somehow we’re being blamed for runaway spending and endless money printing. As we were talking earlier in our conversation, we’ve always had different measures for what is enough and what is appropriate and what is spending that serves the public purpose. What we’re seeing is very much this whatever it takes spending paradigm that validates a highly inflationary industrial state. An industrial state where power is resolutely in the hands of big tech, big corporations, big finance, as I said, with pricing power with, you know, abusive labor practices. This is a very inflationary paradigm. The big finance that is now being extended through industrial fiscal monetary policy validates these power structures, validates, underwrites these pricing powers, these abusive practices. I think MMT’s next question will be how to articulate that this way of using the public purse actually undermines the neoliberal structure. So I don’t know if that really answers the question of what is a good strategy to communicate these questions, but at least in terms of where the ideas are. People, in their gut, feel some kind of unfairness. Why are they so angry with the government budget? Reagan managed to sell us on the lie that we don’t have money, but actually, he repackaged folks’ anger with the big contracts, the big support for the military industrial complex into a narrative that we don’t have money. That was a huge coup. Now that we have exposed this as a lie, we still need to go back to the question of, why are we funding forever wars? Why are we funding industries that deliver very little by way of public goods, and certainly good jobs, and we can’t solely be relying on direct action and unions to do the job. We need to have public policy to upend that neoliberal logic. Again, in terms of communicating, I think going to folks’ anxieties about how this economic system doesn’t work, and deploying powers of the state is one way, but also kind of emancipating. We need to have a positive vision of the state,

Billy Saas:  That was wonderful. Yeah, brought to mind. When I think about the recent history, which is pretty much all of the history of MMT, as a body of theory and research, I wonder in thinking about communication and rhetorical strategy for getting the message out, I wonder if you have any models in mind for previous economic thinkers or bodies of literature that have overcome or somehow succeeded in becoming? I’m thinking specifically of neoclassical and Milton Friedman and neoliberalism’s ascension. Maybe another way to say this or ask this question in a more direct way is: is Milton Friedman maybe a good role model for rhetorical adaptation and strategy, given the apparent success of that school of thought in the 70s and 80s, when there was, part of their story, a breakdown of Keynesian thinking, which we know is not full Keynesian, not even warmed-over Keynesian thinking, in the 1970s. But yeah, are there other models to look at for strategies for being ready when the crisis happens, to strike? Right? And maybe not so violently in terms of, you know, an aggressive strike, but maybe MMT wasn’t ready in 2020? And how might it be ready next time?

Pavlina Tcherneva:  Well, I’m not sure that that is necessarily true. In what way can we think of MMT as being ready? In my understanding of the events that unfolded, MMT, in some ways, gave permission to policymakers to embark on bold policies without having to invoke the deficit myth. We’ll take credit because we mainstreamed this idea. We made it unacceptable to talk about how the government “doesn’t have the money”. The reality is that, throughout history whenever there have been major crises we have responded. The public sector has responded to whatever they’ve considered policy priority. What was different is that we didn’t return so quickly to have some kind of fiscal commission to some kind of mind the budget, rhetorical policy, even though it’s being weaponized at the political level. It’s just not really taken too seriously at this point until maybe, you know, Republicans come and they start slashing budgets. But as we know, the kind of support for industry, I suspect the support for industry is not going to go away. Europe has not really rushed to reinstate its fiscal rules. They’re mulling that over. There is some kind of budget crunch happening, but at least I feel that it is not looming on the horizon. If anything, MMT and if you remember the famous Mario Draghi statement, “is this the best way to allocate liquidity when it’s a matter of the green transition or inequality. No, it probably is not the best way to allocate liquidity and some new ideas like MMT, we should look at them.” I think that this was exactly the reason why Europe reverse engineered its monetary sovereignty. They understood where the straitjacket was. They had to break their own rules. Of course, this was not for the purposes of funding governments, it was really for the purposes of stabilizing yields and bank balance sheets. There is kind of an ideological battle there. Right. But how can we be ready? I mean, I think here, it is probably a question of what policies do you have on offer. The one most closely associated with MMT would be the job guarantee, although we have for a very long time talked about the downsizing of the financial sector. Certainly Randy Wray had written a lot about it, we here at the Levy Institute, for decades have been talking about financial reform. We have ideas, we’ve made statements about Medicare for All, housing guarantees, etc. So in a way, the framework is there for economic security. I don’t know if it’s rhetorical strategy that will get us there, or another fluke and another accident. Some other kind of crisis, where, you know, this will be the next idea, one of these is going to be the next idea on offer. I think you are correct. Rhetorical strategy matters, because folks have to believe in what is happening. They shouldn’t feel like the wool is being pulled over their eyes, and that they need to understand these are good measures. But what I have found in my research over the years is that the job guarantee, for example, even though it wasn’t part of mainstream conversation for such a long time, has polled very well. Even in places where then the idea is just newly introduced, it just consistently garners very high support. I will admit, even to my own surprise initially, but then you look at how bipartisan the support is, and it just makes sense. Our own history teaches us how popular the New Deal was, and how many folks called themselves Roosevelt Democrats because jobs were brought to their communities, and those were important reforms. So, I’m not sure if I’m answering your questions satisfactorily. But is Milton Friedman the model for communicating? Well, to the extent that he has made provocative statements, maybe MMT, should continue to do that, just to rattle the mainstream and bring attention to some of our ideas

Billy Saas:  I am just to clarify, I’m not suggesting that Milton Friedman was some sort of rhetorical mastermind, a lot of it was right place, right time, and serving the interests of power, and that’s entrenched at that moment. Yeah, I think that there are different considerations when you have an agenda that is not explicitly about enriching a certain amount of the population at the expense of the rest, but is about serving the public purpose.

Pavlina Tcherneva:  Let me make a comment on what has dominated the conversation over the last 20 years and I have contributed to this as you know, the question of inequality. As you know, economists didn’t talk about inequality for many, many years and that mainstream economists euphemistically referred to inequality as poverty. So the distribution of income was not really seriously taken until recently. At least in some of my work, I’ve tried to show how just the way the economies work and the way they’re stabilized, does not bring better income distribution, if anything, it makes things worse and worse. But I am worried that in that conversation about inequality, we have lost the conversation about economic security. We do understand that there is a fundamental unfairness if an economy is really shoveling all incomes and rewards to a very small group of people. But that alone is not enough. Why is the bottom 90% not able to make the good life? The so-called good life? That’s really, I think, the fundamental question of inequality. It’s not a question of income. It’s not a question of redistribution. It’s the question of pre-distribution. There was a little bit of a conversation about redistribution, but I feel that that did not take hold, as much as it should have. To the degree that we can return to that, like, what does pre-distribution mean? What does it mean for folks to have decent market income? Is that enough? What can you get with your marketing? I mean, are there preconditions to good life that are provided. The fundamental anxieties are problems that families face and are the same. This is not just the matter of income level. Yes, most people have challenges providing for health care, education, housing, but none of us are insulated from the vagaries of a financial market. Rich or poor, we all fall prey to a system that is highly unstable, very speculative and precarious. So one of the things that we have been doing at the economic democracy initiative is trying to shine a spotlight back on the question of precarity and the uncertainty of livelihoods to expand the scope. Of course, jobs to me remain critically important. But to expand the scope of what that precarity entails.

Scott Ferguson:  So you’ve made the transition for me because I was going to ask you next to tell us about your recent project, the Economic Democracy Initiative.

Pavlina Tcherneva:  Well, yes, the Economic Democracy Initiative is a project at Bard College, which as the name suggests, tries to address the fundamental questions of what we once called economic rights. Our research, our policy outreach, our curricular programs, really tried to get to this question of the structural transformation that might be required for a more democratic social order, we have a few major projects. One is this symposium on what happens after neoliberalism. And there we engage with a series of topics. But the two dominant themes, and what sets this project apart from other projects on neoliberalism are two specific areas. The first one is the area of precarity. That’s a fundamental force that reproduces the neoliberal economy. I already talked about this. We don’t see illiberalism, or the rise of authoritarianism, as some kind of evidence of the Crisis of Neoliberalism. To the contrary, we see that as a consolidation of neoliberalism. It’s because liberal democracy has failed to address the question of economic insecurity. So that’s like the first overarching theme. The second overarching theme is an MMT informed theme, that we want to look at this interdependence between public and private finance, and really zero in on how we can emancipate the public purse from private interests. That can happen both at the policy level but also legally and institutionally. As I just discussed, the states respond to crises with whatever it takes financing strategies, but they don’t do the same for the purposes of the green transition, for the purposes of securing the social safety net, so I have a piece that’s coming out on that symposium on this precise question. Then, we explore various other sub topics like the future of work, what is a diagnosis, what is ailing the 99%, what varieties of capitalism, if you will, or trajectories for social transformation. We try to interrogate emergent futures, etc. So this is a long form symposium with long form pieces. I urge you to see it, and the website is The second project that we’ve been working on is a project around the job guarantee, we have curated a resource, online resource, which not only presents interested researchers and policymakers with the vast body of literature, academic policy, and other, but we also have a global map of programs, which have been tried large or small, that have some of the features of the job guarantee, or at least aspire to kind of a job guarantee model, we don’t obviously have a fully fledged job guarantee anywhere in the world, although there is a major program in India, which I think is still not well known by many in the West. It has provided a lot of interesting lessons about implementation, and impacts of a job guarantee in a developing context. So we have anything from polling information to various legislative documents. It’s a resource for the taking, we also have highlighted the Living New Deal map with legacy projects of the New Deal in the United States. So that’s the second research project. We are now seeding research, as I said, on New Directions In Finance, together with the Levy Economics Institute, and we had a fantastic workshop in November, all the videos are posted on our YouTube channel. So I invite your listeners to look those up. So I’m wondering if you can say a little bit more about pedagogy in the EDI curriculum? Yeah. Some of the programs that we have put together are accessible to students all over the world. Bard College is part of a broader university network, with institutions with whom we’ve partnered for many, many years. Some of the things that we’re doing include summer workshops that are attended by students from virtually every continent, as well as crafting courses that are then also offered at partner institutions. We have a certificate in public policy. The basic philosophy behind the certificate is that one cannot consider themselves an informed policymaker unless they understand the intellectual history of some of the policy ideas. So one of our core courses is actually a course called Economic Perspectives, which I teach at Bard, that is a history of economic thought course with a policy twist, where students try to grapple with the grand debate around ideas such as the minimum wage. Why do they disagree so much on a minimum wage policy and on living wage policy? This tension between markets and state, we try to explore this in this critical way, both when they learn their intellectual giants, but also how these ideas are being applied today to public policy. So that’s the first component to that certificate. The second one is that, well, an informed policy maker needs to know something about economic history as well. We have a number of courses that do that, but one of the ones that I have created is the course called The Right to Employment. That basically studies the struggle to secure the right to employment through time, but in a very interdisciplinary way. Students do get introduced to, again, some of the battles of economic ideas, a little bit of modeling, a little bit of theory, but also legislative documents around the world, various international debt declarations, and concrete policies that have attempted to secure that right to employment and we have a number of other curricular programs. One of them, as I said, is a summer workshop, which is open to undergraduate students. It does provide a new approach to public finance. Again, it is an introduction to some MMT ideas, but it does provide a framework of core policy goals around which discussions of money take place. So the framework is one that is centered on questions of stability, sustainability, and security. This provides us with the context in which we can explore questions of the green transition, macro questions of how do you stabilize an unstable economy? What is security, the multi dimensional ways in which we can think about economic security? These have been really great fun. MMT has typically engaged with the graduate community, and now we’re engaging with undergraduates. Sometimes education happens in mysterious ways, not in ways in which you plan it. So one of the most recent things that I learned about is that currently there are high schools across the country that are debating the job guarantee because it has made it into the national debates. The proposition that is being discussed this year, and the background literature is actually put together by the Librarian of Congress, and that proposition is that the government should substantially improve income distribution by implementing a federal job guarantee, basic income, or Social Security. I have been hearing from students and debate judges and program managers from around the country telling me that the job guarantee really is emerging as a favorite, as a topic of great interest. Students have been studying it for the last few months in preparation. This has been really, really heartwarming and really just phenomenal to hear.

Billy Saas:  It’s so cool, not something that you could plan for or sounds like you would have planned for at all.

Pavlina Tcherneva:  No, I didn’t, I had nothing to do with it. I received an email from a program manager who said, “Did you have any idea that this was happening?” Since then, I have been asked to connect with students. I’ve received emails from students with questions. So it’s just really fantastic. Young people are engaging. There’s something in the air because I was asked to give a talk to another high school just like a month ago and there were like 500 students in the audience and their eyes were like this. And yeah, I don’t know. But the Chicago project managers said that the students were putting together their own proposals for a job guarantee. I will vote for them.

Scott Ferguson:  That is fantastic. That is so wonderful. So one of the final things I’d like to ask you about, if it’s kosher to respond to this question, but I know you’ve done some research and publication with the UN. Could you talk about that work and maybe think about how you seem to have a global framework whenever you’re discussing any of these issues, but it seems like the work with the UN is very much explicitly addressing questions of poverty and jobs policies in an international context.

Pavlina Tcherneva:  Yeah, absolutely. Last year, I worked with the Special Rapporteur, the UN Rapporteur Olivia De Schutter –he’s the Special Rapporteur on extreme poverty and human rights– in developing the new UN report on the job guarantee. I think this was a really, really important document because it is, of course, an international statement of the importance of the policy. The angle that he took was primarily poverty eradication, because in the vast majority of the world, you know, this is an acute problem, and the employment strategy, I would say, is probably under emphasized. Of course, the ILO has been doing this for many, many years, but it is important that the UN had a statement, because in some way, there’s a kind of formal presentation of these policies to nation states. If they so choose to reflect, then they have to make a formal position and some kind of statement on the document. There’s some interest in the international level, they have been interested in Brazil and Colombia, folks who are thinking hard about this kind of employment intensive strategy for development, and the job guarantee specifically. Some of the work has filtered into other legislative work  organically and naturally. We had worked last year to build a job guarantee coalition in Europe, I had worked with a European MP Aurore Lalucq, who was also instrumental in drafting a resolution for the European Union on just transition and good jobs. The document is also very, very powerful, and it also includes the job guarantee proposal as part of that framework. I think what we’re looking for here is shifts in thinking and policy and strategy. I think it is fair to say that the job guarantee is a policy innovation. There have been direct employment projects, active labor market policies that will be implemented in various contexts, whether it is to address gender issues, poverty issues, crisis, youth unemployment, but the job guarantee as a framework for employment security, employment safety net, does represent, I think, a shift in the policy and the mainstream thinking about about these issues. So it’s good to see that there is some kind of international recognition, and hopefully, that can also translate into concrete policy action. Certainly in Europe, there are various experiments that are ongoing, and they are really good to study. They give us some really good insights into the health effects of these programs on people, the community effects, and the way to run the projects to administer them. It’s really, really important work.

Billy Saas:  In this context of an international statement through the UN on a job guarantee, I wonder, is there space you think for, or has there been much discussion of exploring a policy of an international job guarantee? What that might even look like? If it’s possible in any sort of way, shape or form?

Pavlina Tcherneva:  I like your ambition, Billy. I mean, at the end of the day, isn’t that the logical conclusion of the job guarantee? It is important for developed countries to do it, to lead, to set the tone, to demonstrate to mainstream this kind of policy focus. But what I have found is that perhaps the greatest interest currently is from the developing world, because unemployment is such a huge, acute problem, and the largest scale experimentations in recent history happened there. Argentina, South Africa, India. But I think at the end of the day, you’re right, we want to have a full employment framework everywhere. I should say that once the international community did recognize this very clearly, certainly in the UN charter, the ILO Charter, the WTO charter, the initial charter. The idea was that every country has to pursue full employment so that we can benefit from whether it has benefits from trade, whether it is from other cooperation, economic integration.

Billy Saas:  Well, this has been wonderful. Pavlina Tcherneva, thank you so much for joining us on Money on the Left.

Pavlina Tcherneva:  Thank you for having me. It was great to talk to you

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)