Thread by @rohangrey

Okay, as discussed, a thread with some links for @moneymind_ANEP regarding his claims about MMT. Gonna be a long one, so fair warning. Specifically, I’m referring to the following three big claims Wolfgang has made, which can be found in this thread:

https://twitter.com/moneymind_ANEP/status/1170691367565189121

The claims are as follows:

1. ‘MMT applies to countries other than the US, but not to the same degree … MMT tends to implicitly presuppose in a model-platonistic manner that all 200 states had the same quality of institutions, and does not connect to the state-building debate’

2. MMT ignores the actual practical workings of institutions…institutions are presupposed, & even if they are taken into account it’s presuppose they are the same everywhere, & institutional quality is not looked at

3. MMT has only a partial view of law that ignores private law

First, as noted in my initial response to Wolfgang, the first claim reflects a misunderstanding of what MMT is. It is not first and foremost a set of policy prescriptions that presuppose a high degree of monetary sovereignty. It is a descriptive framework that discusses the

implications of both having, and not having, high degrees of monetary sovereignty. A lot of the analytical work involves exploring the capacity offered by having a high degree of sovereignty, but that analysis is not only applicable to countries that enjoy sovereignty today,

it is applicable to any country seeking to understand what changes will achieve greater flexibility. In the same way as a theory of human development may stress the greater capacities adults have vis-a-vis children, without making that theory inapplicable to children as well.

This is clearly seen, for example, in the fact MMT authors were among the earliest and most vocal critics of the Eurozone on the grounds that it involved an abrogation of monetary sovereignty by individual states towards a supranational political entity, and exploring why that

abrogation in turn limited policy options in ways that could cause serious problems (and it has!). Much of this analysis was geared specifically at understanding the unique institutional and legal constraints of the Eurozone. For a brief list of some of this work, see, e.g.:

amazon.com/State-Market-E…

e-elgar.com/shop/eurozone-…

amazon.com/Monetary-Europ…

levyinstitute.org/search/

levyinstitute.org/topics/eurozone

neweconomicperspectives.org/?s=eurozone

Just as a starting point.

It is also seen in the work of developmental scholars, and scholars in developing countries, who use

a MMT lens to analyse the limits implied by their countries existing institutional and policy arrangements. This includes, for example, the work of noted developmental economist Jan Kregel, i.e. here:

levyinstitute.org/publications/j…

w full list here:

cas2.umkc.edu/ECON/economics…

As well as Brazilian scholar Felipe Rezende, i.e.

neweconomicperspectives.org/category/felip…

papers.ssrn.com/sol3/papers.cf…

papers.ssrn.com/sol3/papers.cf…

along with The work of Jesus Resendiz on applying MMT in Mexican context (twitter.com/Tlacuachito), Jesus Felipe at the Asian Development Bank, & others.

I’d also mention here that noted MMT Scott Fullwiler recently coauthored a report for the ADB-BAPPENAS on ‘Policies to Support the Development of Indonesia’s Manufacturing Sector’, which can be found here:

adb.org/sites/default/…

In addition to the work published at the

Levy Economics Institute, which covers all regions of the world (not all of it completely within the MMT paradigm, but much is):

levyinstitute.org/research/the-s…

As well as the broader work of Fadhel’s center, the Global Institute for Sustainable Prosperity, and the various scholars

there who regularly advise on developmental policy in the Middle East and elsewhere:

global-isp.org

(see, e.g. global-isp.org/working-paper-…)

It also includes work undertaken to explore the contexts in which countries may struggle to develop monetary sovereignty based on

historical conditions, such as this early piece from Nathan Tankus and Nathaniel Kline:

nakedcapitalism.com/2013/05/nathan…

As well as the recent book by Ndongo Samba Sylla (a keynote speaker at the upcoming 3rd International MMT Conference) and Franny Pigeaut on monetary sovereignty in

the context of the Western African Monetary Union, which explicitly cites MMT as an inspiration and key framework for its analysis:

amazon.fr/Larme-invisibl…

As well as the conditions under which monetary sovereignty may be generated, and how, such as this talk by Nathan Tankus

on the spectrum of monetary sovereignty:



At the same time, there are a number of countries that do enjoy sufficiently high degrees of monetary sovereignty such that they have greater degrees of fiscal space than currently implied by their institutional

and policy arrangements, beyond the United States. These include, most notably, Australia, where original MMT developer Bill Mitchell has run a center that has produced dozens of detailed empirical and theoretical papers and reports on economic development in a small, open

economy context, as well as advised for the Asian Development Bank and other major international organizations. The center and its publications can be found here:

fullemployment.net

As well, of course, as Bill’s blog, which has dozens of posts on the specifics of the

Australia economy:

bilbo.economicoutlook.net

As well as Japan, the UK, New Zealand, and others, which can also be found at the above links and elsewhere. A special shout out to a friend of mine, @AskerVoldsgaard, who recently published his master’s thesis exploring monetary

sovereignty in the context of Denmark, showing that students are also finding inspiration from the MMT framework and applying it to their local (non-US) contexts:

https://twitter.com/askervoldsgaard/status/1035505460386979840

Clearly, the fact that MMT scholars and students have engaged directly in empirical,

developmentally oriented work in a range of countries with unique contextual considerations and institutional arrangements shows that they aren’t trying to peddle a one-sized fits all narrative that applies equally to all contexts. Indeed, the entire point of providing a general

framework of monetary sovereignty is then to compare it to specific contexts in order to evaluate the degree to which such contexts do or do not meet those conditions, and then analyse the implications that follow from that fact.

Moving to the second claim, that MMT ignores the actual practical workings of institutions and institutional quality. First, MMT has emphasized from the very beginning the importance of a detailed institutional analysis of monetary operations (arguably more than other PKers),

including intra-governmental agency dynamics, such as Stephanie’s article exploring how taxes and bond sales work in the context of fiscal deficits here:

levyinstitute.org/publications/c…

Or Fullwiler’s article tracing the inter-institutional operational steps involved in fiscal spending

in the US context here:

papers.ssrn.com/sol3/papers.cf…

Or it’s detailed understanding of primary dealer markets, such as Eric Tymoigne’s piece here:

levyinstitute.org/pubs/wp_788.pdf

Indeed, many MMT scholars consider themselves working in the tradition of Hyman Minsky, who always and

everywhere emphasized understanding the institutional arrangements and innovations that emerge endogenously from financial systems.

Hence, MMT scholars such as Randy Wray and Yeva Nersisyan highlighting the importance of the shift towards a shadow bank-centric world, here:

papers.ssrn.com/sol3/papers.cf…

And designing proposals that go into detail in terms of proposing new institutional arrangements for the financial system, such as here:

levyinstitute.org/pubs/ppb_115.p…

digitalcommons.bard.edu/cgi/viewconten…

huffpost.com/entry/proposal…

Or understanding corporate taxation and

other possible ways of curbing corporate power, such as Nathan and my work here:

papers.ssrn.com/sol3/papers.cf…

In addition to work looking at the potential for local and complementary currency systems to be integrated with food systems, such as Ben Wilson’s work here:

papers.ssrn.com/sol3/papers.cf…

Or Mat Forstater and Josefina Li’s work here:

books.google.com/books?id=MxVBD…

And @RaulACarrillo ’s work tracing out the legal-institutional structures constraining individual freedom here, connecting MMT directly with Hale:

neweconomicperspectives.org/2014/06/keepin…

And Pavlina’s research into the evolution of state-legal institutions as a vehicle for power:

levyinstitute.org/publications/m…

As well as Mat Forstater’s work on the chartalism in a colonialist context:

modernmoneynetwork.org/sites/default/…

And possibilities for confederalist governance models of a JG, here:

link.springer.com/chapter/10.105…

In addition, MMTers were some of the first to highlight the potential for the coin seigniorage to overcome specific institutional constraints in the context of the US debt ceiling debate, as evidenced here:

neweconomicperspectives.org/2011/08/coin-s…

And more broadly have engaged with the legal

and political science literature around central bank independence, such as here (Randy):

papers.ssrn.com/sol3/papers.cf…

And me:



I personally have written a lot on the unique institutional dynamics of financial systems in developing countries with mobile money

systems, such as here:

binzagr-institute.org/working-paper-…

As well as consulted directly with companies and the UN on new digital currency technologies and considerations for countries around the world to implement, as seen here:

ecurrency.net/static/resourc…

itu.int/en/ITU-T/focus…

And my

advisor Bob Hockett, a MMT ‘fellow traveler’ that has regularly collaborated with MMTers, has written extensively on the legal historical foundations of endogenous money with Saule Omarova:

papers.ssrn.com/sol3/papers.cf…

As well as the corporate law form and its relationship to the

modern banking charter:

scholarship.law.cornell.edu/facpub/1451/

And this is before we get to the historical research that MMT scholars have undertaken on the origins of money and monetary dynamics in pre-modern societies, which obviously implies different institutional relationships:

imtfi.uci.edu/files/docs/201…

levyinstitute.org/pubs/wp_832.pdf

including a broader understanding of ‘the state’ that includes religious authorities:

mospace.umsystem.edu/xmlui/bitstrea…

econpapers.repec.org/article/blaaje…

I’m also conducting research specifically on the privacy implications of monetary system

design, specifically in the context of emerging digital currency technologies:

macromusings.libsyn.com/143-rohan-grey…

So the idea that MMT has some ‘one-sized fits all’ understanding of institutions, and ignores actual practical workings of specific state systems, is simply false.

Finally, moving to the idea idea that MMT ‘has only a partial view of law that ignores private law’. First, from the outset MMT has understood the chartalist point that ‘taxes drive money’ to include things beyond traditional, centrally administered taxes, to include things like

Wergild, which functions more like a form of criminal law centered around fees and fines for private behavior in pre-state tribal societies.

See, for example, Randy Wray’s treatment of wergild and comparison to more ‘public’ forms of taxation, here:

levyinstitute.org/pubs/wp_792.pdf

We founded MMN in 2014 specifically to promote greater dialogue between MMT and lawyers - a project that almost no other (if any) heterodox school of economic thought can claim to have done as seriously:

themorningsidemuckraker.com/the-cost-of-ju…

I and other lawyers in MMN, in recent years, have

extended the MMT chartalist analysis to consider ways in which private law obligations (contract, tort, etc), imposed and enforced by courts, could also anchor the value of currency. See, e.g., here:



And my colleague Raul Carrillo has extended this in

the context of consumer finance and private debts:

neweconomicperspectives.org/2017/09/hy-min…

as well as those incurred through criminal law, here:

tropicsofmeta.com/2017/07/06/wha…

While Hockett has developed a MMT-consistent story of monetary value centered primarily around the legal dynamics

underpinning the enforcement of private contracts, i.e. here:

papers.ssrn.com/sol3/papers.cf…

And Scott Ferguson, who has challenged the public-private dichotomy of law itself:

global-isp.org/working-paper-…

MMN has also organized a number of events bringing together leading private law

scholars to discuss these issues, including Katharina Pistor, such as this event:

modernmoneynetwork.org/content/money-…

And this one:

modernmoneynetwork.org/content/credit…

And Randy Wray has collaborated with and published in legal spaces whose other authors go into significant detail on these topics as

well, such as:

global.oup.com/academic/produ…

MMTers, including us at MMN, also regularly cite to and draw on the work of Annalise Riles, exploring the legal construction of collateral, and the rise of private arbitration as a source of international private law – I personally, for

example, am developing on this topic in the context of a new framework for digital fiat currency for the second chapter of my dissertation, and have discussed her work in numerous public talks, ie:



And of course, this is before we even get to the

prodigious output of MMT lawyer-criminologist and financial regulatory Bill Black, who developed the concept of accounting control fraud and has published extensively on regulation of private finance, accounting, and white collar criminal enforcement:

en.wikipedia.org/wiki/William_K…

neweconomicperspectives.org/category/willi…

I hope this list shows there is far more to MMT’s body of work than may be implied by a 2012 primer written by a single MMT author, designed for lay audiences. Which is why the appropriate thing to do is conduct a proper literature review, and/or reach

out to MMTers to ask about these things before making public claims that such literature does not in fact exist. It is far more time intensive for others like myself to take the time to correct the incorrect statements of people who should know better than it is for those people

to take care before making them.

As Mark Twain said, falsehood flies, and the truth comes limping after it.

/fin