at best, cash is a unit of administration, in the absence of an actual administrative structure or cash, what does anyone expect to happen
inflation is just competing demands on administration capacity, and the main one that causes it is capitalists demanding higher markups. hopefully this conversation is done now
if people are trying to administrate in such a way that is less than the capacity of the system, you get secular stagnation, pretty straightforward
this is ben wilson's thesis on cash as a "unit of social energy" except it's a unit of administrative energy. this is the problem with covid response and also the problem with the left imaginary
you can argue over the correct split between state administrative capacity and administrative capacity within the cash system. this is a big un-plumbed tension in MMT-land
the administered prices literature implies that theres no role for the cash system under government administration of prices. the job guarantee is a stalking horse for planning/industrial policy here
the job guarantee as ensuring full takeup of extant administrative capacity within the cash system is different from communism. it's explicitly about the allocation of uncertainty away from workers and towards the state
this isn't a "calculcation problem" like hayek, or a "distribution problem" like marx, the job guarantee is a means of solving an "administrative problem," like herbert simon
the big success of east asian state capitalist formations should force us to ask real questions about what postkeynesian theory implies for cash administration, and how to best break things down between state and cash administration
one of the biggest problems about the cash administrative system is that it is not very good at separating problems in solvency from problems in liquidity. we've known this since bagehot
what's interesting about Keynes' engagement with sraffa in chapter 17 is that the implied structure of optionality in all commodities markets also shows how every market can be subject to a liquidity crisis without there being an insufficiency of that good
it's not that there isn't enough dry pasta, or that enough dry pasta can't be produced, but that people have suddenly discovered they have liabilities denominated in dried pasta.
in a way, harrod's more impossible papers about capacity utilization are a way of asking the question of the "Lucas Surprise Model" on a per-good-market basis following the outline in chapter 17 of the general theory
Anyway, This Has Veered Too Academic, And Sorry For Threading, But Maybe I Should Develop This Thought Further
the problem with the price system isn't the one that leftists usually have, about "price of everything, value of nothing" or even "markup appropriated by capitalist" it's that every commodity is, within the market, in essence, vector-valued rather than scalar valued
it has "value" which is usually something like target rate of return modulo tobin's q for the producing company, "price" which is the price at time t, and "market orderliness," essentially whether it has a dealer market or not
the way that i usually like to get out of this, is to assume that companies internally target "value" and "market orderliness." as Fred Lee says, markets are just sites of market governance.
jan kregel's paper on chapter 17 of the GT works in the same way perry's "dealer of last resort" model of the federal reserve works in New Lombard Street.
when value is normal, price is through the floor, and market orderliness evaporates, the role of the government is to act as a dealer of last resort in commodities, to throw everything in the economy back into normal backwardation, instead of contango
when produced goods are in contango, you wind up with underproduction and a liquidity trap in those goods. if the government guarantees a price as dealer of last resort that is sufficiently high, it can fix the yield curve in an arbitrary commodity market
so, when markets fail to act as sites of market governance, contango torches the whole productive system. this is the liquidity/solvency problem, in slightly more detail
the way that i like to approach this in my daily life though, is through martijn konings' 2018 book "capital and time", and through deleuze (please do not boo).
as a rando, without any ability to govern markets, due to capitalist ownership of the means of production, the correct way to face the world is to again assume a scalar value for all commodities, but the correct scalar value is Liquidity, not value
for an individual person (and yes i'm catastrophizing but a lot of my friends are poor and this is true), solvency is at most an indication of the likely statistical distribution of liquidity in the long term.
so, all that matters is at what rate some given thing can be turned into something else. this is what i mean when i say the below:
what is about to happen is the most extreme disorderliness in labor markets anyone in america has ever seen.
labor is about to go so hard into contango. in the case of services, we actually want this, to cut down on pandemic. what we don't want is service workers going without wages.
a dealer in a market does not want to ultimately use the things they hold. they just want a couple bps to keep paying folks to write FPGA code. the only way out of this market governance is for the federal government to act as a dealer in labor markets
they can simply pay to hold the labor and let it expire, as they should in the case of service workers right now. they can also redirect other labor that gets bought up, ideally towards medical mitigation and infra buildout
the fact that orderliness in the labor markets is contingent on there being a dealer backstop is why the federal job guarantee is the only real solution in the absence of pre-existing east asian style state administrative capacity
why MMT is important is that labor market participants have liabilities denominated in the currency issued by the backstop dealer in the labor market. the federal government has unlimited firepower to ensure orderliness in these markets, which they need to do
states can easily withstand uncertainty in labor productivity, even over extended crises. labor cannot withstand uncertainty in wages, most americans can't withstand $400 of uncertainty.
I Realize I Dropped The Deleuze Thread, People Dont Want To Hear About Loosing Invariance To Transforms, And How Arbitrage Functions Like The Differentiation/Differenciation Dynamic in Difference And Repetition. Please Email Me If You Want To Know
but ultimately, all markets in a monetary production system are financial markets. orderliness in product markets works the same way as orderliness in financial markets. bankruptcy law is the original implementation of this insight
the reason we have bankruptcy law is to hold constant different variables in the vector values had by the commodities that constitute a no-longer-going-concern. what we are doing economy-wide is an unnecessary disorderly bankruptcy
labor is, for marxist reasons, always the most junior creditor in liquidity terms. the role of the state as countervailing power has to be to protect them. we need a framework that looks a lot like the federal reserve intervention into financial markets, but for labor costs
People's QE is this, paying out the optionality on labor and maintaining orderly market governance structures for when things return to normal. if 25% of the workforce becomes unemployed, and has to reassemble in an environment of pervasive contango in product markets
the great depression will look like a beach vacation.
(@TheStalwart this is the medium-form version of the tweet about a liquidity trap in canned tuna)
