Does Modern Monetary Theory Work Well with a Marxist Perspective on Economics?

Modern Monetary Theory (MMT) and Marxist economics stand in stark contrast to each other. While MMT focuses on how governments make and spend money, Marxist theory is centered around the working classes seizing control of the means of production and implementing a centrally planned economy. This article explores the compatibility between MMT and Marxist economics, including a critical analysis of their key differences and potential points of alignment.

Key Differences: An Overview

Marxist economics advocates for a complete overthrow of the capitalist system. Its proponents believe in the working classes taking control of the means of production and ultimately eliminating private ownership and exploitation. Central planning would be the hallmark of this system, with the state effectively managing all economic activities.

In contrast, Modern Monetary Theory (MMT) is a heterodox economic framework that challenges traditional views on government spending and taxation. MMT suggests that government spending is not constrained by the need to balance a budget or maintain a certain level of national debt. Instead, MMT proposes that governments can create and spend money as needed, with the goal of generating full employment and stabilizing the economy.

Central Themes of Marxist Economics

The core tenets of Marxist economics include:

Class Conflict: Marxist theory posits that the capitalist system is inherently exploitative, with the bourgeoisie (capitalists) exploiting the proletariat (workers) for profit. Means of Production: Marxist economics advocates for the state taking control of the means of production, eliminating private ownership, and implementing a centrally planned economy. Surplus Value: The value created by workers in the production process is siphoned off by the owners of capital, leading to unequal wealth distribution.

Modern Monetary Theory: A Critique

MMT, on the other hand, argues that the government is the ultimate backstop of the economy and does not face the same constraints as the private sector. According to MMT, the limits to government spending are not as strict as mainstream economic theory suggests. Instead, MMT suggests that the government can create and spend money directly to achieve economic goals, with taxes serving as a tool to control inflation.

MMT advocates tend to view government spending as a mechanism for achieving full employment and stabilizing the economy. They argue that by creating and spending money, the government can stimulate economic activity and create jobs, even in times of economic downturn. This approach is often seen as a challenge to the traditional economic thinking that relies on austerity measures and budgetary constraints.

The Job Guarantee Proposal: A Potential Point of Agreement

One MMT policy proposal that Marxists might support is the Job Guarantee. Under this proposal, the government would act as the employer of last resort, offering jobs to anyone willing to work. The pay would be at or slightly below the minimum wage, and the jobs would be designed to be productive and useful to society, even if they are low-skilled.

The goal of the Job Guarantee is to provide an automatic stabilizer for the economy, helping to maintain employment levels during economic downturns. When times are good, fewer people would use the Job Guarantee program as private sector jobs pay better. Conversely, during economic downturns, more people would turn to the Job Guarantee, ensuring that unemployed individuals are still contributing to society and not becoming a drain on the economy.

Implications for Economic Systems

The Job Guarantee proposal aligns with Marxist goals of full employment and socioeconomic stability. Marxists would likely see the adoption of the Job Guarantee as a victory, as it ensures that everyone is employed by the state. However, MMT proponents would view this as a temporary measure, with the ultimate goal being an economy that thrives on its own, with no need for such a program.

In essence, MMT and Marxist economics share a common goal of full employment and economic stability, but they differ in their means of achieving it. MMT focuses on the government's role in creating and spending money to achieve these goals, while Marxist economics emphasizes the need for a fundamental transformation of the capitalist system.

Conclusion

The compatibility between Modern Monetary Theory and Marxist economics is limited but not impossible. The Job Guarantee is a potential point of agreement, as it aligns with both theories' goals of full employment. However, the fundamental differences in their approaches to economic systems and control raise significant challenges to achieving a seamless integration.