Following Peter May’s mention in his blog of the 8th January of Dr Fadhel Kaboub and Modern Monetary Theory (MMT), and his advocacy of proposals for job guarantee initiatives, I happened to spot a link to a presentation by Dr Kaboub in a TRUK blog (http://www.taxresearch.org.uk/Blog/2018/05/05/the-case-for-a-job-guarantee-in-the-uk/).
The presentation is worth watching in full, not least because it contains a fairly straightforward explanation of MMT, and because, in a brief aside, Kaboub takes issue with the term Modern Monetary Theory, because, as he rightly points out, it is not a theory but a description of how money creation actually occurs in countries that enjoy full financial (monetary) sovereignty (e.g. US, UK, Japan, Australia, China, etc). Thus, a far more accurate term would be something like (my suggestion) Actual Monetary Practice (AMP), or, as Kaboub notes, a term that acknowledges that what is being referred to is a system (Actual Monetary System, perhaps?).
Of course, the issue of MMT being a misnomer has been raised by Peter May before on this blog and is a serious one in the sense that use of ‘theory’ means MMT is a “loaded” term. By that I mean that most people (and I know this from many years teaching undergrads and postgrads) take theory to mean we are talking about a supposition or set of ideas that may – and that’s the key word here, may, not does or can – explain a situation, action, or phenomenon. Use of ‘theory’ therefore instantly undermines the accuracy and descriptive power of the MMT approach.
Anyway, that’s simply one – and not the main dimension – of Dr Kaboub’s presentation, which is more specifically about the idea of job guarantee policies. This is what I wanted to pick up in this blog for a very simple reason. Watching the presentation I was particularly interested in the examples he provides of what job guarantee initiatives might focus on and how they might operate. And as I listened I realised that his examples were very similar to an example of social policy that has been tried before in the UK.
Here I’m specifically referring to what were regarded at the time as job creation programmes. Anyone reading this blog who was unemployed for more than six months in the late 1970s or early 1980s may well have direct knowledge of these programmes, as I do. The scheme introduced by the then Labour government was known as the Community Enterprise Programme (CEP). This was initially maintained by the Thatcher government through to 1983-84 when it was replaced by a similar but inferior scheme simply known as the Community Programme (CP).
Put briefly, CEP allowed mainly voluntary/third sector organisations to apply for funding to employ staff for community based enterprise (in the broadest sense of the term) projects. In my case, having done some voluntary youth work since becoming unemployed I was fortunate enough to gain employment as a development worker tasked with setting up a network of toy libraries in a deprived area of Nottingham. CEP posts were typically for one year only, although extensions were possible in exceptional circumstances. Pay was on a par with what would now be regarded as the minimum wage. My recollection is that there were quite strict conditions that applied to the type of employment and project supported, such that CEP could not be used to undercut or replace jobs that were or should have been funded from other sources (e.g. local authorities). Nevertheless, a wide range of projects were supported. In my area as well as my project there were people working on after-school club provision, environmental development and protection, and health, education and advocacy related projects – all similar to examples Dr Kaboub outlines in his presentation.
I can only speak from my own experience when I say that quite often CEP employment provided the basis (i.e. the skills and experience) to apply for jobs elsewhere once your time on the scheme came to an end. But herein lies the rub, and in large part the reason for the demise of CEP and, in time, why the successor CP scheme went the same way. Employment in the public sector – often with local authorities – was the next step for a fair number of CEP workers. Indeed, in my case, the local authority took over funding the post and the project costs through grant aid, although as far as I know that was a relatively rare occurrence.
Nevertheless, under a Tory government that regarded pretty much any form of public sector employment as a waste of money, local authorities – particularly Labour controlled ones – as the enemy, and public services other than the bare essentials necessary for the welfare “safety net” as examples of the “nanny state”, any programme such as CEP was a form of policy to be actively attacked. And that, I fear, is where we currently stand in the UK with any form of job guarantee initiative as long as we have a Tory government that is not that far removed – and in many ways (Brexit) worse – than Thatcher’s governments.
In short, the apparently widespread (and deliberately manufactured) perception that job guarantee policies are about paying people to do nothing (an argument debunked by Dr Kaboub), and the fear that the type of project that employment attaches to are often public sector related – thereby increasing the demand and cost of these services, which is anathema to Tories – means, I strongly suspect, that this is an idea that goes nowhere without a change of government.
Sadly, I don’t see that happening anytime soon. And even if it did I don’t see an incoming Corbyn Labour government having a majority large enough, or at all, that allows the adoption of policies such as job guarantee programmes that will be mercilessly attacked by the mainstream media, the Tory party and all those who fail to understand both how and why such policies can be funded (see MMT) and the short and long term economic and social benefits. That said, if you haven’t already done so I still strongly recommend watching Dr Kaboub’s presentation.