It is interesting that Fadhel Kaboub, Associate Professor of Economics at Denison University, and president of the Global Institute for Sustainable Prosperity, who is a great Modern Monetary Theory ‘MMT’ (Charles Adams’ summary here) and Job Guarantee Advocate, seems to be rather opposed to the Warren Mosler and Bill Mitchell idea that exports are like a household: such that what you export is going to make you poorer, simply because they used to be your resources.
To me this idea not only jarred because sovereign monetary systems are not like a household, but also because I’ve always thought that this was a rather simplistic point of view.
Fadhel Kaboub says in his article:
[Can] developing countries regain monetary policy and their ability to spend on domestic priorities? The goal is to reduce imports, secure a favourable trade balance and pay off their debts, so countries would focus on the root causes of trade deficits: invest in sustainable agricultural practices …. to restore food sovereignty; build renewable energy …. to secure energy sovereignty; and invest in education and research and development to increase productivity and gain the ability to manufacture more valuable products. Such development would also increase the real productive capacity of the economy, meaning that governments would have more room to spend before inflation.
I think this is a way more sensible course.
I draw attention to this because, while I agree with the money creation theory of MMT, Britain, unlike the USA, is a small country, and England is already the second most densely populated country in Europe after (the rather diminuitive) Malta, so England certainly, and to a more limited extent, Britain has a pretty restrained ability to produce all of its food.
Therefore I consider his recipe for developing countries entirely appropriate for our own (allegedly…) developed country.
We have to:
1. Invest in sustainable agricultural practices to endeavour to restore food sovereignty
2. Secure energy sovereignty
3. Invest in education and research
4. Increase productivity and gain the ability to manufacture more valuable products
As a developed country the UK also has the great plus – unfortunately not mentioned in the piece – and to which also any developing country should also vitally aspire – which is the Rule of Law.
So, leaving the argument for an effective Job Guarantee or even Universal Income or Basic Capital to one side for the moment, I am drawn to the hope that this might summarise the complete additional requirements – in the UK at least, for a proper UK ‘MMT’?