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MMT and inflationary bias

Published by Anonymous (not verified) on Fri, 14/08/2020 - 9:04pm in



A view yours truly often encounters when debating MMT is that there is an inflationary bias in MMT and that its framework ignores expectations. Hmm … It is extremely difficult to recognize that description. Given its roots in the writings of Keynes, Lerner, and Minsky, it is, to say the least, rather amazing to attribute […]

The 2021 A level results crisis has to be planned for now

Published by Anonymous (not verified) on Fri, 14/08/2020 - 4:20pm in

I make no apology for returning to the A level theme that I have noted for a couple of days. This blog is a stream of consciousness, as much as anything. It represents my reaction to world events, and in my world this has been a big deal for the last few days. My son and I are, we now know, amongst the lucky ones. We could celebrate last night, and not all could.

This year’s results are not, however, my main concern this morning. Next year’s are. And they are just as important to those who will be taking them as this years have been to people like my son. The prospect that those results will be severely impacted by the coronavirus crisis is very real. And that is an issue I have not seen anyone mention in the mainstream media as yet.

There is an assumption that this year’s results will be aberrational: a disruption in an otherwise smooth flow of results that would otherwise exist from 2019 to 2021, but that is not true. In fact, it is likely to be very far from it. I can, in fact, make a fairly confident set of predictions right now, presuming that there are A level exams in 2021, and nothing should be taken for granted at present.

The first is that students from private schools will perform at way above average level. Their schooling has been relatively uninterrupted during the summer term of 2020, largely because it was reasonable for those schools to presume that every pupil could partake in online learning.

Second, and inversely, state school performance will be worse. They could not deliver a continuing curriculum during a crucial term, or provide the exam training that is, rightly or wrongly, a key part of that team’s work for their pupils. Those pupils will not be as well prepared as is desirable as a result. That is the consequence of their inability to assume all pupils could access online learning.

And third, the impact noted in my second point will be exaggerated by income factors. The lower a pupil’s parental income is likely to be the harder access to education during the last term was also likely to be, through lack of IT resource, uninterrupted space to study, and so on.

As a result it is entirely possible to say now, and with absolute certainty, that next year’s A level results will not see a return to normal.

It is equally certain that those results will be heavily biased in favour of those pupils with the best off parents, and most especially those who have attended private schools.

It follows that without allowing for this fact the 2021 A level results will fail next year’s sixth formers, and most especially those from lower income households attending state schools. That means planning to correct for this has to start now, unless the government is indifferent to the injustice this will give rise to.

And nor will the problem end there. Those aged 15 who will be taking GCSEs next year are also impacted by this. The consequences will flow through to their post 16 choices and A levels. There is very likely impact in that case until the 2023 A level results, at least.

My question in that case is a simple one, and is what is to be done about this, unless we are to be indifferent to the resulting prejudice? This year’s mess can be dismissed as a fiasco, even if an utterly arbitrarily unfair one. But next year’s issue is wholly anticipatable, because I am doing that now. It cannot be avoided in that case. And I suggest that the injustice cannot be avoided either.

So what is to be done? I have no answers, at least as yet. I do not claim that I can formulate answers to every problem I can foresee arising. But unless this issue is addressed now the scale of the anger at the injustices that will result will be even greater than this year, where some degree of forgiveness for the mess is at least possible on the part of some. Next year there will be no such tolerance.

The key issue is that we are not going back to normal.

And that means that ministers need to prepare for that reality.

And so, too, does everyone else.

The post-Covid world is not going to be the same as the pre-Covid one. We need to embrace that reality. Few have. And ministers do not appear to be amongst those few. It’s time they rose to the challenge, and prepared the ground. How society develops from here depends upon them doing so.

Could we be a cashless society?

Published by Anonymous (not verified) on Fri, 14/08/2020 - 3:39pm in


Economics, YouTube

With the intention of making a video a day the range of topics the series that I am creating can address is wide. One of the possibilities is to answer specific questions that have been raised in response to the series. That is why today’s video asks the question ‘could we be a cashless society?’.

Further questions are welcome. We’re filming another batch next week.

Time For Informed Change. Post Covid-19 Economics

Published by Anonymous (not verified) on Fri, 14/08/2020 - 5:34am in

Philip Armstrong email hidden; JavaScript is required
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Nick Potts email hidden; JavaScript is required
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Solent University, Southampton, UK


Published online 13th August 2020


Full article




In these extraordinary times it might just be that heterodox economics gets a hearing; if only to justify government actions ruled impossible or, at least undesirable, by mainstream economics in normal times; it is back to the 2008 future all over again, big-time. So, if economics were to descend from its ‘theological heights’ (and preaching only that which suits elite vested interests), then what are we to say?  This article utilises alternative theoretical lenses to underpin views of fiscal and monetary policy and the case for state banking. It also expresses an opinion as to which capital is worth saving, post-crisis. More generally, we consider if advanced nations should aim to be more self-sufficient in the future and if so, how might developing countries fit into a new order? We are not prophets or salespeople, so we merely seek to provide some economic theory that can help us understand these issues.  The theories we apply are Modern Monetary Theory and the Temporal Single System Interpretation of Marx (which argues that his value theory is consistent and not redundant, in fact invaluable to understanding capitalism). Space will not permit us to drag up endless academic debates on the acceptability of the TSSI of Marx or MMT, and for once, in the face of crisis, we hope we may be spared from abiding by the rules of the club.


(218 words).


Keywords:  Covid crisis, Marx, MMT.











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The post Time For Informed Change. Post Covid-19 Economics appeared first on The Gower Initiative for Modern Money Studies.

Les problèmes clés de l’UE

Published by Anonymous (not verified) on Thu, 13/08/2020 - 6:26pm in



Ouf ! La réunion des dirigeants des Etats de l’Union européenne (UE) n’a finalement pas accouché d’une souris. Le plan de relance qui vient d’être décidé est une avancée politique et institutionnelle très importante … Un tabou est tombé, celui du refus de principe de toute solidarité financière entre les Etats membres face à la […]

The power of the Pound

Published by Anonymous (not verified) on Thu, 13/08/2020 - 5:00pm in

A straightforward introduction to money….... Read more

Creating full employment is the real Job Guarantee

Published by Anonymous (not verified) on Thu, 13/08/2020 - 5:00pm in

There was an interesting discussion on Universal Basic Income here form the ‘Basic Income Conversation’ and in particular, of course how it would be paid for. Actually, I have already discovered that a straightforward basic income is simple to ‘pay for’ when conventionally required. But this discussion was especially with regard to new monetary thought... Read more

The A level result algorithm is proof that the government thinks we’re all just cogs in a machine

Published by Anonymous (not verified) on Thu, 13/08/2020 - 4:39pm in

I posted this on Twitter a few minutes ago:

We are all, of course, to some extent just that. I am under no illusions. But as I wait for results with my son that feel that they might be almost as random as a National Lottery draw, and have  little to do with his real achievements, that is no comfort.

If there is something in life that should be liberating and not oppressing it is education. But this government - and others - have revealed that they think it all about serving the needs of the system and nothing at all about the person’s own experience, effort and reward.

And that’s deeply depressing.

The so-called libertarians on the right are very clearly anything but that.

This needs to be recalled, often, when we consider what world we want. It’s most definitely not this soul destroying one that is intent on delivering the message of personal irrelevance to our young people.

14 February 1979: Foucault on Debt and the Neo-Kantianisn of Neo-liberalism (XIX)

Published by Anonymous (not verified) on Thu, 13/08/2020 - 5:01am in



The second important point in this neo-liberal program is the question of conformable actions (actions conformes). This theory of conformable actions, this programming of conformable actions, is essentially found in a text which was actually one of the great charters of contemporary German policy. It is a posthumous text by Eucken which appeared in 1951 or 1952, called Grundsätze der Wirtschaftspolitik (the foundations of economic policy) and which is, as it were, the other, practical side of the text called Grundlagen der Nationalökonomie published a dozen years earlier, which was the theoretical side. In this Foundations these Fundamental principles of economic policy, Eucken tells us that liberal government, which must be perpetually vigilant and active, must intervene in two ways: first, through regulatory actions (actions régulatrices) and second, through organizing actions (actions ordonnatrices).
Regulatory actions first of all. We should not forget that Eucken is the son of Eucken, the neo-Kantian Nobel prize-winner of the beginning of the twentieth century. As a good Kantian, Eucken says: How should government intervene? It should intervene in the form of regulatory actions, that is to say, it must intervene in fact on economic processes when intervention is imperative for conjunctural reasons. “The economic process always leads to temporary frictions, to modifications which risk giving rise to exceptional situations with difficulties of adaptation and more or less serious repercussions on some groups.” It is necessary then, he says, not to intervene on the mechanisms of the market economy, but on the conditions of the market. Rigorously following the Kantian idea of regulation, intervening on the conditions of the market would mean identifying, accepting, and giving free play to the three typical and fundamental tendencies in the market, but in order to encourage these tendencies and somehow push them to their limit and full reality. These three tendencies are: the tendency to the reduction of costs, the tendency to the reduction of the profit of the enterprise, and finally, the provisional, localized tendency to increased profit, either through a decisive and massive reduction of prices, or by an improvement in production. These are the three tendencies that regulation of the market, that regulatory action must take into account, inasmuch as
they are themselves tendencies of the regulation of the market.
In clear terms this means first of all that the main objective of regulatory action will necessarily be price stability, understood not as fixed prices but as control of inflation. Consequently all other objectives apart from price stability can only be secondary and, so to speak, adjuncts. At any rate, they can never be the primary objective. In particular, the primary objectives must not be the maintenance purchasing power, the maintenance of full employment, or even balancing the balance of payments.
Second, what does this mean for the instruments to be used? It means first of all using the policy of credit, that is to say, establishing the discount rate. It means using foreign trade by reducing the credit balance when you want to contain the rise in foreign prices. Shifts in taxation will also be employed, but always moderate ones, when seeking to act on saving or investment. But none of the kind of instruments used by planning will be resorted to, namely: price control, support for a particular sector of the market, systematic job creation, or public investment. All these forms of intervention must be rigorously banished and replaced by the pure market instruments I have just mentioned. The neo-liberal policy with regard to unemployment in particular is perfectly clear. Whatever the rate of unemployment, in a situation of unemployment you absolutely must not intervene directly or in the first place on the unemployment, as if full employment should be a political idea and an economic principle to be saved at any cost. What is to be saved, first of all and above all, is the stability of prices. Price stability will in fact allow, subsequently no doubt, both the maintenance of purchasing power and the existence of a higher level of employment than in an unemployment crisis, but full employment is not an objective and it may be that a reserve of unemployment is absolutely necessary for the economy. As, I think it was Röpke said, what is an unemployed person? He is not someone suffering from an economic disability; he is not a social victim. He is a worker in transit. He is a worker in transit between an unprofitable activity and a more profitable activity. These then, are the regulatory actions.
Organizing actions are more interesting, however, because they bring us closer to the specific object. What are organizing actions? Well, [they are] actions with the function of intervening on conditions of the market, but on more fundamental, structural, and general conditions of the market than those I have just been talking about.  Michel Foucault, 14 February 1979,  translated by Graham Burchell, Lecture 6, The Birth of Biopolitics.137-139

After inscriping German neo-liberalism into the history of philosophy by way of Eucken's connection to Husserl (recall this post on the fifth lecture of 7 february 1979), and the dueling (recall) receptions of Max Weber, Foucault now has a bit of more fun and treats Eucken as a neo-Kantian.* Perhaps this means Foucault thinks of Husserl, not implausibly, as a species of Kantianism. The underlying conceptual point, that for the ORDOs markets need to constructed, is, thereby, reinforced. They are to be contrasted with earlier liberalism(s) and, perhaps, what he tends to call American-anarcho liberalism (p. 117--sometimes he speaks of American anarcho-capitalism), for whom the market is taken to be natural or spontaneous. 

While Foucault treats organizing actions as more interesting in virtue, I  think, of their closer connection to biopolitics, today I focus on the regulatory actions.  I do so, in part, because in many way the ORDOs have been so influential on this score that their significance may be worth pausing over, despite the seeming banality (to Foucault and us) of them. 

First, the (constructed) proper functioning market has three tendencies: "(i) the tendency to the reduction of costs, (ii) the tendency to the reduction of the profit of the enterprise, and finally, (iii) the provisional, localized tendency to increased profit, either through a decisive and massive reduction of prices, or by an improvement in production." The first tendency is good for consumers who over time can buy more for less. So, while Foucault is right to note that the primary aim is not purchasing power, it falls out, as it were, for free in proper functioning markets. In fact, the first natural tendency also means that deflation is a natural and expected byproduct of competitive market. And that inflation is, temporary  shocks excepted, itself the product of monopoly enhancing, juridical-political interventions in the market. 

The previous comment is a reminder that on the constructive perspective, monopoly is not just an economic but also, and primarily, a political problem that functions to undermine the Ordo's political purpose for the market: a domain where, for all its inequity, bad luck, and perhaps exploitation, no group can be too powerful (recall this post on Mestmäcker.) 

Strikingly, Foucault does not mention the Weimar experience. But if price stability is the primary aim, and markets naturally tend toward lower prices, then in ideal circumstances, when markets are competitive, policy must offer some countervailing inflationary measures.  I would have to go back to Eucken to see if this is so. What this tells us is that in the constructive framework, there are regulatory policies apt for when markets are competitive and different kinds of regulatory policies that are apt when markets are less competitive. If you look that the policies mentioned -- "the policy of credit, that is to say, establishing the discount rate;... using foreign trade... to contain the rise in foreign prices; [modest] shifts in taxation..., when seeking to act on saving or investment" -- these can all be adjusted to stimulate or reduce inflation. 

Second, this approach also provides one with epistemic access to knowing when a market is less than fully competitive; that is, when a corporation is capable of more than occasional, but structurally high profits. This also signals concentrated power, which is dangerous politically and economically. This is why anti-cartel policy is so important to ORDOs from the start. (Foucault has insightful things to say about this in the same lecture.)

As an aside, Foucault is silent on another, distinctive (Kantian) feature of the Ordo regulatory policies: that these, in turn, must be rule-following. This has the good-making consequence of being predictable to agents in the market-place, and so reduce uncertainty. It also has the good-making consequence to an ORDO of creating conditions that minimize the possibility of political rent-seeking (which violate the rules).  (I must check whether Foucault notes this in future lectures.)

Third, this regulatory framework incentivizes open-ended technological productivity enhancing innovation because that's the main way corporations can capture extra profits. Interestingly enough, Foucault notes this: social policy can develop "organizing actions" that create the social pre-conditions for such technological improvements in generating a productive workforce capable of adapting to open-ended changing circumstances. This spirit of adaptation is a key feature neoliberals inherit of Lippmann. In the future I return to this.

Finally, Foucault has no time for the tendency among lazy critics of ORDO-liberalism to read them as applied Schmittians. (This is by now a trope of scholarship.)+ That ordinary markets give "risk giving rise to exceptional situations" is not an invitation to a state of emergency.  Rather it is an invitation to develop a rule based response or to constitute circumstances that prevent it from recurring. This means that for the ORDOs the business of regulatory policy (at both the level of regulatory actions and organizing actions) is always unfinished, it's perpetually vigilant and active.


*Foucault mentions Walter Eucken's father, Rudolf Eucken, going out of his way to alert his audience that he was a "the neo-Kantian Nobel prize-winner of the beginning of the twentieth century." This is an interesting definite description for this Lebensphilosoph.

+I do not deny that EU institutions give rise to quasi-permanent state of emergencies [sic], but that's for another time.

The Monkees Play ‘Randy Scouse Git’

Published by Anonymous (not verified) on Thu, 13/08/2020 - 3:30am in

Here’s something to cheer you all a bit after the news that Boris Johnson and his cronies have created Britain’s biggest recession ever, that they still don’t have any proper advice for parents on whether it’s safe to send their children back to school – but want them there anyway, so they can get their parents back to work no matter that there’s a second wave of Coronavirus coming. And that they’re trying to whip up hatred against a handful of desperate asylum seekers to distract us all from the real poverty, starvation and despair they’ve created.

This is a bit of fun I found on YouTube. It’s of the Monkees, the manufactured American rivals to the Beatles, playing a song I’ve only heard about in rumours: ‘Randy Scouse Git’. Going from the comments to the video, it’s actually about meeting his wife, Samantha, during a visit to the UK in the 1970s. He gave the song its title because he didn’t know it was an insult. Hence, apparently, it also has an inoffensive alternative name. It’s from Nickstranger999’s channel on YouTube.

In his piece about the song, Nickstranger writes

My next favorite Monkees song. The only other copy of this I could find here was sped up, so probably from a UK print. Excellent, and brilliantly written song written by Micky Dolenz. Some additional info cobbled together from various sources: In his book Micky explains the lyrics as a kind of free-association song about his experience of visiting England for the first time. The Beatles are “The Four Kings of E.M.I.” who threw a welcoming party for The Monkees. “Wonderful lady” is his first wife, Samantha Juste. The “girl in yellow dress” is a reference to ‘Mama’ Cass Elliot who was also there. After that heavy night of fun Mickey woke the next day to someone shouting “Randy, Scouse, Git” on the television and thought it would be a cool name. Randy Scouse Git was the term used by Alf Garnet about his Liverpudlian son-in-law in the sitcom “To Death Do Us Part”. Prior to it’s U.K. release the record company informed Mickey of the meaning behind the title and suggested he give them an ‘alternate title’ – hence the U.K. release name of the title.

I’d only heard about this in rumour, where I was told that it the title little Donny Osmond wanted to give one of his songs after hearing the phrase used by Alf Garnet. After he was told that it was an insult, the song instead became ‘Long-Haired Love from Liverpool’. Or perhaps it’s also true of him as well. Who knows?

Anyway, enjoy the song.