Pragmatic Capitalism

Practical Views on Money & Finance


I’ve been fairly vocal in comments in recent weeks about my displeasure with the job’s guarantee (JG) that most MMT proponents are in favor of.  The comments have set off a bit of a firestorm with the JG coming under substantial defense and attack at various other sites.  Some notable attacks came from Rodger Malcolm Mitchell, Rogue Economist and John Carney at CNBC.  Bill Mitchell and several of the founders have been vocal about their support of the JG as it’s clearly a central component of their decades of work on MMT.

In his latest MMT primer Randy Wray elaborated on the debate:

“Bill’s post led to a bit of a scuffle over what is actually in MMT—with Cullen arguing that the Job Guarantee cannot be a component, while Bill insisted that it must be. Warren has sided with Bill and written very persuasive comments arguing that we need the price anchor.”

I haven’t been very clear about this so I should be.  It’s not that I think the JG “cannot” be a component of MMT (Bill drew a very clear line in the sand saying that the JG is “central” to MMT and not “peripheral”), but that our knowledge, understanding and implementation of modern money need not involve the JG.  The JG might be central to the idea the founders had when creating MMT, but that just means it’s central to the original concept of MMT as they saw it.  And they have by no means proven the JG to be the optimal usage of the government’s currency supplier powers (despite substantial evidence and persuasive arguments).   I’ll cover this in more detail in the near future, but I question whether the JG is the optimal usage of these powers.

But the most interesting point that arises from all of this is the clear evolution of the theory (something which is an excellent development whether you are in favor of the JG or not).  The fact that we are having these debates is important for the development of MMT.  Scott Fullwiler posted an excellent comment to a reader on another site:

“where MMT or Neochartalism go is not up to Bill or any other specific person, as the Keynesians proved.

By putting MMT out into the blog world and getting our wish of having a following, the consequence is that we don’t have control over the path it takes. We can do research and hope it influences that path, but it’s no longer ours exclusively. We could have kept tighter control if we had chosen to continue to work on the fringes and remain almost completely unknown.

So, going forward, and perhaps even now, whether the JG is required part of MMT is not for us to decide, even as it certainly is central to previous academic MMT literature. Such are the costs of gaining popularity and having others jump on board. I personally prefer this reality to the alternative path of remaining obscure.”

It’s clear that the founders of MMT see the JG as a central piece of the puzzle.  So exclusion of the JG would make you something other than the MMT that the founders envisioned (which is where I guess I find myself currently).  The always astute JKH referred to my stance as “post MMT” or Postmodern Monetary Theory (PMT?).  Whatever it is, it’s a good development.  Any good school of thought should hope to evolve and expand its reach and impact.  None of this implies that my thinking on the JG is somehow superior or makes for a better “brand” of MMT, but one thing is clear – MMT is becoming more mainstream and gaining a “following” as Scott said.  That’s enormous progress and the founders of MMT should be incredibly proud of what they’ve built.  No matter where it goes MMT will always be linked to the names Mosler, Mitchell, Wray and the other founders.  And given the strength of the arguments and work over the years I am certain that MMT won’t evolve too far from what they’ve always envisioned it to be.

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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