Professor Stephanie Kelton to join group of economics advisers to new MMT Scotland group
- New Scottish economics group to argue for Modern Monetary Theory policies for independent state.
- Some of the worlds most influencial MMT advocates to join advisory panel, including key Sanders 2016 campaign adviser Prof Stephanie Kelton.
- MMT part of a new wave of economic thought around the developed world.
- Heterodox economic school sets economic thinkers in opposition to Growth Commission Sterlingisation proposal.
ONE of the advisers to Bernie Sanders’ 2016 presidential campaign will join a panel of prestigious economic advisers for the new Modern Monetary Theory (MMT) Scotland group being launched at meetings in Glasgow and Edinburgh in May.
Professor Stephanie Kelton of Stony Brook University is one of the US’ most high profile experts on MMT, which posits that governments which control their money supply can determine their own level of spending, and that fiscal constraints on public debt have played far too large a role in modern economic policy.
She is one of several high profile economists who will serve on an advisory group of a new economic network devoted to MMT in Scotland and its application in an independent Scottish state. The advisery panel will also include Warren Mosler and Professor Bill Mitchell, two of the world’s leading MMT thinkers, Professor Mathew Forstater of University of Missouri-Kansas City and Fadhel Kaboub, Associate Professor of Economics at Denison University, among others.
The new group supports Scottish independence, but will seek to address the wider UK economic landscape with MMT solutions to ongoing problems in the economy, and reach those either side of the constitutional debate with its message.
Speaking to CommonSpace, one of MMT Scotland’s co-founders Cameron Archibald said that MMT’s ideas were necessary in Scotland at a time when monetary policy was being debated.
He said: “Countries with their own currency, their own central bank, who can control how their money works, are much better suited to meet the needs of their population compared to a country that uses the currency of another country.”
The SNP Growth Commission proposals, published in May last year, called for ‘Sterlingisation’ – the continued use by an independent Scotland of the UK’s currency, without an independent central bank and the monetary policy levers available to most independent countries.
MMT has been developing as a body of economic thought for decades, but has become more popular among economists since the 2008 financial crisis, most prominently in its analysis of the subsequent Eurozone debt crisis, which was predicted by MMT economists years prior because of the use of the Euro across many, often divergent, European economies.
It is part of the growth of various alternative and heterodox economic schools including Keynsian and post-Keynsian thought, and socialist economic theory more broadly, after decades of dominance by orthodox neoliberal or ‘free market’ economic theories.
MMT has been deployed by adherents to counter the claims made by pro-austerity economists and politicians, who have argued for harsh cuts to reduce national debts and close the gap between public spending and revenue, often justified by simplistic comparisons between government and household finances.
Archibald argued that Scotland needed to move away from these theories: “Our national debt and deficit is not the same as the debt of a household.
“The national debt of a monetary soverign country like the UK is our savings, is our pensions, our mortgages, it’s the disposable income we have in our pockets every day when we walk around – that is the national debt.”
MMT theories have also come to the forefront in the debate about how to tackle the threat of catastrophic climate change – as it places a new onus on the state’s ability to finance planned and strategic industrial responses.
One prominent example is the Green New Deal, advocated in the US by Alexandria Occasion-Cortez. Kelton is one of the most influencial advocates of the policy, which would see the US arrive at carbon neutrality by 2035 through a new green industrialisation creating millions of jobs.
Craig Berry, another co-founder of MMT Scotland, said: “This is part of a growing consensus across the world. This Green New Deal in America is quite deep rooted in MMT economics.
“The idea of a job guarantee, that’s quite central to MMT. This is quite important for how we intend to use the resources we have within our economy. The main focus of MMT is utilising all the resources that we already have, and one of those we have is the pool of unemployed people who could have working.”
The new MMT Scotland group will launch with two public meetings, in the Edinburgh International Conference Centre on Wednesday 8 May and the Mitchell Library Auditorium on 9 May. Both meetings will hear from Mitchell and Mosler among others, and Dr Craig Dalzell of the Common Weal thinktank will join the Glasgow meeting to share their research on the implications for the MMT debate in Scotland.
The new group will also launch a website with a raft of content addressing key ideas around MMT, with details of the new organisation.
MMT ideas have not gone without criticism in the independence movement. Gordon McIntyre Kemp of Business for Scotland warned in The National that it could be dangerous to allow policy makers to believe they can spend based on control of the money supply rather than based on taxation, as this could lead to reckless decisions.
Archibald said that “this is what already happens”, for instance when the US government finances its enormous military expenditure.
Around the world, around $12 trillion in new money has been created since 2010 through ‘quantitative easing’, where Central Banks create money to purchase bonds. The impact of this has been to significantly increase asset values in the UK, and share prices in the US, as top corporations and banks are suddenly awash with liquidity. The Bank of England has admitted that this policy has significantly increased wealth inequality in the UK.
The MMT Scotland site can be accessed at www.MMTScotland.com.
Picture courtesy: Alex Hanson
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