Some months ago,* the Economist published an article on “Corbynomics.” It is unclear whether the piece is an attempt to persuade while purporting to describe and name a seemingly coherent and established set of policies, or an accurate reflection of Corbyn’s and UK Labour’s economic policy.
Callum Williams and Duncan Robinson do point out that “[p]iecing together Corbynomics is difficult, not least because it has evolved during Mr Corbyn’s time in charge of Labour.” Still, the titular packaging is remarkable, given Corbyn’s support for this set of polices is not cited but inferred—with some reaching for books “stored on dusty shelves in the British Library” that, Williams and Robinson claim, “have moral economy written all over them” but that Corbyn may never have read. Prince-whispering, deniable push-polling in longform, or settled policy? Who knows.
What is remarkable about their argument is that it includes the insight that national economies are not like households in order to relaunch the broader claim that national economies are indeed very much like households. They do this by incorporating the insight of a specious analogy but restricting it to money. That is, Williams and Robinson’s article is an attempt to reconcile conventionalist fiscal policy (ok, maybe), with mercantilist economic policy (not ok), in order to relaunch social democracy under the banner of Polanyian moral economy (really awful).
They incorporate the observation that national economies are not households in the most superficial way possible, so that it becomes a point in the interminable polemics of Keynes v. Friedman, but does not disturb their broader and deeper assumption that economies are like households in the spiritual and categorical sense of economic nationalism, Polanyian moral economy, and support for Brexit.
This is precisely what they mean in their characterization of Brexit as “a chance to ‘take back control’ from faceless technocrats in Brussels,” and “democratizing” the economy. Presumably they are able to ‘put a face’ to everyone in Britain, there are no bureaucrats in Whitehall, and a class collaborationist project is imbued with a warm social democratic glow because capitalist exploitation is always redescribed in implicitly xenophobic terms as strange and foreign, and class struggle is conveniently displaced into mercantilist competition and nationalist rivalry.
Indeed, the foundational assumption and key claim of Polanyian moral economy is that “proper” economic policy means “householding.” I discuss Polanyi’s account of national borders as well-defined households in C&C, as well as normative and conventionalist theories of money in relation to plantation estates, the history of slavery and banking policy (such as the Glass-Steagall Act) elsewhere. So I won’t repeat much of that detail here.
What I will do in what follows is, as briefly as possible, explain Polanyian moral economy, and below that suggest why mmt arguments integrated within that frame are profoundly mistaken.
Polanyi is a strict adherent of the normative view of money, in which it (should) function as a “mere accessory” to “barter and exchange,” and where “markets were most highly developed, as under the mercantile system, they throve under the control of a centralized administration which fostered autarchy both in the household of the peasantry and in respect to national life.” He goes on to contrast this with the Smithian concept of “self-regulating markets,” but it’s really just a Catholic characterizing and denouncing a Protestant according to their own preoccupations and assumptions.
Polanyi’s nostalgia for the feudal system is consistent with his overall reactionary views. His characterisation of autarkic peasant households and “national life” is utterly fantastical (a mythic idyll of self-sustaining peasant households that does not correspond to the realities of the manorial system or Absolutism). But it is nevertheless continuous with his broader inclination to fudge empirical economic history so as to deliver a Catholic sermon–as with his account of fascism, discussed here as a variant of a cautionary tale on the purported moral hazards of “economic liberalism.”
As it happens, Polanyi converted (from a Jewish background) to Catholicism in 1917, in the midst of a resurgence of European anti-Semitism and against the background of the Russian revolution. His theory of money is shot through with anti-Semitic tropes derived from the medieval Catholic theologian Thomas Aquinas’ rendering of Aristotle–a doctrine that would be pivotal to the history of European anti-Semitism. Polanyi had also enlisted to fight in the First World War, on the side of the crumbling Habsburg Empire, and was a founding member of the National Bourgeois Party. And, in line with his nostalgia for feudalism, Polanyi also deployed a cautionary tale in his criticisms of the eighteenth-century provision of parish welfare to the ‘able-bodied’ poor, believing that it undermined properly productive economic activity and facilitated moral permissiveness and economic calamity. Indeed since the late 1960s, conservatives in the United States have drawn directly on Polanyi’s arguments to oppose any progress in welfare reforms.
That Polanyi can be characterised as something other than a reactionary relies on misunderstanding and wilfully distorting his nostalgia for ‘small-scale production’ (conflating the Manorial estate with syndicalism), his co-option of Marxist phrases and terms into the cause of promulgating Catholic doctrine, and his criticism of “economic liberalism” which are both inaccurate in the detail and conservative in their nostalgic depiction of feudalism as “embedded” and “proper” economic activity.
As for mmt, it is not alone in its insight that economies are not households because no household prints money.
What it has done is treat this insight as if it were an abstract point that could, in imagined scenarios of abstract national economies, mean that all government expenditure or debt holds no implications. All governments, by this account, can simply print money to pay for national economic activity.
This is utter nonsense on two counts. It abstracts from the brief, historical position of the United States (which may well be changing) to all national economies, when the US is the lender of last resort because trade is reckoned in US dollars as a de facto global currency. It presupposes self-contained economies and the absence of supply-chains, which has never ever been true except in the fever dreams of those economists who trace economics to the mythical origins in the self-sufficient household, though really, the slave-owning estate and feudal manor, like Polanyi.
It is absurd to claim, on the one hand, that economies are not like households, and then reintroduce that analogy by pretending its patterning of power doesn’t exist as a complex and hierarchical system in which the US sits at the apex of debt. It would be like claiming that everyone can, like Donald Trump, run up billions of debt, when there are restrictions on bankruptcy and debt arrangements that apply to others but not Trump.
The reason that mmt becomes appealing for moral economists is they think that money can and should operate as a neutral medium of exchange, but it never touches on the crucial issue that money is a form of entitlement to property. Which is to say: it becomes appealing because it evokes the idea of a distributed sovereignty and masters of households, lots of little Trumps. Call it social democracy, moral economy, right-wing libertarianism, anarcho-capitalism or whatever, but it’s very much a white guy’s perspective on freedom and economics.
The only way in which Williams and Robinson’s economic policy becomes plausible is as a series of government workfare projects to, for instance, undertake environmental renewal where workers are paid in tokens they can exchange for local services or something like food stamps. Hypothetically, at a stretch, there may be nothing wrong with these arrangements; but the devil is in the detail of control, conditions, and the extent to which it is tied to forced work arrangements operating under the presumably novel heading of using the government as the ’employer of last resort,’ whose workers cannot bargain over their wages, conditions or indeed (as with food stamps) what they can buy. Which brings us back to the authoritarian, indeed fascist, fantasy of saving capitalism from the conflict between labour and capital, through state regulation of ‘the market,’ without abolishing exploitation but controlling the desires and freedom of workers in that equation. Seems great.
* This was written at the time that article appeared. And while there has been some critical responses to both mmt and, perhaps less so Polanyian moral economy, that I’ve seen since, I decided to post it though it is only an outline of the arguments.