The government can spend much more money than it currently does, even given a swelling national debt that frequently makes headlines. That’s the argument that has put Modern Monetary Theory (MMT) at the center of macroeconomic discourse over the past few years—the idea driving often heated debates between some of the most prominent voices in mainstream economics and the band of rebel academics who have brought MMT to prominence. Alexandria Ocasio-Cortez gave MMT a boost this year, citing it as an idea that should inform some of the spending assumptions behind the Green New Deal and other progressive priorities.
Endorsements like hers have helped MMT take on a profile that seems to surpass the accessibility of some of its theoretical details, but its main tenets can be summed up fairly easily for laypeople: A government that issues its own currency cannot run out of money in any real sense and needn’t rely on taxation or budget cuts to make up funding shortfalls. The true limit on spending isn’t the numbers on federal balance sheets but inflation, which MMT proponents argue can be managed by taxation and other policy mechanisms. The implications of this are controversial enough that MMT has been the subject of criticism not only from mainstream economists but also voices on the left wary of undermining the case for progressive taxation and wholly abandoning economic consensus on the risk of inflation. Earlier this year, Doug Henwood joined a growing chorus of socialist voices condemning MMT, in an essay in Jacobin that called the theory “snake oil” and “a weak response to decades of anti-tax mania.”
Where one falls on the particulars of this debate is a matter of how one conceptualizes, among other things, the abstract origins of money itself. Yet the most significant speech given at last weekend’s Third Modern Monetary Theory conference at Stony Brook University was made not by an economist or financial wonk, but by a pastor. (The New Republic was one of the conference’s sponsors.) During a panel on “Money, Race, and Civil Rights,” Delman Coates, senior pastor at Maryland’s Mt. Ennon Baptist Church and a former candidate for Maryland lieutenant governor, described his journey to heterodox economics to the MMT enthusiasts in attendance as a spiritual one informed by the history and sociopolitical commitments of the black church.
“The black church for me represents that subset of African American sacred spirituality that has been on the side of the fight for freedom, justice, and equality,” he said. “The second influence really has a lot to do with my understanding of the economic justice roots of the civil rights movement. To a large extent people focus on themes and issues around racial reconciliation as a key constituent element of the civil rights movement. But what is very formative to me is my understanding of the economic justice roots of the civil rights movement.”
Specifically, Coates credited Martin Luther King’s Poor People’s Campaign, which included demands for full employment and a basic income, as one of the influences that motivated his interest in Modern Monetary Theory, as did the experience of offering assistance to parishioners in the wake of the financial crisis. “I knew as a leader that I had to play a role in helping to build a movement that addresses our unnecessary and imprudent reliance on commercial bank money,” he said, “because it enabled commercial banks to receive profits off of credit money that they created out of nothing—causing wealth extraction, destabilizing our economy and hurting the communities that I serve.”
Coates now promotes the tenets of MMT not just to the 10,000 members of his church, but also to a growing network of ministers and activists through his organization, Our Money, which includes economists Darrick Hamilton and William Darity—best known as prominent advocates of the federal job guarantee and reparations—on its advisory board.
“We’ve been conducting trainings all around the country,” Coates told the conference. “I’ll go around the country and I’ll meet with 25 to 30 pastors—principally African American pastors—and talk to them about MMT. We want to get them on board by understanding the core economic framing, so that ultimately over time we can convert them into advocates and activists.”
Our Money was among the groups invited by Rep. Ilhan Omar to a mid-September press conference introducing a pilot job guarantee bill that would test the concept in 15 communities across the country. That press conference followed Our Money’s March for Full Employment on Labor Day, which brought a thousand activists to Washington for a demonstration at the Federal Reserve. In his remarks at the conference, Coates ran down a number of Our Money’s other organizing events, including educational sessions at Morehouse College, Hampton University, and the Congress of National Black Churches, as proof that the gospel of MMT is spreading across the black community.
“We need more leaders, more influencers becoming evangelists for this incredible good news, there’s more resources, there’s more potential—that our economy does not have to be predicated on scarcity,” he said. “I don’t want my community to have to wait until we tax Jeff Bezos and Amazon in order for us to have dignified jobs, Medicare for All, and a Green New Deal, or to have our roads and infrastructure rebuilt in America.”
For all of the technical discussions of MMT in dueling op-eds and Twitter debates alike, this year’s gathering of the MMT community suggested that the key promoters of MMT are now lay activists who, like Coates, have taken the ideas underpinning MMT directly to curious voters and academics with an interdisciplinary interest in social justice movements. Coates was joined on the civil rights panel by University of Washington historian Camille Walsh, who gave a presentation on tax rhetoric and school segregation, and Bucknell University professor Nina Banks, who is penning a biography of Sadie Alexander, the first African-American economist and a proponent of the job guarantee. There was a nod to this in a presentation by University of Missouri-Kansas City professor Scott Fullwiller. “There are no economic problems,” he said at one point. “There are social problems, there are technological problems, there are environmental problems, there are social-technological-environmental problems. There are not economic problems.”
The conference’s attendees included not just professors and curious college students, but activists, software engineers, and a smattering of the currently unemployed. One of the latter, an IT specialist and Real Progressives co-founder named Steven Grumbine, spoke up after the civil rights panel to describe how his life had been upended by the global financial crisis. “While I’m very progressive, I’m not unlike many Trump voters,” he told the panelists. “I look like them, I often sound like them—there’s a lot of things that you could see in my life that mirror them.”
“The only thing that kept me from hanging in my basement was the fact that I’ve got a child with autism who will never probably be independent a day in his life,” he continued. “This is very real to me,” he continued. “This isn’t some fun thing. You know, I am constantly on edge living like a feral cat.”
His words reflected the general mood of many of the non-economists who found themselves at the conference, including more or less ordinary people who found, in MMT, further fuel for their skepticism and anger toward both financial institutions and the traditional economic assumptions fomented by the recession and its aftermath.
One of the blows against orthodox thinking has been the persistence of low inflation rates even as unemployment has plummeted—economic convention holds that there ought to be an inverse relationship between unemployment and inflation, an idea that has at times justified contractionary measures to slow down the economy in order to stave inflation off. In a viral exchange with Ocasio-Cortez during a House hearing in July, Federal Reserve chair Jerome Powell conceded that conventional wisdom about inflation had been defied in recent years, the memory of which drew renewed ire from Rocco Million, a self-described disabled vet who attended the conference’s workshop on inflation. “That’s sadistic!” he said. “And nobody even blinks an eye. Every citizen should be flipping out. We’re forcing millions of people to be unemployed to fight a war against inflation when we don’t even know what creates it!”
“The national debt, you know—every baby’s born with $64,000 worth of debt,” laughed Allyson Drucker of Real Progressives, a site promoting MMT. “It’s fear porn! It’s by design to keep us from learning the truth and being able to see what they’re doing.”
“Wages are the way they are because corporations have control,” she continued. “Because of money going into politics and deregulation and all that crap. So a lot of people say job guaranteed or a or a Green New Deal or whatever isn’t going to happen because the corporate world won’t let it happen. I don’t believe that. I think we have the power and it’s going to happen.
“They’re saying Bernie’s crazy,” Million responded, “What are they talking about? We’ve got millions of people all across America that are either under-employed or unemployed.”
Exchanges like this suggest that MMT has taken on a life of its own—discussions among those who have developed an interest in its theories have moved well beyond its basics. This is in part because some of those basics have been at least partially conceded by a number of prominent economic voices over the past few years in statements often chronicled by Stony Brook economics professor Stephanie Kelton—easily the most high profile voice in the MMT movement—who spoke during a panel on “MMT and the Public Sphere.”
“Here comes [outgoing American Economic Association president] Olivier Blanchard, January of this year, at the AEA presidential address,” she said. “He delivers remarks that shift the policy discussion almost overnight. What does he do? He gets up and says, ‘Actually it appears that the debt is not on an unsustainable trajectory. Given the relationship between interest rates and growth rates for the last three decades, it is reasonable to expect that the neutral term will look much like the recent past, and therefore we could probably sustain not just trillion dollar deficits, but perhaps even larger ones.’”
She mentioned, too, recent remarks from European Central Bank (ECB) president Mario Draghi about MMT, which he brought up unprompted at a meeting of the ECB’s Governing Council as an example of heterodox monetary ideas worth examining. “These are objectively pretty new ideas,” he said. “They have not been discussed by the Governing Council. We should look at them, but they have not been tested.”
“[Federal Reserve Chair Jay] Powell was asked about MMT,” Kelton said. “Janet Yellen was asked about MMT. The question gets posed, but with Draghi—he just invoked it on his own.”
The question is being posed in the United States not only in direct response to the ideas advanced by MMT’s theorists but in response to fiscal and political realities—debt reduction has been jettisoned from the national political conversation and we’ve already entered a world of expanding deficits without commensurate budget cuts or increases in taxation. Even skeptical economists and thinkers have conceded that some of the policy projects on which MMT advocates focus, such as addressing climate change, will be as expensive as they are existentially necessary.
In a policy landscape where debt is already an afterthought, MMT’s significance seems to be in its role as a new kind of public economics for progressives. This new way of thinking about the political economy is winning converts less on the strength of any particular argument about money creation or inflation than on the implications of its reframing of our political and economic constraints, and its suggestion that solving much of what ails our increasingly unequal society is a matter of willpower rather than finances. Those speaking up in defense of the assumptions MMT assails would do well to consider that the hearts and minds of the public are rarely won on technicalities.