In the controversy around Modern Monetary Theory, both its advocates and its critics (for the most part) take MMT at face value as a theory of money, and so go back and forth about whether it gets money right. What they both miss is that MMT is really a theory of the state.

The dispute, almost entirely technical, revolves around concepts like chartal money, functional finance, & sectoral accounting, and whether their interpretation by MMT writers can justify the policies they support without running into serious economic difficulties.

MMT points out that a gov. issuing & borrowing in its own currency can't run out of money and need only focus on inflation as its spends to full employment & price stability; its critics object that this is misleading b/c the same gov. can't control its currency's exchange value,

...in large part b/c banks also issue the currency, so the gov. is not the sole issuer of it. And so on. But MMT doesn't worry about this, b/c as the founder of chartalism, Friedrich Knapp, put it over a century ago, the monetary system itself is an administrative phenomenon.

A gov. that has "monetary sovereignty" can, in principle, construct the legal and institutional framework for its currency so that exchange rates and inflation are not a problem. This is where capital controls, financial regulation, and the jobs guarantee all come in.

Through rational statecraft, and if they just jettison the outdated nostrums of "sound finance" and debt/deficit hysteria, politicians and officials could run the economy in an equilibrium based on full employment and price stability. The trick is to overcome this mental block.

But capital is a transnational form of society, and its contradictions and irrationalities are equally transnational. The "mental block" that MMT ppl are constantly enjoining us to overcome is not just some subjective error, but is the irrationalism of capital itself.

A materialist analysis would look at the social and historical foundations of the ideology of sound finance etc., and would explain and critique its persistence by locating its plausibility to ppl in the way this form of society reproduces itself.

But the politics of MMT are innocent of any materialist analysis or assumptions, amounting to a kind of repetition compulsion that can only denounce the received wisdom, over and over again, instead of analyzing it. So it's totally idealist.

Ultimately, the intellectual and political project of MMT reduces to a form of Keynesianism as @GeoffPMann understands it: an internal critique of liberalism which takes the national state as the only institution capable of resolving the antagonisms inherent in the market.

As Knapp himself put it in The State Theory of Money, the fiscal and monetary governance of enlightened officials can put an end to "the confusions and errors of the class struggle." The rationality of MMT stands and falls with the alleged rationality of the nation state.

b/c it is from the standpoint of the state, this vision of government as the universal arbiter that can resolve the problems of a confused and conflictual civil society purely by technical means rules out a critical, historical analysis of the form of the state itself.

MMT understands the main problem to be the outdated dogma of sound finance economics, which is fueled and propagated by powerful interests who have a chokehold on the government. The power of money over politics is of course real...

...but if this is the extent of the political analysis, then it obscures an understanding of the how the neutral, abstract form of the capitalist state, with its scientific expression as economics, itself expresses the global and irrational class rule of capital.

The capitalist state is not defined by the direct rule of financial/commercial interests, but rather by the radical, formal separation between state and market, public and private, that it presupposes, and that allows it to go to work on a purely technical, abstract "economy."

A socialist left, if there is to be one, will take the system as a whole, state and civil society as a global relationship, as its horizon, rather than presupposing the epistemology of the capitalist state as its point of departure.

[really sorry about this thread]