Big Picture News: Modern Monetary Theory (MMT) and the Anti-Monopoly Movement
Money, like everything else now, can only be understood in context. There is an ecology of money. It’s still a medium of exchange and we continue to deposit money in banks. Money soon gets complicated when you consider the role of interest (Muslims forbid it, and some Christians still condemn usury), how taxes are levied, private versus public investments, stock exchanges, capital markets, commodity futures, digital currencies, NFTs, etc. Further, money policies are established in a cultural context — social, political, and economic. Many if not most people tune out this complexity and by default trust the status quo.
It’s “natural” to trust the status quo, but thanks to global warming and the resulting disruption of earth’s climate, all human societies are now on notice. We are facing, as my friends Annie and Jay Warmke put it, “the end of the world as we know it.” They usually add “thank god” because they escaped the consumer culture and created a Center for Sustainable Living in rural Ohio.
Humans are waking up to what we’ve done to the planet and are making amends. We’re planting seeds, not only to regenerate the soil and relocalize our food system, we’re also designing community solar gardens, reinventing how we move around, restoring watersheds, creating fibersheds, planning circular economies, and finally, challenging corporate oligarchies and their marketing (advertising/propaganda) campaigns that are desperately defending the consumer culture status quo.
Be honest. We’re all pretty stuck and addicted to the convenience of stuff at our fingertips and delivered to our doorsteps. Further, progress in transforming our relationship to food, energy, transit, etc. is slow, too slow to stop the collision course we are on.
Back to Money. Michael Shuman, a leading advocate of rebuilding our local economies, notes that if we add up all the savings in the U.S. —stocks, bonds, IRAs, 401(k)s, pensions, insurance funds, etc. — our investment capital adds up to about 56 trillion dollars. Almost all of that money is being invested in the multinational corporations, usually 4–6 mega companies, that in turn dominate every sector of the global economy. Shuman recommends that we start moving some of that capital locally, including local stock exchanges. The main point here is that our money is reinforcing the status quo, the one that runs on fossil fuels, creates income inequality, and needs to change radically before it is too late.
Enter Modern Monetary Theory and the trending #MMT economists who address this big picture dilemma. They offer a fiscal solution to shift our priorities away from the current neoliberal focus on privatization and a hands off policy to limit government regulation of corporations. Many MMT economists advocate a proactive policy of public sector investments to scale up the growing efforts to relocalize our food, energy, and transit systems.
Such a shift in investment from private to public has been a non starter for the last 4+ decades. If adopted, however, such a radical shift could fund the needed transition to sustainable food, energy, transit systems and even the so-called soft infrastructure of health care, housing, education and living wage jobs.
I am not an economist, but anyone can learn the basic premises of MMT. The central idea of MMT is that governments with a fiat currency system under their control can and should print (or create with a few keystrokes in today’s digital age) as much money as they need to spend because they cannot go broke or be insolvent unless a political decision to do so is taken. Confusion arises because the federal government is not subject to balancing their budget as everyone else must do — individuals, businesses, state and local governments, etc. MMT is not really a theory, but rather a description of how the money system operates. Here’s a simple chart.
I wrote a longer piece on how MMT is the Key to Funding a New Green Deal and the Progressive Agenda. Here is a short 10 minute explainer video by MMT economist Fadhel Kaboub that describes the MMT framework that can manage and fund this transition without causing inflation.
Such a bold plan is finally gaining some traction. Trillion dollar investments by the federal reserve, first to bail out the banks during the Great Recession, then Covid19 relief to individuals and businesses, and now the American Infrastructure Investment and Jobs Act have shown that the Fed has the power and capacity to fund such major, game changing programs if Congress has the votes for the legislation. Progressive leaders like Bernie Sanders, Elizabeth Warren, AOC, et al have been influenced by MMT economists, notably Stephanie Kelton, a Fellow at the Sanders Institute who has served as chief economist on the Senate Banking Committee (2015).
While economists on the right and left reject MMT, criticism of the well established neoliberal economic policies has never been greater. To be told that there is no money available to fund popular programs like single payer health care, raising the minimum wage, transitioning to renewable energy, and a Green New Deal to fight the existential threat of climate change is being questioned as never before.
Young people, who have born the brunt of neoliberal policies, are sick of credit card debt, student loan debt, being unable to afford skyrocketing rent or qualify for a housing loan. To top it off, they are told there is not enough money to fund a Green New Deal to fight climate change. Greta Thunberg has become an international icon of resistance to this absurd status quo. Youth have flocked to the Sunrise Movement that has established 400 local hubs in all 50 states since 2015.
Jon Stewart’s new program, The Problem, debuted last fall on Apple TV and episodes are available on YouTube. Stewart plays the role of a populist for ordinary people and invites experts to help him understand complex problems like the stock market, banking, and economics. You can watch his episode on MMT here.
MMT is Big Picture News because it promises to solve the money issue and allow Congress to fund programs that are essential if we are to free ourselves from the death grip of a status quo stumbling toward ecocide. As I write this the politics are not favorable, yet there could be an opening through the budding anti-monopoly movement. This is one area where a possible consensus across party lines could form. A recent Vox poll found that “Two-thirds of Americans want to break up companies like Amazon and Google.” The dissatisfaction cuts almost equally across Democrats, Republicans, and Independents.
The significance of this approach is that monopolies represent the power that is squelching the growth of local, bottom up change. If the oligarchs, even in one industry, were forced to play by long standing but rarely enforced anti-trust laws, it could free up the emergence of game changing new systems that could scale up and compete. If Exxon and Big Oil were regulated, taxed, no longer subsidized, and prohibited from funding disinformation campaigns, it would speed up the transition to renewable energy. This process could set off a domino effect. Big Ag’s Monsanto Bayer could lose their subsidies, forced to pay for health costs from pesticide and herbicide applications, thereby allowing the local food systems to scale up. Big Pharma could be taxed for exorbitant profiteering on drugs, vaccines, limit advertising, and forced to negotiate prices with Medicare, etc. Big Tech, Big Banks, Big Health Care, Big Retail… you get the idea. In a few years there could be real progress across all heretofore Too Big Too Fail monopolies.
Lina Khan, Biden’s new head of the Federal Trade Commission, has said, “Monopolies are bad, not simply because they threaten to lead to higher consumer prices or even necessarily undermine productivity and growth. But monopolies are bad because they’re bad for democracy.” This is a major departure from past reluctance to enforce anti-trust legislation, and meshes nicely with Biden’s framing of the battle between Democracy and Autocracy. Oligarchies around the world are the new enemy.
Meghna Chakrabarti, host and editor of NPR’s On Point, recently did a weeklong special series called More than money: The cost of monopolies in America. “It’s time to look more closely at what monopolistic consolidation does, not only to the markets those companies are in, but to the societies they’re into.” Meghna’s program documented how various sectors of the economy are able to flex their monopoly power in pricing for profits and to do so with impunity with their armies of lobbyists funding politicians in Congress and in state legislatures.
Monopoly capitalism, a term preferred by Minnesota’s progressive attorney general Keith Ellison, is precisely the problem: CEOs are the new oligarchs using their power to resist the bottom up movements struggling to transform our agriculture, energy, transit and related physical and human infrastructure systems. The Davids fighting Goliath can win, but only if money can be freed up to fund game changing initiatives that can supplant the dominant industries of the status quo.
A new bill — the Prohibiting Anticompetitive Mergers Act of 2022 — was introduced in Congress by Sen. Elizabeth Warren and Rep. Mondaire Jones.
- The legislation would confront the danger of acute corporate concentration in America by giving the Federal Trade Commission and the Department of Justice the tools to block, and even reverse, mega-mergers.
- Proposed mergers worth more than $5 billion could be blocked automatically.
- And past mergers that resulted in a market share of over 50% could be reversed retroactively.
- The bill already has many co-sponsors, including Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez.
Public Citizen — along with more than 40 allied organizations, including Color Of Change, Demand Progress, Greenpeace USA, the International Brotherhood of Teamsters, and Our Revolution — sent a letter to Sen. Warren and Rep. Jones supporting the bill.
There are signs that the status quo is unraveling — the pandemic, the war in Ukraine, unstable stock markets, inflation… all reveal the cracks in supply chains and the need to relocalize our economies. The systems deck is being shuffled. New players could win. Watch this new anti-monopoly space.
MMT economists have a vision from the past that could transform the present. Economics was the motivation for FDR’s Second Bill of Rights. (Wikipedia, and ff.) Roosevelt argued that the “political rights” guaranteed by the Constitution and the Bill of Rights had “proved inadequate to assure us equality in the pursuit of happiness”. His remedy was to declare an “economic bill of rights” to guarantee these specific rights:
- Employment (right to work[notes 1])
- An adequate income for food, shelter, and recreation
- Farmers’ rights to a fair income
- Freedom from unfair competition and monopolies
- Decent housing
- Adequate medical care
- Social security
- Education
Proposed in 1944, these rights, never implemented, remain fresh and achievable at our current impasse. We can take inspiration from TR’s trust busting and from FDR’s will to fight the “economic royalists” of his day. The combination of a new anti-monopoly movement with MMT fiscal policies could shape the rest of this critical decade. The picture of the young man at the top of this essay, and the one of our young FTC chair Lina Khan, suggests to me that if we remain calm, learn MMT, and break the excessive power of industry oligarchs, real systemic change is still possible.
