Modern Monetary Theory and an Economy of Human Development — Part II
V. Jobbing to Vocation
While systems of oversight operate at a macro-economic level, their influence is felt in multiple micro-economic ways with regard to the lives of people and their work. Although the term work can be used to describe both a job and a vocation, the latter implies meaning while the former only requires livelihood.
As currently configured, the economy assumes that provisioning occurs through jobbing. In other words, if you don’t have a job, you won’t be able to provide for yourself or your family. This arrangement overlooks the facet of livelihood associated with meaning; even if you have the good fortune to procure a position, there is a good chance it won’t be meaningful. As anthropologist David Graeber documents in his 2018 book, Bullshit Jobs: A Theory, a large portion of employees and contractors self-identify their positions as meaningless.
What can work be? What would it be like if people were able to spend a majority of their waking hours dedicated to meaningful work? What capacities would be required in the populations to fulfill such potential? What capacity would be required in the economy?
There are many real limits in the economy: natural resources, human hours, the wellbeing of humans and their environments, the technology available, the education available. Unlike these natural limits, the money supply of sovereign nations and its distribution is within the realm of human agency. Its rules are contrived and can be regenerated.
In The One-Straw Revolution, agroecologist Masanobu Fukuoka states, “The ultimate goal of farming is not the growing of crops, but the cultivation and perfection of human beings.” By its nature, economics regularly points us to the functional results of work: food, housing, healthcare, etc. At this point in our inquiry, it is worth calling out a second result of work: the effect it has on the worker. Overall, low-skill work does not require much of the worker. As living beings, without a context that demands dynamism, our psyches can atrophy. Conversely, when each of us find our calling or vocation (which, necessarily is non-generic, and which arises uniquely out of the relationship between our essence and our context) we enter into a process where we ourselves are being developed.
In some places, it seems as though there’s an assumption that the jobs an economy creates of its own volition are the right jobs, jobs that are good for people. But this is self-evidently false. MMT separates the ideas of money and debt and opens the space for a different conceptualization of work. Regenerative thinkers employing MMT return agency to workers by introducing the idea that the quality and variety of jobs that are available can be determined by a living economic system that builds human agency rather than a mechanical economic automatism. What would it be like if all jobs could be developmental?
VI. People
We often use idioms of speech that suggest that money exists independently and that there is some kind of inherent relationship between money and the things it can be used to acquire, e.g. “the price of oil”. However, money is a purely social construct. People are the only place to which money flows, and the only place from which it originates. Although we have accounting methods that list items such as land, resources, infrastructure, food, machinery, etc. — all of these things only cost money because people were involved in their identification, processing, distribution, and celebration.
More importantly, people, and the development of their potential, are the purpose of an economy and therefore of money. Yes, the economy has massive impacts on the more-than-human sphere. Yet we mislead ourselves if we pretend that the economy has a primary focus other than us. If this is the case, why does the economy fail so many people? What would an economy look like if it were in service to all? For one thing, it would shift its focus to enabling capacity development.
VII. Debt to Money
What are the hurdles blocking this evolution in the purpose of the economy? The myth of the fiat sovereign debt crisis is one. When we use terms like “the national debt” and “taxpayer money” to reference money created by the federal budget, we obscure the reality that, without federal government “debt,” there would be no money. All dominant currencies today are self-sovereign and fait-issued. Although it is true that the vast majority of the quantity of money is created through bank debt, banks are able to extend this credit based on their relationship with the federal government, which is the ultimate source of these funds.
Another way to think of it is that the economy is composed of two money circuits, the private money circuit (which ultimately has public origins), and the public money circuit. When the economy has a recession, the “supply” of private money shrinks (through a lower velocity, through defaults, etc.). For the economy to stay the same size, this difference must be made up by the public money circuit. We call this rebalancing a “federal deficit.”
From the perspective of MMT, sovereign money moves from being a liability (a debt) to an asset (a tool we can use to further develop the capacity of our people). What could we do, what could we build, what could we become, if only we chose to recognize that we have the money? How would this shift in perspective change the ways people spend their time and attention?
VIII. Full Employment and Vocation
Unemployment hit historic lows in December 2019, with U-3 (people actively seeking jobs) at 3.5% and U-6 (U-3 plus underemployed people and people that don’t have a job and have given up looking for one) at 6.7%, and historic highs in April of 2020 at 14.7% and 22.8% respectively. With a 2019 labor force of 166 million according to the World Bank, during the period in which we supposedly had arrived at the Non-Accelerating Inflation Rate of Unemployment (NAIRU — the Fed’s metric for “full employment”), we still had 5.8 million Americans in U-3, and 11.1 million Americans in U-6. In other words, under the conventional approach to managing our currency supply, it is taken for granted that there will be a chronically unemployed class of millions of Americans. To use an oft-cited metaphor, it is a game of musical chairs; mathematically, if you’re one of those in over the NAIRU limit, it is literally impossible for you to find a job, because they don’t exist. If that’s the best we can do, isn’t it time to consider other monetary and fiscal instruments rather than sacrificing a significant proportion of the population?
The intention of a perpetually unemployed class doesn’t just affect the segment of the population in the unemployed demographic — a large portion of the remaining population is in constant fear of falling into the bottom class, and this focuses their attention on survival earning. Conversely, if we were to eliminate this class, that segment of the population could refocus their attention from jobs that give them the purchasing power to fund their survival to endeavors from which they can derive meaning. This would also result in an evolution of the economic paradigm, moving from an accounting based on jobs to one based on potential.
IX. Capacity to Address True Problems
MMT is an instrument that can refocus the economy away from a zero-sum game where chronic employment is a given towards an economy refocused on the development of people towards the aim of an evolving and dynamic society. Through a shift from monetary to fiscal measures, from discretionary to mandatory spending, and from financial development to human development, MMT better equips nations with the appropriate instruments to build a regenerative economy.
In conclusion, given the convergent crises of wealth inequality, climate change, and joblessness due to Covid-19, there is a growing need for fundamental shifts in how we think about and design our economic systems. In setting out on this path, economists and policymakers would do well to consider the purpose of the economy, and the way in which it can provide not just jobs, but meaningful work that develops the people performing this work. By opening up space in our thinking about how money works and how it might be used, Modern Monetary Theory provides a compelling and pragmatic alternative to the status quo.
Acknowledgements
Thank you to the editors of this piece: Beatrice Ungard, Luke Smith, Alejandro Levins, Ben Haggard, Kyra Kristof, and Scott Yeager.
