How Political is MMT?

by Patricia Pino

Many times critics state two contradictory sets of accusations at MMT; on the one hand they claim MMT is a political project, driven by the ideology of its activists. On the other hand they state that MMT is not political enough and has little to say of the way we should run our economies. So, some clarification seems important.

The founding academics of MMT always state that it is as politically agnostic as an economic theory can get. MMT is merely a description of the monetary system; we need to add our own moral lens to it before we can apply its insights to policy making. We believe this is an important aspect to highlight about MMT as a theory.

Human beings, however, are not politically agnostic. Consciously or subconsciously we all hold a range of views about what is morally right and what is fair. This inevitably impacts on our opinions about government policy and on our politics in general. Those who promote MMT are no different. Some seek to use the truths that MMT highlights to challenge key aspects of our political and economic order. Others have come to a better understanding of the economy due to MMT insights and this has in turn informed their political positions.

But mostly, MMT is important because it allows us to discuss economic policy in relation to real economic constraints rather than arbitrary financial ones. This means we can focus on the politics embedded into every policy, instead of assessing each policy merely in terms of its impact on ‘budget balancing’ targets. This doesn’t mean that activists will necessarily get the policies they strive for. But it does mean that we can begin to have a public discussion about policy which is more transparent and honest.

In this sense MMT is a democratizing project.