Fiscal Policy and MMT, Modern Monetary Theory

Can the tail wiggle the dog?

Can the tail wag the dog?

Fiscal policy can at best achieve a higher level of employment temporarily. But unused productive capacities are inherent in the capitalist economic and social order. In the cycle of goods production, full employment can only be achieved temporarily, because the production of goods is only throttled back when overproduction has become visible and the demand for labor has fallen again. Fiscal policy can only have a moderating effect on this cycle, but it cannot in principle smooth it out….

Fiscal policy can at best temporarily achieve a higher level of employment. Unused productive capacities are inherent in the capitalist economic and social order. In the cycle of commodity production, full employment can only be achieved temporarily because commodity production is only throttled when overproduction has become visible and the need for labor has decreased again. Fiscal policy can only have a moderating effect on this process, but in principle it cannot smooth it out.

And the upper class ideally expects maximum utilization of the workforce potential with a large minimum wage sector such as that set up by Schröder-dominated social democracy, but not full employment, as this raises the wage level.

An economy with full employment, but mainly producing armaments, would cause rapidly increasing poverty among the population unless the state were so powerful that it could force other countries to buy them.

While Keynes was concerned about the welfare of the nations at a time when one could still allow oneself to imagine a state above the classes, the MMT has lost this point of view. Apart from full employment, the MMT has not developed any criteria for the meaning and goal of utilizing the productive capacities. The state's actions are not neutral or cross-class. He temporarily solves the problem of falling profit rates by expanding the low-wage sector. For this, he is urgently dependent on immigrants who accept the lowest wages and work on demand. To obscure this connection, the government and industry associations all speak of a shortage of skilled workers