Time? For? Socialism? What happened when Thomas Piketty descended from the elegant mathematical Olympus of economic theory into the muck of political and economic crises, public debates, social confrontations, and competing visions of progress?
The 100th anniversary Max Weber’s death reminds us to critically and constructively engage with his thought, as his thought remains one of the best frameworks to approach the challenges of the next 100 years to come.
“We’ve been told there’s no magic money tree,” one expert says. “Well there is and they’ve just used it.”
Here’s that idea in more detail: MMT says inflation will only happen when aggregate demand (all the purchasing being done in the economy) outstrips the goods and services available for purchase (the supply). If there are a lot of dollars trying to purchase stuff, and not enough stuff to purchase, that stuff becomes more expensive.
So long as the economy keeps producing enough goods and services, the theory goes, it won’t have too much inflation.
For this reason, MMT advocates say, governments shouldn’t spend freely during periods of high employment, as the economy can’t increase production to meet the extra demand and would therefore be at risk of inflation.
This may spell the end of the neo-liberal ideal.
Most Australians want to leave the world a better place for those that come after them.
It’s time to make sure we do it.
Lots of older Australians are doing their best, individually, supporting their children via the “Bank of Mum and Dad”, caring for grandchildren, and scrimping through retirement to leave their kids a good inheritance.
These private transfers help a lucky few, but they don’t solve the broader problem. In fact, inheritances exacerbate inequality because they largely go to the already wealthy.
We need policy changes.
Reducing or eliminating tax breaks for “comfortably off” older Australians would be a start.
Marco Polo was right to be amazed. The instruments of trade and finance are inventions, in the same way that creations of art and discoveries of science are inventions—products of the human imagination. Paper money, backed by the authority of the state, was an astonishing innovation, one that reshaped the world. That’s hard to remember: we grow used to the ways we pay our bills and are paid for our work, to the dance of numbers in our bank balances and credit-card statements. It’s only at moments when the system buckles that we start to wonder why these things are worth what they seem to be worth.
This idea of Law’s led him to the idea of a new national French bank that took in gold and silver from the public and lent it back out in the form of paper money. The bank also took deposits in the form of government debt, cleverly allowing people to claim the full value of debts that were trading at heavy discounts: if you had a piece of paper saying the king owed you a thousand livres, you could get only, say, four hundred livres in the open market for it, but Law’s bank would credit you with the full thousand livres in paper money.
Law’s notion of centralised banking is what continues today:
Today, we live in a version of John Law’s system. Every state in the developed world has a central bank that issues paper money, manipulates the supply of credit in the interest of commerce, uses fractional-reserve banking, and features joint-stock companies that pay dividends. All of these were brought to France, pretty much simultaneously, by John Law.
What Bagehot brought to the table was a focus on gold:
He thought that money, real money, was gold, and gold alone. All the other forms of currency in the system were merely different kinds of credit.
This was then held by the central bank.
What Lancaster highlights is how the successes and failures of both men continue to be played out again today. The central role of nationalism is therefore interesting to consider when thinking about the world of Amazon and Facebook.
Progressive capitalism is not an oxymoron. Rather, it is the most viable and vibrant alternative to an ideology that has clearly failed. As such, it represents the best chance we have of escaping our current economic and political malaise.
We put people at the center of ‘The Business Equation’ because ‘The Future Of Work’ is only part of the problem, the bigger problem is ‘The Future of Business’.