MIT research scientist, Andrew McAfee, argues we need to rethink our assumptions about capitalism and the environment. Economic growth, he says, has been gradually decoupling from resource consumption. So, if capitalism survives this current crisis, we may need to adapt our understanding of the way it all works. We also hear from Annmaree O’Keeffe, from the Lowy Institute’s Pacific Islands Program, about the value of Australia’s international public broadcasting effort now that the Pacific is once again an Australian geopolitical focus.
“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.
After more than four decades of dominance, free-market capitalism is facing a challenge.
It’s rival, the rather blandly named Modern Monetary Theory, promises to return economic planning to a less ideological footing.
It’s also keen to strike a blow against the “surplus fetish” that many economists now blame for declining public services and growing inequality.