1. Ocasio Cortez Keynes
2. Ocasio Cortez Keynesian
3. Ocasio Cortez Speech Today
4. Ocasio Cortez Keynesian School
5. Riley Roberts Ocasio Cortez

Professor Mulligan explains why Keynesian economics doesn’t work in the real world. Two critical elements are missing from the old-style Keynesian approach. The first piece is that employment, which depends on benefits and opportunity costs to employer and employee, is a bigger driver of spending than government benefits are.

For all the vitriol that President Trump has directed at freshman congresswoman Alexandria Ocasio-Cortez, a self-described democratic socialist, the president and AOC actually have more in common than either of them might care to admit. Both are, in effect, subscribers to a relatively new economic theory, known as Modern Monetary Theory, or MMT. This is Keynesian economics without restraint, allied with an unworkable employment-buffer scheme which looks for all the world like socialism. It appeals to Alexandria Ocasio-Cortez. That might give you a clue. Second, we have climate alarmism. That’s not the bad idea in itself. Cuntface Alexandria Ocasio-Cortez (A.O.C.) signifies the new political-economic savageness in America. Her doofy agenda demonstrates the rampant financial illiteracy amongst her gen. Cuntface Alexandria Ocasio-Cortez (A.O.C.) signifies the new political-economic savageness in America. Her doofy agenda demonstrates the rampant financial illiteracy amongst her gen.

Do not be frightened away by the term NAIRU. It is rather simple to understand and is explained in the article. Although one of the key theoretical pillars of neo-liberalism is has been found to have been wrong.

Stuart Medina Miltimore is an economist. He is a founder of the Spanish Association Red MMT and has contributed to the dissemination of Modern Money Theory in Spain by publishing two books, La Moneda del Pueblo and El Leviatán desencadenado. Siete propuestas para el pleno empleo y la estabilidad de precios. Veintiuna razones para salir del euro.

Last week the young and refreshing congresswoman Alexandria Ocasio-Cortez (AOC) from the 4^th District in New York managed to destroy the concept of a Non-Accelerating Inflation Rate of Unemployment or NAIRU in literally less than 5 minutes during a congressional hearing with the new Chairman of the Federal Reserve System, Jerome Powell. NAIRU is one of the many fictions that mainstream economists have created to justify persistent levels of high unemployment. I will delve on the meaning of NAIRU and the strong symbolism of the nail that AOC hammered into mainstream economics’ coffin later in this text. But first let’s take some excerpts from the hearing. You can find a recording of the hearing online. It was knock-out in three counts.

Count 1

AOC asked Powell to confirm that the mandate of the Federal Reserve is to provide price stability with maximum employment, “meaning to aim for the lowest unemployment rate possible without runaway inflation”. Powell had to agree because of course it is.

AOC then digs in into the presumed relationship between unemployment and inflation. “In early 2014 the Federal Reserve believed that the long run unemployment rate was around 5.4%. In early 2018 this was estimated lower at 4.5%; now the estimate is around 4.2%. What is the current unemployment rate?”

Powell responds 3.7%.

Count 2

AOC then retort “but unemployment has fallen about 3 full points since 2014 but inflation is no higher today than it was 5 years ago. Given these facts, do you think that the Fed’s estimates of the lowest sustainable unemployment rate may have been too high?”

Ocasio Cortez Keynes

Powell responds “absolutely” and chuckles. He then hopelessly fumbles and concedes that “this is something that you cannot identify directly”. Of course! NAIRU is just an estimate that cannot be observed as many other mythological creatures created by neoclassical economics. “We’ve learned that it’s substantially lower than we thought.”

Then AOC gives a climatic masterstroke: “I’ve heard that economists are increasingly worried that the idea of a Philips curve that links unemployment and inflation is no longer describing what is happening in today’s economy.”

Powell admits what central bankers have known now for years: “The connection between slack in the economy –the level of unemployment— was very strong if you go back 50 years and it’s gotten weaker and weaker to the point that it is a faint heartbeat. (…). We’ve learned that the economy can sustain much lower levels of unemployment without troubling levels of inflation.”

AOC has drawn blood and is not letting Powell get away: “Why are we seeing this decoupling in a relationship that we had seen in the economy decades ago.” Powell fumbles again and brings in the inflation expectation narrative, another unicorn of Neoclassical economics. “The expectations are so settled that we think that is what drives inflation expectations. When unemployment went way up you did not see inflation go down.”

Count 3

The congresswoman now gives the final blow: “Do you think that may have implications in terms of policy making; that there is perhaps room for increased tolerance of policies that have historically been thought to drive inflation?”

Powell is now stirring on his chair: “I don’t want to get into the minimum wage discussion directly but I think we’ve learned that (…) downward pressure on inflation around the Globe and here is stronger than we had thought. Central banks are not hitting their inflation targets, they are always below.” Yes! Because governments have refused to use fiscal policy to spur growth and decided to rely on monetary policy instead, which, as Warren Mosler explained is like putting someone to drive a car using a wheel that is not connected to anything.AOC then mentions what Powell is reluctant to talk about: “Earlier you had suggested that in the event of a recession or a contraction we’d like to see more fiscal policy that supports monetary policy. Can you further articulate what those policies and considerations should be?”

Powell responds “I was referring to a severe recession or downturn and if that were to happen then I think that it would be important that fiscal policy come in to play.”

There you go! A central banker just admitted what Modern Money Theory has been saying all along: monetary policy is useless to fix the economy. You need fiscal policy to manage the business cycle. The significance of what Alexandria did last week cannot be emphasized enough.

Now Jerome Powell is no progressive, he wouldn’t have been placed there by Trump otherwise. However, while trying to latch on to his conventional mainstream beliefs he still had to concede that the NAIRU relation doesn’t seem to hold any longer and that there is a role for fiscal policy.

NAIRU was never a meaningful relationship. You can observe a direct relationship between bargaining power and the retaliatory price increase of businessmen. It is common sense to think that a tight labour market will improve the bargaining power of workers who will thus be able to extort better working conditions from their employers. Salaries being a key component of business costs it is self-evident that prices will tend to rise if wages grow. That is called class struggle: the distributional conflict between capital and labour. Inflation, a process for which both workers and business were responsible, was conveniently blamed by mainstream economists on one side only although, in actuality, only firms can raise prices.

While these wage-price spirals could be observed in the 1970s and 1980s they faded away during the Neo-liberal era. Thatcher made it her overriding mission to liquidate the power of trade unions but attacks on workers’ rights were used throughout most advanced nations during the long Neo-liberal half century. That is why we have no inflation today.

The origin of NAIRU can be traced back to the Philips curve, the correlation that the New Zealand economist A.W. Philips identified between unemployment rates and wage rates. The problem is that this statistical observation was not stable throughout time. Never mind. Mainstream economists needed to prove that there was a natural rate of unemployment which could not be trespassed without serious harm to price stability and the economy. They wanted a tool to prove that inflation had to be controlled through mass involuntary unemployment.

In the 1970’s Milton Friedman and Edmund Phelps argued that the erratic shifts in the inverse correlation between unemployment rates and inflation were due to changes in expectations of future price rises. The rational expectations theory not only underpins NAIRU but is also a key argument against the use of fiscal policy. Neoclassical economists purport that fiscal policy is ineffective because agents respond to rises in public spending with an expectation of future tax increases and inflation and cease to invest and create jobs.

NAIRU has been used as a key component of models that systematically underestimate the output gap. An economy growing at its full capacity would be one with full employment and at risk of overheating. If you can fool people into believing that there is no unemployment then you can also pretend that the public deficit is too high and that inflation is around the corner. The concept of NAIRU helped to place the focus of economic policy on controlling inflation rather than employment. NAIRU has thus been the cornerstone of the austerity policies that have destroyed the welfares policies of the postwar era. Moreover, high NAIRU estimates are interpreted as an indication of ‘labour market rigidities’, which can only be confronted by deregulation.

The ideas behind NAIRU were already criticized in 1929 by John Maynard Keynes before the concept was contrived when he famously stated that the “conservative belief that there is some law of nature which prevents men from being employed, that it is ‘rash’ to employ men, and that it is financially ‘sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years.”

Well, lo and behold, forty years later History gave the practitioners of nonsense economics the opportunity to put in practice the folly of unemployment policies. Conveniently, the oil crisis of the 1970s, when Arab oil producing states imposed a fourfold increase in crude prices, provided the perfect excuse to implement the recipes of neoliberal economists. All they needed to do was to put the blame on labour.

Five decades of Neo-liberalism is a long period and the consequences have been dramatic. Many of us have never known a period of full employment.

It is no surprise that AOCs coup received little attention from European media. It astounding that they have not picked up on the significance of AOC’s challenge to one of the most cherished beliefs of mainstream economics. The European media have taken notice of the new generation of young progressive politicians that have recently entered the US Congress, a roll that includes Rashida Tlaib, Ilhan Omar and Alexandria Ocasio-Cortez, females with an ethnic background that is different from President Trump’s but are unabashed in their challenge to the establishment. Modern Money Theory is the theoretical foundation of many proposal put forth by AOC. Sadly, the European media seem to be absolutely clueless about the significance of the challenge to mainstream Economics posed by Modern Money Theory. This paradigm shift, developed by scholars in American and Australian universities, has yet to be felt in economic policies but has already proven mainstream Economics to be morally and intellectually bankrupt.

This is the more notorious considering that Economists working for the European Commission and other multilateral organizations have caused incredible damage to the population of Europe with insane estimates of NAIRU and NAWRU (Non-Accelerating Wages Rate of Unemployment, NAIRU’s twin sister). Consider the case of Spain. The Organization for Economic Cooperation and Development (OECD) estimated in 2012 that the sustainable rate of unemployment for Spain was 15.6%. In the midst of Spain’s worst unemployment crisis, which coincided with a long period of deflation, the European Commission experts made estimates of the NAWRU which suspiciously always seemed to trail the actual unemployment number as shown in figure 1 [ CITATION Gec14 l 3082 ].

Figure 1. European Commission’s NAWRU estimates for Spain at different publication times. Source: European Commission, Economics Forecasts, European Economy and CIRCA website. Taken from Gechert, Tober, & Rietzler, 2014.

The problem with NAWRU and NAIRU is the use of the so called Kalman-filter that leads to revisions of all past estimates whenever new data is entered and assigns a disproportionate impact to the last observations. Hence the estimates tend to trail the actual number, which “raises doubts about the reliability of the underlying statistical filtering procedure” [ CITATION Hub17 l 3082 ].

Ocasio Cortez Keynesian

A questionable methodology has stubbornly been upheld by European officials to provide fake output potential gaps and structural deficits as a justification to sideline fiscal policies. By assigning the NAWRU a core role, the European econometric models implicitly discount other policy options. In a severe recession like the one suffered by European peripheral countries a traditional Keynesian approach, which would have increased budget deficits to stimulate the economy and create jobs, was evidently in order. Instead, high unemployment rates were not interpreted as a symptom of a weak economy but as a proof of a rigid labor market in need of “structural” reform.

The question begging is: why are European progressive leaders incapable of embarrassing our central bankers and policy makers as effectively as AOC? It should not prove difficult to reveal that Christine Lagarde and Ursula Von der Leyen adhere to a defunct ideology. European parties of the Left: here is an opportunity to redeem yourselves. Prove your worth!

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The coronavirus pandemic has triggered what is likely to be the deepest crisis in the history of capitalism. Comparisons to the Great Depression of the 1930s are being made across the board, as the world economy collapses and unemployment shoots up in all countries.

In the UK, Gross Domestic Product (GDP) is predicted to fall by at least 15% in the next quarter. In the US, Morgan Stanley predicts an annualised fall of 30%. Almost 10 million have lost their jobs in America already. In Britain, one million applied for Universal Credit in the space of just two weeks.

Desperate times call for desperate measures. The ruling class is throwing everything they have at the situation. The problem is, their arsenals are already empty from their attempts to fight the last recession.

With interest rates at 0%, monetary policy has reached its limits. Years of quantitative easing have led to a case of diminishing returns. And public debts are already sky-high from bailing out the banks during the last global crisis. In short, they have run out of ammo to tackle this crisis.

As a result, governments across the world have been left with no choice but to pump money into the economy in an effort to prop up the system. Already, trillions have been promised by the advanced capitalist countries alone, including $2.2 trillion in central bank measures and $4.3 trillion in state spending.

And in all likelihood, this is only the tip of the iceberg in terms of what will be required to avert a complete market meltdown in the weeks and months ahead.

All socialists now?

Many observers cannot believe their eyes. Overnight, a laissez-faire Tory government has turned towards unprecedented state intervention in the economy, promising £330 billion (15% of GDP) to help small businesses and homeowners, and a limitless amount to subsidise workers’ wages.

In the USA, it seems that Donald Trump has been convinced into implementing a ‘helicopter drop’ of money over American households, with every citizen potentially set to receive a cheque for over $1,000 in the post.

At a similar time of crisis in the early 1970s, Republican US President Richard Nixon was said to remark that “we are all Keynesians now”, as his administration turned towards expansionist economic policies. Similarly, today, many are remarking that “we are all socialists now”, as big business governments everywhere throw free-market orthodoxy out of the window in an effort to save the system.

“Boris must embrace socialism immediately in order to save the liberal free market,” declared one writer in the Tory mouthpiece, the Telegraph. The coronavirus crisis is “turning Tories into socialists” announced another headline, this time in the Conservative journal, the Spectator.

Those on the left who have spent years arguing against austerity and for demands such as a ‘universal basic income’ (UBI) understandably believe that their time has come. Even outgoing Labour leader Jeremy Corbyn declared that the Tory government’s emergency measures were a vindication of his economic programme. Here, after all, is the famous ‘magic money tree’ that the Conservatives had claimed did not exist!

In particular, advocates of Keynesian policies - of government stimulus, state spending, and top-down economic management - feel that their ideas have finally been proven correct.

Ditto with their contemporary acolytes: those who subscribe to ‘Modern Monetary Theory’ (MMT) - promoted by leading lights of the Democratic Party in the USA, such as Alexandria Ocasio-Cortez (AOC), and by influential economic advisors in the British labour movement

Recent events seem to offer activists the perfect rebuttal to right-wing critics who ask how radical policies will be paid for. Want free healthcare and education? No problem, we’ll just print money. Mass investment in green energy? Don’t worry, we can turn on the government’s taps. Give everyone a UBI? Easy - just add it to the bill!

The problem is, eventually this bill must be paid. The real question is: by whom?

What is Keynesianism?

Truth be told, Modern Monetary Theory is a bit of a misnomer. In reality, it is not much of a theory. Nor is it particularly modern. Indeed, at root it is really just a rehash of the ideas of John Maynard Keynes, who believed that governments could manage and regulate the capitalist system by ‘stimulating demand’.

Keynes was an English economist, who came to prominence for his writings on the turbulent inter-war period. Despite being embraced today by the labour movement and the left, Keynes was a devout Liberal. He was actively opposed to socialism, Bolshevism, and the Russian Revolution, proudly declaring that, “the class war will find me on the side of the educated bourgeoisie”.

Indeed, his ideas were not intended to help the working class, but were an attempt to provide capitalist governments with a strategy on how to get out of crises. In particular, his most famous work - his General Theory - was a direct response to the Great Depression, and the mass unemployment seen in America, Britain, and across Europe at the time.

Whilst no fan of socialism, Keynes was critical of the so-called ‘free market’. He correctly identified - as Marx had done many decades before - that the ‘invisible hand’ of the market was not omnipotent; that supply and demand would not always match in perfect ‘equilibrium’.

Instead, capitalism periodically found itself - like in the 1930s - stuck in a vicious circle, with rising unemployment leading to falling demand; falling demand leading to a collapse in business investment; and collapsing investment leading to rising unemployment; and so on.

The solution, Keynes asserted, was for the state to step in any make up for the shortfall in demand. In other words, governments should spend where private business would not, in order to ensure that workers had money in their pockets to spend.

His concern was less that workers might eat, and more that they might buy and consume, thus providing a market - the ‘effective demand’ - that the capitalists required in order to sell their produce and make a profit.

In short, Keynes’ programme was not one aimed at ameliorating the lives of the working class, but at saving capitalism from its own contradictions.

In this respect, we see echoes today of Keynes’ ideas in the policies being carried out in response to the coronavirus-induced crisis. The establishment are not so much worried about people dying in the short term, as they are about the potential depression that will follow if workers do not have jobs, money, and the ability to purchase the commodities churned out by the capitalists in the future.

As in the Great Depression, then, the concern of the ruling class and their economic advisors is not about saving ordinary people’s lives, but about the viability of their system - the profit system.

The New Deal

Notably, Keynes’ ideas were clearly influential in shaping the New Deal: President Roosevelt’s programme of public works that were intended to stimulate US economic growth during the Great Depression.

After all, in his General Theory, the English economist even suggested that the government could boost demand by burying money in the ground and getting workers to dig it back up.

“There need be no more unemployment,” stated Keynes. “It would, indeed, be more sensible to build houses and the like,” he continued, “but if there are political and practical difficulties in the way of this, the above would be better than nothing.”

Today, these same ideas are raised in relation to proposals for a Green New Deal (GND), which has become a signature demand of the left, advocated by AOC in the US and by left-wing Labour activists in the UK.

The only problem that the advocates of a new New Deal fail to mention, however, is that the original did not work. The slump continued long after its implementation (in fact, it became worse with the rise of ‘beggar-thy-neighbour’ protectionism). Unemployment even went up. Only with the onset of the Second World War and the mopping up of workers into the army and the arms sector did unemployment fall.

Even Keynes himself was forced to admit defeat. “It is, it seems, politically impossible for a capitalistic democracy to organise expenditure on the scale necessary to make the grand experiments which would prove my case — except in war conditions.”

The same can be seen in China in recent years, where the largest ever Keynesian programme of construction has been undertaken in the last decade, in an effort to escape the impact of the global capitalist crisis. But the result has been a massive increase in public debts, on one side, and the ludicrous contradiction of ghost cities alongside a huge housing crisis, on the other.

This is the logical conclusion of Keynesian attempts to bureaucratically manage a capitalist, profit-driven economy. There is no reason to believe a new New Deal would fare any better today in America, Britain, or anywhere else.

At the same time, it is also important to recognise the differences between these (failed) Keynesian experiments of the past and the measures being enacted by policy makers and world leaders today in similarly desperate circumstances.

Traditional Keynesian steps were an attempt to stimulate demand - and, in turn, business investment - through government spending. At the present time, however, the aim is not so much to boost demand; after all, production is largely paralysed by the pandemic.

Instead, the primary goal is just to maintain the system on life support until the current situation subsides; to ensure that the bosses still have a workforce to exploit when the pause button is lifted. And, above all, to provide workers with a basic means of living, in order to prevent a social explosion from occurring in the meantime.

No free lunch

Like their traditional Keynesian predecessors, MMT supporters believe that there should never be any slump, or any need for austerity and balanced budgets, since governments can always step in by creating money and spending it.

Provided countries have their own ‘independent’ currency, we are told, the government can never run out of money, since the state can always choose to pay for any debts by ‘printing’ more.

Yes, money can be created ‘out of thin air’. But value and demand cannot. The state can create money. But the state cannot guarantee that this money has any value. Without a productive economy behind it, money is meaningless. Money is only a representation of value. And real value is created in production, as a result of the application of socially necessary labour time.

The money that a state creates, therefore, will only be of any worth in so far as it reflects the value that is in circulation in the economy, in the form of the production and exchange of commodities. Where this is not the case, then this is a recipe for inflation and instability.

For example, all other things being equal, if the government prints two notes where there was one previously, this devalues the currency by half, and therefore prices in the economy will double. Medieval monarchs - and their subjects - learnt this the hard way, when prices soared and inflation shot up in response to endless debasements of the currency.

At the end of the day, there is no such thing as a free lunch when it comes to capitalism. Governments do not have any money of their own. State spending ultimately must be paid out of taxation or out of borrowing. And neither creates demand, but merely shifts it around the economy.

Firstly, take taxes. These must either fall on the capitalist class, which bites into investment. Or they must fall on the working class, which bites into consumption. In either case, the effect is to restrict demand, not create it.

Similarly with government borrowing. Money borrowed today from the capitalists must be paid back tomorrow - and with interest. In other words, demand can be ‘stimulated’ today through government borrowing, but only by cutting into demand in the future.

The state can try to avoid taxes and borrowing by printing money. But it cannot print teachers and schools, doctors and hospitals, or engineers and factories. If government spending pushes demand above that which can be supplied, then market forces will push up prices across the board - that is, it will generate inflation.

This is the ultimate limit to any government’s ability to create and spend money - the productive capacity of the economy: the economic resources available to a country in terms of its industry, infrastructure, education, population, and so on.

At the same time, whilst the state can create money, it cannot ensure that this money is put to use. It is not the state that creates the demand for money, but the needs of capitalist production. And this production is ultimately driven by profit. Businesses invest, produce, and sell in order to make a profit. Where the capitalists cannot make a profit, they will not produce. It is as simple as that.

Capitalism and class

Of course, if society’s needs are not being provided and produced by the private sector, then the government can step in and provide them directly through the public sector. But the logical conclusion of this is not to create more money, or to provide everyone with a ‘universal basic income’, but to take production out of the market by nationalising the key levers of the economy as part of a rational, democratic, socialist plan.

But you cannot plan what you do not control. And you cannot control what you do not own. Keynesianism, however, avoids this key question of economic ownership.

Indeed, Keynesian economic analysis is completely devoid of the issue of class; seemingly ignorant of the fact that we live in a class society, composed of antagonist economic interests: those of the exploiters, and those of the exploited.

Ultimately, as long as the economy remains dominated by big business and private monopolies, any money pumped into the system will go to pay for commodities - food and shelter, etc. - that are produced by the capitalists.

In other words, all this money will end up in the hands of profiteering parasites. This is the real problem with reformist demands like UBI, which do nothing to challenge the power of the capitalist class.

At the end of the day, neither the Keynesians nor their MMT/UBI descendents propose fundamentally altering the current economic relations and the broken dynamics that flow from these. Private property, for them, remains inviolable and sacrosanct. The anarchy of the market is untouched.

Their strategy, in summary, is one that saves and patches up capitalism, rather than overthrowing it.

We must tackle the roots of the capitalist system: private ownership and production for profit. Only by bringing in common ownership over the means of production and implementing a socialist economic plan can we satisfy society’s needs. We cannot print our way to socialism.

Marxism vs Keynesianism

Today, even in times of ‘boom’, the febrile global economy operates far below its productive capacity. This ‘excess capacity’ has become a hallmark symptom of a system that has long outlived its usefulness. Even at its height, capitalism can only successfully utilise about 80-90% of its productive abilities. This falls to 70% or less in times of slump. In past recessions, the figure falls to as low as 40-50%.

But the question never asked by the Keynesians (of all flavours) is how we have ended up in this situation in the first place?

“The use of MMT [and Keynesianism in general] is akin to pumping up a flat tyre,” remarks Larry Elliott, economics editor of the Guardian. “Once it is fully inflated there is no need to carry on pumping.” But what is the cause of the original puncture?

Why isn’t our full productive capacity being utilised? Why has the economy become stuck in this downward spiral of low investment, unemployment, and stagnant demand? Why must the government step in and save the system?

To this, the Keynesians have no answer. They merely state that ‘excess capacity’ is the result of a lack of effective demand. Businesses are not investing because there is not enough demand for the goods they produce. But why?

Ocasio Cortez Speech Today

Marxism, by contrast, provides a clear, scientific analysis of the capitalist system, its relations and laws, and why these intrinsically lead to crises. These, in the final analysis, are crises of overproduction. The economy collapses not simply because of a fall in demand (or confidence), but because the productive forces come into conflict with the narrow limits of the market.

Production under capitalism is for profit. But to realise a profit, the capitalists must be able to sell the commodities they produce.

Ocasio Cortez Keynesian School

Profit, at the same time, however, is appropriated by the capitalists from the unpaid labour of the working class. Workers produce more value than they receive back in the form of wages. The difference is surplus value, which the capitalist class divides amongst itself in the form of profits, rents, and interest.

The result is that, under capitalism, there is an inherent overproduction in the system. It is not simply a ‘lack of demand’. Workers can never afford to buy back all the commodities that capitalism produces. The ability to produce outstrips the ability of the market to absorb.

Of course, the system can overcome these limits for a time though reinvestment of the surplus into new means of production; or through the use of credit to artificially expand the market. But these are only temporary measures, “paving the way,” in the words of Marx, “for more extensive and more destructive crises” in the future.

Riley Roberts Ocasio Cortez

The 2008 crash marked the culmination of such a process - a climax that was delayed for decades on the basis of Keynesian policies and a boom in credit alike. But now a new, even deeper crisis has hit - and neither the Keynesians, the MMTers, nor anyone other than the Marxists can offer a way out.

At most, Keynesianism and MMT provide a palliative medicine for a chronic disease. But neither can diagnose this disease correctly, nor offer a genuine cure.

Socialism or barbarism

The capitalists today are throwing everything - including the kitchen sink - at the problem, in a desperate attempt to keep their system from collapsing. But what they give to workers in the form of wages subsidies and government spending today, will be taken away through austerity tomorrow.

Those in the labour movement calling for Keynesian-style measures are no doubt full of good intentions. But, as the old saying goes, the road to hell is paved with such well-meaning wishes.

Demands for Keynesian policies, MMT, UBI and the rest are not just wrong but harmful - harmful because they sow illusions, preparing the way for disaster and disappointment.

In this respect, we must shout loudly like the little boy in Hans Christian Andersen's tale - the emperor has no clothes! We have a duty to offer a word of warning to workers and youth: do not believe those trying to foist their quack remedies upon you. Now is not the time for the wiley charms of charlatans and snake-oil salesmen.

We do not criticise Keynesianism and MMT from the same position as the apologists of the ‘free market’, however. No, our criticisms come from a Marxist perspective - from the standpoint of what is good for the world working class; from what is necessary to abolish capitalism and liberate humanity.

Capitalism is at an impasse. It can offer society nothing but barbarism. Only a clear socialist alternative of common ownership, workers’ control, and democratic economic planning can provide a way forward for humanity.