Having noted that the Greens were a plausible recipient of my vote yesterday on the basis of their green policies and support for proportional representation, I then took a look at their economic policies and found this pile of economic nonsense:
To summarise my reaction, if a party does not understand what money is and how it works then, in my opinion, it is not fit to govern. Given the above, that is where the Greens are.
The policy statement looks as if it came straight from an organisation called Positive Money which has been writing this economically illiterate stuff for more than a decade now.
A while ago I wrote a blog post about why I objected to Positive Money's ideas. Since their ideas have not seemed to change, and the Green Party still seems to be dedicated to them, and so in turn to completely crashing the economy (which is what would happen if they tried to implement any such policy) it seems worth reiterating what my objections are. What follows is in italics as it comes from my 2018 post.
________
The idea I take issue with is this, which PM says is core to their policy proposals:
The central bank would be exclusively responsible for creating as much new money as was necessary to promote non-inflationary growth. It would manage money creation directly, rather than through the use of interest rates to influence borrowing behaviour and money creation by banks. Decisions on money creation would be taken independently of government, by the Monetary Policy Committee (or a newly formed Money Creation Committee). The Committee would be accountable to the Treasury Select Committee, a cross-party committee of MPs who scrutinise the actions of the Bank of England and Treasury. The Committee would no longer set interest rates, which would now be set in the market.
The central bank would continue to follow the remit set for it by the nation's finance minister or chancellor. In the UK this remit is currently to deliver “price stability” (defined by an inflation target of 2%), and subject to that, to “support the Government's economic objectives including those for growth and employment.” The inflation target acts as a limiter to stop the creation of money becoming excessive, but subject to that, the central bank is able to create additional money.
I always struggle to know where to start when faced with this proposal, it is so overwhelmingly harmful. The following are the objections within the constraints of a reasonable-length post. They are not necessarily in order of objectionableness: candidly, they all achieve that status.
First, I object to any unelected committee taking control of our economic policy. I object to the current sham of central bank independence and I object to alternatives to it. We elect governments to run economic policy and not unelected 'wise people' whose status may well be challengeable and most of whom will be slaves to some long-dead economist.
Second, I object to inflation being at the core of money policy. Of course it is vital, but most especially to the interests of those with wealth. The object of money creation should be to ensure that there is enough to create full employment and rising median wages. Since the only inflation that money creation policy can control will not happen until there is full employment making inflation the target is to get every priority wrong in that case, and to put the interests of capital over those of labour. And that's not what any progressive should be doing, in my opinion.
Third, this policy fails to understand what money is. Money is, in the modern world, simply a promise to pay. It comes into existence when that promise is made. It ceases to exist when it is fulfilled. So, governments create money when they promise to pay when spending, and fulfill that promise when accepting the money that they create as payment for tax. And bank borrowers create money when promising to make payment of loans, and do so then they repay them. Conversely, banks promise to pay in the future when accepting net deposits: they say they will recreate the money when returning it. But in each case there is no physical thing called money. There is just a promise. That's all. But Positive Money do not appreciate that. They are saying there is something called 'central bank money' and that a stock of this can be created and distributed for use to banks. This is simply untrue: unless there is a promise to pay there is no money and you cannot distribute promises that do not exist between parties that are unaware that they might make them. The Positive Money idea is not possible unless the fourth objection applies.
Fourth, the PM proposal rations money. This is exactly what the gold standard did. It said money was in limited supply and countries were not at liberty to create it at will. The limitation in supply created a price for money - or interest - which rewarded those who had it and penalised those who had not in a form of rent extraction that reinforced inequality. We have been eliminating this rent: in my opinion this is the best explanation for the rapid decline in real interest rates and the reason why they will not increase again: there is no premium to pay for a commodity that is not now in artificially short supply. But, more important than this, the limitation on money availability constrained growth: desirable transactions could not take place because the means to make settlement was said not to exist. But this shortage is also artificial: there is literally no limit to the promises we can make. The only limit is to the number we are able to fulfill. So long as we focus on productive capacity then (and this is critical) the government's job is to permit all the money required to deliver that capacity and not to constrain it by saying that cash is not available. But that is exactly what PM would do: just as in the 30s the gold standard delivered a depression, so would PM.
Fifth, PM would also hopelessly undermine the use of sterling. The reality is that people borrow and spend in sterling because they need to pay their taxes, and a banking system that can create credit to meet their needs lets them do so. As a result the government has macroeconomic control of the economy. But if credit creation was constrained then people would borrow in and use other currencies: they would have no choice because sterling would cease to be credible. Not only would the microeconomic cost be considerable, as would be the risk, but the loss of macroeconomic control would be catastrophic.
Finally, PM are in any case just wrong: all sterling is already created by the government. It cannot, of course, control other currencies but as it stands in a UK context that does not matter: sterling is the invariable currency of choice. And it is created in two ways. One is by government spending, as explained here. Alternatively, it appears to be created by bank lending. But this is a chimaera. Banks may appear to do this, but do so only because customers are willing to offer to pay them in the sterling currency the government creates (and no one else does create it) and second because banks are licenced by the government under very strict controls to accept those promises. There may appear to be lots of banks creating money, but there is only one banking system doing, at the heart of which is the Bank of England that already advances funds to lending banks on demand and controls their lending by reserve requirements and specific regulation as well as specific policy e.g. to encourage or withhold mortgages. The idea that banks float free and do just what they want, as banks, in this system is not true. They do as investment banks, but that is something quite different and why the two should not be in one organisation. But to say banks create most money now is just wrong: they don't. They work under the licence of the Bank of England when doing so. PM are tackling an issue that does not even exist.
PM could play a valuable role in campaigning if they understood modern monetary theory, money and its role in the economy. As it is they promote dangerous policies that would reinforce inequality, crash the economy, and undermine any chance of the government directing any recovery. It's hard to think of many organisations seeking to do much more harm than that. Why it thinks itself progressive when doing so is hard to imagine. There is, thankfully, the MMT alternative. It's the only viable option.
_______
I might add one further thing. It is the category error at the very heart of both Positive Money's work and at the heart of the Green's policy. There is implicit in both the idea that there is something real, tangible and separable that is money. It is as if they thin k it is tangible. There is no such thing. There are only promises to pay. There are only mutual exchanges. Banks are just accounting mechanisms that record those promises. And given that fact (for fact it is) what the Green's are proposing is not just absurd but dangerous.
I am not sure I could vote Green now.
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Thank you very much for posting this analysis. Such a shame the Green Party is yet another “Money Luddite” outfit like the other UK parties. It confirms my belief that I’m politically homeless. All so unnecessary when a little effort to understand the history of money development in the world but especially the pioneering role of this country can be found in such books as Christine Desan’s book “Making Money: Coin, Currency, and the Coming of Capitalism” now nearly eight years old. What’s the matter with the British that they so readily turn their backs on important developments in their history? Can’t be bothered to look into why things are the way they are!
Thank you for this – Green Party economics has long been a problem for me – lovely people, but sadly too orthodox in the engine room that is money and fiscal policy.
Significant change is required in all our political party’s attitudes to this issue.
But the thing is, PM seem so lop-sided in their approach because it seems – and correct me if I’ve got it wrong – they don’t seem to understand the function of tax? If I’m correct, it’s no wonder the Greens – as a political party at least – find PM so attractive because of the dreaded ‘T-word’ which stands for ‘toxic’ as well as tax.
Quite right PSR, to misquote my friend Dave, who says, “…green politics without economics is just gardening”….
I recently joined the Green Party on the basis that it has an overarching focus on the existential threat that climate change now poses. Further evidence of this has emerged over recent days. I do not agree with all Green Party policy however they are a closer fit to my beliefs than any other party. PR is the game changer and is supported by the Greens. Economic Policy can be refined and developed. Maybe you could help Richard ? My constituency is a marginal Conservative seat having moved from Labour last time so my my vote will not count unless I vote tactically.
I could help
Of all political parties the Greens ask me least of all
I’m not surprised at the May local elections I asked the Green Party candidate about my misgivings about the national party’s monetary system understanding and I was promptly told by this candidate “it’s all above my pay grade!” Why amongst the Brits on matters vital to the economy and therefore national well-being it’s always someone else’s responsibility to sort it out?
I wish I knew
You’re joking Richard, surely?
That cannot be right.
What the hell is going on there?
I’ll put it this way – if the Greens want me to vote them, I want an explanation please. At the moment its the Lib Dems based on PR and size (as well as working with the Greens).
You know what, I bought Stephanie Kelton’s book for my local Green councillor to read a couple of years ago and he has NEVER contacted me to talk about it. A voter!
I purchased copies for a few people mostly better off than me, in positions of power and influence and not one has ever come back and engaged with me about it.
Fair enough, maybe it’s me but there is an intellectual malaise and lack of curiosity at the centre of our politics that disturbs me.
They didn’t understand it, I suspect
I’ve been an active Green member for over a decade. At most levels in the Party they don’t have economics’ understanding that is at a critical thinking level.
A long time ago a senior Green asked me what I thought of Positive Money – I said PM were confused and wrong. This was on the basis of reading Richard’s work and others.
My two discussions with Natalie Bennett during elections were nice but included – “Read Molly’s book” and “Read our Manifesto”.
Green Party members are largely ‘gardeners’ (I use it as a metaphor) concerned about the Environment, to the detriment of other issues. They are very confused about Economics and leave that to others.
I gave a talk on ‘Money and Tax’ to a meeting of 40 odd Greens, it was well received. I quoted from RMs work and MMT whilst using illustrations from Progressive Pulse (Adams) on how money work.
That Greens have little interest in ‘Money’ is a major opportunity though, don’t turn your back on a group of wonderful people who need educating.
Thanks Tony
I am reflecting on what to do about this
Excellent stuff. Good explanation and the last para, 2nd sentence nailed it: category error. Greens need to go back to the drawing board – fast. & it begs the question: how did they get themselves into this rut/groove? Discussions on money should evolve – there are always new angles. Looks like the Greens have stuck with one particualr view.
Observation on 4th point: “This is exactly what the gold standard did. It said money was in limited supply and countries were not at liberty to create it at will.” Most many, all? countries had something like this in the 19th century. This being the case, money expansion relied on – discovering more gold (or perhaps silver). Calif & the 49ers arguably funded the rapid (industrial) expansion of the USA, UK colonial policy was patially driven by gold (South Africa? Gold Coast etc). Speculation. Feel free to shoot it down in flames.
@ Mike Parr On the point you make about the use of gold I think that it’s in Perry Mehrling’s book “Money and Empire” that the inflationary effects of New World gold were dampened down by the West developing trade with the East where there was a propensity to hoard gold. Pretty much the effect of states issuing treasury bonds, a hoarding mechanism and therefore primarily deflationary if the interest coupon is low.
”how did they get themselves into this rut/groove?”
I’m sure a GP member could help us out with how policy-making in the GP works nowadays. I used to be a member and it seemed that anyone who felt very strongly about an issue and was prepared to put the work in could potentially have a big influence on policy. Judging by the debates that I used to follow in the GP online forums, it appeared to me that economic policy was something that it would be hard for the GP to develop coherently, due to the widely varying backgrounds and economic ideas of the membership. I reckon most GP members would come into the ‘above my paygrade’ camp – they support the overall GP vision but are flaky/disinterested on economic specifics. There are many GP members who come from the liberal/environmentalist camp, who have very conventional/mainstream views on economics that are not progressive at all. Then there is the Positive Money camp. It appeared to me that quite a few GP members in the early 2000s got interested in the Positive Money view being – naturally enough for Greens – in search of progressive alternatives. But maybe without sufficiently understanding the issues. Back then the MMT perspective wasn’t really developed, or at least, wasn’t easily available to non-specialists, so the kind of critique given above wasn’t there to counterbalance or contradict the PM ideas. And the PM-supporters managed to get their perspective built into Green Party policy. It’s just been waiting ever since for GP members with a better understanding to come along and feed in the MMT perspective.
I think this pretty much sums it up.
And it’s my guess that the majority of MPs have very little understanding of money.
As a Green Party member I would hope to engage with Richard at some point on this.
Agreed.
Your last para paraphrased sums up the whole thing
‘There is nothing real , tangible and separable that is ‘money’. There are only promises to pay. There are only mutual exchanges. Banks are just accounting mechanisms that record those promises. And given that fact (for fact it is) what the Green’s are proposing is not just absurd but dangerous.’
And so the world has it’s hottest week on record but rampant “Money Luddism” in all the UK’s political parties means we can’t make tackling climate change a priority and do our bit in this country (see Starmer’s recent deferral announcement on climate change spending for example)!
https://www.theguardian.com/environment/2023/jul/07/un-climate-change-hottest-week-world
Hi Richard, thanks for making me aware of that policy on the manifesto. I would be very happy to put forward a motion for the autumn conference to change it, to advocate what you do in terms of MMT. As much as advocating Positive Money’s view is wrong, and as much as I’d love a Green majority government as a member, that won’t happen at the next election so I would still advocate voting Green in safe seats or those where the Green is incumbent or the best placed progressive challenger.
My instinct also says that a Green led government or coalition would review policies and change their approach if something better were discovered. In my case, I have learned a lot from you on MMT and from other bloggers on active travel best practice
I prefer people who get things right in advance
Same, but I am still prepare to try to change the policy. I believe that the 2024 manifesto will be different in parts to the 2019 one. Hopefully the party will keep the good policies and amend the bad ones
People rarely get things right in advance.
Positive Money’s opinions are superficially attractive.
At first sight it can certainly seem as if commercial banks create money. When I take out a £1,000 loan from a commercial bank, by crediting my account with £1,000 the bank has promised to pay me £1,000, and I have committed myself to repaying the loan — i.e. I have promised to pay the bank £1,000. It can certainly seem as if money has been created by the commercial bank from nothing.
However when I spend the money, I could, although I probably won’t, first withdraw the money as cash, which is itself a promise to pay £1,000, but this time is it is a promise from the BoE — i.e. it is sterling currency. So when the bank credits my account it promises to pay me in something which is itself a promise to pay, but it does not create the second of these promises — i.e. it does not create money. Similarly I promise to pay back the loan in something that is itself a promise to pay, but I don’t create the second promise. In fact my promise does not depend on the second promise ever being made — i.e. of my ever having enough sterling to repay the loan — although I obviously hope it will be.
Of course, this can only work if there commercial banks are regulated in some way and one could argue that the regulations could be better, but this is another issue.
If, for the sake of argument, one were to accept Green Party/PM position on money creation as it exists today and to conclude that it is thoroughly undemocratic, then it seems to me that the solution of having an “independent” National Monetary Authority create all the money to be used in the economy does not seem to adequately address the democratic deficit. Presumably making it accountable to Parliament is supposed to address this, but no organisation can by truly independent and truly accountable to parliament. But it would allow politicians say they have no choice in the policies they pursue; after all the “independent” NMA says there is not enough money.
But why should it be a good thing for government expenditure to be limited by the NMA’s virtual pot of gold when it is decidedly not a good thing for it to be limited by a real pot of gold? I have not seen this question answered, let alone asked, by either PM or the Green Party.
I was at one time a member of the Green Party’s Tax and Fiscal Policy working group. I scaled down my involvement while recovering from a rather serious accident. Since then I have become very involved in the politics of the Chinese diaspora. In particular I am a committee member of a new organisation called Workers Solidarity against the Chinese Communist Party. There are only 24 hours in a day and I don’t feel I have the time to devote to the working group, although having read this blog for a few years, I feel I could contribute much more now.
However, PM seems to have been fairly popular at the time, there were people pushing MMT. Moreover there is nothing to stop any Green Party members reading this joining the working group.
Thanks fir that
Interesting points re commercial banks
Well Matt I hope you do this. You’ll probably be the first party member in the country to stand up and propose the party investigate MMT with a view to adopting it as official monetary system and financing policy. You will probably get martyred mentally by the “ill-educated children” in your party but will live to tell the tale. In my view you’ll be something of a hero! Do come back and tell us the tale of your experience.
You can’t “adopt” MMT as policy. It is description of how money works. MMT is not, per se, a policy prescription.
Policy can be informed and influenced by MMT, and indeed it should be. But MMT can inform the policies of both right and left wing parties. It is a theory, in the sense of being a description, of how money works. Like other theories the understanding can be used for good or ill.
Please don’t reiterate “adopting’ MMT. It makes it much more difficult to explain if people think it is a set of policy prescriptions. It is not.
Richard, this phrase is gold:
“There is literally no limit to the promises we can make. The only limit is to the number we are able to fulfill.”
It’s much easier to understand that Keynes’ “What we can do, we can pay for”.
It could be the strapline for this blog.
Interesting thought……
2 Kirsten Gibbs “The only limit is to the number we are able to fulfill.”
And that is a resource limit and that in turn is directly influenced by the productivity levels we’re able to reach and the effect on the planet’s ability to sustain us.
A neat encapsulation, though my feeling is that ‘only’ tends to undermine a sense of the underlying reality: there are actual limits, albeit not the limits that conventional economic wisdom would suppose.
“There is literally no limit to the promises we can make. The limit is to the number we are able to fulfill.”
I don’t think the 2 sayings have the same meanng, at all. Why is there a limit on the promises we can fulfill? If it is limited by funding then it contradicts Keynes.
I am not sure I agree Cyndy. I think the implicatiion is that it cannot be limited by funding
I am sorry Richard, that is not implicit in the phrase as quoted. I would read it that it IS limited by funding.
About nine years ago here was a to and fro between Ann Pettifor and Positive Money which is still on the web.
There is something to commend in the analysis but not their solution.
I am with Ann Pettifor.
So am I on this one
Could you not set up a course with green party executive members to make them look at the economy in your way, rather than letting them get it wrong from the start? I understand you know Caroline Lucas. Someone who wants to take over her position as MPin Brighton is Sian Berry.
Another way to get them to listen could be through Bright Green, their blog run by Chris Jarvis who is a green party councillor in Oxford, and used to be one of the board of weownit.
I would be happy to do so
This sounds like a really excellent idea – maybe you and Ann Pettifor could join forces to pursue the possibility?
After all, as the GP have no chance of forming the next government, what do they have to lose by at least listening to you? And if they can gently but firmly be persuaded of the error of their ways and propose an alternative truly progressive approach maybe the results could surprise us all.
I would be happy to talk with them
I agree with Richard and the MMT approach. But these things are about people as much as ideas. PM has been around for a while, and groups that spend a long time fighting for an important idea tend to form strong bonds, quite naturally tend to resist new incomers challenging what they see as their hard-won progress.
Accepted, there are real and valid differences in foundational principles. But this isn’t always a great place to start. Over the years I have seen so many groups make the classic mistake of ‘having to agree before we start’, start with the differences, divide into camps, and waste pointless energy down the competition-dominance rabbit hole. 80 percent of real world problems are in the implementation and it is there that most collaboration begins: when you want to make progress, get people doing stuff.
I’d therefore suggest it would be interesting to get MMT people, including Richard, PM people, and others together around modelling real world problems with ie Minsky. The differences emerge along with their solutions . People are persuaded by answers rather than by other people. Would this be worth a punt, would Steve Keen help make it happen?
Just a thought. Modelling is great like that. People focus on the technical side but the value of modelling is as much in the process and community – the things that make coalitions work, the change we need alongside PR voting. Way to go.
The PM model survives about 20 minutes interaction with Minsky
Now, that would be worth demonstrating! I did a little dance when I first came across Minsky about ten years ago. Despite my numerical illiteracy, I grasped instinctively that it was the only piece of modelling software at the time able to encompass complex systems through feedback and an open framework… this has to be appealing to the Greens! Maybe an economics student would fancy giving it a whirl?
Volunteers?
Oh Dear,
Surely not this again? Sheesh. Will someone please tell the British Greens that the “Positive Money” rubbish that they have embraced is nothing more than a tarted-up, extension of Milton Friedman’s undeniably monetarist, neoliberal , RIGHT-WING, “100 Per cent” “Full-Reserve Banking” notion.
Somehow the P.M. mob have weirdly hoodwinked these Greens. That’s not entirely surprising but it first popped up as a Greens anomaly years ago. After all this time you’d think that by now someone would have tipped them off that Positive Money is actually a cultish conservative crock and not the anti-corporate, anti-financialist platform that the Greens might think it is.
Richard, you’ve got a profile. Perhaps you could point this out to them. Nicely, of course. Through a mutual friend? Lol. I don’t know if that’s appropriate but someone’s got to do it.
https://en.wikipedia.org/wiki/Full-reserve_banking
note who the publisher is here:
https://positivemoney.org/2011/07/what-exactly-is-full-reserve-banking-2/
They are more than welcome to talk to me.
I’d like to get the Scottish Greens to talk to you too. Their current Policy Review Document, though not nearly as daft as the English Greens on money, has this:
“3.18.2.4 Public Money
A Scottish Central Bank will be responsible for managing the creation of a Scottish currency. We support the Scottish currency being available as both physical cash and digital central bank backed currency.
We support public money. In an independent Scotland physical cash should be issued by the Central Bank rather than by commercial banks.
We believe both physical cash and digital central bank backed currency should be available on an equitable basis to all individuals in Scotland.”
But most worryingly, their section on taxation starts as follows:
“3.5 Direct Taxation
3.5.1 Taxation is needed in order to fund government expenditure.”
Sigh….and they have access to really good people like Craig Dalzell
Somewhat related to the Monetary System Luddism prevailing amongst Britain’s political parties does anybody know if Starmer is committed to nationalising anything? The issue came up in the comments section of Polly Toynbee’s article in today’s Guardian.
Ann’s piece is very clear
https://www.annpettifor.com/2014/04/why-i-disagree-with-martin-wolf-and-positive-money/
Pilgrim
my neighbour is a Labour local Councillor and he has read Stephanie Kelton and accepts the theory. But holds to the party line of balance income and expenditure but borrow to invest. It depends on what we mean by investment. In my part of the West Country Labour is usually third.
@Ian Stevenson When you say borrow do you mean issue treasury bonds and pay an interest coupon on them? I struggle to understand why the government would consider this when it can simply create the money and not pay any interest and particularly when the interest coupon is high. Does Keir Starmer not understand the concept of value for money or is it simply he doesn’t understand the UK government can create money from thin air? The same argument of course applies to taking out a bank loan.
The government need not do this
But right now society does need a safe place to save – and the government has a duty to provide it
A means of saving is needed but not with a system whereby a rogue Bank of England can jack up interest unnecessarily high! Another greed facilitating flaw in the system much like a privatised water and sewage industry.
@ Ian Stevenson Good comment by Ann Pettifor. Thanks for the link. I must admit I’ve never understood why people hold Martin Wolf in high esteem he doesn’t seem capable of thinking through the consequences of ideas.
Hi Richard,
Thank you for your frank analysis. As a Green Councillor and avid reader of your blog.
I suggest you contact Green Party Economist Molly Scott-Cato who I know is a Positive Money advocate. Talk also with Caroline Lucas.
A proper debate is urgently needed.
I know both
But I think it best you mail them
Money is money, and as lots of people have now realised, is essentially an IOU. David Graeber is particularly insightful in “Debt”. Money is therefore infinite.
Resources are essentially forms of energy and are subject to the laws of thermodynamics. If the choice is to break the “laws of economics” or the laws of thermodynamics, the choice is an obvious…unless you are an economist.
I am going to print this quote from David Attenborough, contained in an article by the late Michael Viney, a much lauded and loved Irish Times writer on matters environmental, on a T-Shirt.
“Anyone who thinks you can have infinite growth on a finite planet is either a madman, or an economist”.
Endless money, limited planet.
One minor quibble. As far as I know private bank lending is controlled via Basel III Capital requirements not reserve requirements. https://www.bis.org/bcbs/basel3.htm
To be fair to the greens Richard, I don’t think there are many economic experts in the ranks. It’s generally not the sort of party to attract economics graduates! I hope you are able to help with their woes, along with the other parties, none of whom seem to have much grasp of money.
But then, really, who does? It’s been drilled into us all through a great deal of neoliberal propaganda that money is a finite thing, and something we should protect and conserve. It’s not a big surprise that that overarching theme is part of all the main party’s economic policy too.
I think what we should look for in politicians is a willingness to use evidence based policy, respect scientific knowledge, and defer to trusted experts where possible. Basically the willingness to accept that they don’t know everything and can be wrong, like us all.
I think any party could produce good policy if they were willing to do those things. But that would take a lot more political vision and humility than most of the current crop seem capable of.
Thanks Chris
The best economists do not have economics degrees. Learning some rubbish maths based on false assumptions does not make you an economist.
The best economists are political economists, sociologists, geographers and maybe accountants, but not economists.
I am not sure this Green Party monetary policy is based on an accidental misunderstanding of money and monetary dynamics. I think it is quite deliberately anti-government in the same way alt right libertarian Austrian School and bitcoin proponents seek to remove government as a limit to the power of their favoured minority interest.
Then it is time they appreciated that the power to create money – as properly understood. – is what gives government power. If they don’t want government to have power then they are not credible.
I think it is possible some of them they do realise the power of govt is derived from the ability to create money. Being anarchists they think it would be better if governments didn’t have power. And yes, in my opinion, anarchy is not credible in any society more complex than a primitive hunter gather society facing no external challenges.
If the Green’s are seriously offering anarchy then things are really bad
@ Chris Hill A deliberate act of sabotage of the Green Party by the Monetarists? Is this one of the main reasons Caroline Lucas quit being an MP to fight this?
Intricacy and clarity at the same time, a rare achievement. I also think this is the clearest articulation i have seen of the necessary dependency of entrepreneurial activity on money creation.
@ Michael O’Byrne Infinite growth isn’t the problem in front of human beings so much anymore it’s the type of activity we need to engage in either because some recognise the “infinite growth” problem or “the others” will be forced to recognise it by climate change effects (increasing forest fires in Canada creating smog effects in New York for example). This means switching investment patterns and by whom – more government less market. For example, much UK housing stock is energy inefficient yet poverty is increasing amongst many people who live in this stock making it impossible for them to fund improvement.
Many thanks for outlining to problems with Positive Money here, very useful I am a Green Party member and in touch with tax and finance group so will be raising these issues
Also worth noting EC700
“There are four main reasons for taxation:
1. to provide the money to fund public expenditure;
2. to redistribute income and wealth;
3. to influence behaviour, including behaviour that promotes ecological sustainability and public health; and
4. broader management of the economy, recognising that tax is at the heart of the social contract and underpins government accountability.”
Number One is particularly illiterate
True
There are six reasons, as explained in The Joy of Tax
The more you think about it the Green Party wanting to resolve the issue of the market needing to create less money for consumption so the government can create more to tackle climate change by handing over the decision to a small unaccountable committee like the Bank of England’s MPC is an act of self-sabotage or maybe even deliberate sabotage by those making use of the Positive Money theory which derives from Milton Friedman’s Monetarism. Thatcher’s adoption of it severely weakened the UK economy completely unnecessarily! All of the UK’s political parties are of course immature in their economic understanding. Go further afield and what do you find the continuation of the 3% collar in the Eurozone on member government spending as though climate change isn’t happening!
Money is fetished over still as the secret sauce to solve all problems, including the environment.
It’s not money that we are after, but what we think money will buy.
I fear that not only water companies but the UK as a whole is climate and Envronment insolvent. I am sure we can find the means once we decide the way to go: to get ready for climate chaoes whilst defossilizing or continue to pretend that clever entrepreneurs, cap in hand to rich geezers will “sort it out” as the rich use their greed to profit whilst turning Britain green. The water industry was their first try.
I wrote to the Green party requesting a change in economic policy. I suggested that they read your analysis.
I wish they would contact you.
I don’t believe that the LibDems have re-written their Yellow Book – so I am stuffed for alternatives to support.
I am going to read the whole of their statement with care
I just reread the statement. As an active local politician myself I understand that policy – that which politicians have to have a say in -and the actual implementation, is best left to experts. And that politics is about chess – you say something then the others have to move. The statement that the system”has failed and is no longer fit for purpose” is correct IMHO. Especially when there is a giga-pound investment needed in green infrastructure, handling of mortgage debt, young people without own homes etc A lot has to do with banking being able to lend out as much as they like to whatever they like. It needs reform. The Greens are calling it. This might have an effect on the other parties. They will either have to say “NAy the system is fit” or come with their own proposals.Or hope that silence will work
You could take the idea that because they want to move money creation over to Central Bank then the manifesto must be wrong. Or that they are the only party calling the banking system out and pointing to reforms. Wise politicians make sweeping statements that people can believe in and employ the experts to do the nitty gritty. Banks doing the money creating through loans is not working. That is one big chess piece to put on the board!
Sorry – but you cannot reform the banking system by denying the reality of what money is – and that is what I was talking issue with.
I too want reform – but I will based that on an understandign of what mone is – and not on something that it never has been and never will be.
If the starting point for your position is that ‘banks can lend as much as they like for whatever they like’, then it’s hard to take you seriously.
That’s the trouble with plenty of people that criticise the current banking system from a position, not actually understanding how it works!
Stop being stupid
Because they can does not mean they should or would, unless, as I say, you’re stupid enough to believe that
Hi Richard.
I have emailed Caroline. I can’t find one for Molly Scott-Cato (who teaches economics).
When I asked Caroline about MMT I got the impression that my Party is scared of the concept because of the derision it would get from mainstream media of even suggesting that money is created from thin air. A history of being ridiculed makes us nervous. It is hard enough to get serious discussion coverage without PR.
I am however surprised that our published policy is so non-sensicle when the Greens in the early 1980s were pioneers of The New Economics Foundation and The Other Economic Summit, set up to challenge the grossly unfair annual G7 Summit.
I just hope that this policy can be replaced by MMT.
I was at the first TOES and was accountant to NEF in its early days.
I’m gobsmacked by this.
I remember chatting to you at a Conference many years ago (Fair Tax Mark) and assumed that everything was ‘great’.
It seems to me that a good way forward would be a significant motion by Matt and others (above), and getting you in a panel discussion at Conference to educate pre voting?
I would be happy to do that