Tribune. Modern Monetary Theory, in English Modern Monetary Theory (MMT) undertakes to question the role of the state and its financing. She rose to popularity beyond academic circles in 2019 during the U.S. election primaries. Bernie Sanders was largely inspired by it for his program. Then it was Jeremy Corbyn’s turn in the UK.
The recent translation of two popular works written by Stéphanie Kelton, The deficit myth (The links that free, 368 pages, 23.50 euros), and Pavlina Tcherneva, Job Guarantee (La Découverte, 152 pages, 18 euros) is an opportunity for the French to discover this theoretical current which arouses debates and controversies.
Historically, MMT is not that modern. On the one hand, it was developed from the 1990s by economists from the University of Missouri in Kansas City and the Levy Institute, an American think tank. On the other hand, the theoretical influences are old with in particular the “chartalists” (from Latin charta, paper) of the twentieth century (Georg Friedrich Knapp 1842-1926, Alfred Mitchell-Innes 1864-1950), who analyze the functioning of a modern economy through the link between money and state, the works of Abba Lerner (1903-1982) on the function of fiscal stimulus, those of Hyman Minsky (1919-1996) on the structural financial instability of capitalism, constitute the three main theoretical anchor points of CMM.
The primary function of money is that of the unit of account
As the name suggests, modern monetary theory is primarily concerned with money. The approach is original because it immediately places money at the start of economic reasoning; it rehabilitates it, while economists are rather disturbed by money.
Those who are influenced by Marx see in it the universal fetish of capitalism, a sordid object which the capitalist seeks to accumulate endlessly for himself. Others, of neoclassical inspiration, see in money a simple veil surrounding exchanges: money is a creature of the market that should be protected from manipulation by the State because this could lead to inflation if money is created in excess; central banks must therefore be independent from politics.
MMT adopts an overthrown position. Money is not harmful and it is above all a creature of… the State. It adopts a chartalist conception of money defended in particular by Keynes in 1930: the primary function of money is that of the unit of account, which must be the only one to circulate.
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