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あなたは#MMTが好きだけど、友達にはまだ理解してもらえないという人には、この本が役立つかもしれません。
お金についての簡単な入門書です。計算も怖いことも何もなくて、楽しくするためにたくさんの絵を描きました
アマゾン： shorturl.at/lprCE
Thank you for having me on. Or I'm going to kick it over
now to my co-host, Jessica. I am so
excited we're sitting down with you. Randall Wray I never really understood where money came from
until you explained it. And I think maybe a lot of people feel that way. So I really want to start
with the the basics or start at the beginning, rather. Where did money come from
and how did we get money as it is today? And maybe we'll start from where
you usually start, which is from where did writing come from? Yes. So I think we can
quickly look at a slide one. Okay.
So the book on the left actually is the latest book. And this one
is an illustrated guide to money and contains a series of cartoons.
And I'll make use of a few of these. We can move to slide two
John Maynard Keynes, who I think we're going to talk about a little bit more later,
said that money, the origins of money, are lost in the mists of time because he speculated
that money might have originated about 4000 years ago.
It turns out it's actually a bit longer ago than that. So while we imagine
that use of credit is a modern invention from the very beginning,
most purchases that were made using money actually were
based on credit, meaning that somebody had to keep records
of debts. And so writing had to be invented. So what I'm going to argue is that the origins of money
can be found in the origins of writing.
Where did money come from?
• Lost in the mists of time?
• 4000 years ago at least!
• While we imagine that use of credit is a modern invention, from time immemorial most purchases were based on credit.
• Meaning, someone had to keep records of debts.
So writing had to be invented.
お金はどこから来たのだろう？
- 時の流れの中で失われた？
- 少なくとも4000年前です！
- クレジットは現代の発明だと思われていますが、太古の昔から、ほとんどの買い物はクレジットで成り立っていました。
- つまり、誰かが借金の記録を残さなければならなかったのです。
だから、文字が発明されたのです。
MONEYS ORIGINS ARE LOST IN THE MISTS WHEN THE ICE WAS MELTING AND-THE WEATHER WAS DELIGHTFUL AND THE MIND FREE TO BE FERTILE OF NEW IDEAS
-JM KEYNES
(Keynes1930, 13)
お金の起源は、氷が溶けて、天気がよくて、心が自由で、新しいアイディアが生まれるような時代の霧の中に失われる
-JM KINES
ケインズ貨幣論1930
4:00
We can go to the next slide.
Mesopotamia is very unusual because it provides
about 10,000 years of evidence for the evolution
of writing. If we go back to 8000 B.C., so that's 10,000 years ago.
What archeologists have found is these little tokens,
and there are about 300 different kinds of tokens that have been found.
The tokens look sort of like what they're supposed to represent. And so you have a token
for a goat, you have a token that represents sheep and so on. And a bit later than that,
they started producing these clay balls and they would push the
tokens inside. And so it seems they were keeping track of something.
Exactly what we don't know, except that we do know what each token represents.
And you would have to break open the ball to see what tokens were inside.
And so it seems that that was a disadvantage having to break the ball open.
So they started pushing the tokens into the ball to make an imprint
on the outside and then poking them through a hole. So the tokens would still be in the ball.
But you had a record of what tokens were inside the ball,
so you weren't required to break the ball open, but you could finally, in the end,
break the ball and make sure that the record on the outside matches
the record kept in terms of tokens on the inside. Then they
had the technological innovation of saying, you know, we don't really need the ball
and we don't need a whole bunch of tokens. We can press a cow
token into a piece of clay four times to represent four cows
and so on. And so around 3200 B.C., they dropped the balls
and they just used rectangular pieces of clay and push a token into that.
And the clay rectangle that we're showing here, 3200 years ago,
there are two different kinds of things being represented
on this clay record. Around 3000 B.C., there was another
technological innovation. They realized you don't actually have to make the tokens. You can use a stylus to draw
the token on a piece of clay, and then of course, you let it harden. And so that occurs
around 3000 B.C. and that continually evolves to the point of
just 300 years later, 2700 B.C., we start to see clay tablets
that look an awful lot like the more modern clay shubati tablets
on which cuneiform writing starts to appear not too long after that.
Okay. And so we have this historical record. So if you look at the period
from 2700 B.C. to 8000 B.C., more than 5000 years,
all the records of writing that you find have something in common:
they are keeping track of debts
and so I always joke writing was not invented by poets.
Writing was invented by accountants for keeping records,
keeping track. and why do I say debts? It's true that we do not know
that those clay balls were representing a debt of a certain number of cows.
But we can read the modern ones because the cuneiform
writing developed out of these token imprints in clay, there's a direct progression
of the writing. It becomes more stylized, but we can read it and so we can speculate that
probably from the very beginning these were keeping track of debt.
So finally,
around 2500 B.C., we start to get writing That is not record keeping
where it is of a religious nature in the beginning, and then finally they develop literary texts.
1,000 years later around 1500 B.C., the alphabet is invented
and now we get writing that is much more like human language. The earlier writing is not at all
but modern writing with alphabets. They're trying to write down
words as we speak them. Okay, let's skip to the final slide for this
part of the discussion. So what we find is debt
records kept on clay tablets. Now, that's Mesopotamia.
When we look at Europe as far as we can tell, money doesn't go back nearly so far.
And the medium that was used or you could say the technology for keeping the records
was very different. It was notches in sticks called tally sticks.
We still use the term tally. You tally up your bill at the end of your meal
and they would cut little hash marks across the surface of the stick.
That was called a score in the case of a score that's worth 20, say,
£20 in Europe. And this is how they kept
records of debts in Europe. And in spite of what people think
most transactions by kings in Europe
took place in tally sticks, not in coins. So most spending by the King
took the form of issuing a tally stick. And we have this term raise a tally,
which would be telling your Treasury Department the Exchequer to go cut some sticks
so that the King could spend and the sticks would then be split in half.
The king or his agent would keep half one of the halves and the other half
was given to the seller of something to the king.
Then the king would collect those other halves in tax payment.
The purpose of splitting the stick is to make sure that nobody was counterfeiting. The lines had to match up
perfectly before the king would accept. The other half of the stick
called the stub and the one half is called the stock. The other half is called the stub.
We still use those terms as in ticket stubs in order to match, just like they do
at the concert. Right. To make sure that you have not counterfeited. Okay, so that's the story
of the origins of money and the origins of writing and the link between the two.
B:
I think a lot of people would be surprised when they hear this at first. I know I was because when I think
of debt or accounting, I think the money comes first.
First, you have to borrow money from someone else to be in any kind of debt. But that's not really
how it works. Can you say more about the function of debt in a society
and how that led to the creation of of money, as we might understand
it today?
12:00
W:
Yeah. Well, there is a
very common we say institution defining institution
is different from the way people usually what you say, Well, my church is an institution. My school is an institution,
but as a practice. So human practice that we find throughout
tribal society. So humans lived in tribal society for the first million years,
depending on how far you know, which species you want to count as humans.
They lived in tribal societies and they had a practice that was named Weregild
in the case of the German tribal society. Germans
were still living in tribal society when Rome was civilized,
and Roman scholars studied Germans to see how do people live in a tribal society.
So the first anthropologists were studying German tribal society, and they found this
practice called very guild, which is if I do something to injure a member
of your family, I owe you. I owe your family.
Say I accidentally kill your brother, then I owe your family.
私たちは今でも「集計」という言葉を使います。 食事の終わりに請求書を集計すると、スティックの表面に小さなハッシュマークが刻まれます。
ヨーロッパでは20、たとえば20ポンドに相当するスコアの場合、それはスコアと呼ばれていました。 そして、これが彼らがヨーロッパで借金の記録を保管した方法です。 そして、人々が考えていることにもかかわらず、ヨーロッパの王によるほとんどの取引はコインではなく割棒で行われました。 したがって、国王による支出のほとんどは、集計棒の発行という形をとりました。 そして、今期は集計結果を上げさせています。それは、国王が使えるように棒を何本か切りに行き、棒を半分に分けるように財務省に指示することになります。 王または王の代理人は半分を保管し、残りの半分は王に何かを売る人に与えられました。 その後、王は残りの半分を税金として徴収します。 スティックを分割する目的は、誰も偽造していないことを確認することです。 王が受け入れるには、セリフが完全に一致する必要がありました。 スティックの残りの半分はスタブと呼ばれ、もう半分はストックと呼ばれます。 残りの半分はスタブと呼ばれます。 コンサートで行うのと同じように、照合するためにチケットの半券などにこれらの用語を今でも使用しています。 右。 偽造されていないことを確認するため。 さて、これがお金の起源と文字の起源、そしてその二つの間のつながりの物語です。 最初にこれを聞いたら驚かれる方も多いと思います。 借金や会計について考えるとき、お金が最初に来ると思うので、私もそう思いました。 まず、借金をするためには他人からお金を借りる必要があります。 しかし、実際はそうではありません。 今日私たちが理解しているように、社会における借金の役割と、それがどのようにしてお金の創造につながったのかについて、もっと詳しく教えていただけますか? うん。 そうですね、私たちがよく言う、制度を定義する制度は、人々が通常言うこととは異なるということです、そうですね、私の教会は制度です。 私の学校は教育機関ですが、練習場です。 部族社会全体で見られる人間の慣習です。 つまり、どの種を人間として数えるかは、あなたがどこまで知っているかに応じて異なりますが、人類は最初の100万年間部族社会に住んでいました。 彼らは部族社会に住んでおり、ドイツの部族社会の場合にはヴェレギルドと呼ばれる習慣がありました。 ローマが文明化された頃、ドイツ人はまだ部族社会に住んでおり、ローマの学者たちはドイツ人を研究して、人々が部族社会でどのように暮らしているのかを調べました。 それで、最初の人類学者はドイツの部族社会を研究していて、この慣行が非常にギルドと呼ばれるものであることを発見しました。つまり、私があなたの家族の一員を傷つけるようなことをしたら、私はあなたに借りがあるということです。 あなたの家族に借りがあります。 たとえば、私が誤ってあなたの兄弟を殺したとしたら、私はあなたの家族に借りがあるとします。
ヨーロッパでは20、たとえば20ポンドに相当するスコアの場合、それはスコアと呼ばれていました。 そして、これが彼らがヨーロッパで借金の記録を保管した方法です。 そして、人々が考えていることにもかかわらず、ヨーロッパの王によるほとんどの取引はコインではなく割棒で行われました。 したがって、国王による支出のほとんどは、集計棒の発行という形をとりました。 そして、今期は集計結果を上げさせています。それは、国王が使えるように棒を何本か切りに行き、棒を半分に分けるように財務省に指示することになります。 王または王の代理人は半分を保管し、残りの半分は王に何かを売る人に与えられました。 その後、王は残りの半分を税金として徴収します。 スティックを分割する目的は、誰も偽造していないことを確認することです。 王が受け入れるには、セリフが完全に一致する必要がありました。 スティックの残りの半分はスタブと呼ばれ、もう半分はストックと呼ばれます。 残りの半分はスタブと呼ばれます。 コンサートで行うのと同じように、照合するためにチケットの半券などにこれらの用語を今でも使用しています。 右。 偽造されていないことを確認するため。 さて、これがお金の起源と文字の起源、そしてその二つの間のつながりの物語です。 最初にこれを聞いたら驚かれる方も多いと思います。 借金や会計について考えるとき、お金が最初に来ると思うので、私もそう思いました。 まず、借金をするためには他人からお金を借りる必要があります。 しかし、実際はそうではありません。 今日私たちが理解しているように、社会における借金の役割と、それがどのようにしてお金の創造につながったのかについて、もっと詳しく教えていただけますか? うん。 そうですね、私たちがよく言う、制度を定義する制度は、人々が通常言うこととは異なるということです、そうですね、私の教会は制度です。 私の学校は教育機関ですが、練習場です。 部族社会全体で見られる人間の慣習です。 つまり、どの種を人間として数えるかは、あなたがどこまで知っているかに応じて異なりますが、人類は最初の100万年間部族社会に住んでいました。 彼らは部族社会に住んでおり、ドイツの部族社会の場合にはヴェレギルドと呼ばれる習慣がありました。 ローマが文明化された頃、ドイツ人はまだ部族社会に住んでおり、ローマの学者たちはドイツ人を研究して、人々が部族社会でどのように暮らしているのかを調べました。 それで、最初の人類学者はドイツの部族社会を研究していて、この慣行が非常にギルドと呼ばれるものであることを発見しました。つまり、私があなたの家族の一員を傷つけるようなことをしたら、私はあなたに借りがあるということです。 あなたの家族に借りがあります。 たとえば、私が誤ってあなたの兄弟を殺したとしたら、私はあなたの家族に借りがあるとします。
And they had a system of fines that would determine what I had to pay.
So something like for a death, it would be significant. Here would be a cow
or a horse or something like that. I would be in debt to you. You would be my creditor
until I repaid my debt. Now, we are speculating
if we carry this back and say, Oh, that's what those tokens were all about in ancient
Mesopotamia, because we don't know for certain that that is what they were doing.
But this practice of indebtedness is as old as humans.
In fact, we know that chimpanzees have the notion of debt and credit.
If I help defend you against some
really mean chimpanzee, then you owe me. And if I'm challenged,
you've got to repay that debt. So even animals have this notion
of indebtedness. So the speculation is that probably this is where
the notion of indebtedness comes from. Now,
in tribal society, they don't have money. So the debt is always in terms of, well,
for this infraction, I owe a goat. For that infraction, I owe a bushel of wheat.
So there's a different item that needs to be delivered in payment
for the particular injury that I caused. Money is a conceptual leap
because we're going from a payment of a horse or a cow to a payment
in terms of a unit of measurement, a money of account,
and just as it took 10,000 years to develop writing,
there's little doubt that it took thousands of years to develop this idea
that, you know, I can measure different kinds of debts in the same measuring unit.
Now, measuring units are also very old. You know, we've got the inch, we've got the foot,
or in Europe, they got the meter, they got the centimeter. So units of measurement are
much older than the money unit of measurement.
And in fact, all the money, the early units of measurement
of money were borrowed from the measurement for the most important grain:
wheat or barley or rice, depending on which society you look at. And the word used
would be the same as the word that was used for measuring a quantity of grain.
And just think about it. What is the British money unit?
It's called the pound. What was the Italian money unit before they joined the euro?
The lira, which means pound. Okay, If we go back to Mesopotamia, it's the Mina. In the Bible,
it's the Shekel. All of these are weight units. They got transformed
into money units. So let's skip to the next slide.
So what is money?
そして、彼らは私が支払わなければならない金額を決定する罰金制度を持っていました。 したがって、死のようなものであれば、それは重要なものになるでしょう。 ここには牛や馬、あるいはそのようなものがいるでしょう。 私はあなたに借りがあるでしょう。 私が借金を返済するまで、あなたは私の債権者になります。 さて、これを持ち帰って、ああ、それが古代メソポタミアにおけるそれらのトークンの目的だったのだろうかと推測しているところです。なぜなら、それが彼らがしていたことであるかどうかは確かではないからです。 しかし、この借金の習慣は人類と同じくらい古いものです。 実際、チンパンジーには借金と信用という概念があることがわかっています。 本当に意地悪なチンパンジーからあなたを守るのに私が協力したら、あなたは私に借りがあるでしょう。 そしてもし私が異議を申し立てられたら、あなたはその借りを返さなければなりません。 したがって、動物にも負い目という概念があります。 したがって、おそらくここから負債という概念が生まれたのではないかと推測されています。 今、部族社会ではお金がありません。 つまり、借金は常に、つまり、この違反に対して、私はヤギに借りがあるということになります。 その違反のせいで、私は小麦1ブッシェルの借りがある。 つまり、私が引き起こした特定の怪我の支払いとして、別の品物を届ける必要があります。 お金というのは概念的な飛躍です。なぜなら、私たちは馬や牛の支払いから、測定単位、つまり会計上のお金という観点からの支払いに移行しようとしているからです。文字を開発するのに1万年かかったのと同じように、次のことはほとんど疑いの余地がありません。 同じ測定単位でさまざまな種類の負債を測定できるというアイデアを発展させるのに何千年もかかりました。 さて、測定器も非常に古いものです。 ご存知のように、私たちにはインチとフィートがあり、ヨーロッパではメートルとセンチメートルがあります。 したがって、測定単位は貨幣測定単位よりもはるかに古いものです。 そして実際、すべてのお金、つまり初期のお金の測定単位は、どの社会に注目するかによって異なりますが、小麦、大麦、米などの最も重要な穀物の測定から借用されたものです。 そして、使用される単語は、穀物の量を測定するために使用される単語と同じになります。 そして、ちょっと考えてみてください。 イギリスの通貨単位とは何ですか? それはポンドと呼ばれます。 ユーロに加盟する前のイタリアの通貨単位は何ですか? リラ、ポンドを意味します。 さて、メソポタミアに戻ると、それはミナです。 聖書ではシェケルです。 これらはすべて重量の単位です。 それらはお金の単位に変換されました。 次のスライドに進みましょう。 では、お金とは何でしょうか？
Money is an IOU.
It's a record of indebtedness. Okay? That's what all money is
have in common. So it is a record of indebtedness that tally stick
was a record of indebtedness. That clay shubati tablet was a record of indebtedness.
Our $1 bill is a record of indebtedness.
In the case of the $1 bill, who is in debt? Well, it's the U.S.
government. And if you're holding a dollar bill, you're the creditor.
That's kind of nice to think of, isn't it? The government owes you. You are the creditor.
In the case of a bank check, If you write a check to your landlord,
you are the debtor. Your bank is actually going to make the payment for you,
but they are going to debit your bank account. So you are indebted
and you're using the banks debt, which is a checking account
at the bank, in order to make a payment to your landlord. And the way that it works is
the bank will debit your demand deposit and credit the landlord's
demand deposit. That's how payments are made. So let me tell you
a story about the the earliest creation
of paper money in the West. We can skip to the next slide.
The Chinese invented paper money as just simply it's a way to record
an IOU.
Instead of recording it on a clay tablet or on a stick,
you record it on a piece of paper. So the Chinese were doing that. And in the West
we had not come up with that technological innovation yet. The American
colonies were colonies of Britain and they were not allowed
to issue coins. The British crown had a monopoly
on coin issue. They wanted the American colonies to have to earn coins
by shipping exports to Britain, because that was the whole reason for having a colony
that you would be able to get the output of that colony. The colonists needed
the British coins. It was their source of currency, but they were not allowed
to issue their own coins. But the British,
the colonial governments, were always short of money. They didn't have enough money.
Mostly to defend the colonists against the
Native Americans, against the French in Canada. And so they needed to provision
their armies and they hit on a loophole.
They couldn't issue coins, but there was no prohibition on issuing IOUs
that were recorded on pieces of paper. And so the colonial legislatures,
it turns out all 13 of them did this with various deviations.
They would pass an act that allowed for
the printing up of, say, 10,000 Virginia pounds.
They were using the pound money account because, after all, we were British colonies.
But these would be Virginia pounds, not British pounds. So they would issue
the £10,000 of Virginia notes. A shilling is just a lower denomination of the pound.
And at the same time the legislature would pass
a new tax and it was called a redemption tax. And I'll get to why
they called it that. And it would be expected to raise about £10,000
of Virginia pounds over the course of a couple of years.
So they would pass a law authorizing printing money. And at the same time,
there would be a twin law that would authorize imposing a tax.
Okay. So then the colony, the colonial government, would use that paper money
in order to buy what it needed. In the case of this cartoon, it shows you that what
the colonial government wanted was a mule and a wagon, so they would issue
the paper money in order to purchase the the mule and the cart.
Now, why would anyone sell their mule and cart
for a piece of paper? Well, the reason was because they had to pay a tax,
and the only way to get the money to pay the tax
was either to sell something to the British king and get coins
because you could pay your tax in coins. But that was hard to do. There weren't nearly enough coins,
so you also could sell to the colonial government and get the paper money.
That was much easier to do. So it turns out that about 75% of all the tax revenue
came in the form of that paper money. About 25% came in the form of coins
because they were much harder to get ahold of. Let's go to the next slide.
So what did the colonial government do when they got that paper
money back in tax payment? They burned it, all of it.
We know that they burned all of it because they kept very careful records. When the money came back,
they burned it. Why were they called redemption taxes? Because the money would
be redeemed in paying taxes. And once redeemed,
it would be destroyed. If you think about a free pizza coupon.
So Joe's Pizzeria issues free pizza coupons to build up customers.
When you go in with that free pizza coupon and you give it to Joe,
you are redeeming the coupon. And we use that term, of course. And what does Joe
do with the pizza coupon? Does he put it in the cash register? No, he burns it.
So revenue is for redemption. It's for burning.
That's what they did. And that is the fundamental principle
of money IOUs. When you return them
to the issuer, they are burnt. If you write IOU,
a cup of sugar to your neighbor because you borrow a cup of sugar
when you redeem yourself and take a cup of sugar back
to the neighbor and they return the IOU,
You don’t say, Oh boy, now I'm rich. I've got an IOU because it's your IOU. What you do
is you tear it up and throw it away. Okay? So we're done with the slides.
B:
I love this story so much. It's one of my favorite stories because it makes so clear
that a currency issuing government has to put the currency out there
before they can tax it back. They spend and then tax. And with this misconception that the US government badly
needs our tax dollars in order to have any money to spend on public programs. And that's
just not how it works. And I think this story demonstrates that in such a more simple way.
It's a little bit easier to understand. But I also like that it demonstrates
in a way that the tally sticks doesn't where the tally sticks, it's like, okay,
I have to have these tallies for the king and they have to match up at the end of the year. And I have to do this
because this king has this great big army and controls what happens in the country, and it evokes people's
biggest fears, I think, about ah we have this authoritarian
who makes us use this currency and they can threaten us with violence if we choose to not use the currency
and not pay the tax. But this story of the Virginia Pound shows, okay,
we're trying to start a society from scratch, right? It's a colony. We need people to do jobs.
We need people to grow food. We need people to run banks and schools. And this really shows
how issuing the currency helped to mobilize resources and labor. And it really shows
how money can be a tool of social organization. Just a tool to help our society function at all.
So I just love everything we get out of this story, and it really demonstrates
why a fiat currency might be preferable to alternatives. So can you say
what happened? Like why did everyone adopt like a Medallist view
of like a gold or silver backed currency or a Metallist view of money?
26:20
W:
Yeah, well,
the short answer is that I think that it it fits
with an anti-democratic. I mean, today we would say Neoliberal
view. And I don't want to deny that
there hasn't been a fascination with precious metals
for a very long time. And I don't want to deny that precious metals
were used in coinage because that is true. And so you can sort of
get blinded by the gold. And gold is fascinating to people
and the thing about metallic coins is they last a long time
and they don't get destroyed in fire when all the revenue is paid.
So with tally sticks, the British did exactly the same thing with tally sticks
that the colonists were doing with paper money. They burned all of them. In fact, they burned down the House of Parliament
in the 1840s when they were finally getting rid of tally sticks. The Treasury
they called the Exchequer in Britain, hated the tally stick so much because it was a huge,
time consuming process to match the stock and stub. So they were so happy
they weren't going to have to deal with tally sticks anymore. They threw them all in the fire at the same time, burned down the house of Parliament
is sort of funny, but it's true that metal was in coins
and there's a very long story about why they did it,
but that goes all the way back to the Greek city states where precious metal had a
an appeal to people So lots of people
think, well, you know, gold standards were normal that
pegging your currency to a quantity of gold, but it's actually the exception.
It's very rare. It really was the 19th century
when a large number of the most developed countries
established gold standards. They weren't natural, they were purposely established.
And part of the reason for that was to constrain government and to try to
make money operate as if the free market would work.
So Karl Polanyi who's a very famous anthropologist and
social scientist, makes this argument that this was intentional.
It was trying to make money work as if it were a commodity.
And what it actually did was severely constrain
the governments ability to spend and made us rely more on the market
and less on the government. So I think that it was an anti-democratic move.
And if you look today at who calls for a return to the gold standard,
it's going to be the free market, Austrian leaning,
very conservative people like Ron Paul.
30:00
A:
I want to echo Jessica's
appreciation and gratitude that you're giving us this historical story because that's just so rare in a lot
of economic conversation these days. And I know a lot of our viewers and listeners,
including my own father, shout out to Jaime, our history buffs and and this is just going to be
right up their alley. So if we go now to to this place that you're speaking to.
Right. The 19th into the 20th century, it's it's a perfect transition because we start to see
like the formalization of economics as a discipline, as a field.
And what they seem to be talking about at the time is focusing
on the individual as this utility maximizing rational agent
that is just encountering other individuals and trying to trade. And of course, if we aggregate this up,
we can think about firms trying to compete and do the same thing. But, you know, markets are balancing
themselves out that we even have a little graphic here that I think is kind of funny because
if we can pull that up, Mike, There we go. Right. There is this idea that you hear
from economists. Everything they say is supply and demand, right? If you if you teach a parrot economics,
what they will say is supply and demand. So how then do we go
from this view? Right. Which is very focused on the micro economy or
micro foundations, as they say, to a more systemic perspective,
which I think really places importance on what you're talking about, which is
the role that society provisioning itself, the role that governments have in
a system as a whole, or what we might call a macro economy.
W:
Yeah, well,
so anyone who studied economics knows that Adam Smith is claimed to be the father of economics,
and he's the father of two traditions, really. So one, is this
what you called micro or individual based view of
society, supply and demand, And
pursuit of individual profit maximization and so on.
And the notion of an “Invisible Hand”. Okay. And it's true that Smith
seems to have mentioned invisible hand only twice, and it's not clear that he didn't mean God
by that, but it's interpreted as he meant the market. The market is the
invisible hand that sends you signals and you react to that. And that is supposed to lead
to the best possible outcome for everybody. Okay, so there is that branch.
The other branch was very skeptical of capitalism.
Adam Smith said that, you know, the producers rarely meet
except to conspire against the public. Okay. And he was very doubtful
that capitalism actually was in the interests of the majority of people.
He thought that factories tended to make workers very stupid because they had to do
the same task over and over and over again. Okay. And so there is that tradition, too.
These two traditions come to a head in the 1870s.
So in the 1870s we get the development of what is called Neoclassical economics,
and that is the free market branch. That's the small government branch,
and that's the branch that wants to constrain the government and is going to promote
things like the gold standard. Okay. The other side culminates
in the development of Marxian economics, the Marxists. So Karl Marx wrote Capital
and published in 1867, and that leads to an alternative view.
It is focused on the economy as a whole. We could say that that is
where macroeconomics came from. However,
in the United States, Marxism is a bad word. And so
we date the development of macroeconomics to John Maynard Keynes,
who we can talk more about later. And it is a non
Marxian approach to macro, but it's pretty easy to show
that you can map the main ideas almost 1 to 1
to the Marxist approach too. So this is an anti free
market approach. It's looking at the macro, performance of the macro economy as a whole.
Modern macro really comes out of Keynes, not out of Marx.
And it rejects the idea that
free markets act as if an invisible hand is guiding them.
Now, somewhat surprisingly, if you look at economics in the United States
at the end of the 19th century and in the
beginning of the 20th century, this neoclassical version was
thought to be the English economics. It's called political economy.
Most economists in the United States were not Neoclassical economists.
Keynes didn't exist yet, so they were not Keynesians,
but they were Institutionalists. If you look at the founding
of the top United States Economic Journal in the 1880s, the American
Economic Review, that was an Institutionalist journal. So it really was not taking
that Neoclassical path. Neoclassical economics took over
in the United States much later after we had gone through a Keynesian period.
So we were somewhat different. Institutionalists were interested
in the business cycle and they were
developing a different approach to economics, and they really were dominant
in policymaking until believe it or not, President Kennedy.
President Kennedy is when we got to the conversion over to Keynesian economics.
37:00
A:
So let's talk about Keynes for for a second here. Some would say that Keynes is like
the Shakespeare of economics. And by some I mean Jessica and I who made that up yesterday.
But, you know, he's seen as a figure that really influenced
the conversation on economics. Can you tell us what some of his core and most important
ideas are And if you could find value in Keynes, if you also care about class issues,
workers from that more radical Marxist perspective as well?
W:
Okay. Well, so
Keynes’s most famous book is 1936,
and it's called The General Theory of Money, Interest and Employment. But keep in mind
General Theory. What was he mimicking?
Einstein The General Theory of Relativity. So what Keynes was doing
for economics was what Einstein had done for physics and what
Darwin had done for evolution. And those are the three
greatest figures in science.
Darwin, Keynes and Einstein. So I would say
much more important than Shakespeare. Okay, it's nice, but
Keynes is just much more important. All right. He is. In fact,
if you look at all of his contributions, I would say it goes beyond Einstein and Darwin.
Keynes was already famous when he wrote the General Theory.
His dissertation, so his college dissertation
was a complete rethinking of probability theory.
At the end of World War One, he wrote a book, The Economic Consequences
of the Peace, and he said the peace treaty that the allies have signed
against the axes is going to generate another world war.
And he was right. We got World War Two. He wrote
the Treatise on Money in 1930, extremely important contribution
to monetary thought. And much of what becomes MMT is there
in the Treatise on Money before the General Theory In 1926,
he wrote a book, a very short book called The End of Laissez Faire.
What is a laissez faire? It's the theory we were talking about earlier that free markets are the solution to everything.
In 1926, Keynes writes this book and he says it's just not true.
And no economist really believes this. This is a political agenda.
This is not an economic theory. It's a political agenda to remove the government
and democratic governance from society. Okay. And he predicted that
that we're going to go into a great crash, which is the Great Depression. Okay. So when the depression hits,
Keynes realizes that his 1930 book
was fatally flawed. He had not come up yet with
what we would now call macroeconomics. So he knew the free market approach was wrong.
So that branch of Smith was wrong, but he didn't know what to replace it with.
The General Theory, he replaced it with the theory of effective demand,
which is the basis for modern macroeconomics. And
so to explain this really simply is difficult. But
just as an example, he starts off the book this way. So the theory is
that labor is, you know, like bananas or anything else.
You have a supply of labor and you have a demand for labor. So despite labors, people who want to work
and earn an income and the demand for labor is the firms that want to hire. And if the free market
is allowed to work, then demand and supply. So we always have this
cross of demand supply that will determine the wage and the wage
will clear the labor market, which means anybody wants to work
at the market wage will be able to get a job and so you'll have no unemployment
and Pigou, who was a famous economist, had written a book
at the beginning of the Depression saying, you know, the solution to the depression is just the wage fall.
If wages fall, all those unemployed people will be able to get jobs. So the only reason that
we have unemployment is the wage is too high. Okay? The problem is the wage was
falling and unemployment was getting worse. So in the United States,
the wage kept going down, prices kept falling and more
and more people were losing their jobs. Okay. And it looked like
if we let the market work, we would end up with nobody has a job and nothing is produced.
So Keynes says that theory has to be wrong. Okay? Falling wages
is not the solution. Okay? Why doesn't it work? Because if wages go down,
people have less income to spend. If they have less income to spend,
then firms can't sell as much. If firms can't sell as much,
they're going to lay workers off. So falling wages actually reduce employment.
The problem with the theory was that it is,
we would say, micro based. It ignores what happens
when wages go down. It looks only at the labor market. It doesn't look at what happens
to people's spending if their wages go down. So in technical terms,
we would say it's not independent of what goes on in other markets.
Now, Keynes starts off talking about labor, but the argument can
be extended generally to all markets. You can't do the supply
and demand analysis. It's fundamentally flawed because it requires
independence. What goes on in one market doesn't affect other markets and so
what you need instead is to approach it from the macro view,
from the view of the economy as a whole. Okay. And that's what macroeconomics does.
Keynes talked about a fallacy of composition. You can't just add up
from, you know, the decisions made by individuals
to get what goes on in the economy as a whole. And so, again, just one more
sort of technical explanation. It's called the Paradox of Thrift.
Okay. So we're all told that saving is good, it's good for individuals
to save for the future, and it's good for society to save for the future. Okay.
So how do we say, well, we spend less? So what if everyone decided
that tomorrow they're going to spend less because they want to save more? Because that's good for them.
They get to save for their college education for them or their kids, or save to buy a house,
save to buy a car. Okay. Well, if they spend less, that means that
sales will be lower. If sales are lower then firms need fewer workers.
If firms hire fewer workers, then less income is generated.
And Keynes argued that we'll end up with no more saving
because incomes will fall by enough to reduce total saving
instead of increasing it. You as an individual, can choose to save more.
Of course you can. You just skip McDonald's this week.
But if we all do that, everyone's skipping McDonald's this week.
McDonald's will have to lay workers off so their incomes will be lower
and the savings of everyone who lost their job will be lower
and offset your increase of saving. And that's why it won't work in the aggregate.
That's why the supply and demand analysis is wrong, because it assumes your saving affects
nobody else. But that's not true. And it effects
receipts by the firms that are trying to sell output.
47:00
So when you're in the car with mom and you're like, Oh please, we have to go to McDonald's on the way home.
And mum says, No, we have food at home in the kitchen, So you're going to tank the economy! We have to go.
That's very important. Go ahead and save, but you should feel guilty.
So you heard it here, folks, right? Because our lives and our economy
is interdependent and connected. The conventional supply and demand model
just doesn't work. The thing that they try to force on us in any high school
economics class or, you know, people love to say it's economics 101. Right? This model ignores
that we are all part of a society and there's all these institutions that are connected.
So I just think that's so important. One of the things I'm really interested in we're really interested
in is how today people talk about Keynes and Keynesianism,
but they think of it as having not changed since Keynes wrote,
and they think of figures like Paul Krugman, even Larry Summers.
And there's this straight line as if all scholars
or thinkers who are influenced by Keynes are the same. Can you tell us how that trajectory
played out to where these figures that we now think are Keynesians
came to think how they do and then where the other branch leads to, which thinks about
other schools of thought? The American Institutionalists that you mentioned, even the things
Marx was saying and that story and this divergence. Yeah. So economics
is very unusual as a discipline. If you look at other social sciences,
also the hard sciences, there are different approaches. So in political science
you would study of variety of approaches. When you
are in a college class. Same would be true in psychology,
the same would be true in political science. So there would be different approaches
to studying society from that perspective of political science, sociology, anthropology,
and so on. Economics is very strange. In the vast
majority of classrooms in the United States, you're going to get an economics textbook
and it's going to present one approach. It's going to be the mainstream approach
that has been true since the end of World War Two. So in the beginning,
the first textbook was Paul Samuelson, and it presented a version of Keynes
that accepted some parts of Keynes,
but tried to marry it to that Neoclassical
supply and demand approach. And it was
always fundamentally flawed and incoherent because so you're learning
what goes on at the micro level, and then you have sort of a theory of effective demand at the macro level.
And the two really don't fit. And I
so it sort of leads to two reactions. One is the people who actually read Keynes
and they say, Oh but so much of this is not in Keynes.
And what you're presenting is -- I am going to use a word
I think it's okay bastardized because that's the term that was used by
Joan Robinson, who was probably the greatest female economist
and should have won a Nobel Prize. We encourage
plurality of words here on Funny Money. So you're good. So anyway, she said well that's
Bastard Keynesianism because
we know who the mother was and that is Neoclassical economics, but we don't know who the father is.
It's not Keynes. So that's why she called it that. And so she was
sort of the leader of a splinter group of followers of Keynes.
And they finally settled on calling themselves Post Keynesians because everybody's post Keynes,
because Keynes is dead. It’s like B.C. before Christ
BK, before Keynes. So it's going to be the people who
try to stay true to the General Theory. Okay. And it has various
branches too, which is fine. People go in slightly different ways, but they all accept
the General Theory as the basis of the approach. And so they're
distinguished from the Samuelson version
of Keynes. But then there's another reaction against Samuelson,
which is that, well, hold it. The macro is not consistent
with the micro. The micro should be the foundations
because so we've got a theory of how individuals behave and then we have a theory
of how society behaves and those two aren't linked. So we need to link the two
and so we need to get better micro foundations
into our macro economics. And what that eventually leads to
is completely throwing out Keynes because this cannot be done. You cannot have a Keynesian
macro that's consistent with individual utility maximization
It doesn't work. And so that led to sort of a a complete
revolution or counter revolution in mainstream macro.
They just throw Keynes out, okay? And that becomes the new mainstream theory.
It's carried to an absurdity, absurd level
called Rational Expectations. I don't want to get into the details, but it becomes just so obviously laughable
that you have a guy named Robert Lucas who I think just died,
got a Nobel Prize for arguing that all the people
in those breadlines during the Great Depression were voluntarily unemployed.
They chose not to work. Okay? They're maximizing
their utility standing in the unemployed bread line to get a handout
of a piece of bread and a cup of soup that was voluntary, not involvuntary unemployment. Okay?
They voluntarily were not working. Anyway. Absurd.
He got a Nobel Prize. Okay, but it becomes embarrassing when you argue such
complete nonsense. And so you get a bit of a reaction against that.
You try to make things a little bit more realistic, even though less coherent.
And that is how you get a Paul Krugman. So these are the New Keynesians.
They want to be able to say things that aren't completely ridiculous,
but they don't embrace Keynes. So
that finally becomes a massive consensus is built,
which takes all the crazy ideas and then tries to add
a few more sensible ideas. And that becomes the New Monetary Consensus.
That is now the dominant. And that is the only thing that is taught
in most classrooms in the United States. Okay. So that's what's so strange
about this discipline economics. You get no variety.
if you as a student try to talk to your teacher about Keynes or Marx,
they all say, we don't do that. Okay, that is not allowed in our classroom.
All right. So it's very strange.
How did we get in that position? I'm not quite sure why.
Economics is not like other disciplines, why it's completely intolerant of any ideas that challenge
this mainstream view. That doesn't mean that alternatives don't exist.
I'm just saying they're not taught. Okay, So there are heterodox economics,
heterodox economists who take either Keynes
or Marx or both of them as fathers of their approach,
and they try to extend the thought and use it for economic analysis.
And the various groups are, as you said, Institutionalists, Post Keynesians,
Marxists and sub branches of each of those.
And then finally, Modern Money Theory is also a heterodox approach
that takes good ideas from a variety of approaches. So can you tell us
a little bit of that story? How did we get to MMT? And now I feel like we're all coming
full circle now. That was such a brilliant exposé of the history of these
these different ideas and how they developed these traditions. How then did we get to MMT, to Modern Monetary Theory?
Well, the people who contributed to the development
all had backgrounds in these heterodox approaches.
I had background in Post Keynesian Institutionalist and Marxist
Bill Mitchell more heavily
in Marxist and Post Keynesian.
Stephanie studied with me in the beginning and with John Henry, so she also was exposed
to all three of these approaches. And so we are
out there, we're doing heterodox economics and
Bill did more labor economics. Stephanie and I were doing
more monetary economics and there was a post Keynesian
thought discussion group. I don't remember what year, but very early nineties
that had most of the well-known post Keynesians,
quite a few Marxists, some Austrians and other people
who deviated from the mainstream on this discussion group.
And in January of 1996, this hedge fund guy named Warren Mosler came on.
And I think that's where we would date the beginning. It was the day
that Warren came on the discussion group and started
posting these comments that,
you know, on the surface appear very strange. But
many of us recognized that what he was saying,
maybe you use different words, but it was correct. And
so some of the discussion continued to take place on the PKT,
but there was a lot of hostility to it. And so most of my discussion
with them took place off It and whatever that very early version of email was
and and Bill Mitchell was there an active
even more active than I was by that time. Stephanie was there in the background, but
within a year or so we were talking
each other offline and I don't remember, but I think I probably met Bill in person
at the, main American Economics Association meetings in January,
maybe in 97, If it wasn’t 97, it was 98. I met Bill in person
and we started we created a center at UMKC,
and he created a center in Australia and we started trying
to promote the ideas. So that
where it began. So before we get to our last question
and kind of wrap up a little bit, we have a clip you might recognize one of the people in it.
Mike, can we cue it up? Does the Green New Deal add up as the top priority?
And I'd start with Mr.. Let me start with you. What would it cost?
It depends on what you include in the Green New Deal. Say pick a number. Okay. Well, I can say the complete
package of greening programs could be as much as 5% of GDP for the next ten years.
Which is give me a number. Just pick a number
because I've heard $73 trillion. I've heard.
No. Not that. So, Professor Wray, do all great economic thinkers also have to have
great beards? That that actually was also before COVID,
too. To wrap it up and unpack what's in that question. Right. Why is MMT important
for the many crises that we are facing today? You were on that committee.
They were talking about climate, right? Why do people like us insist so much with this theory,
with this framework and perspective? So occasionally the
Democrats do propose very good policies and
the Green New Deal, Biden's Build Back Better
had good components in those things. And what we consistently see
that kills them is the pay for. So that that I think that was a Republican answer
asking that question but you know well what does it cost right So they're always going to ask
that question. And the the Democrats
will then have to come up with some tax.
And when you tie good progressive policies
to new taxes, you've sort of doubled the opposition.
So you've already got opposition to good progressive policies because there are
many conservatives who do not want those policies. They don't want policies
that would improve the lives of most Americans. That's just not in their interest.
You know, they they have their constituency and that is not it. Their constituency
might be Wall Street, it might be the military industrial complex. It is not American
living standards. So they're going to oppose it quite naturally. And so you've got opposition
and then you add a tax. Well, you know, there's nobody who really likes
more taxes, at least on themselves. And
Americans traditionally have been very peculiar
because they would even oppose taxes on high income people. And when you dig
deeper, it's because a lot of them bought this American dream,
well, I might be rich someday and I would hate to pay higher taxes.
So I oppose taxing the rich more. And so
this plays into the hands of conservatives. Now, I think it's much less true now
because the the hopes of Americans have been pretty well squashed by 50 years
of Neoliberalism. So I think most Americans recognize
that that American dream, if it ever was
true, is no longer true. You're not going to become rich. Okay?
We do not have more social mobility than Europe. You know, we've always thought we did,
but it's just not true. Americans are not more likely
to move up the ladder, and it's become increasingly hard for each
succeeding generation to move up. In all likelihood,
you're going to live worse than your parents did, and Americans are starting to recognize that.
But you still are going to have lots of opposition to tax increases. And
I that the truth is that taxing the rich doesn't help
something like the Green New Deal anyway, but that's a different topic we could go into.
So anyway you've doubled the opposition when you tie
the two things together. So what we need do is,
get rid of this notion that you need to pay for spending by
by matching tax revenue to the spending. And we do not need to
balance the budget. We do not need to limit the debt,
which is a huge issue now that is being used as an excuse
to cut the social safety net, to reduce Medicare, Medicaid and Social Security.
So what MMT is trying to do is to change
the understanding and to change the focus of the debate
around pay fors and
balanced budgets to recognizing that money is never the issue.
If you issue your own currency, finance is not the problem.
The problem is resources. So in the case of the Green New Deal
and what I was trying to get at at that meeting of the Budget
Committee is the only question that's important is can we find the resources.
So for the Green New Deal, can we find the resources
to completely restructure our economy, to make it
economically, socially and environmentally sustainable? Because right now all three of those
in all three ways, we have a completely unsustainable
society. We will not survive. So the question is,
do we have the know how and do we have the resources to completely restructure
the economy? And the answer to both those is yes, we do.
And I'm not an environmental scientist, but the environmental scientists
seem to say that, yeah, we have the technical know how. And, you know, if we come up against things
that we don't know how to do, we can figure it out. Do we have the resources?
Well, it looks like we do. We certainly have enough labor.
There may be some questions about, you know, can we find the lithium
we need for batteries and so on, and we've got to release those resources.
One of the books by Keynes that I forgot to mention earlier, 1940,
he wrote a book, How to Pay for the War. So think about 1940. Okay.
World War Two and
countries that in the past had engaged in big wars
always had high inflation. World War One, Britain had high inflation.
World War One wasn't so big for the United States, but the Civil War was a big war. High inflation.
Revolutionary War, high inflation. So Keynes wrote a book to prevent
that from happening. So he titles it How to Pay for the War.
And it sounds like he's asking, where will we find the money? But that's not it at all. He wasn't worried about that
at all. He was worried about the resources. How will we find the resources
to devote to the war effort? And he laid out the strategy. So he said money is not problem.
What we need to do is release resources from current use
and move those to the war effort. So he talked about the role of taxes, not to
create money to spend, but to reduce private consumption.
He talked about the role of selling bonds not because the government's going to borrow money,
because it can't borrow its own money, but because he wanted you to save
so that you wouldn't be buying output. And then rationing and wage
or price controls. So he set out the strategy. And for the most part,
the UK followed it and so did the United States. We used all of those methods
and both of us managed to get through World War Two with relatively low inflation.
It worked. But anyway, what I'm saying is we need the same sort of strategy for the Green New Deal,
for Build Back Better for Reparations for African Americans
and Native Americans. All of these are the same question. It's not the dollars, it's
how do we find the resources? So I'm sure you know, Sandy Darity’s
work on reparations. And people went, Oh no. $800,000 to every
descendant of African slaves.
They're going to spend all that money and we're going to get massive inflation, you know, or where we find the money to give it to them?
No the question is just how can we allow African-Americans
who are descendants of slavery and have faced discrimination
for 400 years, how are we going to allow them to share
in an American living standard? Okay. It's a matter of finding the resources.
That's the only question that matters.
Thank you so much, Professor Wray. This has been really great.
There's just so much to take away from everything you've said here, and I feel like we could talk for hours and hours and hours.
But seriously, your contributions to MMT and just the field of economics are great, and the way
you explain things I think will help a lot of people understand things that they didn't before. A lot of this stuff
I always say should be taught in K-through-12 education, and it's a crime that it's not. So thank you.
And that's why we have the cartoon book. It may be too difficult for kindergarten,
but it's going to be fine for fourth, fifth, sixth grade on up.
You got to start them early, five years old learning about tally sticks. That's the only way to go.
Professor Wray, thank you so much as well. This has been a fantastic conversation and we hope to
see you again soon. Okay. Thanks a lot. All right.
みなさん、こんにちは。ファニーマネーへようこそ。これは、経済、経済がどのように機能するか、そして経済をより良く機能させる方法についてのポッドキャストです。そして今日は、とっておきのエピソードをご紹介します。購読者とリスナーの皆さんに感謝したいと思います。友人や家族、そして世に出回っているおかしなお金で何が起こっているのか混乱している人たちとポッドキャストを共有してください。そこで今日は、優れた経済学者であり、優れた思想家であるランダル・レイと話をします。彼はお金の話を私たちに教えてくれるでしょう。お金はいつから始まったのですか? それはどこから来たのか？それはどのようにして実現したのでしょうか？そこでの話は何ですか？ランドール・レイは、それを私たちに教えてくれる男です。何' 今日のお金の役割は何でしょうか？うまく機能していますか？そして、経済学とは一体何なのでしょうか？見えざる手はどこから来たのでしょうか？経済学者は本当にそれを信じているのでしょうか？私たちが確実に知っていることは何でしょうか? 私たちは何を間違っているのでしょうか、そしてここからどこへ向かうのでしょうか? ランディ・レイがそのすべてを実際に説明してくれます。そして、私はこれらのアイデアがどこから来たのかを理解するための枠組みとして歴史を使用するのが大好きなので、特に興奮しています。今日のエピソードは本当に楽しかったので、早速本題に入ります。ランディ・レイはウィラメット大学の著名な客員教授であり、バード大学レビー経済研究所の経済学の教授でもあります。しかし、彼はミズーリ大学、カンザスシティ大学、デンバー大学でも教えています。レイ教授はいくつかの本の著者です。現代貨幣理論と異端のマクロ経済学の両方への最も重要な入門書のいくつかが含まれています。彼の最新の本は『Making Money Work for Us: How MMT Can Save America』と呼ばれ、さらに最近ではたくさんの写真を使った児童書も執筆しています。そしてもちろん、彼は現代貨幣理論の創始者の一人です。それではさっそくですが、ランドール・レイ教授、番組にご来場いただきまして誠にありがとうございます。
私を乗せてくれてありがとう。それとも、今から共同司会者のジェシカに報告するつもりです。皆さんと一緒に座ることができてとても興奮しています。ランドール・レイ あなたが説明するまで、お金がどこから来たのか全く理解できませんでした。そしておそらく多くの人がそう感じているのではないかと思います。だから、本当に基礎から始めたいというか、むしろ最初から始めたいと思っています。お金はどこから来て、今日のようにお金をどうやって手に入れたのでしょうか？そして、おそらくあなたがいつも始めるところ、つまり執筆はどこから来たのかというところから始めましょう。はい。それでは、スライド 1 枚を簡単に見ていただければと思います。わかった。つまり、左側の本が最新の本です。そして、これはお金のイラストガイドであり、一連の漫画が含まれています。そして、これらのいくつかを使用します。2 つのスライドに移動できます。ジョン・メイナード・ケインズは、後ほどもう少し詳しくお話しすると思いますが、お金、お金の起源は時間の霧の中に失われていると言いました。約4000年前。実際にはそれよりも少し前のことが分かりました。したがって、クレジットの使用は最初から現代の発明であると私たちは想像していますが、お金を使って行われた買い物のほとんどは、実際には信用に基づいていたため、誰かが借金の記録を残さなければなりませんでした。そこで、書くことを発明する必要がありました。つまり、私が主張したいのは、お金の起源は文章の起源に見られるということです。
0:03
Hello, everybody. Welcome back to Funny Money. This is a podcast about the economy, how it works
0:09and how it can work better. And today we have a real treat of an episode. I want to thank all of our subscribers
0:15and listeners. Make sure you're sharing the podcast out with your friends and family and everybody who's confused
0:20about what's going on with all of the funny money that's out there. So we are going to talk
0:25with Randall Wray today, who is a brilliant economist, a brilliant thinker.
0:31He's going to walk us through the story of money. When did money start? Where did it come from?
0:37How did it become a thing? What's the story there? Randall Wray is the guy that can walk us through that.
0:43What's the function of money today? Is it functioning well? And what is economics
0:50even as a field? Where did the invisible hand come from? Do economists really believe
0:56in that? What do we know for sure? What do we get wrong and where do we go
1:01from here? Randy Wray is really going to walk us through all of that. And I'm particularly excited
1:06just because I love to use history as a framework
1:11for understanding where these ideas come from. So I'm going to go right into it because today's episode
1:17was a real treat. Randy Wray is a distinguished
1:22visiting professor at Willamette University and a professor of economics at the Levy Economics Institute
1:28of Bard College. But he's also taught at the University of Missouri, Kansas City, and the University
1:33of Denver. Professor Wray is the author of several books, including some of the most important
1:39introductions to both Modern Monetary Theory and Heterodox Macroeconomics.
1:44His latest book is called Making Money Work for Us: How MMT Can Save America,
1:50and he's written a more recent children's book with lots of pictures. And, of course, he's one of the founding thinkers
1:56of Modern Monetary Theory. So without further ado, Professor Randall Wray, thank you so much
2:01for coming on the show. Thank you for having me on. Or I'm going to kick it over
2:07now to my co-host, Jessica. I am so
2:12excited we're sitting down with you. Randall Wray I never really understood where money came from
2:18until you explained it. And I think maybe a lot of people feel that way. So I really want to start
2:23with the the basics or start at the beginning, rather. Where did money come from
2:30and how did we get money as it is today? And maybe we'll start from where
2:35you usually start, which is from where did writing come from? Yes. So I think we can
2:44quickly look at a slide one. Okay.
2:49So the book on the left actually is the latest book. And this one
2:54is an illustrated guide to money and contains a series of cartoons.
3:00And I'll make use of a few of these. We can move to slide two
3:06John Maynard Keynes, who I think we're going to talk about a little bit more later,
3:12said that money, the origins of money, are lost in the mists of time because he speculated
3:20that money might have originated about 4000 years ago.
3:25It turns out it's actually a bit longer ago than that. So while we imagine
3:31that use of credit is a modern invention from the very beginning,
3:36most purchases that were made using money actually were
3:42based on credit, meaning that somebody had to keep records
3:48of debts. And so writing had to be invented. So what I'm going to argue is that the origins of money
3:55can be found in the origins of writing.
4:00
次のスライドに進むことができます。メソポタミアは、約 1 万年にわたる文字の進化の証拠を提供するため、非常に珍しいものです。紀元前8000年に遡れば1万年前ということになります。考古学者が発見したのはこれらの小さなトークンで、約 300 種類の異なるトークンが発見されています。トークンは、それらが表現すべきものに似ています。したがって、ヤギのトークン、羊などを表すトークンが得られます。そして、それより少し遅れて、彼らはこれらの粘土ボールの製造を開始し、トークンをその中に押し込みました。それで彼らは何かを追跡していたようです。それぞれのトークンが何を表しているのかはわかっていることを除けば、まさにそれが私たちにはわかりません。そして、中にどんなトークンが入っているかを確認するには、ボールをこじ開ける必要があります。それで、ボールをこじ開けなければならなかったことが不利だったようです。そこで彼らはトークンをボールの中に押し込んで外側に刻印を作り、穴に突き刺し始めました。したがって、トークンはまだボールの中にあります。しかし、ボールの中にどのようなトークンが入っているかの記録があったため、ボールをこじ開ける必要はありませんでしたが、最終的にはボールをこじ開けて、外側の記録が保持されている記録と一致することを確認することができました。内部のトークンに関しては。その後、彼らは技術革新を行い、ボールも大量のトークンも必要ないと言いました。牛のトークンを粘土に 4 回押し付けて、4 頭の牛などを表現できます。そこで紀元前 3200 年頃、彼らはボールを落とし、長方形の粘土片を使用して、その中にトークンを押し込んだだけでした。そして、私たちがここで示している粘土の長方形は、3200 年前のもので、この粘土記録には 2 つの異なる種類のものが表現されています。紀元前 3000 年頃、新たな技術革新が起こりました。彼らは実際にトークンを作る必要がないことに気づきました。スタイラスを使って粘土にトークンを描き、もちろんそれを硬化させます。そしてそれは紀元前 3000 年頃に発生し、わずか 300 年後の紀元前 2700 年に至るまで継続的に進化し、楔形文字があまりにも現れ始めたより現代のシュバティ粘土板に酷似した粘土板が見られるようになりました。それからずっと後。わかった。そして私たちはこの歴史的記録を持っています。したがって、紀元前 2700 年から紀元前 8000 年までの 5000 年以上の期間を見ると、見つかったすべての文書記録には共通点があります。彼らは借金を追跡しているので、私はいつも冗談を言うのですが、文章は詩人によって発明されたものではありません。ライティングは、記録を保持し、追跡するために会計士によって発明されました。そしてなぜ私が借金と言うのですか？確かに、それらの粘土玉が一定数の牛の借金を表していたとは知りません。しかし、現代の文字を読むことができるのは、楔形文字が粘土に刻まれた痕跡から発展し、文字の直接的な発展があるからです。それはより様式化されていますが、私たちはそれを読むことができるので、おそらく最初からこれらは借金を追跡していたと推測できます。これらの粘土ボールが一定数の牛の借金を表していたことを私たちが知らないのは事実です。しかし、現代の文字を読むことができるのは、楔形文字が粘土に刻まれた痕跡から発展し、文字の直接的な発展があるからです。それはより様式化されていますが、私たちはそれを読むことができるので、おそらく最初からこれらは借金を追跡していたと推測できます。これらの粘土ボールが一定数の牛の借金を表していたことを私たちが知らないのは事実です。しかし、現代の文字を読むことができるのは、楔形文字が粘土に刻まれた痕跡から発展し、文字の直接的な発展があるからです。それはより様式化されていますが、私たちはそれを読むことができるので、おそらく最初からこれらは借金を追跡していたと推測できます。
それで最終的に、紀元前 2500 年頃、初めは宗教的な性質を持っていた記録保持ではない文章が書き始められ、最終的には文学的なテキストが開発されました。1,000 年後の紀元前 1500 年頃にアルファベットが発明され、今では人間の言語にはるかに近い文字が使用できるようになりました。初期の文字は決してアルファベットを使った現代文です。彼らは私たちが話している言葉を書き留めようとしています。さて、ディスカッションのこの部分の最後のスライドに進みましょう。そこで私たちが発見したのは、粘土板に記録された借金記録です。さて、それはメソポタミアです。私たちが知る限りヨーロッパを見てみると、お金はそれほど昔に戻っていません。そして、使用された媒体、または記録を保持するための技術は非常に異なっていました。それはタリースティックと呼ばれる棒の切れ込みでした。
私たちは今でも「集計」という言葉を使います。 食事の終わりに請求書を集計すると、スティックの表面に小さなハッシュマークが刻まれます。
ヨーロッパでは20、たとえば20ポンドに相当するスコアの場合、それはスコアと呼ばれていました。 そして、これが彼らがヨーロッパで借金の記録を保管した方法です。 そして、人々が考えていることにもかかわらず、ヨーロッパの王によるほとんどの取引はコインではなく割棒で行われました。 したがって、国王による支出のほとんどは、集計棒の発行という形をとりました。 そして、今期は集計結果を上げさせています。それは、国王が使えるように棒を何本か切りに行き、棒を半分に分けるように財務省に指示することになります。 王または王の代理人は半分を保管し、残りの半分は王に何かを売る人に与えられました。 その後、王は残りの半分を税金として徴収します。 スティックを分割する目的は、誰も偽造していないことを確認することです。 王が受け入れるには、セリフが完全に一致する必要がありました。 スティックの残りの半分はスタブと呼ばれ、もう半分はストックと呼ばれます。 残りの半分はスタブと呼ばれます。 コンサートで行うのと同じように、照合するためにチケットの半券などにこれらの用語を今でも使用しています。 右。 偽造されていないことを確認するため。 さて、これがお金の起源と文字の起源、そしてその二つの間のつながりの物語です。
ヨーロッパでは20、たとえば20ポンドに相当するスコアの場合、それはスコアと呼ばれていました。 そして、これが彼らがヨーロッパで借金の記録を保管した方法です。 そして、人々が考えていることにもかかわらず、ヨーロッパの王によるほとんどの取引はコインではなく割棒で行われました。 したがって、国王による支出のほとんどは、集計棒の発行という形をとりました。 そして、今期は集計結果を上げさせています。それは、国王が使えるように棒を何本か切りに行き、棒を半分に分けるように財務省に指示することになります。 王または王の代理人は半分を保管し、残りの半分は王に何かを売る人に与えられました。 その後、王は残りの半分を税金として徴収します。 スティックを分割する目的は、誰も偽造していないことを確認することです。 王が受け入れるには、セリフが完全に一致する必要がありました。 スティックの残りの半分はスタブと呼ばれ、もう半分はストックと呼ばれます。 残りの半分はスタブと呼ばれます。 コンサートで行うのと同じように、照合するためにチケットの半券などにこれらの用語を今でも使用しています。 右。 偽造されていないことを確認するため。 さて、これがお金の起源と文字の起源、そしてその二つの間のつながりの物語です。
B:
最初にこれを聞いたら驚かれる方も多いと思います。 借金や会計について考えるとき、お金が最初に来ると思うので、私もそう思いました。 まず、借金をするためには他人からお金を借りる必要があります。 しかし、実際はそうではありません。
今日私たちが理解しているように、社会における借金の役割と、それがどのようにしてお金の創造につながったのかについて、もっと詳しく教えていただけますか?
W:
うん。 そうですね、私たちがよく言う、制度を定義する制度は、人々が通常言うこととは異なるということです、そうですね、私の教会は制度です。 私の学校は教育機関ですが、練習場です。 部族社会全体で見られる人間の慣習です。 つまり、どの種を人間として数えるかは、あなたがどこまで知っているかに応じて異なりますが、人類は最初の100万年間部族社会に住んでいました。 彼らは部族社会に住んでおり、ドイツの部族社会の場合にはヴェレギルドと呼ばれる習慣がありました。 ローマが文明化された頃、ドイツ人はまだ部族社会に住んでおり、ローマの学者たちはドイツ人を研究して、人々が部族社会でどのように暮らしているのかを調べました。 それで、最初の人類学者はドイツの部族社会を研究していて、この慣行が非常にギルドと呼ばれるものであることを発見しました。つまり、私があなたの家族の一員を傷つけるようなことをしたら、私はあなたに借りがあるということです。 あなたの家族に借りがあります。 たとえば、私が誤ってあなたの兄弟を殺したとしたら、私はあなたの家族に借りがあるとします。
そして、彼らは私が支払わなければならない金額を決定する罰金制度を持っていました。 したがって、死のようなものであれば、それは重要なものになるでしょう。 ここには牛や馬、あるいはそのようなものがいるでしょう。 私はあなたに借りがあるでしょう。 私が借金を返済するまで、あなたは私の債権者になります。 さて、これを持ち帰って、ああ、それが古代メソポタミアにおけるそれらのトークンの目的だったのだろうかと推測しているところです。なぜなら、それが彼らがしていたことであるかどうかは確かではないからです。 しかし、この借金の習慣は人類と同じくらい古いものです。 実際、チンパンジーには借金と信用という概念があることがわかっています。 本当に意地悪なチンパンジーからあなたを守るのに私が協力したら、あなたは私に借りがあるでしょう。 そしてもし私が異議を申し立てられたら、あなたはその借りを返さなければなりません。 したがって、動物にも負い目という概念があります。 したがって、おそらくここから負債という概念が生まれたのではないかと推測されています。 今、部族社会ではお金がありません。 つまり、借金は常に、つまり、この違反に対して、私はヤギに借りがあるということになります。 その違反のせいで、私は小麦1ブッシェルの借りがある。 つまり、私が引き起こした特定の怪我の支払いとして、別の品物を届ける必要があります。 お金というのは概念的な飛躍です。なぜなら、私たちは馬や牛の支払いから、測定単位、つまり会計上のお金という観点からの支払いに移行しようとしているからです。文字を開発するのに1万年かかったのと同じように、次のことはほとんど疑いの余地がありません。 同じ測定単位でさまざまな種類の負債を測定できるというアイデアを発展させるのに何千年もかかりました。 さて、測定器も非常に古いものです。 ご存知のように、私たちにはインチとフィートがあり、ヨーロッパではメートルとセンチメートルがあります。 したがって、測定単位は貨幣測定単位よりもはるかに古いものです。 そして実際、すべてのお金、つまり初期のお金の測定単位は、どの社会に注目するかによって異なりますが、小麦、大麦、米などの最も重要な穀物の測定から借用されたものです。 そして、使用される単語は、穀物の量を測定するために使用される単語と同じになります。 そして、ちょっと考えてみてください。 イギリスの通貨単位とは何ですか? それはポンドと呼ばれます。 ユーロに加盟する前のイタリアの通貨単位は何ですか? リラ、ポンドを意味します。 さて、メソポタミアに戻ると、それはミナです。 聖書ではシェケルです。 これらはすべて重量の単位です。 それらはお金の単位に変換されました。 次のスライドに進みましょう。 では、お金とは何でしょうか？
お金は借用書です。借金の記録です。わかった？それがすべてのお金に共通することです。つまり、割棒が負債の記録だったということは、負債の記録なのです。その粘土のシュバティ板は恩義の記録でした。私たちの1ドル札は借金の記録です。1ドル紙幣の場合、誰が借金をしているのでしょうか？まあ、それはアメリカ政府です。そして、ドル紙幣を持っているなら、あなたは債権者です。それはちょっと良い考えですね。政府はあなたに借りがあります。あなたは債権者です。銀行小切手の場合、家主に小切手を切った場合、あなたは債務者になります。実際に支払いを行うのは銀行ですが、銀行口座から引き落とされることになります。つまり、あなたは借金を抱えており、家主に支払うために銀行の当座預金口座である銀行負債を使用していることになります。そして、その仕組みは、銀行があなたの要求払預金を借方に記入し、家主の要求払預金に貸方記入することです。このようにして支払いが行われます。そこで、西洋における最も初期の紙幣の作成に関する話をしましょう。次のスライドにスキップできます。中国人は単に借用書を記録するための手段として紙幣を発明しました。
粘土板や棒に記録するのではなく、紙に記録します。つまり中国人はそれをやっていたのです。そして西洋ではまだそのような技術革新を思いついていませんでした。アメリカの植民地はイギリスの植民地であり、硬貨の発行は許可されていませんでした。英国王室は硬貨の発行を独占していました。彼らは、アメリカの植民地がイギリスに輸出することでコインを稼がなければならないことを望んでいました。なぜなら、それが植民地を持つ理由のすべてであり、その植民地の生産物を得ることができるからです。入植者たちはイギリスのコインを必要としていました。これは彼らの通貨源でしたが、独自のコインを発行することは許可されていませんでした。しかし、植民地政府であるイギリスは常に資金が不足していました。彼らには十分なお金がありませんでした。その主な目的は、アメリカ先住民やカナダのフランス人から入植者を守るためでした。そこで彼らは軍隊を準備する必要があり、抜け穴を見つけました。硬貨を発行することはできませんでしたが、紙に記録された借用書を発行することは禁止されていませんでした。そして、植民地議会は、13 議会全員がさまざまな逸脱を伴いながらこれを行ったことが判明しました。彼らは、例えば10,000バージニアポンドの印刷を許可する法律を可決するだろう。結局のところ、私たちはイギリスの植民地だったからです。ただし、これらは英国ポンドではなくバージニア ポンドになります。そこで彼らは1万ポンドのバージニア紙幣を発行することになった。シリングはポンドの単なる単位単位です。13 人全員がさまざまな逸脱を伴いながらこれを実行したことが判明しました。彼らは、例えば10,000バージニアポンドの印刷を許可する法律を可決するだろう。結局のところ、私たちはイギリスの植民地だったからです。ただし、これらは英国ポンドではなくバージニア ポンドになります。そこで彼らは1万ポンドのバージニア紙幣を発行することになった。シリングはポンドの単なる単位単位です。13 人全員がさまざまな逸脱を伴いながらこれを実行したことが判明しました。彼らは、例えば10,000バージニアポンドの印刷を許可する法律を可決するだろう。結局のところ、私たちはイギリスの植民地だったからです。ただし、これらは英国ポンドではなくバージニア ポンドになります。そこで彼らは1万ポンドのバージニア紙幣を発行することになった。シリングはポンドの単なる単位単位です。
そして同時に議会は償還税と呼ばれる新しい税を可決します。そして、なぜ彼らがそれをそう呼んだのかを説明します。そして、数年間でバージニアポンド約1万ポンドを集めることが期待される。そこで彼らは紙幣の印刷を許可する法律を可決するだろう。そして同時に、税金の賦課を許可する双子の法律が制定されることになる。わかった。それで、植民地、植民地政府は、必要なものを買うためにその紙幣を使うことになります。この漫画の場合、植民地政府が欲しかったのはラバと荷馬車だったので、ラバと荷馬車を購入するために紙幣を発行したことが示されています。さて、なぜラバやカートを紙切れで売る人がいるでしょうか? 理由は、税金を支払わなければならないからでした。そして、税金を支払うためのお金を得る唯一の方法は、イギリス国王に何かを売ってコインを手に入れることしかありませんでした。なぜなら、税金はコインで支払うことができるからです。しかし、それは大変でした。コインがほとんど足りなかったので、植民地政府に売って紙幣を手に入れることもできました。それははるかに簡単でした。つまり、税収全体の約 75% がその紙幣の形で得られたことがわかります。約 25% はコインの形で提供されました。コインは入手が非常に困難でした。次のスライドに進みましょう。つまり、税収全体の約 75% がその紙幣の形で得られたことがわかります。約 25% はコインの形で提供されました。コインは入手が非常に困難でした。次のスライドに進みましょう。つまり、税収全体の約 75% がその紙幣の形で得られたことがわかります。約 25% はコインの形で提供されました。コインは入手が非常に困難でした。次のスライドに進みましょう。
それでは、植民地政府は税金の支払いとしてその紙幣を取り戻したとき、何をしたのでしょうか? 彼らはそれをすべて燃やしました。彼らは非常に注意深く記録を保管していたため、すべてを燃やしたことがわかります。お金が戻ってくると、彼らはそれを燃やしてしまいました。なぜ償還税と呼ばれたのでしょうか？なぜなら、そのお金は税金を支払うことで換金されるからです。そして、一度償還されると、それは破壊されます。ピザの無料クーポンについて考えてみると。そこで Joe's Pizzeria は顧客を増やすために無料のピザ クーポンを発行しました。その無料ピザクーポンを持って入場し、それをジョーに渡すと、クーポンを引き換えることになります。そしてもちろん、私たちはその用語を使います。そして、ジョーはピザのクーポンをどうするのでしょうか? 彼はそれをレジに入れますか？いいえ、彼はそれを燃やします。したがって、収益は償還のためのものです。燃やすためのものです。それが彼らのしたことなのです。そしてそれがお金の借用書の基本原則です。発行者に返却すると、焼却されます。あなたが借用書を書いて、隣人に砂糖一杯、自分を償還するときに砂糖一杯を借りて、砂糖一杯を隣人に持ち帰ると、借用書を返してくれるから、あなたは「ああ、さあ、私は」とは言わないでしょう。お金持ちだよ。それはあなたの借用証書なので、私は借用書を持っています。あなたがすることは、それを引き裂いて捨てることです。わかった？これでスライドは終わりです。
B:
この話がとても大好きです。この話は私のお気に入りの話の 1 つです。なぜなら、通貨発行政府は税金を還付する前に通貨を発行しなければならないことが非常に明確になっているからです。彼らは支出してから課税します。そして、米国政府は公共プログラムに資金を費やすために私たちの税金を切実に必要としているという誤解があります。そして、それはうまくいきません。そして、この物語はそれをとてもシンプルな方法で示していると思います。少し分かりやすくなりました。しかし、私はまた、集計が固執する場所ではなく、集計が固執する方法を示していることも気に入っています。「わかった、私は王のためにこれらの集計を持っていなければならず、年末にはそれらが一致しなければならない」というような感じです。そして、私がそうしなければならないのは、この王が偉大な大軍を持っていて、この国で起こることをコントロールしているからであり、それが人々の最大の恐怖を呼び起こすからです、ああ、私たちにこの通貨を使わせる権威主義者がいる、そして彼らは私たちを脅す可能性がある、と私は思います。私たちが通貨を使用せず、税金も支払わないことを選択した場合、暴力が発生します。しかし、このバージニア・ポンドの物語は、私たちが社会をゼロから始めようとしていることを示していますよね？それは植民地です。仕事をするには人材が必要です。食べ物を育てるには人が必要です。銀行や学校を運営するには人材が必要です。これは、通貨の発行が資源と労働力の動員にどのように役立ったかを実際に示しています。そして、それはお金がいかに社会組織のツールとなり得るかを実際に示しています。私たちの社会が機能するのを助ける単なるツールにすぎません。したがって、私はこの物語から得られるすべてが大好きであり、法定通貨が代替通貨よりも好ましい理由を本当に示しています。それで何が起こったのか言えますか？たとえば、なぜ誰もが金や銀の裏付けのある通貨についてメダリスト的な見方や、お金についてメタリスト的な見方を採用したのでしょうか？そうですね、簡単に言うと、それは反民主主義に当てはまると思います。つまり、今日では新自由主義的見解と言えます。そして、長い間貴金属に対する魅力がなかったことを否定するつもりはありません。そして私はそうではありません 貴金属が貨幣に使用されたことは事実であるため、否定したくないのです。そのため、金に目がくらんでしまう可能性があります。そして、金は人々にとって魅力的であり、金属コインの特徴は、寿命が長く、収入がすべて支払われても火災で焼失しないことです。つまり、入植者が紙幣で行っていたことと全く同じことをイギリス人も割棒で行ったのです。彼らはそれらをすべて燃やしました。実際、彼らは 1840 年代にようやく集計棒を撤去しようとしていたときに、国会議事堂を焼き払ったのです。英国で大蔵省と呼ばれる財務省は、株式と半券を照合するのに膨大で時間のかかるプロセスであるため、割棒を非常に嫌っていました。そのため、彼らはもう集計棒を扱う必要がなくなることにとても満足していました。彼らはそれらすべてを同時に火の中に投げ込みました。国会議事堂が焼き払われたというのはちょっと面白い話だが、金属がコインに入っていたのは事実で、なぜそんなことをしたのかについては非常に長い話があるが、それは貴金属が魅力的だったギリシャの都市国家にまで遡る。つまり、多くの人は、金本位制は通貨を金の量に固定するのが普通だったと考えていますが、実際には例外です。とても珍しいことです。多くの先進国が金本位制を確立したのは実際に 19 世紀でした。それらは自然なものではなく、意図的に確立されたものです。そしてその理由の一部は、政府を抑制し、あたかも自由市場が機能するかのようにお金を機能させようとすることでした。そこで、非常に有名な人類学者であり社会科学者であるカール・ポランニーは、これは意図的であったと主張しています。お金を商品であるかのように働かせようとしていたのです。そして実際にそれがもたらしたのは、政府の支出能力を大幅に制限し、私たちが政府よりも市場に依存するようになったということです。ですから、これは反民主主義的な動きだったと思います。そして今日、誰が金本位制への復帰を要求しているのかを見てみると、それは自由市場でオーストリア寄りの、ロン・ポールのような非常に保守的な人々になるだろう。この歴史的な話を私たちに教えてくれたことに対するジェシカの感謝と感謝の気持ちを繰り返したいと思います。なぜなら、最近の多くの経済会話ではこのような話は非常に珍しいからです。そして、私自身の父を含む多くの視聴者やリスナーが、歴史愛好家であるハイメに声を上げていることを私は知っていますが、これはまさに彼らの期待通りのことになるでしょう。それで、今あなたが話しているこの場所に行くとします。右。19 世紀から 20 世紀は完璧な移行期であり、経済学が学問として、分野として形式化されつつあると考えられ始めています。そして、当時彼らが話しているように見えるのは、他の個人と出会って取引しようとしているだけの、この効用を最大化する合理的なエージェントとしての個人に焦点を当てているということです。そしてもちろん、これを集計すると、競争して同じことをしようとしている企業について考えることができます。でも、ご存知のとおり、市場はバランスを保っているので、ちょっと面白いと思うちょっとしたグラフィックもここに掲載しています。右。経済学者からはこんな考えが聞かれます。彼らが言うことはすべて需要と供給ですよね？オウムに経済学を教えると、彼らは需要と供給について言うでしょう。では、この見方からどうやって進めばよいのでしょうか? 右。彼らが言うように、ミクロ経済やミクロな基盤に非常に焦点を当てているのは、より体系的な視点であり、私はあなたが話していること、社会がそれ自体を提供する役割、政府が持つ役割を本当に重要視していると思いますシステム全体、あるいはいわゆるマクロ経済において。そうですね、経済学を学んだ人なら誰でも、アダム スミスが経済学の父であると主張されていること、そして実際には彼が 2 つの伝統の父であることを知っています。一つは、これをミクロな、あるいは個人ベースの社会観、需要と供給、そして個人の利益最大化の追求などと呼ぶのでしょうか。そして「見えざる手」という概念。わかった。そして、スミスが見えざる手について言及したのは 2 回だけであることは事実であり、彼がそれが神を意味したものではないことは明らかではありませんが、彼が市場を意味していると解釈されました。市場はあなたにシグナルを送る見えざる手であり、あなたはそれに反応します。そしてそれは誰にとっても最善の結果をもたらすはずです。さて、その支店があります。もう一方の支部は資本主義に非常に懐疑的でした。アダム・スミスは、ご存知のように、プロデューサーたちが大衆に対して共謀する場合を除いてはめったに会うことがないと言いました。わかった。そして彼は、資本主義が実際に大多数の人々の利益になるかどうかについて非常に疑問を抱いていました。彼は、工場では同じ作業を何度も何度も繰り返さなければならないため、労働者が非常に愚かになる傾向があると考えました。わかった。そして、その伝統もあります。これら 2 つの伝統は 1870 年代に頂点に達します。そこで 1870 年代に、いわゆる新古典派経済学が発展し、それが自由市場部門です。それは小さな政府機関です そしてそれは政府を抑制したいと考えており、金本位制のようなものを推進しようとしている部門です。わかった。もう一方の側は、マルクス経済学、つまりマルクス主義者の発展で最高潮に達します。つまり、カール・マルクスは『資本論』を執筆し、1867 年に出版しましたが、それが別の見方につながります。経済全体に焦点を当てています。そこからマクロ経済学が生まれたと言えるでしょう。しかし、米国ではマルクス主義は悪い言葉です。そこでマクロ経済学の発展の起源をジョン・メイナード・ケインズに遡らせますが、彼については後ほど詳しくお話します。これはマクロに対する非マルクス主義的なアプローチですが、主要なアイデアをほぼ 1 対 1 でマルクス主義的なアプローチにもマッピングできることを示すのは非常に簡単です。したがって、これは反自由市場アプローチです。それはマクロ、マクロ経済全体のパフォーマンスを見ているのです。現代のマクロは実際にはマルクスからではなくケインズから来ています。そして、自由市場はあたかも見えざる手が導いているかのように機能するという考えを否定します。さて、少し驚くべきことに、19 世紀末から 20 世紀初頭の米国の経済学を見ると、この新古典派バージョンは英国の経済学であると考えられていました。それを政治経済といいます。米国のほとんどの経済学者は新古典派経済学者ではありませんでした。ケインズはまだ存在していなかったので、彼らはケインズ主義者ではありませんでしたが、制度主義者でした。1880年代の米国のトップ経済誌であるアメリカン・エコノミック・レビューの創刊を見てみると、それは制度主義的な雑誌でした。つまり、実際には新古典主義の道を辿っていなかったわけです。新古典派経済学は、ケインズ時代を経てずっと後に米国に引き継がれました。ですから、私たちは少し違っていました。制度主義者たちは景気循環に関心を持ち、経済学への異なるアプローチを開発しており、信じられないかもしれないが、政策決定において実際に支配的でした、ケネディ大統領。ケネディ大統領は、ケインズ経済学への転換に至ったときのことです。そこで、ここで少しケインズについて話しましょう。ケインズは経済学のシェイクスピアのような人だという人もいるだろう。そして、ここで言う一部の人とは、昨日それを考え出したジェシカと私を意味します。しかしご存知のように、彼は経済学に関する会話に大きな影響を与えた人物とみなされています。彼の核心的で最も重要な考えが何であるかを教えてください。また、ケインズに価値を見出すことができるなら、階級問題にも関心があるなら、労働者もそのより急進的なマルクス主義の観点から？わかった。そうですね、ケインズの最も有名な本は 1936 年で、『貨幣、利子、雇用の一般理論』と呼ばれています。ただし、一般理論を念頭に置いてください。彼は何を真似ていたのでしょうか？アインシュタインの一般相対性理論。つまり、ケインズが経済学で行ったことは、アインシュタインが物理学で行ったこと、ダーウィンが進化論で行ったことと同じだった。そして、これらは科学の 3 人の偉大な人物です。ダーウィン、ケインズ、アインシュタイン。したがって、私はシェイクスピアよりもはるかに重要だと言えます。それはいいことですが、ケインズのほうがはるかに重要です。わかった。彼は。実際、彼の貢献すべてを見てみると、それはアインシュタインやダーウィンを超えていると言えるでしょう。ケインズは『一般理論』を書いた時点ですでに有名でした。彼の論文は、そのため、彼の大学の論文は確率論を完全に再考するものでした。第一次世界大戦の終わりに、彼は『平和の経済的影響』という本を書き、同盟国が枢軸国に反して署名した平和条約は新たな世界戦争を引き起こすだろうと述べた。そして彼は正しかった。第二次世界大戦が始まった。彼は 1930 年に貨幣論を執筆し、貨幣思想への極めて重要な貢献を果たしました。そして MMT となるものの多くは、一般理論以前の貨幣論にあります。1926 年に彼は本を書きました。それは「自由放任主義の終焉」と呼ばれる非常に短い本です。自由放任とは何ですか？自由市場がすべての解決策であるというのは、先ほど話した理論です。1926年にケインズはこの本を書き、それは真実ではないと述べています。そしてこれを本気で信じている経済学者はいない。これは政治的議題です。これは経済理論ではありません。それは政府と民主的統治を社会から排除するという政治的課題です。わかった。そして彼は、私たちは大暴落、つまり大恐慌に陥るだろうと予言しました。わかった。そのため、不況が襲ったとき、ケインズは自分の 1930 年の著書に致命的な欠陥があることに気づきました。彼はまだ、私たちが現在マクロ経済学と呼ぶものを思いつきませんでした。したがって、彼は自由市場のアプローチが間違っていることを知っていました。つまり、スミスのその枝は間違っていましたが、彼はそれを何に置き換えればよいのか分かりませんでした。彼は一般理論を、現代のマクロ経済学の基礎である有効需要理論に置き換えました。したがって、これを簡単に説明するのは非常に困難です。しかし、ほんの一例として、彼は本の冒頭をこのように始めています。つまり、理論的には、労働はバナナか何かのようなものであるということになります。労働力の供給があり、労働力の需要もあります。したがって、労働力にもかかわらず、働いて収入を得たい人がおり、企業は労働力の需要を雇用したいと考えています。そして、自由市場が機能することを許可されれば、需要と供給が生じます。つまり、賃金を決定する需要と供給のクロスが常にあり、その賃金が労働市場を通過します。つまり、市場の賃金で働きたい人は誰でも仕事を得ることができ、失業もピグーも発生しません。有名な経済学者だった彼は、大恐慌の初期に本を書いて、ご存知のように、不況の解決策は賃金の低下だけである、と述べていました。賃金が下がれば、失業者は全員仕事を得ることができます。つまり、私たちが失業している唯一の理由は、賃金が高すぎるということです。わかった？問題は、賃金が低下し、失業率が悪化していたことだ。そのため、米国では賃金は下がり続け、物価は下がり続け、職を失う人が増えました。わかった。そして、市場を機能させれば、誰も仕事を失い、何も生産されなくなるように見えました。つまりケインズは、その理論は間違いであるに違いないと言うのです。わかった？賃金の低下は解決策ではありません。わかった？なぜ機能しないのでしょうか? なぜなら、賃金が下がれば人々が使える収入が減るからです。支出できる収入が減れば、企業はそれほど売り上げを伸ばすことができなくなります。企業は売り上げが上がらなければ従業員を解雇するだろう。したがって、賃金の低下は実際に雇用を減少させます。この理論の問題点は、それがいわばミクロベースであるということでした。賃金が下がった場合に何が起こるかを無視しています。それは労働市場だけを見ています。それはありません 賃金が下がったら人々の支出がどうなるか考えてはいけません。したがって、技術的な用語で言えば、他の市場で起こっていることとは無関係ではないと言えます。さて、ケインズは労働について話し始めたが、この議論は一般的にすべての市場に拡張することができる。需要と供給の分析はできません。独立性が必要なため、根本的に欠陥があります。ある市場で起こっていることが他の市場に影響を与えることはありません。そのため必要なのは、マクロな視点、経済全体の視点からアプローチすることです。わかった。そしてそれを行うのがマクロ経済学です。ケインズは合成の誤謬について語った。ご存知のとおり、経済全体で起こっていることを得るために、個人が下した決定を単純に合計することはできません。そこで、もう一度、技術的な説明をもう 1 つだけ行います。それ' 倹約のパラドックスと呼ばれるものです。わかった。そのため、私たちは皆、貯蓄は良いこと、個人が将来のために貯蓄することは良いこと、そして将来のために貯蓄することは社会にとって良いことだと言われています。わかった。では、どうすれば支出が減ると言えるでしょうか? では、もっと節約したいので、明日は支出を減らすと誰もが決めたらどうなるでしょうか? それは彼らにとって良いことだからです。彼らは自分や子供たちの大学教育のために貯蓄したり、家や車を購入するために貯蓄したりすることができます。わかった。まあ、支出が減れば、売上も減るということです。売上が下がれば、企業が必要とする労働者も減ります。企業が雇用する労働者が減れば、得られる収入も減ります。そしてケインズは、総貯蓄が増加するどころか減少するほど収入が減少するため、最終的には貯蓄ができなくなるだろうと主張した。あなたは個人として、さらに節約することを選択できます。もちろんできます。今週はマクドナルドをスキップするだけです。でも、もしみんながそんなことをしたら、今週はみんなマクドナルドに行かなくなるでしょう。マクドナルドは従業員を解雇しなければならないため、従業員の収入は減り、職を失った全員の貯蓄は減り、あなたの貯蓄の増加を相殺することになります。そしてそれが、総合的にはうまくいかない理由です。だからこそ、需要と供給の分析が間違っているのです。なぜなら、あなたの貯蓄が他の誰にも影響を及ぼさないと仮定しているからです。しかし、そうではありません。そして、生産物を売ろうとしている企業の収入にも影響を及ぼします。それで、お母さんと一緒に車に乗っているときに、「ああ、お願い、帰りにマクドナルドに行かなきゃいけないんだ」って思ったとき。すると母は、「いいえ、食べ物は家のキッチンにあるのですから、経済を悪化させることになるのです！」と言いました。いかなくちゃ。それはとても重要なことです。保存してください。しかし、罪悪感を感じるべきです。それで、皆さん、ここで聞いたんですよね？なぜなら、私たちの生活と経済は相互に依存しており、つながっているからです。従来の需要と供給のモデルはまったく機能しません。高校の経済学の授業で私たちに押し付けようとするもの、あるいは、人々はそれが経済学 101 だと言いたがります。そうでしょう? このモデルは、私たち全員が社会の一部であり、すべての組織がつながっているということを無視しています。だから、それはとても重要なことだと思うんです。私が本当に興味があることの一つは、今日人々がケインズとケインズ主義についてどのように語るかということですが、彼らはケインズが書いた時からケインズ主義は変わっていないと考えており、ポール・クルーグマンやラリーのような人物についてさえ考えています。サマーズ。そして、あたかもケインズの影響を受けた学者や思想家はみな同じであるかのような直線があります。今私たちがケインズ主義者だと考えているこれらの人物たちが、自分たちがどのように行動するのかを考えるようになり、その後、他の学派について考える他の分岐がどこにつながるのかに至るまで、その軌跡がどのように展開されたのか教えていただけますか。あなたが言及したアメリカの制度主義者、マルクスが言っていたこと、あの話、そしてこの相違さえも。うん。つまり、経済学は学問としては非常に珍しいのです。他の社会科学やハードサイエンスに目を向けると、さまざまなアプローチがあります。したがって、政治学ではさまざまなアプローチを研究することになります。大学の授業に参加しているとき。心理学でも同じことが当てはまりますし、政治学でも同じことが当てはまります。したがって、政治学、社会学、人類学などの観点から社会を研究するにはさまざまなアプローチがあるでしょう。経済学というのはとても不思議なものです。米国のほとんどの教室では、経済学の教科書が与えられ、そこには 1 つのアプローチが示されています。これは、第二次世界大戦の終結以来続いている主流のアプローチになるでしょう。当初、最初の教科書はポール・サミュエルソンで、ケインズの一部を受け入れながらも新古典派の需要と供給のアプローチと融合させようとしたバージョンのケインズを提示していました。そして、それは常に根本的に欠陥があり、一貫性がありませんでした。なぜなら、ミクロレベルで何が起こっているかを学び、マクロレベルでの有効需要の理論のようなものを得るからです。そしてこの2つは本当に合わないのです。そして、それは一種の2つの反応につながると思います。1つは、実際にケインズを読んだ人たちで、「ああ、しかし、これの多くはケインズには載っていない」と言います。そして、あなたは何ですか？ここでのプレゼンテーションは -- 私は、「ろくでなしでも大丈夫だと思う」という言葉を使います。なぜなら、それはおそらく最も偉大な女性経済学者であり、ノーベル賞を受賞するはずだったジョーン・ロビンソンが使った言葉だからです。Funny Money では複数の単語を使用することを推奨します。それで、あなたは大丈夫です。それで、とにかく、彼女は、母親が誰であるかは知っているので、それはろくでなしケインズ主義であり、それは新古典派経済学ですが、父親が誰であるかはわかりません、とよく言いました。ケインズじゃないよ。それで彼女はそれをそう呼んだのです。そして、彼女はケインズ支持者の分裂グループのリーダーのようなものでした。そして彼らは最終的に、誰もがポスト・ケインズであり、ケインズは死んだので、自らをポスト・ケインズ主義者と呼ぶことに落ち着いた。キリストBK以前、ケインズ以前のBCのようなものです。したがって、一般理論に忠実であろうとする人々になるでしょう。わかった。そして、さまざまな支店もあるので、それは問題ありません。人によってやり方は若干異なりますが、全員が一般理論をアプローチの基礎として受け入れています。したがって、それらはサミュエルソン版のケインズとは区別されます。しかし、その後、サミュエルソンに対して別の反応があり、それは、まあ、待ってくださいというものです。マクロとミクロは一致していません。ミクロが基礎となるべきです。なぜなら、個人がどのように行動するかについての理論があり、次に社会がどのように行動するかについての理論があり、それら 2 つはリンクされていないからです。したがって、この 2 つを結び付ける必要があり、マクロ経済学にミクロの基礎をより良く組み込む必要があります。そしてそれは最終的に、それができないという理由でケインズを完全に追い出すことにつながります。個人の効用の最大化と一致するケインズマクロを作ることはできません。それは機能しません。そしてそれが、主流マクロにおけるある種の完全な革命または反革命につながりました。彼らはケインズを追い出すだけです、いいですか？そしてそれが新たな主流理論となる。それは合理的期待と呼ばれる不条理、不条理なレベルにまで運ばれます。詳細には立ち入りたくないが、ロバート・ルーカスという名前の男がいて、大恐慌下でパンラインにいた人々は全員、自主的に失業している。彼らは働かないことを選択しました。わかった？彼らは、非自発的な失業ではなく自発的なパンとスープの配布物を手に入れるために、失業者のパンの列に並ぶという効用を最大限に活用している。わかった？彼らは自発的に働いていませんでした。ともかく。ばかばかしい。彼はノーベル賞を受賞しました。わかった、しかし、そのような完全にナンセンスな議論をすると恥ずかしいことになります。それで、あなたはそれに対して少し反応します。たとえ一貫性が低くても、物事をもう少し現実的にしようとします。そうやってポール・クルーグマンを手に入れるのです。つまり、これらはニューケインジアンです。彼らは完全にばかげていないことを言えるようになりたいと思っていますが、ケインズを支持していません。それで最終的に大規模なコンセンサスが構築され、すべてのクレイジーなアイデアが採用され、さらにいくつかの賢明なアイデアが追加されます。そしてそれが新しい通貨コンセンサスになります。それが今では主流となっています。そしてそれが、米国のほとんどの教室で教えられる唯一のことです。わかった。それが、この分野の経済学の非常に奇妙な点です。多様性はありません。あなたが学生として先生にケインズやマルクスについて話そうとすると、みんな「そんなことはない」と言うでしょう。そんなことはしません。そうですね、それはうちの教室では禁止です。わかった。それはとても奇妙です。私たちはどのようにしてそのような立場に立つことができたのでしょうか？理由はよくわかりません。経済学が他の学問と違って、この主流の見解に異議を唱える考えに対して完全に不寛容であるのはなぜでしょうか。それは、代替手段が存在しないという意味ではありません。彼らは教えられていないと言っているだけです。ケインズかマルクス、あるいはその両方をアプローチの祖とし、その考えを拡張して経済分析に利用しようとする異端の経済学、異端の経済学者がいます。そして、さまざまなグループは、あなたが言ったように、制度主義者、ポストケインジアン、マルクス主義者、そしてそれぞれの派閥です。そして最後に、現代貨幣理論も、さまざまなアプローチから優れたアイデアを取り入れた異端的なアプローチです。それで、その話を少し聞かせてもらえますか？どうやってMMTにたどり着いたのでしょうか？そして今、私たちは皆一周回ってきたように感じています。それは、これらのさまざまなアイデアの歴史と、それらの伝統がどのように発展したかについての非常に見事な暴露でした。では、私たちはどのようにしてMMT、つまり現代貨幣理論にたどり着いたのでしょうか? さて、開発に貢献した人々は皆、これらの異端的なアプローチの背景を持っていました。私はポスト・ケインジアン制度主義者およびマルクス主義者のビル・ミッチェルのバックグラウンドを持っており、マルクス主義とポスト・ケインジアンに重点を置いていました。ステファニーは最初は私から学び、ジョン・ヘンリーからも学びました。そのため、彼女もこれら 3 つのアプローチすべてに触れてきました。それで私たちは外に出て、異端の経済学を研究していますが、ビルはもっと労働経済学を研究しました。ステファニーと私は金融経済学をもっと勉強していて、ポストケインズ思想のディスカッショングループがありました。何年だったかは覚えていないが、90年代初頭、有名なポストケインジアンのほとんど、かなりの数のマルクス主義者、オーストリア人、その他主流から逸脱した人々がこのディスカッショングループに参加していた。そして1996年1月、ウォーレン・モズラーというヘッジファンドの男が登場した。そこが始まりだと思います。ウォーレンがディスカッショングループに参加し、表面的には非常に奇妙に見えるコメントを投稿し始めた日でした。しかし、私たちの多くは、彼の言っていることは、もしかしたら違う言葉を使っているかもしれないが、それが正しいということを認識していました。そのため、PKTに関する議論が引き続き行われましたが、PKTに対する敵意は非常に強かったです。それで、彼らとの私の議論のほとんどは、それやその非常に初期のバージョンの電子メールが何であれ、それ以外で行われました、そして、ビル・ミッチェルは、その時までに私よりもさらに活発でした。ステファニーはバックグラウンドでそこにいましたが、1年かそこらのうちに、私たちはオフラインでお互いに話し始めました。覚えていませんが、おそらく1月、おそらく97年の主要な米国経済学会の会議でビルと直接会ったと思います。 97 年ではなかったとしても、98 年でした。私はビルに直接会い、UMKC にセンターを作り始めました。彼はオーストラリアにセンターを作り、私たちはそのアイデアを推進しようと努め始めました。それでそれは始まりました。最後の質問に行き、少しまとめをする前に、この中に映っている人物の 1 人に見覚えのあるクリップを紹介します。マイク、合図してもいいですか？グリーン・ニューディールは最優先事項と言えるでしょうか? そして私' ミスターから始めましょう。あなたから始めましょう。費用はいくらかかりますか? それはグリーンニューディールに何を含めるかによって決まります。番号を選んでくださいと言ってください。わかった。そうですね、緑化プログラムの完全なパッケージは、今後 10 年間で GDP の 5% に達する可能性があると言えます。つまり、番号を教えてください。73 兆ドルと聞いたので数字を選んでください。私は聞きました。いいえ、そうではありません。それで、レイ教授、偉大な経済思想家は皆、立派なひげを生やさなければならないのでしょうか？それも実はコロナ前にもあったこと。それをまとめて、その質問の内容を解き明かします。右。私たちが今日直面している多くの危機にとって、なぜ MMT が重要なのでしょうか? あなたはその委員会のメンバーでした。彼らは気候について話していましたよね？なぜ私たちのような人間はこの理論にそれほど固執するのでしょうか、この枠組みと視点で？そのため、民主党は時折、非常に優れた政策を提案することがあり、グリーン・ニューディールやバイデン氏の「Build Back Better」にはそれらの点で優れた要素が含まれていた。そして、私たちが常に目にしているのは、彼らを殺すのは報酬です。つまり、それはその質問に対する共和党の答えだったと思いますが、その費用がどれくらいかかるのかはよく知っていますから、彼らは常にその質問をするでしょう。そして民主党は税金を捻出する必要があるだろう。そして、優れた進歩的な政策を新しい税金と結びつければ、反対派は倍増することになります。つまり、優れた進歩的な政策にはすでに反対者がいます。なぜなら、そうした政策を望まない保守派がたくさんいるからです。彼らは、ほとんどのアメリカ人の生活を改善するような政策を望んでいません。それは彼らの利益にならないだけです。ほら、彼らには彼らの選挙区があるが、それだけではない。彼らの選挙区はウォール街かもしれないし、軍産複合体かもしれない。それはアメリカの生活水準ではありません。だから彼らはごく自然に反対するでしょう。それで反対があり、税金を追加することになります。そうですね、少なくとも自分自身に対して税金が増えることを心から好む人はいないでしょう。そしてアメリカ人は伝統的に、高所得者への課税にすら反対するという非常に特殊な国民だ。さらに深く掘り下げてみると、彼らの多くがこのアメリカンドリームを買ったからであり、いつか私も金持ちになるかもしれないし、高い税金を払いたくないのです。したがって、私は富裕層へのさらなる課税には反対です。そして、これが保守派の手に渡ることになる。アメリカ人の希望は50年間の新自由主義によってかなり打ち砕かれてきたので、今ではそれはあまり真実ではないと思います。したがって、ほとんどのアメリカ人は、アメリカン・ドリームがかつて真実だったとしても、もはや真実ではないことを認識していると思います。あなたは金持ちになるつもりはありません。わかった？ヨーロッパほど社会的流動性が高いわけではありません。私たちはいつもそう思ってきましたが、実はそうではありません。アメリカ人が昇進する可能性はそれほど高くはなく、後続の世代が昇進することはますます困難になっています。おそらく、あなたは両親よりもひどい生活を送ることになるでしょう、そしてアメリカ人はそれを認識し始めています。しかし、それでも増税には反対する人がたくさんいるでしょう。そして、真実は、富裕層への課税はグリーン・ニューディールのようなものには何の役にも立たないということですが、それは別の話題として取り上げることができます。とにかく、この 2 つを結び付けると、反対は 2 倍になります。それで、私たちがする必要があるのは、税収と支出を一致させることで、支出に対して支払う必要があるというこの概念を取り除きます。また、予算のバランスをとる必要もありません。メディケア、メディケイド、社会保障を削減するために社会セーフティネットを削減する口実として利用されている現在大きな問題である債務を制限する必要はありません。したがって、MMTがやろうとしているのは、理解を変え、賃金や均衡予算に関する議論の焦点を、お金が決して問題ではないという認識に変えることだ。独自通貨を発行すれば金融は問題になりません。問題は資源だ。したがって、グリーン・ニューディールの場合、私が予算委員会の会議で主張しようとしていたことは、重要な唯一の問題は、リソースを見つけることができるかということです。では、グリーン・ニューディールに関して、私たちは経済を完全に再構築するためのリソースを見つけることができるのでしょうか？経済的、社会的、環境的に持続可能なものにするためには？なぜなら、現時点では、これら 3 つの点すべてが、完全に持続不可能な社会になっているからです。私たちは生き残れません。そこで問題は、私たちが経済を完全に再構築するためのノウハウとリソースを持っているかということです。これら両方に対する答えは「はい、そうします」です。私は環境科学者ではありませんが、環境科学者たちは、確かに私たちは技術的なノウハウを持っていると言っているようです。そして、どうすればよいかわからないことに直面しても、私たちはそれを理解することができます。リソースはありますか? そうですね、どうやらそうなるようです。確かに労働力は十分にあります。バッテリーなどに必要なリチウムを見つけられるかという疑問もあるかもしれませんが、私たちはそれらの資源を解放しなければなりません。先ほど言い忘れたケインズの本の1つ、1940年に彼は『戦争の支払い方法』という本を書きました。それでは、1940 年のことを考えてみましょう。第二次世界大戦や過去に大規模な戦争を行った国々では常にインフレが高かった。第一次世界大戦中、イギリスは高度なインフレに見舞われました。第一次世界大戦はアメリカにとってそれほど大きな戦争ではありませんでしたが、南北戦争は大きな戦争でした。高いインフレ。独立戦争、高インフレ。そこでケインズはそれを防ぐために本を書きました。そこで彼は、この本に「戦争への支払い方法」というタイトルを付けました。そして彼は、お金はどこで見つかるのか、と尋ねているように聞こえます。しかし、それだけではありません。彼はそれについてまったく心配していませんでした。彼は資源について心配していました。戦争遂行に充てる資源をどうやって確保するのでしょうか？そして彼は戦略を立てた。だから彼はお金は問題ないと言いました。私たちがしなければならないのは、資源を現在の使用から解放し、戦争活動に移すことです。そこで彼は、税金の役割について、支出するお金を生み出すことではなく、個人消費を減らすことであると語った。彼は、政府がお金を借りようとするからでも、政府自身のお金を借りられないからでもなく、生産物を買わないように貯蓄してほしいから債券を売る役割について語った。そして配給と賃金または価格の統制。そこで彼は戦略を立てました。そしてほとんどの場合、英国もこれに追従し、米国も同様でした。私たちはこれらすべての方法を使用し、私たち二人とも比較的低いインフレで第二次世界大戦を乗り切ることができました。出来た。しかし、とにかく、私が言いたいのは、グリーン・ニューディールや、アフリカ系アメリカ人やアメリカ先住民への賠償のためにより良い復興を図るためにも、同じような戦略が必要だということです。これらはすべて同じ質問です。お金ではなく、資源をどうやって見つけるかが問題なのです。ご存知かと思いますが、サンディ・ダリティの賠償に関する取り組み。そして人々は「ああ、いやだ」と言いました。アフリカ人奴隷の子孫全員に80万ドル。彼らはそのお金をすべて使い果たし、私たちは大規模なインフレを引き起こすでしょう、それとも彼らにそれを与えるお金をどこで見つけますか？いいえ、問題は、奴隷制度の子孫であり、400年間差別に直面してきたアフリカ系アメリカ人をどのようにして許容できるのか、彼らがアメリカの生活水準を共有できるようにするのかということです。わかった。それはリソースを見つけることの問題です。それが重要な唯一の質問です。なんてこった。アフリカ人奴隷の子孫全員に80万ドル。彼らはそのお金をすべて使い果たし、私たちは大規模なインフレを引き起こすでしょう、それとも彼らにそれを与えるお金をどこで見つけますか？いいえ、問題は、奴隷制度の子孫であり、400年間差別に直面してきたアフリカ系アメリカ人をどのようにして許容できるのか、彼らがアメリカの生活水準を共有できるようにするのかということです。わかった。それはリソースを見つけることの問題です。それが重要な唯一の質問です。なんてこった。アフリカ人奴隷の子孫全員に80万ドル。彼らはそのお金をすべて使い果たし、私たちは大規模なインフレを引き起こすでしょう、それとも彼らにそれを与えるお金をどこで見つけますか？いいえ、問題は、奴隷制度の子孫であり、400年間差別に直面してきたアフリカ系アメリカ人をどのようにして許容できるのか、彼らがアメリカの生活水準を共有できるようにするのかということです。わかった。それはリソースを見つけることの問題です。それが重要な唯一の質問です。彼らがアメリカの生活水準を共有できるようにするにはどうすればよいでしょうか？わかった。それはリソースを見つけることの問題です。それが重要な唯一の質問です。彼らがアメリカの生活水準を共有できるようにするにはどうすればよいでしょうか？わかった。それはリソースを見つけることの問題です。それが重要な唯一の質問です。
レイ教授、本当にありがとうございました。これは本当に素晴らしかったです。ここであなたが話した内容からは得るものがたくさんあり、何時間でも何時間でも話せそうな気がします。しかし真面目な話、MMT や経済学の分野におけるあなたの貢献は素晴らしく、あなたの説明の仕方は、多くの人がこれまで理解できなかったことを理解するのに役立つと思います。私がいつも言っているこれらのことの多くは、幼稚園から高校までの教育で教えられるべきですが、そうでないのは犯罪です。ありがとうございます。それが私たちがこの漫画本を持っている理由です。幼稚園には難しすぎるかもしれませんが、4、5、6年生以上なら大丈夫です。5 歳から数取り棒について学ぶのに、早いうちから始めなければなりません。それが唯一の方法です。レイ先生、本当にありがとうございました。素晴らしい会話でした。またお会いできることを楽しみにしています。わかった。どうもありがとう。わかった。
0:03
Hello, everybody. Welcome back to Funny Money. This is a podcast about the economy, how it works
0:09and how it can work better. And today we have a real treat of an episode. I want to thank all of our subscribers
0:15and listeners. Make sure you're sharing the podcast out with your friends and family and everybody who's confused
0:20about what's going on with all of the funny money that's out there. So we are going to talk
0:25with Randall Wray today, who is a brilliant economist, a brilliant thinker.
0:31He's going to walk us through the story of money. When did money start? Where did it come from?
0:37How did it become a thing? What's the story there? Randall Wray is the guy that can walk us through that.
0:43What's the function of money today? Is it functioning well? And what is economics
0:50even as a field? Where did the invisible hand come from? Do economists really believe
0:56in that? What do we know for sure? What do we get wrong and where do we go
1:01from here? Randy Wray is really going to walk us through all of that. And I'm particularly excited
1:06just because I love to use history as a framework
1:11for understanding where these ideas come from. So I'm going to go right into it because today's episode
1:17was a real treat. Randy Wray is a distinguished
1:22visiting professor at Willamette University and a professor of economics at the Levy Economics Institute
1:28of Bard College. But he's also taught at the University of Missouri, Kansas City, and the University
1:33of Denver. Professor Wray is the author of several books, including some of the most important
1:39introductions to both Modern Monetary Theory and Heterodox Macroeconomics.
1:44His latest book is called Making Money Work for Us: How MMT Can Save America,
1:50and he's written a more recent children's book with lots of pictures. And, of course, he's one of the founding thinkers
1:56of Modern Monetary Theory. So without further ado, Professor Randall Wray, thank you so much
2:01for coming on the show. Thank you for having me on. Or I'm going to kick it over
2:07now to my co-host, Jessica. I am so
2:12excited we're sitting down with you. Randall Wray I never really understood where money came from
2:18until you explained it. And I think maybe a lot of people feel that way. So I really want to start
2:23with the the basics or start at the beginning, rather. Where did money come from
2:30and how did we get money as it is today? And maybe we'll start from where
2:35you usually start, which is from where did writing come from? Yes. So I think we can
2:44quickly look at a slide one. Okay.
2:49So the book on the left actually is the latest book. And this one
2:54is an illustrated guide to money and contains a series of cartoons.
3:00And I'll make use of a few of these. We can move to slide two
3:06John Maynard Keynes, who I think we're going to talk about a little bit more later,
3:12said that money, the origins of money, are lost in the mists of time because he speculated
3:20that money might have originated about 4000 years ago.
3:25It turns out it's actually a bit longer ago than that. So while we imagine
3:31that use of credit is a modern invention from the very beginning,
3:36most purchases that were made using money actually were
3:42based on credit, meaning that somebody had to keep records
3:48of debts. And so writing had to be invented. So what I'm going to argue is that the origins of money
3:55can be found in the origins of writing.
We can go to the next slide.
4:02Mesopotamia is very unusual because it provides
4:08about 10,000 years of evidence for the evolution
4:15of writing. If we go back to 8000 B.C., so that's 10,000 years ago.
4:22What archeologists have found is these little tokens,
4:28and there are about 300 different kinds of tokens that have been found.
4:33The tokens look sort of like what they're supposed to represent. And so you have a token
4:39for a goat, you have a token that represents sheep and so on. And a bit later than that,
4:47they started producing these clay balls and they would push the
4:52tokens inside. And so it seems they were keeping track of something.
4:59Exactly what we don't know, except that we do know what each token represents.
5:04And you would have to break open the ball to see what tokens were inside.
5:09And so it seems that that was a disadvantage having to break the ball open.
5:15So they started pushing the tokens into the ball to make an imprint
5:20on the outside and then poking them through a hole. So the tokens would still be in the ball.
5:26But you had a record of what tokens were inside the ball,
5:32so you weren't required to break the ball open, but you could finally, in the end,
5:37break the ball and make sure that the record on the outside matches
5:43the record kept in terms of tokens on the inside. Then they
5:49had the technological innovation of saying, you know, we don't really need the ball
5:55and we don't need a whole bunch of tokens. We can press a cow
6:00token into a piece of clay four times to represent four cows
6:06and so on. And so around 3200 B.C., they dropped the balls
6:11and they just used rectangular pieces of clay and push a token into that.
6:17And the clay rectangle that we're showing here, 3200 years ago,
6:24there are two different kinds of things being represented
6:30on this clay record. Around 3000 B.C., there was another
6:35technological innovation. They realized you don't actually have to make the tokens. You can use a stylus to draw
6:43the token on a piece of clay, and then of course, you let it harden. And so that occurs
6:49around 3000 B.C. and that continually evolves to the point of
6:57just 300 years later, 2700 B.C., we start to see clay tablets
7:02that look an awful lot like the more modern clay shubati tablets
7:10on which cuneiform writing starts to appear not too long after that.
7:17Okay. And so we have this historical record. So if you look at the period
7:22from 2700 B.C. to 8000 B.C., more than 5000 years,
7:29all the records of writing that you find have something in common:
7:36they are keeping track of debts
7:41and so I always joke writing was not invented by poets.
7:48Writing was invented by accountants for keeping records,
7:53keeping track. and why do I say debts? It's true that we do not know
8:00that those clay balls were representing a debt of a certain number of cows.
8:07But we can read the modern ones because the cuneiform
8:13writing developed out of these token imprints in clay, there's a direct progression
8:19of the writing. It becomes more stylized, but we can read it and so we can speculate that
8:26probably from the very beginning these were keeping track of debt. So finally,
8:31around 2500 B.C., we start to get writing That is not record keeping
8:37where it is of a religious nature in the beginning, and then finally they develop literary texts.
8:441,000 years later around 1500 B.C., the alphabet is invented
8:50and now we get writing that is much more like human language. The earlier writing is not at all
8:56but modern writing with alphabets. They're trying to write down
9:01words as we speak them. Okay, let's skip to the final slide for this
9:09part of the discussion. So what we find is debt
9:16records kept on clay tablets. Now, that's Mesopotamia.
9:22When we look at Europe as far as we can tell, money doesn't go back nearly so far.
9:28And the medium that was used or you could say the technology for keeping the records
9:34was very different. It was notches in sticks called tally sticks.
9:40We still use the term tally. You tally up your bill at the end of your meal
9:45and they would cut little hash marks across the surface of the stick.
9:51That was called a score in the case of a score that's worth 20, say,
9:58£20 in Europe. And this is how they kept
10:05records of debts in Europe. And in spite of what people think
10:10most transactions by kings in Europe
10:17took place in tally sticks, not in coins. So most spending by the King
10:24took the form of issuing a tally stick. And we have this term raise a tally,
10:30which would be telling your Treasury Department the Exchequer to go cut some sticks
10:38so that the King could spend and the sticks would then be split in half.
10:45The king or his agent would keep half one of the halves and the other half
10:50was given to the seller of something to the king.
10:56Then the king would collect those other halves in tax payment.
11:02The purpose of splitting the stick is to make sure that nobody was counterfeiting. The lines had to match up
11:09perfectly before the king would accept. The other half of the stick
11:16called the stub and the one half is called the stock. The other half is called the stub.
11:22We still use those terms as in ticket stubs in order to match, just like they do
11:27at the concert. Right. To make sure that you have not counterfeited. Okay, so that's the story
11:34of the origins of money and the origins of writing and the link between the two.
11:40I think a lot of people would be surprised when they hear this at first. I know I was because when I think
11:45of debt or accounting, I think the money comes first.
11:51First, you have to borrow money from someone else to be in any kind of debt. But that's not really
11:56how it works. Can you say more about the function of debt in a society
12:01and how that led to the creation of of money, as we might understand
12:06it today? Yeah. Well, there is a
12:12very common we say institution defining institution
12:17is different from the way people usually what you say, Well, my church is an institution. My school is an institution,
12:23but as a practice. So human practice that we find throughout
12:29tribal society. So humans lived in tribal society for the first million years,
12:37depending on how far you know, which species you want to count as humans.
12:42They lived in tribal societies and they had a practice that was named Weregild
12:49in the case of the German tribal society. Germans
12:54were still living in tribal society when Rome was civilized,
12:59and Roman scholars studied Germans to see how do people live in a tribal society.
13:06So the first anthropologists were studying German tribal society, and they found this
13:11practice called very guild, which is if I do something to injure a member
13:16of your family, I owe you. I owe your family.
13:22Say I accidentally kill your brother, then I owe your family.
13:28And they had a system of fines that would determine what I had to pay.
13:33So something like for a death, it would be significant. Here would be a cow
13:39or a horse or something like that. I would be in debt to you. You would be my creditor
13:45until I repaid my debt. Now, we are speculating
13:51if we carry this back and say, Oh, that's what those tokens were all about in ancient
13:57Mesopotamia, because we don't know for certain that that is what they were doing.
14:03But this practice of indebtedness is as old as humans.
14:09In fact, we know that chimpanzees have the notion of debt and credit.
14:16If I help defend you against some
14:21really mean chimpanzee, then you owe me. And if I'm challenged,
14:27you've got to repay that debt. So even animals have this notion
14:32of indebtedness. So the speculation is that probably this is where
14:39the notion of indebtedness comes from. Now,
14:44in tribal society, they don't have money. So the debt is always in terms of, well,
14:50for this infraction, I owe a goat. For that infraction, I owe a bushel of wheat.
14:56So there's a different item that needs to be delivered in payment
15:01for the particular injury that I caused. Money is a conceptual leap
15:08because we're going from a payment of a horse or a cow to a payment
15:13in terms of a unit of measurement, a money of account,
15:19and just as it took 10,000 years to develop writing,
15:24there's little doubt that it took thousands of years to develop this idea
15:30that, you know, I can measure different kinds of debts in the same measuring unit.
15:37Now, measuring units are also very old. You know, we've got the inch, we've got the foot,
15:43or in Europe, they got the meter, they got the centimeter. So units of measurement are
15:49much older than the money unit of measurement.
15:54And in fact, all the money, the early units of measurement
16:00of money were borrowed from the measurement for the most important grain:
16:07wheat or barley or rice, depending on which society you look at. And the word used
16:14would be the same as the word that was used for measuring a quantity of grain.
16:20And just think about it. What is the British money unit?
16:25It's called the pound. What was the Italian money unit before they joined the euro?
16:32The lira, which means pound. Okay, If we go back to Mesopotamia, it's the Mina. In the Bible,
16:38it's the Shekel. All of these are weight units. They got transformed
16:44into money units. So let's skip to the next slide.
16:51So what is money? Money is an IOU.
16:56It's a record of indebtedness. Okay? That's what all money is
17:02have in common. So it is a record of indebtedness that tally stick
17:07was a record of indebtedness. That clay shubati tablet was a record of indebtedness.
17:13Our $1 bill is a record of indebtedness.
17:18In the case of the $1 bill, who is in debt? Well, it's the U.S.
17:23government. And if you're holding a dollar bill, you're the creditor.
17:29That's kind of nice to think of, isn't it? The government owes you. You are the creditor.
17:37In the case of a bank check, If you write a check to your landlord,
17:44you are the debtor. Your bank is actually going to make the payment for you,
17:50but they are going to debit your bank account. So you are indebted
17:56and you're using the banks debt, which is a checking account
18:02at the bank, in order to make a payment to your landlord. And the way that it works is
18:09the bank will debit your demand deposit and credit the landlord's
18:14demand deposit. That's how payments are made. So let me tell you
18:22a story about the the earliest creation
18:27of paper money in the West. We can skip to the next slide.
18:34The Chinese invented paper money as just simply it's a way to record
18:40an IOU. Instead of recording it on a clay tablet or on a stick,
18:45you record it on a piece of paper. So the Chinese were doing that. And in the West
18:50we had not come up with that technological innovation yet. The American
18:56colonies were colonies of Britain and they were not allowed
19:01to issue coins. The British crown had a monopoly
19:07on coin issue. They wanted the American colonies to have to earn coins
19:13by shipping exports to Britain, because that was the whole reason for having a colony
19:20that you would be able to get the output of that colony. The colonists needed
19:26the British coins. It was their source of currency, but they were not allowed
19:32to issue their own coins. But the British,
19:37the colonial governments, were always short of money. They didn't have enough money.
19:42Mostly to defend the colonists against the
19:48Native Americans, against the French in Canada. And so they needed to provision
19:54their armies and they hit on a loophole.
19:59They couldn't issue coins, but there was no prohibition on issuing IOUs
20:06that were recorded on pieces of paper. And so the colonial legislatures,
20:12it turns out all 13 of them did this with various deviations.
20:19They would pass an act that allowed for
20:24the printing up of, say, 10,000 Virginia pounds.
20:30They were using the pound money account because, after all, we were British colonies.
20:36But these would be Virginia pounds, not British pounds. So they would issue
20:42the £10,000 of Virginia notes. A shilling is just a lower denomination of the pound.
20:48And at the same time the legislature would pass
20:54a new tax and it was called a redemption tax. And I'll get to why
21:00they called it that. And it would be expected to raise about £10,000
21:07of Virginia pounds over the course of a couple of years.
21:13So they would pass a law authorizing printing money. And at the same time,
21:19there would be a twin law that would authorize imposing a tax.
21:26Okay. So then the colony, the colonial government, would use that paper money
21:33in order to buy what it needed. In the case of this cartoon, it shows you that what
21:38the colonial government wanted was a mule and a wagon, so they would issue
21:44the paper money in order to purchase the the mule and the cart.
21:50Now, why would anyone sell their mule and cart
21:56for a piece of paper? Well, the reason was because they had to pay a tax,
22:02and the only way to get the money to pay the tax
22:07was either to sell something to the British king and get coins
22:13because you could pay your tax in coins. But that was hard to do. There weren't nearly enough coins,
22:19so you also could sell to the colonial government and get the paper money.
22:24That was much easier to do. So it turns out that about 75% of all the tax revenue
22:30came in the form of that paper money. About 25% came in the form of coins
22:37because they were much harder to get ahold of. Let's go to the next slide.
22:42So what did the colonial government do when they got that paper
22:48money back in tax payment? They burned it, all of it.
22:54We know that they burned all of it because they kept very careful records. When the money came back,
23:00they burned it. Why were they called redemption taxes? Because the money would
23:06be redeemed in paying taxes. And once redeemed,
23:12it would be destroyed. If you think about a free pizza coupon.
23:18So Joe's Pizzeria issues free pizza coupons to build up customers.
23:24When you go in with that free pizza coupon and you give it to Joe,
23:30you are redeeming the coupon. And we use that term, of course. And what does Joe
23:35do with the pizza coupon? Does he put it in the cash register? No, he burns it.
23:40So revenue is for redemption. It's for burning.
23:46That's what they did. And that is the fundamental principle
23:52of money IOUs. When you return them
23:57to the issuer, they are burnt. If you write IOU,
24:02a cup of sugar to your neighbor because you borrow a cup of sugar
24:07when you redeem yourself and take a cup of sugar back
24:13to the neighbor and they return the IOU,
24:18You don’t say, Oh boy, now I'm rich. I've got an IOU because it's your IOU. What you do
24:23is you tear it up and throw it away. Okay? So we're done with the slides.
24:29I love this story so much. It's one of my favorite stories because it makes so clear
24:36that a currency issuing government has to put the currency out there
24:42before they can tax it back. They spend and then tax. And with this misconception that the US government badly
24:49needs our tax dollars in order to have any money to spend on public programs. And that's
24:54just not how it works. And I think this story demonstrates that in such a more simple way.
24:59It's a little bit easier to understand. But I also like that it demonstrates
25:04in a way that the tally sticks doesn't where the tally sticks, it's like, okay,
25:10I have to have these tallies for the king and they have to match up at the end of the year. And I have to do this
25:15because this king has this great big army and controls what happens in the country, and it evokes people's
25:21biggest fears, I think, about ah we have this authoritarian
25:26who makes us use this currency and they can threaten us with violence if we choose to not use the currency
25:31and not pay the tax. But this story of the Virginia Pound shows, okay,
25:36we're trying to start a society from scratch, right? It's a colony. We need people to do jobs.
25:43We need people to grow food. We need people to run banks and schools. And this really shows
25:48how issuing the currency helped to mobilize resources and labor. And it really shows
25:54how money can be a tool of social organization. Just a tool to help our society function at all.
26:01So I just love everything we get out of this story, and it really demonstrates
26:06why a fiat currency might be preferable to alternatives. So can you say
26:12what happened? Like why did everyone adopt like a Medallist view
26:17of like a gold or silver backed currency or a Metallist view of money? Yeah, well,
26:23the short answer is that I think that it it fits
26:29with an anti-democratic. I mean, today we would say Neoliberal
26:35view. And I don't want to deny that
26:41there hasn't been a fascination with precious metals
26:46for a very long time. And I don't want to deny that precious metals
26:54were used in coinage because that is true. And so you can sort of
27:00get blinded by the gold. And gold is fascinating to people
27:06and the thing about metallic coins is they last a long time
27:13and they don't get destroyed in fire when all the revenue is paid.
27:18So with tally sticks, the British did exactly the same thing with tally sticks
27:24that the colonists were doing with paper money. They burned all of them. In fact, they burned down the House of Parliament
27:30in the 1840s when they were finally getting rid of tally sticks. The Treasury
27:37they called the Exchequer in Britain, hated the tally stick so much because it was a huge,
27:45time consuming process to match the stock and stub. So they were so happy
27:51they weren't going to have to deal with tally sticks anymore. They threw them all in the fire at the same time, burned down the house of Parliament
27:56is sort of funny, but it's true that metal was in coins
28:04and there's a very long story about why they did it,
28:09but that goes all the way back to the Greek city states where precious metal had a
28:17an appeal to people So lots of people
28:22think, well, you know, gold standards were normal that
28:28pegging your currency to a quantity of gold, but it's actually the exception.
28:34It's very rare. It really was the 19th century
28:39when a large number of the most developed countries
28:46established gold standards. They weren't natural, they were purposely established.
28:52And part of the reason for that was to constrain government and to try to
28:58make money operate as if the free market would work.
29:05So Karl Polanyi who's a very famous anthropologist and
29:11social scientist, makes this argument that this was intentional.
29:16It was trying to make money work as if it were a commodity.
29:22And what it actually did was severely constrain
29:27the governments ability to spend and made us rely more on the market
29:34and less on the government. So I think that it was an anti-democratic move.
29:41And if you look today at who calls for a return to the gold standard,
29:48it's going to be the free market, Austrian leaning,
29:54very conservative people like Ron Paul. I want to echo Jessica's
30:01appreciation and gratitude that you're giving us this historical story because that's just so rare in a lot
30:07of economic conversation these days. And I know a lot of our viewers and listeners,
30:13including my own father, shout out to Jaime, our history buffs and and this is just going to be
30:18right up their alley. So if we go now to to this place that you're speaking to.
30:24Right. The 19th into the 20th century, it's it's a perfect transition because we start to see
30:30like the formalization of economics as a discipline, as a field.
30:36And what they seem to be talking about at the time is focusing
30:41on the individual as this utility maximizing rational agent
30:47that is just encountering other individuals and trying to trade. And of course, if we aggregate this up,
30:53we can think about firms trying to compete and do the same thing. But, you know, markets are balancing
30:59themselves out that we even have a little graphic here that I think is kind of funny because
31:05if we can pull that up, Mike, There we go. Right. There is this idea that you hear
31:12from economists. Everything they say is supply and demand, right? If you if you teach a parrot economics,
31:17what they will say is supply and demand. So how then do we go
31:23from this view? Right. Which is very focused on the micro economy or
31:28micro foundations, as they say, to a more systemic perspective,
31:34which I think really places importance on what you're talking about, which is
31:40the role that society provisioning itself, the role that governments have in
31:46a system as a whole, or what we might call a macro economy. Yeah, well,
31:52so anyone who studied economics knows that Adam Smith is claimed to be the father of economics,
31:58and he's the father of two traditions, really. So one, is this
32:05what you called micro or individual based view of
32:10society, supply and demand, And
32:16pursuit of individual profit maximization and so on.
32:21And the notion of an “Invisible Hand”. Okay. And it's true that Smith
32:29seems to have mentioned invisible hand only twice, and it's not clear that he didn't mean God
32:35by that, but it's interpreted as he meant the market. The market is the
32:40invisible hand that sends you signals and you react to that. And that is supposed to lead
32:45to the best possible outcome for everybody. Okay, so there is that branch.
32:51The other branch was very skeptical of capitalism.
32:57Adam Smith said that, you know, the producers rarely meet
33:02except to conspire against the public. Okay. And he was very doubtful
33:09that capitalism actually was in the interests of the majority of people.
33:15He thought that factories tended to make workers very stupid because they had to do
33:21the same task over and over and over again. Okay. And so there is that tradition, too.
33:28These two traditions come to a head in the 1870s.
33:34So in the 1870s we get the development of what is called Neoclassical economics,
33:41and that is the free market branch. That's the small government branch,
33:47and that's the branch that wants to constrain the government and is going to promote
33:53things like the gold standard. Okay. The other side culminates
33:59in the development of Marxian economics, the Marxists. So Karl Marx wrote Capital
34:07and published in 1867, and that leads to an alternative view.
34:15It is focused on the economy as a whole. We could say that that is
34:20where macroeconomics came from. However,
34:26in the United States, Marxism is a bad word. And so
34:35we date the development of macroeconomics to John Maynard Keynes,
34:40who we can talk more about later. And it is a non
34:46Marxian approach to macro, but it's pretty easy to show
34:52that you can map the main ideas almost 1 to 1
34:58to the Marxist approach too. So this is an anti free
35:05market approach. It's looking at the macro, performance of the macro economy as a whole.
35:11Modern macro really comes out of Keynes, not out of Marx.
35:17And it rejects the idea that
35:23free markets act as if an invisible hand is guiding them.
35:28Now, somewhat surprisingly, if you look at economics in the United States
35:35at the end of the 19th century and in the
35:40beginning of the 20th century, this neoclassical version was
35:48thought to be the English economics. It's called political economy.
35:55Most economists in the United States were not Neoclassical economists.
36:01Keynes didn't exist yet, so they were not Keynesians,
36:07but they were Institutionalists. If you look at the founding
36:12of the top United States Economic Journal in the 1880s, the American
36:17Economic Review, that was an Institutionalist journal. So it really was not taking
36:23that Neoclassical path. Neoclassical economics took over
36:28in the United States much later after we had gone through a Keynesian period.
36:35So we were somewhat different. Institutionalists were interested
36:40in the business cycle and they were
36:47developing a different approach to economics, and they really were dominant
36:52in policymaking until believe it or not, President Kennedy.
36:59President Kennedy is when we got to the conversion over to Keynesian economics.
37:05So let's talk about Keynes for for a second here. Some would say that Keynes is like
37:10the Shakespeare of economics. And by some I mean Jessica and I who made that up yesterday.
37:16But, you know, he's seen as a figure that really influenced
37:22the conversation on economics. Can you tell us what some of his core and most important
37:27ideas are And if you could find value in Keynes, if you also care about class issues,
37:35workers from that more radical Marxist perspective as well? Okay. Well, so
37:43Keynes’s most famous book is 1936,
37:49and it's called The General Theory of Money, Interest and Employment. But keep in mind
37:54General Theory. What was he mimicking?
37:59Einstein The General Theory of Relativity. So what Keynes was doing
38:05for economics was what Einstein had done for physics and what
38:10Darwin had done for evolution. And those are the three
38:16greatest figures in science.
38:22Darwin, Keynes and Einstein. So I would say
38:27much more important than Shakespeare. Okay, it's nice, but
38:35Keynes is just much more important. All right. He is. In fact,
38:43if you look at all of his contributions, I would say it goes beyond Einstein and Darwin.
38:51Keynes was already famous when he wrote the General Theory.
38:57His dissertation, so his college dissertation
39:03was a complete rethinking of probability theory.
39:10At the end of World War One, he wrote a book, The Economic Consequences
39:15of the Peace, and he said the peace treaty that the allies have signed
39:21against the axes is going to generate another world war.
39:26And he was right. We got World War Two. He wrote
39:33the Treatise on Money in 1930, extremely important contribution
39:40to monetary thought. And much of what becomes MMT is there
39:45in the Treatise on Money before the General Theory In 1926,
39:51he wrote a book, a very short book called The End of Laissez Faire.
39:58What is a laissez faire? It's the theory we were talking about earlier that free markets are the solution to everything.
40:04In 1926, Keynes writes this book and he says it's just not true.
40:11And no economist really believes this. This is a political agenda.
40:17This is not an economic theory. It's a political agenda to remove the government
40:24and democratic governance from society. Okay. And he predicted that
40:33that we're going to go into a great crash, which is the Great Depression. Okay. So when the depression hits,
40:41Keynes realizes that his 1930 book
40:48was fatally flawed. He had not come up yet with
40:55what we would now call macroeconomics. So he knew the free market approach was wrong.
41:02So that branch of Smith was wrong, but he didn't know what to replace it with.
41:08The General Theory, he replaced it with the theory of effective demand,
41:14which is the basis for modern macroeconomics. And
41:20so to explain this really simply is difficult. But
41:26just as an example, he starts off the book this way. So the theory is
41:33that labor is, you know, like bananas or anything else.
41:38You have a supply of labor and you have a demand for labor. So despite labors, people who want to work
41:45and earn an income and the demand for labor is the firms that want to hire. And if the free market
41:51is allowed to work, then demand and supply. So we always have this
41:56cross of demand supply that will determine the wage and the wage
42:02will clear the labor market, which means anybody wants to work
42:09at the market wage will be able to get a job and so you'll have no unemployment
42:15and Pigou, who was a famous economist, had written a book
42:21at the beginning of the Depression saying, you know, the solution to the depression is just the wage fall.
42:28If wages fall, all those unemployed people will be able to get jobs. So the only reason that
42:34we have unemployment is the wage is too high. Okay? The problem is the wage was
42:40falling and unemployment was getting worse. So in the United States,
42:45the wage kept going down, prices kept falling and more
42:51and more people were losing their jobs. Okay. And it looked like
42:56if we let the market work, we would end up with nobody has a job and nothing is produced.
43:02So Keynes says that theory has to be wrong. Okay? Falling wages
43:09is not the solution. Okay? Why doesn't it work? Because if wages go down,
43:14people have less income to spend. If they have less income to spend,
43:20then firms can't sell as much. If firms can't sell as much,
43:25they're going to lay workers off. So falling wages actually reduce employment.
43:32The problem with the theory was that it is,
43:38we would say, micro based. It ignores what happens
43:44when wages go down. It looks only at the labor market. It doesn't look at what happens
43:49to people's spending if their wages go down. So in technical terms,
43:54we would say it's not independent of what goes on in other markets.
44:00Now, Keynes starts off talking about labor, but the argument can
44:06be extended generally to all markets. You can't do the supply
44:12and demand analysis. It's fundamentally flawed because it requires
44:18independence. What goes on in one market doesn't affect other markets and so
44:25what you need instead is to approach it from the macro view,
44:30from the view of the economy as a whole. Okay. And that's what macroeconomics does.
44:37Keynes talked about a fallacy of composition. You can't just add up
44:45from, you know, the decisions made by individuals
44:52to get what goes on in the economy as a whole. And so, again, just one more
44:59sort of technical explanation. It's called the Paradox of Thrift.
45:04Okay. So we're all told that saving is good, it's good for individuals
45:10to save for the future, and it's good for society to save for the future. Okay.
45:16So how do we say, well, we spend less? So what if everyone decided
45:23that tomorrow they're going to spend less because they want to save more? Because that's good for them.
45:28They get to save for their college education for them or their kids, or save to buy a house,
45:34save to buy a car. Okay. Well, if they spend less, that means that
45:40sales will be lower. If sales are lower then firms need fewer workers.
45:48If firms hire fewer workers, then less income is generated.
45:55And Keynes argued that we'll end up with no more saving
46:01because incomes will fall by enough to reduce total saving
46:08instead of increasing it. You as an individual, can choose to save more.
46:15Of course you can. You just skip McDonald's this week.
46:20But if we all do that, everyone's skipping McDonald's this week.
46:26McDonald's will have to lay workers off so their incomes will be lower
46:31and the savings of everyone who lost their job will be lower
46:37and offset your increase of saving. And that's why it won't work in the aggregate.
46:43That's why the supply and demand analysis is wrong, because it assumes your saving affects
46:49nobody else. But that's not true. And it effects
46:55receipts by the firms that are trying to sell output.
47:01So when you're in the car with mom and you're like, Oh please, we have to go to McDonald's on the way home.
47:07And mum says, No, we have food at home in the kitchen, So you're going to tank the economy! We have to go.
47:12That's very important. Go ahead and save, but you should feel guilty.
47:19So you heard it here, folks, right? Because our lives and our economy
47:25is interdependent and connected. The conventional supply and demand model
47:31just doesn't work. The thing that they try to force on us in any high school
47:37economics class or, you know, people love to say it's economics 101. Right? This model ignores
47:43that we are all part of a society and there's all these institutions that are connected.
47:48So I just think that's so important. One of the things I'm really interested in we're really interested
47:54in is how today people talk about Keynes and Keynesianism,
48:00but they think of it as having not changed since Keynes wrote,
48:06and they think of figures like Paul Krugman, even Larry Summers.
48:12And there's this straight line as if all scholars
48:17or thinkers who are influenced by Keynes are the same. Can you tell us how that trajectory
48:24played out to where these figures that we now think are Keynesians
48:29came to think how they do and then where the other branch leads to, which thinks about
48:36other schools of thought? The American Institutionalists that you mentioned, even the things
48:42Marx was saying and that story and this divergence. Yeah. So economics
48:48is very unusual as a discipline. If you look at other social sciences,
48:54also the hard sciences, there are different approaches. So in political science
49:01you would study of variety of approaches. When you
49:06are in a college class. Same would be true in psychology,
49:11the same would be true in political science. So there would be different approaches
49:17to studying society from that perspective of political science, sociology, anthropology,
49:22and so on. Economics is very strange. In the vast
49:29majority of classrooms in the United States, you're going to get an economics textbook
49:36and it's going to present one approach. It's going to be the mainstream approach
49:43that has been true since the end of World War Two. So in the beginning,
49:49the first textbook was Paul Samuelson, and it presented a version of Keynes
49:57that accepted some parts of Keynes,
50:03but tried to marry it to that Neoclassical
50:08supply and demand approach. And it was
50:14always fundamentally flawed and incoherent because so you're learning
50:20what goes on at the micro level, and then you have sort of a theory of effective demand at the macro level.
50:26And the two really don't fit. And I
50:32so it sort of leads to two reactions. One is the people who actually read Keynes
50:39and they say, Oh but so much of this is not in Keynes.
50:44And what you're presenting is -- I am going to use a word
50:50I think it's okay bastardized because that's the term that was used by
50:56Joan Robinson, who was probably the greatest female economist
51:02and should have won a Nobel Prize. We encourage
51:08plurality of words here on Funny Money. So you're good. So anyway, she said well that's
51:14Bastard Keynesianism because
51:19we know who the mother was and that is Neoclassical economics, but we don't know who the father is.
51:25It's not Keynes. So that's why she called it that. And so she was
51:31sort of the leader of a splinter group of followers of Keynes.
51:37And they finally settled on calling themselves Post Keynesians because everybody's post Keynes,
51:42because Keynes is dead. It’s like B.C. before Christ
51:48BK, before Keynes. So it's going to be the people who
51:56try to stay true to the General Theory. Okay. And it has various
52:01branches too, which is fine. People go in slightly different ways, but they all accept
52:08the General Theory as the basis of the approach. And so they're
52:13distinguished from the Samuelson version
52:18of Keynes. But then there's another reaction against Samuelson,
52:23which is that, well, hold it. The macro is not consistent
52:30with the micro. The micro should be the foundations
52:35because so we've got a theory of how individuals behave and then we have a theory
52:41of how society behaves and those two aren't linked. So we need to link the two
52:46and so we need to get better micro foundations
52:52into our macro economics. And what that eventually leads to
52:57is completely throwing out Keynes because this cannot be done. You cannot have a Keynesian
53:04macro that's consistent with individual utility maximization
53:10It doesn't work. And so that led to sort of a a complete
53:17revolution or counter revolution in mainstream macro.
53:22They just throw Keynes out, okay? And that becomes the new mainstream theory.
53:30It's carried to an absurdity, absurd level
53:36called Rational Expectations. I don't want to get into the details, but it becomes just so obviously laughable
53:45that you have a guy named Robert Lucas who I think just died,
53:50got a Nobel Prize for arguing that all the people
53:55in those breadlines during the Great Depression were voluntarily unemployed.
54:03They chose not to work. Okay? They're maximizing
54:08their utility standing in the unemployed bread line to get a handout
54:14of a piece of bread and a cup of soup that was voluntary, not involvuntary unemployment. Okay?
54:21They voluntarily were not working. Anyway. Absurd.
54:26He got a Nobel Prize. Okay, but it becomes embarrassing when you argue such
54:32complete nonsense. And so you get a bit of a reaction against that.
54:38You try to make things a little bit more realistic, even though less coherent.
54:45And that is how you get a Paul Krugman. So these are the New Keynesians.
54:52They want to be able to say things that aren't completely ridiculous,
54:58but they don't embrace Keynes. So
55:03that finally becomes a massive consensus is built,
55:11which takes all the crazy ideas and then tries to add
55:17a few more sensible ideas. And that becomes the New Monetary Consensus.
55:23That is now the dominant. And that is the only thing that is taught
55:28in most classrooms in the United States. Okay. So that's what's so strange
55:33about this discipline economics. You get no variety.
55:39if you as a student try to talk to your teacher about Keynes or Marx,
55:45they all say, we don't do that. Okay, that is not allowed in our classroom.
55:52All right. So it's very strange.
55:59How did we get in that position? I'm not quite sure why.
56:05Economics is not like other disciplines, why it's completely intolerant of any ideas that challenge
56:14this mainstream view. That doesn't mean that alternatives don't exist.
56:19I'm just saying they're not taught. Okay, So there are heterodox economics,
56:26heterodox economists who take either Keynes
56:32or Marx or both of them as fathers of their approach,
56:39and they try to extend the thought and use it for economic analysis.
56:46And the various groups are, as you said, Institutionalists, Post Keynesians,
56:53Marxists and sub branches of each of those.
56:59And then finally, Modern Money Theory is also a heterodox approach
57:05that takes good ideas from a variety of approaches. So can you tell us
57:10a little bit of that story? How did we get to MMT? And now I feel like we're all coming
57:16full circle now. That was such a brilliant exposé of the history of these
57:22these different ideas and how they developed these traditions. How then did we get to MMT, to Modern Monetary Theory?
57:29Well, the people who contributed to the development
57:35all had backgrounds in these heterodox approaches.
57:43I had background in Post Keynesian Institutionalist and Marxist
57:49Bill Mitchell more heavily
57:54in Marxist and Post Keynesian.
58:01Stephanie studied with me in the beginning and with John Henry, so she also was exposed
58:07to all three of these approaches. And so we are
58:12out there, we're doing heterodox economics and
58:19Bill did more labor economics. Stephanie and I were doing
58:25more monetary economics and there was a post Keynesian
58:33thought discussion group. I don't remember what year, but very early nineties
58:39that had most of the well-known post Keynesians,
58:46quite a few Marxists, some Austrians and other people
58:52who deviated from the mainstream on this discussion group.
58:59And in January of 1996, this hedge fund guy named Warren Mosler came on.
59:05And I think that's where we would date the beginning. It was the day
59:11that Warren came on the discussion group and started
59:19posting these comments that,
59:24you know, on the surface appear very strange. But
59:30many of us recognized that what he was saying,
59:35maybe you use different words, but it was correct. And
59:42so some of the discussion continued to take place on the PKT,
59:49but there was a lot of hostility to it. And so most of my discussion
59:55with them took place off It and whatever that very early version of email was
1:00:03and and Bill Mitchell was there an active
1:00:12even more active than I was by that time. Stephanie was there in the background, but
1:00:20within a year or so we were talking
1:00:26each other offline and I don't remember, but I think I probably met Bill in person
1:00:31at the, main American Economics Association meetings in January,
1:00:37maybe in 97, If it wasn’t 97, it was 98. I met Bill in person
1:00:44and we started we created a center at UMKC,
1:00:49and he created a center in Australia and we started trying
1:00:55to promote the ideas. So that
1:01:01where it began. So before we get to our last question
1:01:07and kind of wrap up a little bit, we have a clip you might recognize one of the people in it.
1:01:13Mike, can we cue it up? Does the Green New Deal add up as the top priority?
1:01:19And I'd start with Mr.. Let me start with you. What would it cost?
1:01:25It depends on what you include in the Green New Deal. Say pick a number. Okay. Well, I can say the complete
1:01:32package of greening programs could be as much as 5% of GDP for the next ten years.
1:01:38Which is give me a number. Just pick a number
1:01:43because I've heard $73 trillion. I've heard.
1:01:48No. Not that. So, Professor Wray, do all great economic thinkers also have to have
1:01:54great beards? That that actually was also before COVID,
1:02:01too. To wrap it up and unpack what's in that question. Right. Why is MMT important
1:02:10for the many crises that we are facing today? You were on that committee.
1:02:15They were talking about climate, right? Why do people like us insist so much with this theory,
1:02:23with this framework and perspective? So occasionally the
1:02:28Democrats do propose very good policies and
1:02:35the Green New Deal, Biden's Build Back Better
1:02:40had good components in those things. And what we consistently see
1:02:46that kills them is the pay for. So that that I think that was a Republican answer
1:02:52asking that question but you know well what does it cost right So they're always going to ask
1:02:58that question. And the the Democrats
1:03:04will then have to come up with some tax.
1:03:09And when you tie good progressive policies
1:03:15to new taxes, you've sort of doubled the opposition.
1:03:22So you've already got opposition to good progressive policies because there are
1:03:27many conservatives who do not want those policies. They don't want policies
1:03:33that would improve the lives of most Americans. That's just not in their interest.
1:03:39You know, they they have their constituency and that is not it. Their constituency
1:03:44might be Wall Street, it might be the military industrial complex. It is not American
1:03:50living standards. So they're going to oppose it quite naturally. And so you've got opposition
1:03:57and then you add a tax. Well, you know, there's nobody who really likes
1:04:04more taxes, at least on themselves. And
1:04:09Americans traditionally have been very peculiar
1:04:16because they would even oppose taxes on high income people. And when you dig
1:04:22deeper, it's because a lot of them bought this American dream,
1:04:29well, I might be rich someday and I would hate to pay higher taxes.
1:04:36So I oppose taxing the rich more. And so
1:04:41this plays into the hands of conservatives. Now, I think it's much less true now
1:04:48because the the hopes of Americans have been pretty well squashed by 50 years
1:04:56of Neoliberalism. So I think most Americans recognize
1:05:01that that American dream, if it ever was
1:05:06true, is no longer true. You're not going to become rich. Okay?
1:05:12We do not have more social mobility than Europe. You know, we've always thought we did,
1:05:18but it's just not true. Americans are not more likely
1:05:24to move up the ladder, and it's become increasingly hard for each
1:05:29succeeding generation to move up. In all likelihood,
1:05:35you're going to live worse than your parents did, and Americans are starting to recognize that.
1:05:40But you still are going to have lots of opposition to tax increases. And
1:05:46I that the truth is that taxing the rich doesn't help
1:05:52something like the Green New Deal anyway, but that's a different topic we could go into.
1:05:58So anyway you've doubled the opposition when you tie
1:06:04the two things together. So what we need do is,
1:06:09get rid of this notion that you need to pay for spending by
1:06:16by matching tax revenue to the spending. And we do not need to
1:06:23balance the budget. We do not need to limit the debt,
1:06:29which is a huge issue now that is being used as an excuse
1:06:34to cut the social safety net, to reduce Medicare, Medicaid and Social Security.
1:06:42So what MMT is trying to do is to change
1:06:48the understanding and to change the focus of the debate
1:06:54around pay fors and
1:06:59balanced budgets to recognizing that money is never the issue.
1:07:05If you issue your own currency, finance is not the problem.
1:07:11The problem is resources. So in the case of the Green New Deal
1:07:16and what I was trying to get at at that meeting of the Budget
1:07:23Committee is the only question that's important is can we find the resources.
1:07:30So for the Green New Deal, can we find the resources
1:07:35to completely restructure our economy, to make it
1:07:42economically, socially and environmentally sustainable? Because right now all three of those
1:07:48in all three ways, we have a completely unsustainable
1:07:54society. We will not survive. So the question is,
1:08:01do we have the know how and do we have the resources to completely restructure
1:08:08the economy? And the answer to both those is yes, we do.
1:08:13And I'm not an environmental scientist, but the environmental scientists
1:08:18seem to say that, yeah, we have the technical know how. And, you know, if we come up against things
1:08:24that we don't know how to do, we can figure it out. Do we have the resources?
1:08:29Well, it looks like we do. We certainly have enough labor.
1:08:36There may be some questions about, you know, can we find the lithium
1:08:41we need for batteries and so on, and we've got to release those resources.
1:08:48One of the books by Keynes that I forgot to mention earlier, 1940,
1:08:54he wrote a book, How to Pay for the War. So think about 1940. Okay.
1:08:59World War Two and
1:09:05countries that in the past had engaged in big wars
1:09:12always had high inflation. World War One, Britain had high inflation.
1:09:18World War One wasn't so big for the United States, but the Civil War was a big war. High inflation.
1:09:23Revolutionary War, high inflation. So Keynes wrote a book to prevent
1:09:29that from happening. So he titles it How to Pay for the War.
1:09:34And it sounds like he's asking, where will we find the money? But that's not it at all. He wasn't worried about that
1:09:40at all. He was worried about the resources. How will we find the resources
1:09:46to devote to the war effort? And he laid out the strategy. So he said money is not problem.
1:09:52What we need to do is release resources from current use
1:09:57and move those to the war effort. So he talked about the role of taxes, not to
1:10:04create money to spend, but to reduce private consumption.
1:10:10He talked about the role of selling bonds not because the government's going to borrow money,
1:10:16because it can't borrow its own money, but because he wanted you to save
1:10:23so that you wouldn't be buying output. And then rationing and wage
1:10:28or price controls. So he set out the strategy. And for the most part,
1:10:34the UK followed it and so did the United States. We used all of those methods
1:10:40and both of us managed to get through World War Two with relatively low inflation.
1:10:45It worked. But anyway, what I'm saying is we need the same sort of strategy for the Green New Deal,
1:10:51for Build Back Better for Reparations for African Americans
1:10:58and Native Americans. All of these are the same question. It's not the dollars, it's
1:11:05how do we find the resources? So I'm sure you know, Sandy Darity’s
1:11:11work on reparations. And people went, Oh no. $800,000 to every
1:11:18descendant of African slaves.
1:11:23They're going to spend all that money and we're going to get massive inflation, you know, or where we find the money to give it to them?
1:11:28No the question is just how can we allow African-Americans
1:11:35who are descendants of slavery and have faced discrimination
1:11:40for 400 years, how are we going to allow them to share
1:11:45in an American living standard? Okay. It's a matter of finding the resources.
1:11:51That's the only question that matters. Thank you so much, Professor Wray. This has been really great.
1:11:58There's just so much to take away from everything you've said here, and I feel like we could talk for hours and hours and hours.
1:12:04But seriously, your contributions to MMT and just the field of economics are great, and the way
1:12:10you explain things I think will help a lot of people understand things that they didn't before. A lot of this stuff
1:12:15I always say should be taught in K-through-12 education, and it's a crime that it's not. So thank you.
1:12:22And that's why we have the cartoon book. It may be too difficult for kindergarten,
1:12:28but it's going to be fine for fourth, fifth, sixth grade on up.
1:12:35You got to start them early, five years old learning about tally sticks. That's the only way to go.
1:12:40Professor Wray, thank you so much as well. This has been a fantastic conversation and we hope to
1:12:45see you again soon. Okay. Thanks a lot. All right.
4:02Mesopotamia is very unusual because it provides
4:08about 10,000 years of evidence for the evolution
4:15of writing. If we go back to 8000 B.C., so that's 10,000 years ago.
4:22What archeologists have found is these little tokens,
4:28and there are about 300 different kinds of tokens that have been found.
4:33The tokens look sort of like what they're supposed to represent. And so you have a token
4:39for a goat, you have a token that represents sheep and so on. And a bit later than that,
4:47they started producing these clay balls and they would push the
4:52tokens inside. And so it seems they were keeping track of something.
4:59Exactly what we don't know, except that we do know what each token represents.
5:04And you would have to break open the ball to see what tokens were inside.
5:09And so it seems that that was a disadvantage having to break the ball open.
5:15So they started pushing the tokens into the ball to make an imprint
5:20on the outside and then poking them through a hole. So the tokens would still be in the ball.
5:26But you had a record of what tokens were inside the ball,
5:32so you weren't required to break the ball open, but you could finally, in the end,
5:37break the ball and make sure that the record on the outside matches
5:43the record kept in terms of tokens on the inside. Then they
5:49had the technological innovation of saying, you know, we don't really need the ball
5:55and we don't need a whole bunch of tokens. We can press a cow
6:00token into a piece of clay four times to represent four cows
6:06and so on. And so around 3200 B.C., they dropped the balls
6:11and they just used rectangular pieces of clay and push a token into that.
6:17And the clay rectangle that we're showing here, 3200 years ago,
6:24there are two different kinds of things being represented
6:30on this clay record. Around 3000 B.C., there was another
6:35technological innovation. They realized you don't actually have to make the tokens. You can use a stylus to draw
6:43the token on a piece of clay, and then of course, you let it harden. And so that occurs
6:49around 3000 B.C. and that continually evolves to the point of
6:57just 300 years later, 2700 B.C., we start to see clay tablets
7:02that look an awful lot like the more modern clay shubati tablets
7:10on which cuneiform writing starts to appear not too long after that.
7:17Okay. And so we have this historical record. So if you look at the period
7:22from 2700 B.C. to 8000 B.C., more than 5000 years,
7:29all the records of writing that you find have something in common:
7:36they are keeping track of debts
7:41and so I always joke writing was not invented by poets.
7:48Writing was invented by accountants for keeping records,
7:53keeping track. and why do I say debts? It's true that we do not know
8:00that those clay balls were representing a debt of a certain number of cows.
8:07But we can read the modern ones because the cuneiform
8:13writing developed out of these token imprints in clay, there's a direct progression
8:19of the writing. It becomes more stylized, but we can read it and so we can speculate that
8:26probably from the very beginning these were keeping track of debt. So finally,
8:31around 2500 B.C., we start to get writing That is not record keeping
8:37where it is of a religious nature in the beginning, and then finally they develop literary texts.
8:441,000 years later around 1500 B.C., the alphabet is invented
8:50and now we get writing that is much more like human language. The earlier writing is not at all
8:56but modern writing with alphabets. They're trying to write down
9:01words as we speak them. Okay, let's skip to the final slide for this
9:09part of the discussion. So what we find is debt
9:16records kept on clay tablets. Now, that's Mesopotamia.
9:22When we look at Europe as far as we can tell, money doesn't go back nearly so far.
9:28And the medium that was used or you could say the technology for keeping the records
9:34was very different. It was notches in sticks called tally sticks.
9:40We still use the term tally. You tally up your bill at the end of your meal
9:45and they would cut little hash marks across the surface of the stick.
9:51That was called a score in the case of a score that's worth 20, say,
9:58£20 in Europe. And this is how they kept
10:05records of debts in Europe. And in spite of what people think
10:10most transactions by kings in Europe
10:17took place in tally sticks, not in coins. So most spending by the King
10:24took the form of issuing a tally stick. And we have this term raise a tally,
10:30which would be telling your Treasury Department the Exchequer to go cut some sticks
10:38so that the King could spend and the sticks would then be split in half.
10:45The king or his agent would keep half one of the halves and the other half
10:50was given to the seller of something to the king.
10:56Then the king would collect those other halves in tax payment.
11:02The purpose of splitting the stick is to make sure that nobody was counterfeiting. The lines had to match up
11:09perfectly before the king would accept. The other half of the stick
11:16called the stub and the one half is called the stock. The other half is called the stub.
11:22We still use those terms as in ticket stubs in order to match, just like they do
11:27at the concert. Right. To make sure that you have not counterfeited. Okay, so that's the story
11:34of the origins of money and the origins of writing and the link between the two.
11:40I think a lot of people would be surprised when they hear this at first. I know I was because when I think
11:45of debt or accounting, I think the money comes first.
11:51First, you have to borrow money from someone else to be in any kind of debt. But that's not really
11:56how it works. Can you say more about the function of debt in a society
12:01and how that led to the creation of of money, as we might understand
12:06it today? Yeah. Well, there is a
12:12very common we say institution defining institution
12:17is different from the way people usually what you say, Well, my church is an institution. My school is an institution,
12:23but as a practice. So human practice that we find throughout
12:29tribal society. So humans lived in tribal society for the first million years,
12:37depending on how far you know, which species you want to count as humans.
12:42They lived in tribal societies and they had a practice that was named Weregild
12:49in the case of the German tribal society. Germans
12:54were still living in tribal society when Rome was civilized,
12:59and Roman scholars studied Germans to see how do people live in a tribal society.
13:06So the first anthropologists were studying German tribal society, and they found this
13:11practice called very guild, which is if I do something to injure a member
13:16of your family, I owe you. I owe your family.
13:22Say I accidentally kill your brother, then I owe your family.
13:28And they had a system of fines that would determine what I had to pay.
13:33So something like for a death, it would be significant. Here would be a cow
13:39or a horse or something like that. I would be in debt to you. You would be my creditor
13:45until I repaid my debt. Now, we are speculating
13:51if we carry this back and say, Oh, that's what those tokens were all about in ancient
13:57Mesopotamia, because we don't know for certain that that is what they were doing.
14:03But this practice of indebtedness is as old as humans.
14:09In fact, we know that chimpanzees have the notion of debt and credit.
14:16If I help defend you against some
14:21really mean chimpanzee, then you owe me. And if I'm challenged,
14:27you've got to repay that debt. So even animals have this notion
14:32of indebtedness. So the speculation is that probably this is where
14:39the notion of indebtedness comes from. Now,
14:44in tribal society, they don't have money. So the debt is always in terms of, well,
14:50for this infraction, I owe a goat. For that infraction, I owe a bushel of wheat.
14:56So there's a different item that needs to be delivered in payment
15:01for the particular injury that I caused. Money is a conceptual leap
15:08because we're going from a payment of a horse or a cow to a payment
15:13in terms of a unit of measurement, a money of account,
15:19and just as it took 10,000 years to develop writing,
15:24there's little doubt that it took thousands of years to develop this idea
15:30that, you know, I can measure different kinds of debts in the same measuring unit.
15:37Now, measuring units are also very old. You know, we've got the inch, we've got the foot,
15:43or in Europe, they got the meter, they got the centimeter. So units of measurement are
15:49much older than the money unit of measurement.
15:54And in fact, all the money, the early units of measurement
16:00of money were borrowed from the measurement for the most important grain:
16:07wheat or barley or rice, depending on which society you look at. And the word used
16:14would be the same as the word that was used for measuring a quantity of grain.
16:20And just think about it. What is the British money unit?
16:25It's called the pound. What was the Italian money unit before they joined the euro?
16:32The lira, which means pound. Okay, If we go back to Mesopotamia, it's the Mina. In the Bible,
16:38it's the Shekel. All of these are weight units. They got transformed
16:44into money units. So let's skip to the next slide.
16:51So what is money? Money is an IOU.
16:56It's a record of indebtedness. Okay? That's what all money is
17:02have in common. So it is a record of indebtedness that tally stick
17:07was a record of indebtedness. That clay shubati tablet was a record of indebtedness.
17:13Our $1 bill is a record of indebtedness.
17:18In the case of the $1 bill, who is in debt? Well, it's the U.S.
17:23government. And if you're holding a dollar bill, you're the creditor.
17:29That's kind of nice to think of, isn't it? The government owes you. You are the creditor.
17:37In the case of a bank check, If you write a check to your landlord,
17:44you are the debtor. Your bank is actually going to make the payment for you,
17:50but they are going to debit your bank account. So you are indebted
17:56and you're using the banks debt, which is a checking account
18:02at the bank, in order to make a payment to your landlord. And the way that it works is
18:09the bank will debit your demand deposit and credit the landlord's
18:14demand deposit. That's how payments are made. So let me tell you
18:22a story about the the earliest creation
18:27of paper money in the West. We can skip to the next slide.
18:34The Chinese invented paper money as just simply it's a way to record
18:40an IOU. Instead of recording it on a clay tablet or on a stick,
18:45you record it on a piece of paper. So the Chinese were doing that. And in the West
18:50we had not come up with that technological innovation yet. The American
18:56colonies were colonies of Britain and they were not allowed
19:01to issue coins. The British crown had a monopoly
19:07on coin issue. They wanted the American colonies to have to earn coins
19:13by shipping exports to Britain, because that was the whole reason for having a colony
19:20that you would be able to get the output of that colony. The colonists needed
19:26the British coins. It was their source of currency, but they were not allowed
19:32to issue their own coins. But the British,
19:37the colonial governments, were always short of money. They didn't have enough money.
19:42Mostly to defend the colonists against the
19:48Native Americans, against the French in Canada. And so they needed to provision
19:54their armies and they hit on a loophole.
19:59They couldn't issue coins, but there was no prohibition on issuing IOUs
20:06that were recorded on pieces of paper. And so the colonial legislatures,
20:12it turns out all 13 of them did this with various deviations.
20:19They would pass an act that allowed for
20:24the printing up of, say, 10,000 Virginia pounds.
20:30They were using the pound money account because, after all, we were British colonies.
20:36But these would be Virginia pounds, not British pounds. So they would issue
20:42the £10,000 of Virginia notes. A shilling is just a lower denomination of the pound.
20:48And at the same time the legislature would pass
20:54a new tax and it was called a redemption tax. And I'll get to why
21:00they called it that. And it would be expected to raise about £10,000
21:07of Virginia pounds over the course of a couple of years.
21:13So they would pass a law authorizing printing money. And at the same time,
21:19there would be a twin law that would authorize imposing a tax.
21:26Okay. So then the colony, the colonial government, would use that paper money
21:33in order to buy what it needed. In the case of this cartoon, it shows you that what
21:38the colonial government wanted was a mule and a wagon, so they would issue
21:44the paper money in order to purchase the the mule and the cart.
21:50Now, why would anyone sell their mule and cart
21:56for a piece of paper? Well, the reason was because they had to pay a tax,
22:02and the only way to get the money to pay the tax
22:07was either to sell something to the British king and get coins
22:13because you could pay your tax in coins. But that was hard to do. There weren't nearly enough coins,
22:19so you also could sell to the colonial government and get the paper money.
22:24That was much easier to do. So it turns out that about 75% of all the tax revenue
22:30came in the form of that paper money. About 25% came in the form of coins
22:37because they were much harder to get ahold of. Let's go to the next slide.
22:42So what did the colonial government do when they got that paper
22:48money back in tax payment? They burned it, all of it.
22:54We know that they burned all of it because they kept very careful records. When the money came back,
23:00they burned it. Why were they called redemption taxes? Because the money would
23:06be redeemed in paying taxes. And once redeemed,
23:12it would be destroyed. If you think about a free pizza coupon.
23:18So Joe's Pizzeria issues free pizza coupons to build up customers.
23:24When you go in with that free pizza coupon and you give it to Joe,
23:30you are redeeming the coupon. And we use that term, of course. And what does Joe
23:35do with the pizza coupon? Does he put it in the cash register? No, he burns it.
23:40So revenue is for redemption. It's for burning.
23:46That's what they did. And that is the fundamental principle
23:52of money IOUs. When you return them
23:57to the issuer, they are burnt. If you write IOU,
24:02a cup of sugar to your neighbor because you borrow a cup of sugar
24:07when you redeem yourself and take a cup of sugar back
24:13to the neighbor and they return the IOU,
24:18You don’t say, Oh boy, now I'm rich. I've got an IOU because it's your IOU. What you do
24:23is you tear it up and throw it away. Okay? So we're done with the slides.
24:29I love this story so much. It's one of my favorite stories because it makes so clear
24:36that a currency issuing government has to put the currency out there
24:42before they can tax it back. They spend and then tax. And with this misconception that the US government badly
24:49needs our tax dollars in order to have any money to spend on public programs. And that's
24:54just not how it works. And I think this story demonstrates that in such a more simple way.
24:59It's a little bit easier to understand. But I also like that it demonstrates
25:04in a way that the tally sticks doesn't where the tally sticks, it's like, okay,
25:10I have to have these tallies for the king and they have to match up at the end of the year. And I have to do this
25:15because this king has this great big army and controls what happens in the country, and it evokes people's
25:21biggest fears, I think, about ah we have this authoritarian
25:26who makes us use this currency and they can threaten us with violence if we choose to not use the currency
25:31and not pay the tax. But this story of the Virginia Pound shows, okay,
25:36we're trying to start a society from scratch, right? It's a colony. We need people to do jobs.
25:43We need people to grow food. We need people to run banks and schools. And this really shows
25:48how issuing the currency helped to mobilize resources and labor. And it really shows
25:54how money can be a tool of social organization. Just a tool to help our society function at all.
26:01So I just love everything we get out of this story, and it really demonstrates
26:06why a fiat currency might be preferable to alternatives. So can you say
26:12what happened? Like why did everyone adopt like a Medallist view
26:17of like a gold or silver backed currency or a Metallist view of money? Yeah, well,
26:23the short answer is that I think that it it fits
26:29with an anti-democratic. I mean, today we would say Neoliberal
26:35view. And I don't want to deny that
26:41there hasn't been a fascination with precious metals
26:46for a very long time. And I don't want to deny that precious metals
26:54were used in coinage because that is true. And so you can sort of
27:00get blinded by the gold. And gold is fascinating to people
27:06and the thing about metallic coins is they last a long time
27:13and they don't get destroyed in fire when all the revenue is paid.
27:18So with tally sticks, the British did exactly the same thing with tally sticks
27:24that the colonists were doing with paper money. They burned all of them. In fact, they burned down the House of Parliament
27:30in the 1840s when they were finally getting rid of tally sticks. The Treasury
27:37they called the Exchequer in Britain, hated the tally stick so much because it was a huge,
27:45time consuming process to match the stock and stub. So they were so happy
27:51they weren't going to have to deal with tally sticks anymore. They threw them all in the fire at the same time, burned down the house of Parliament
27:56is sort of funny, but it's true that metal was in coins
28:04and there's a very long story about why they did it,
28:09but that goes all the way back to the Greek city states where precious metal had a
28:17an appeal to people So lots of people
28:22think, well, you know, gold standards were normal that
28:28pegging your currency to a quantity of gold, but it's actually the exception.
28:34It's very rare. It really was the 19th century
28:39when a large number of the most developed countries
28:46established gold standards. They weren't natural, they were purposely established.
28:52And part of the reason for that was to constrain government and to try to
28:58make money operate as if the free market would work.
29:05So Karl Polanyi who's a very famous anthropologist and
29:11social scientist, makes this argument that this was intentional.
29:16It was trying to make money work as if it were a commodity.
29:22And what it actually did was severely constrain
29:27the governments ability to spend and made us rely more on the market
29:34and less on the government. So I think that it was an anti-democratic move.
29:41And if you look today at who calls for a return to the gold standard,
29:48it's going to be the free market, Austrian leaning,
29:54very conservative people like Ron Paul. I want to echo Jessica's
30:01appreciation and gratitude that you're giving us this historical story because that's just so rare in a lot
30:07of economic conversation these days. And I know a lot of our viewers and listeners,
30:13including my own father, shout out to Jaime, our history buffs and and this is just going to be
30:18right up their alley. So if we go now to to this place that you're speaking to.
30:24Right. The 19th into the 20th century, it's it's a perfect transition because we start to see
30:30like the formalization of economics as a discipline, as a field.
30:36And what they seem to be talking about at the time is focusing
30:41on the individual as this utility maximizing rational agent
30:47that is just encountering other individuals and trying to trade. And of course, if we aggregate this up,
30:53we can think about firms trying to compete and do the same thing. But, you know, markets are balancing
30:59themselves out that we even have a little graphic here that I think is kind of funny because
31:05if we can pull that up, Mike, There we go. Right. There is this idea that you hear
31:12from economists. Everything they say is supply and demand, right? If you if you teach a parrot economics,
31:17what they will say is supply and demand. So how then do we go
31:23from this view? Right. Which is very focused on the micro economy or
31:28micro foundations, as they say, to a more systemic perspective,
31:34which I think really places importance on what you're talking about, which is
31:40the role that society provisioning itself, the role that governments have in
31:46a system as a whole, or what we might call a macro economy. Yeah, well,
31:52so anyone who studied economics knows that Adam Smith is claimed to be the father of economics,
31:58and he's the father of two traditions, really. So one, is this
32:05what you called micro or individual based view of
32:10society, supply and demand, And
32:16pursuit of individual profit maximization and so on.
32:21And the notion of an “Invisible Hand”. Okay. And it's true that Smith
32:29seems to have mentioned invisible hand only twice, and it's not clear that he didn't mean God
32:35by that, but it's interpreted as he meant the market. The market is the
32:40invisible hand that sends you signals and you react to that. And that is supposed to lead
32:45to the best possible outcome for everybody. Okay, so there is that branch.
32:51The other branch was very skeptical of capitalism.
32:57Adam Smith said that, you know, the producers rarely meet
33:02except to conspire against the public. Okay. And he was very doubtful
33:09that capitalism actually was in the interests of the majority of people.
33:15He thought that factories tended to make workers very stupid because they had to do
33:21the same task over and over and over again. Okay. And so there is that tradition, too.
33:28These two traditions come to a head in the 1870s.
33:34So in the 1870s we get the development of what is called Neoclassical economics,
33:41and that is the free market branch. That's the small government branch,
33:47and that's the branch that wants to constrain the government and is going to promote
33:53things like the gold standard. Okay. The other side culminates
33:59in the development of Marxian economics, the Marxists. So Karl Marx wrote Capital
34:07and published in 1867, and that leads to an alternative view.
34:15It is focused on the economy as a whole. We could say that that is
34:20where macroeconomics came from. However,
34:26in the United States, Marxism is a bad word. And so
34:35we date the development of macroeconomics to John Maynard Keynes,
34:40who we can talk more about later. And it is a non
34:46Marxian approach to macro, but it's pretty easy to show
34:52that you can map the main ideas almost 1 to 1
34:58to the Marxist approach too. So this is an anti free
35:05market approach. It's looking at the macro, performance of the macro economy as a whole.
35:11Modern macro really comes out of Keynes, not out of Marx.
35:17And it rejects the idea that
35:23free markets act as if an invisible hand is guiding them.
35:28Now, somewhat surprisingly, if you look at economics in the United States
35:35at the end of the 19th century and in the
35:40beginning of the 20th century, this neoclassical version was
35:48thought to be the English economics. It's called political economy.
35:55Most economists in the United States were not Neoclassical economists.
36:01Keynes didn't exist yet, so they were not Keynesians,
36:07but they were Institutionalists. If you look at the founding
36:12of the top United States Economic Journal in the 1880s, the American
36:17Economic Review, that was an Institutionalist journal. So it really was not taking
36:23that Neoclassical path. Neoclassical economics took over
36:28in the United States much later after we had gone through a Keynesian period.
36:35So we were somewhat different. Institutionalists were interested
36:40in the business cycle and they were
36:47developing a different approach to economics, and they really were dominant
36:52in policymaking until believe it or not, President Kennedy.
36:59President Kennedy is when we got to the conversion over to Keynesian economics.
37:05So let's talk about Keynes for for a second here. Some would say that Keynes is like
37:10the Shakespeare of economics. And by some I mean Jessica and I who made that up yesterday.
37:16But, you know, he's seen as a figure that really influenced
37:22the conversation on economics. Can you tell us what some of his core and most important
37:27ideas are And if you could find value in Keynes, if you also care about class issues,
37:35workers from that more radical Marxist perspective as well? Okay. Well, so
37:43Keynes’s most famous book is 1936,
37:49and it's called The General Theory of Money, Interest and Employment. But keep in mind
37:54General Theory. What was he mimicking?
37:59Einstein The General Theory of Relativity. So what Keynes was doing
38:05for economics was what Einstein had done for physics and what
38:10Darwin had done for evolution. And those are the three
38:16greatest figures in science.
38:22Darwin, Keynes and Einstein. So I would say
38:27much more important than Shakespeare. Okay, it's nice, but
38:35Keynes is just much more important. All right. He is. In fact,
38:43if you look at all of his contributions, I would say it goes beyond Einstein and Darwin.
38:51Keynes was already famous when he wrote the General Theory.
38:57His dissertation, so his college dissertation
39:03was a complete rethinking of probability theory.
39:10At the end of World War One, he wrote a book, The Economic Consequences
39:15of the Peace, and he said the peace treaty that the allies have signed
39:21against the axes is going to generate another world war.
39:26And he was right. We got World War Two. He wrote
39:33the Treatise on Money in 1930, extremely important contribution
39:40to monetary thought. And much of what becomes MMT is there
39:45in the Treatise on Money before the General Theory In 1926,
39:51he wrote a book, a very short book called The End of Laissez Faire.
39:58What is a laissez faire? It's the theory we were talking about earlier that free markets are the solution to everything.
40:04In 1926, Keynes writes this book and he says it's just not true.
40:11And no economist really believes this. This is a political agenda.
40:17This is not an economic theory. It's a political agenda to remove the government
40:24and democratic governance from society. Okay. And he predicted that
40:33that we're going to go into a great crash, which is the Great Depression. Okay. So when the depression hits,
40:41Keynes realizes that his 1930 book
40:48was fatally flawed. He had not come up yet with
40:55what we would now call macroeconomics. So he knew the free market approach was wrong.
41:02So that branch of Smith was wrong, but he didn't know what to replace it with.
41:08The General Theory, he replaced it with the theory of effective demand,
41:14which is the basis for modern macroeconomics. And
41:20so to explain this really simply is difficult. But
41:26just as an example, he starts off the book this way. So the theory is
41:33that labor is, you know, like bananas or anything else.
41:38You have a supply of labor and you have a demand for labor. So despite labors, people who want to work
41:45and earn an income and the demand for labor is the firms that want to hire. And if the free market
41:51is allowed to work, then demand and supply. So we always have this
41:56cross of demand supply that will determine the wage and the wage
42:02will clear the labor market, which means anybody wants to work
42:09at the market wage will be able to get a job and so you'll have no unemployment
42:15and Pigou, who was a famous economist, had written a book
42:21at the beginning of the Depression saying, you know, the solution to the depression is just the wage fall.
42:28If wages fall, all those unemployed people will be able to get jobs. So the only reason that
42:34we have unemployment is the wage is too high. Okay? The problem is the wage was
42:40falling and unemployment was getting worse. So in the United States,
42:45the wage kept going down, prices kept falling and more
42:51and more people were losing their jobs. Okay. And it looked like
42:56if we let the market work, we would end up with nobody has a job and nothing is produced.
43:02So Keynes says that theory has to be wrong. Okay? Falling wages
43:09is not the solution. Okay? Why doesn't it work? Because if wages go down,
43:14people have less income to spend. If they have less income to spend,
43:20then firms can't sell as much. If firms can't sell as much,
43:25they're going to lay workers off. So falling wages actually reduce employment.
43:32The problem with the theory was that it is,
43:38we would say, micro based. It ignores what happens
43:44when wages go down. It looks only at the labor market. It doesn't look at what happens
43:49to people's spending if their wages go down. So in technical terms,
43:54we would say it's not independent of what goes on in other markets.
44:00Now, Keynes starts off talking about labor, but the argument can
44:06be extended generally to all markets. You can't do the supply
44:12and demand analysis. It's fundamentally flawed because it requires
44:18independence. What goes on in one market doesn't affect other markets and so
44:25what you need instead is to approach it from the macro view,
44:30from the view of the economy as a whole. Okay. And that's what macroeconomics does.
44:37Keynes talked about a fallacy of composition. You can't just add up
44:45from, you know, the decisions made by individuals
44:52to get what goes on in the economy as a whole. And so, again, just one more
44:59sort of technical explanation. It's called the Paradox of Thrift.
45:04Okay. So we're all told that saving is good, it's good for individuals
45:10to save for the future, and it's good for society to save for the future. Okay.
45:16So how do we say, well, we spend less? So what if everyone decided
45:23that tomorrow they're going to spend less because they want to save more? Because that's good for them.
45:28They get to save for their college education for them or their kids, or save to buy a house,
45:34save to buy a car. Okay. Well, if they spend less, that means that
45:40sales will be lower. If sales are lower then firms need fewer workers.
45:48If firms hire fewer workers, then less income is generated.
45:55And Keynes argued that we'll end up with no more saving
46:01because incomes will fall by enough to reduce total saving
46:08instead of increasing it. You as an individual, can choose to save more.
46:15Of course you can. You just skip McDonald's this week.
46:20But if we all do that, everyone's skipping McDonald's this week.
46:26McDonald's will have to lay workers off so their incomes will be lower
46:31and the savings of everyone who lost their job will be lower
46:37and offset your increase of saving. And that's why it won't work in the aggregate.
46:43That's why the supply and demand analysis is wrong, because it assumes your saving affects
46:49nobody else. But that's not true. And it effects
46:55receipts by the firms that are trying to sell output.
47:01So when you're in the car with mom and you're like, Oh please, we have to go to McDonald's on the way home.
47:07And mum says, No, we have food at home in the kitchen, So you're going to tank the economy! We have to go.
47:12That's very important. Go ahead and save, but you should feel guilty.
47:19So you heard it here, folks, right? Because our lives and our economy
47:25is interdependent and connected. The conventional supply and demand model
47:31just doesn't work. The thing that they try to force on us in any high school
47:37economics class or, you know, people love to say it's economics 101. Right? This model ignores
47:43that we are all part of a society and there's all these institutions that are connected.
47:48So I just think that's so important. One of the things I'm really interested in we're really interested
47:54in is how today people talk about Keynes and Keynesianism,
48:00but they think of it as having not changed since Keynes wrote,
48:06and they think of figures like Paul Krugman, even Larry Summers.
48:12And there's this straight line as if all scholars
48:17or thinkers who are influenced by Keynes are the same. Can you tell us how that trajectory
48:24played out to where these figures that we now think are Keynesians
48:29came to think how they do and then where the other branch leads to, which thinks about
48:36other schools of thought? The American Institutionalists that you mentioned, even the things
48:42Marx was saying and that story and this divergence. Yeah. So economics
48:48is very unusual as a discipline. If you look at other social sciences,
48:54also the hard sciences, there are different approaches. So in political science
49:01you would study of variety of approaches. When you
49:06are in a college class. Same would be true in psychology,
49:11the same would be true in political science. So there would be different approaches
49:17to studying society from that perspective of political science, sociology, anthropology,
49:22and so on. Economics is very strange. In the vast
49:29majority of classrooms in the United States, you're going to get an economics textbook
49:36and it's going to present one approach. It's going to be the mainstream approach
49:43that has been true since the end of World War Two. So in the beginning,
49:49the first textbook was Paul Samuelson, and it presented a version of Keynes
49:57that accepted some parts of Keynes,
50:03but tried to marry it to that Neoclassical
50:08supply and demand approach. And it was
50:14always fundamentally flawed and incoherent because so you're learning
50:20what goes on at the micro level, and then you have sort of a theory of effective demand at the macro level.
50:26And the two really don't fit. And I
50:32so it sort of leads to two reactions. One is the people who actually read Keynes
50:39and they say, Oh but so much of this is not in Keynes.
50:44And what you're presenting is -- I am going to use a word
50:50I think it's okay bastardized because that's the term that was used by
50:56Joan Robinson, who was probably the greatest female economist
51:02and should have won a Nobel Prize. We encourage
51:08plurality of words here on Funny Money. So you're good. So anyway, she said well that's
51:14Bastard Keynesianism because
51:19we know who the mother was and that is Neoclassical economics, but we don't know who the father is.
51:25It's not Keynes. So that's why she called it that. And so she was
51:31sort of the leader of a splinter group of followers of Keynes.
51:37And they finally settled on calling themselves Post Keynesians because everybody's post Keynes,
51:42because Keynes is dead. It’s like B.C. before Christ
51:48BK, before Keynes. So it's going to be the people who
51:56try to stay true to the General Theory. Okay. And it has various
52:01branches too, which is fine. People go in slightly different ways, but they all accept
52:08the General Theory as the basis of the approach. And so they're
52:13distinguished from the Samuelson version
52:18of Keynes. But then there's another reaction against Samuelson,
52:23which is that, well, hold it. The macro is not consistent
52:30with the micro. The micro should be the foundations
52:35because so we've got a theory of how individuals behave and then we have a theory
52:41of how society behaves and those two aren't linked. So we need to link the two
52:46and so we need to get better micro foundations
52:52into our macro economics. And what that eventually leads to
52:57is completely throwing out Keynes because this cannot be done. You cannot have a Keynesian
53:04macro that's consistent with individual utility maximization
53:10It doesn't work. And so that led to sort of a a complete
53:17revolution or counter revolution in mainstream macro.
53:22They just throw Keynes out, okay? And that becomes the new mainstream theory.
53:30It's carried to an absurdity, absurd level
53:36called Rational Expectations. I don't want to get into the details, but it becomes just so obviously laughable
53:45that you have a guy named Robert Lucas who I think just died,
53:50got a Nobel Prize for arguing that all the people
53:55in those breadlines during the Great Depression were voluntarily unemployed.
54:03They chose not to work. Okay? They're maximizing
54:08their utility standing in the unemployed bread line to get a handout
54:14of a piece of bread and a cup of soup that was voluntary, not involvuntary unemployment. Okay?
54:21They voluntarily were not working. Anyway. Absurd.
54:26He got a Nobel Prize. Okay, but it becomes embarrassing when you argue such
54:32complete nonsense. And so you get a bit of a reaction against that.
54:38You try to make things a little bit more realistic, even though less coherent.
54:45And that is how you get a Paul Krugman. So these are the New Keynesians.
54:52They want to be able to say things that aren't completely ridiculous,
54:58but they don't embrace Keynes. So
55:03that finally becomes a massive consensus is built,
55:11which takes all the crazy ideas and then tries to add
55:17a few more sensible ideas. And that becomes the New Monetary Consensus.
55:23That is now the dominant. And that is the only thing that is taught
55:28in most classrooms in the United States. Okay. So that's what's so strange
55:33about this discipline economics. You get no variety.
55:39if you as a student try to talk to your teacher about Keynes or Marx,
55:45they all say, we don't do that. Okay, that is not allowed in our classroom.
55:52All right. So it's very strange.
55:59How did we get in that position? I'm not quite sure why.
56:05Economics is not like other disciplines, why it's completely intolerant of any ideas that challenge
56:14this mainstream view. That doesn't mean that alternatives don't exist.
56:19I'm just saying they're not taught. Okay, So there are heterodox economics,
56:26heterodox economists who take either Keynes
56:32or Marx or both of them as fathers of their approach,
56:39and they try to extend the thought and use it for economic analysis.
56:46And the various groups are, as you said, Institutionalists, Post Keynesians,
56:53Marxists and sub branches of each of those.
56:59And then finally, Modern Money Theory is also a heterodox approach
57:05that takes good ideas from a variety of approaches. So can you tell us
57:10a little bit of that story? How did we get to MMT? And now I feel like we're all coming
57:16full circle now. That was such a brilliant exposé of the history of these
57:22these different ideas and how they developed these traditions. How then did we get to MMT, to Modern Monetary Theory?
57:29Well, the people who contributed to the development
57:35all had backgrounds in these heterodox approaches.
57:43I had background in Post Keynesian Institutionalist and Marxist
57:49Bill Mitchell more heavily
57:54in Marxist and Post Keynesian.
58:01Stephanie studied with me in the beginning and with John Henry, so she also was exposed
58:07to all three of these approaches. And so we are
58:12out there, we're doing heterodox economics and
58:19Bill did more labor economics. Stephanie and I were doing
58:25more monetary economics and there was a post Keynesian
58:33thought discussion group. I don't remember what year, but very early nineties
58:39that had most of the well-known post Keynesians,
58:46quite a few Marxists, some Austrians and other people
58:52who deviated from the mainstream on this discussion group.
58:59And in January of 1996, this hedge fund guy named Warren Mosler came on.
59:05And I think that's where we would date the beginning. It was the day
59:11that Warren came on the discussion group and started
59:19posting these comments that,
59:24you know, on the surface appear very strange. But
59:30many of us recognized that what he was saying,
59:35maybe you use different words, but it was correct. And
59:42so some of the discussion continued to take place on the PKT,
59:49but there was a lot of hostility to it. And so most of my discussion
59:55with them took place off It and whatever that very early version of email was
1:00:03and and Bill Mitchell was there an active
1:00:12even more active than I was by that time. Stephanie was there in the background, but
1:00:20within a year or so we were talking
1:00:26each other offline and I don't remember, but I think I probably met Bill in person
1:00:31at the, main American Economics Association meetings in January,
1:00:37maybe in 97, If it wasn’t 97, it was 98. I met Bill in person
1:00:44and we started we created a center at UMKC,
1:00:49and he created a center in Australia and we started trying
1:00:55to promote the ideas. So that
1:01:01where it began. So before we get to our last question
1:01:07and kind of wrap up a little bit, we have a clip you might recognize one of the people in it.
1:01:13Mike, can we cue it up? Does the Green New Deal add up as the top priority?
1:01:19And I'd start with Mr.. Let me start with you. What would it cost?
1:01:25It depends on what you include in the Green New Deal. Say pick a number. Okay. Well, I can say the complete
1:01:32package of greening programs could be as much as 5% of GDP for the next ten years.
1:01:38Which is give me a number. Just pick a number
1:01:43because I've heard $73 trillion. I've heard.
1:01:48No. Not that. So, Professor Wray, do all great economic thinkers also have to have
1:01:54great beards? That that actually was also before COVID,
1:02:01too. To wrap it up and unpack what's in that question. Right. Why is MMT important
1:02:10for the many crises that we are facing today? You were on that committee.
1:02:15They were talking about climate, right? Why do people like us insist so much with this theory,
1:02:23with this framework and perspective? So occasionally the
1:02:28Democrats do propose very good policies and
1:02:35the Green New Deal, Biden's Build Back Better
1:02:40had good components in those things. And what we consistently see
1:02:46that kills them is the pay for. So that that I think that was a Republican answer
1:02:52asking that question but you know well what does it cost right So they're always going to ask
1:02:58that question. And the the Democrats
1:03:04will then have to come up with some tax.
1:03:09And when you tie good progressive policies
1:03:15to new taxes, you've sort of doubled the opposition.
1:03:22So you've already got opposition to good progressive policies because there are
1:03:27many conservatives who do not want those policies. They don't want policies
1:03:33that would improve the lives of most Americans. That's just not in their interest.
1:03:39You know, they they have their constituency and that is not it. Their constituency
1:03:44might be Wall Street, it might be the military industrial complex. It is not American
1:03:50living standards. So they're going to oppose it quite naturally. And so you've got opposition
1:03:57and then you add a tax. Well, you know, there's nobody who really likes
1:04:04more taxes, at least on themselves. And
1:04:09Americans traditionally have been very peculiar
1:04:16because they would even oppose taxes on high income people. And when you dig
1:04:22deeper, it's because a lot of them bought this American dream,
1:04:29well, I might be rich someday and I would hate to pay higher taxes.
1:04:36So I oppose taxing the rich more. And so
1:04:41this plays into the hands of conservatives. Now, I think it's much less true now
1:04:48because the the hopes of Americans have been pretty well squashed by 50 years
1:04:56of Neoliberalism. So I think most Americans recognize
1:05:01that that American dream, if it ever was
1:05:06true, is no longer true. You're not going to become rich. Okay?
1:05:12We do not have more social mobility than Europe. You know, we've always thought we did,
1:05:18but it's just not true. Americans are not more likely
1:05:24to move up the ladder, and it's become increasingly hard for each
1:05:29succeeding generation to move up. In all likelihood,
1:05:35you're going to live worse than your parents did, and Americans are starting to recognize that.
1:05:40But you still are going to have lots of opposition to tax increases. And
1:05:46I that the truth is that taxing the rich doesn't help
1:05:52something like the Green New Deal anyway, but that's a different topic we could go into.
1:05:58So anyway you've doubled the opposition when you tie
1:06:04the two things together. So what we need do is,
1:06:09get rid of this notion that you need to pay for spending by
1:06:16by matching tax revenue to the spending. And we do not need to
1:06:23balance the budget. We do not need to limit the debt,
1:06:29which is a huge issue now that is being used as an excuse
1:06:34to cut the social safety net, to reduce Medicare, Medicaid and Social Security.
1:06:42So what MMT is trying to do is to change
1:06:48the understanding and to change the focus of the debate
1:06:54around pay fors and
1:06:59balanced budgets to recognizing that money is never the issue.
1:07:05If you issue your own currency, finance is not the problem.
1:07:11The problem is resources. So in the case of the Green New Deal
1:07:16and what I was trying to get at at that meeting of the Budget
1:07:23Committee is the only question that's important is can we find the resources.
1:07:30So for the Green New Deal, can we find the resources
1:07:35to completely restructure our economy, to make it
1:07:42economically, socially and environmentally sustainable? Because right now all three of those
1:07:48in all three ways, we have a completely unsustainable
1:07:54society. We will not survive. So the question is,
1:08:01do we have the know how and do we have the resources to completely restructure
1:08:08the economy? And the answer to both those is yes, we do.
1:08:13And I'm not an environmental scientist, but the environmental scientists
1:08:18seem to say that, yeah, we have the technical know how. And, you know, if we come up against things
1:08:24that we don't know how to do, we can figure it out. Do we have the resources?
1:08:29Well, it looks like we do. We certainly have enough labor.
1:08:36There may be some questions about, you know, can we find the lithium
1:08:41we need for batteries and so on, and we've got to release those resources.
1:08:48One of the books by Keynes that I forgot to mention earlier, 1940,
1:08:54he wrote a book, How to Pay for the War. So think about 1940. Okay.
1:08:59World War Two and
1:09:05countries that in the past had engaged in big wars
1:09:12always had high inflation. World War One, Britain had high inflation.
1:09:18World War One wasn't so big for the United States, but the Civil War was a big war. High inflation.
1:09:23Revolutionary War, high inflation. So Keynes wrote a book to prevent
1:09:29that from happening. So he titles it How to Pay for the War.
1:09:34And it sounds like he's asking, where will we find the money? But that's not it at all. He wasn't worried about that
1:09:40at all. He was worried about the resources. How will we find the resources
1:09:46to devote to the war effort? And he laid out the strategy. So he said money is not problem.
1:09:52What we need to do is release resources from current use
1:09:57and move those to the war effort. So he talked about the role of taxes, not to
1:10:04create money to spend, but to reduce private consumption.
1:10:10He talked about the role of selling bonds not because the government's going to borrow money,
1:10:16because it can't borrow its own money, but because he wanted you to save
1:10:23so that you wouldn't be buying output. And then rationing and wage
1:10:28or price controls. So he set out the strategy. And for the most part,
1:10:34the UK followed it and so did the United States. We used all of those methods
1:10:40and both of us managed to get through World War Two with relatively low inflation.
1:10:45It worked. But anyway, what I'm saying is we need the same sort of strategy for the Green New Deal,
1:10:51for Build Back Better for Reparations for African Americans
1:10:58and Native Americans. All of these are the same question. It's not the dollars, it's
1:11:05how do we find the resources? So I'm sure you know, Sandy Darity’s
1:11:11work on reparations. And people went, Oh no. $800,000 to every
1:11:18descendant of African slaves.
1:11:23They're going to spend all that money and we're going to get massive inflation, you know, or where we find the money to give it to them?
1:11:28No the question is just how can we allow African-Americans
1:11:35who are descendants of slavery and have faced discrimination
1:11:40for 400 years, how are we going to allow them to share
1:11:45in an American living standard? Okay. It's a matter of finding the resources.
1:11:51That's the only question that matters. Thank you so much, Professor Wray. This has been really great.
1:11:58There's just so much to take away from everything you've said here, and I feel like we could talk for hours and hours and hours.
1:12:04But seriously, your contributions to MMT and just the field of economics are great, and the way
1:12:10you explain things I think will help a lot of people understand things that they didn't before. A lot of this stuff
1:12:15I always say should be taught in K-through-12 education, and it's a crime that it's not. So thank you.
1:12:22And that's why we have the cartoon book. It may be too difficult for kindergarten,
1:12:28but it's going to be fine for fourth, fifth, sixth grade on up.
1:12:35You got to start them early, five years old learning about tally sticks. That's the only way to go.
1:12:40Professor Wray, thank you so much as well. This has been a fantastic conversation and we hope to
1:12:45see you again soon. Okay. Thanks a lot. All right.
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