I’m curious as to how you see Hudson’s Superimperialism as an explanation and confirmation of MMT, rather than (as I have understood it) a negation (and furthermore how you interpret it as a Marxian/Marxist theory).
While MMT could theoretically work in a vacuum, was you’ve illustrated, I’ve come to understand the balance of payments issue absolutely critical to its stable functioning. International payments cannot be balanced vis a vis trading partners when a country continues creating money, even if such creation is balanced internally (or have I gotten this completely wrong?). That’s why I argue that MMT only “works” when applied to the USD, as it’s the only currency exempt from typical balance of payments considerations.
Superimperialism is Modern Monetary Theory, as in, its entire theoretical basis is the Modern theory of money which says money is a unit of account that governments can create and destroy at will, and can use to create targeted growth of the industrial economy. (And despite being called ‘Modern’, as detailed in Killing the Host it can actually trace its roots all the way back to ancient Mesopotamia, four thousand years ago).
This is completely contrary to neoliberal theory, in which money is a scarce resource whose properties and origins are completely mysterious and unrelated to governments - they’ll say something about trade originating in directly bartering goods, which eventually evolved into bartering goods for gold and silver due to convenience, or some other such counter-historical fairy story. Killing the Host has an excellent section on the real origin of money in the palace economies of ancient Babylon and Assyria.
A government can either use its ability to print money to fund industrial development, or, if it’s been hijacked by the power of financial capital, it can surrender its central bank to private control (as is the case with the Fed, or the Bank of England) which will print money to give to other private banks, for the purpose of making loans that strip money out of industry, inflate the prices of real estate, stocks and bonds, and grind the real economy down under the weight of unpayable debt and rent. There’s no alternative outside these two scenarios, either money is being mainly directed into the real economy or into the financial economy (with the addition that the rate of money printing may also change, as dictated by whoever controls the levers of power).
The actual process and results of this can only be explained by Modern Monetary Theory. Neoliberal theory has been developed by the financial captialists to “explain” why things must proceed as they have done, but this is purely obfuscation of the actual truth. Modern Monetary Theory also doesn’t make any prescriptions, it just describes how money is created and destroyed and the effects of the different methods by which governments can deploy money. Wielding money to create economic growth and increase material wealth is just the most obviously correct way to use this tool, for us workers.
Balance of payments has nothing directly to do with the supply of money. In a fair trade, the only thing that matters is the differential between the physical masses of goods flowing into and out of a country (specifically, the total true Marxist value of goods, i.e. the number of hours of labor time embodied by the goods, modified by the momentary fluctuations of supply and demand) - not the denomination of these goods in their respective local currencies.
The problem comes when money must be held aside while goods are in transit - the stability of the currency then becomes an issue if the goods of country A were exchanged for X of country B’s money, the goods are in transit for a month, and then when they arrive and the money is finally received there has been inflation and X of B no longer buys the equivalent (Marxist) value of A’s goods in the form of B’s goods. This time may be extended further if country B has a lack of goods that country A wants to buy immediately. Suddenly, the currency being held by an external party is no longer just an internal unit of account, but has become a financial asset.
Solving this problem is difficult, and dollar imperialism was kickstarted by the very fact that US dollars were extremely stable in the 50s thanks to the guaranteed basket of goods that dollars could buy from the huge industrial economy of the US. The US then leveraged this demand for US dollars that let it pay other nations with its own IOUs to be able to encircle the world with its military forces, and finally locked this advantage in place by forcing countries to take loans denominated in dollars from the IMF.
The problem with the US is specifically that it prevents other countries from using MMT. Many Global South countries could easily become food self-sufficient if they were permitted to use government spending to develop food agriculture, but they are forbidden from doing so, because that would deprive the US of the ability to sanction and starve them if they step out of line. Thus, they’re beholden to obtaining dollars only because of the time gap between the US cutting off their food and their own agriculture reaching the level that it can provide for their population.
And likewise, many other industries for finished goods could be built up in these nations, but instead are suppressed so that their natural resources can only be shipped out as raw materials. If the governments could print and deploy money for their own purposes, they could build factories and employ workers in these industries, generating wealth for the country - but they’re prevented from doing so by IMF edicts.
BRICS have held talks on finding an alternative to the dollar for international trade, such as an international bank with the ability to issue ‘bancors’, but there has been little progress so far. But in principle, as long as goods can be traded fairly on the world market, a country using MMT to mobilize its own economy internally should have no effect on its ability to trade.
You do raise the point that there may be difficulties for countries lacking key resources that would then have to rely heavily on trade, though this is only a complication and not a dead end, and there are many other countries that clearly have the size and resources to become self-sufficient and prosperous but are not allowed to do so - think of many huge Central African nations with very rich reserves of both minerals and energy which they could be using to build their own economies, but instead hand over to the Global North.
The other problem here would be a slow start to industrialization if the tool base has to be developed from the ground up in countries with basically no factories or machinery at all, but here again China is offering developmental loans (functionally, access to industrial machinery and infrastructure building) to kick-start this process.
I’m curious as to how you see Hudson’s Superimperialism as an explanation and confirmation of MMT, rather than (as I have understood it) a negation (and furthermore how you interpret it as a Marxian/Marxist theory).
While MMT could theoretically work in a vacuum, was you’ve illustrated, I’ve come to understand the balance of payments issue absolutely critical to its stable functioning. International payments cannot be balanced vis a vis trading partners when a country continues creating money, even if such creation is balanced internally (or have I gotten this completely wrong?). That’s why I argue that MMT only “works” when applied to the USD, as it’s the only currency exempt from typical balance of payments considerations.
Superimperialism is Modern Monetary Theory, as in, its entire theoretical basis is the Modern theory of money which says money is a unit of account that governments can create and destroy at will, and can use to create targeted growth of the industrial economy. (And despite being called ‘Modern’, as detailed in Killing the Host it can actually trace its roots all the way back to ancient Mesopotamia, four thousand years ago).
This is completely contrary to neoliberal theory, in which money is a scarce resource whose properties and origins are completely mysterious and unrelated to governments - they’ll say something about trade originating in directly bartering goods, which eventually evolved into bartering goods for gold and silver due to convenience, or some other such counter-historical fairy story. Killing the Host has an excellent section on the real origin of money in the palace economies of ancient Babylon and Assyria.
A government can either use its ability to print money to fund industrial development, or, if it’s been hijacked by the power of financial capital, it can surrender its central bank to private control (as is the case with the Fed, or the Bank of England) which will print money to give to other private banks, for the purpose of making loans that strip money out of industry, inflate the prices of real estate, stocks and bonds, and grind the real economy down under the weight of unpayable debt and rent. There’s no alternative outside these two scenarios, either money is being mainly directed into the real economy or into the financial economy (with the addition that the rate of money printing may also change, as dictated by whoever controls the levers of power).
The actual process and results of this can only be explained by Modern Monetary Theory. Neoliberal theory has been developed by the financial captialists to “explain” why things must proceed as they have done, but this is purely obfuscation of the actual truth. Modern Monetary Theory also doesn’t make any prescriptions, it just describes how money is created and destroyed and the effects of the different methods by which governments can deploy money. Wielding money to create economic growth and increase material wealth is just the most obviously correct way to use this tool, for us workers.
Balance of payments has nothing directly to do with the supply of money. In a fair trade, the only thing that matters is the differential between the physical masses of goods flowing into and out of a country (specifically, the total true Marxist value of goods, i.e. the number of hours of labor time embodied by the goods, modified by the momentary fluctuations of supply and demand) - not the denomination of these goods in their respective local currencies.
The problem comes when money must be held aside while goods are in transit - the stability of the currency then becomes an issue if the goods of country A were exchanged for X of country B’s money, the goods are in transit for a month, and then when they arrive and the money is finally received there has been inflation and X of B no longer buys the equivalent (Marxist) value of A’s goods in the form of B’s goods. This time may be extended further if country B has a lack of goods that country A wants to buy immediately. Suddenly, the currency being held by an external party is no longer just an internal unit of account, but has become a financial asset.
Solving this problem is difficult, and dollar imperialism was kickstarted by the very fact that US dollars were extremely stable in the 50s thanks to the guaranteed basket of goods that dollars could buy from the huge industrial economy of the US. The US then leveraged this demand for US dollars that let it pay other nations with its own IOUs to be able to encircle the world with its military forces, and finally locked this advantage in place by forcing countries to take loans denominated in dollars from the IMF.
The problem with the US is specifically that it prevents other countries from using MMT. Many Global South countries could easily become food self-sufficient if they were permitted to use government spending to develop food agriculture, but they are forbidden from doing so, because that would deprive the US of the ability to sanction and starve them if they step out of line. Thus, they’re beholden to obtaining dollars only because of the time gap between the US cutting off their food and their own agriculture reaching the level that it can provide for their population.
And likewise, many other industries for finished goods could be built up in these nations, but instead are suppressed so that their natural resources can only be shipped out as raw materials. If the governments could print and deploy money for their own purposes, they could build factories and employ workers in these industries, generating wealth for the country - but they’re prevented from doing so by IMF edicts.
BRICS have held talks on finding an alternative to the dollar for international trade, such as an international bank with the ability to issue ‘bancors’, but there has been little progress so far. But in principle, as long as goods can be traded fairly on the world market, a country using MMT to mobilize its own economy internally should have no effect on its ability to trade.
You do raise the point that there may be difficulties for countries lacking key resources that would then have to rely heavily on trade, though this is only a complication and not a dead end, and there are many other countries that clearly have the size and resources to become self-sufficient and prosperous but are not allowed to do so - think of many huge Central African nations with very rich reserves of both minerals and energy which they could be using to build their own economies, but instead hand over to the Global North.
The other problem here would be a slow start to industrialization if the tool base has to be developed from the ground up in countries with basically no factories or machinery at all, but here again China is offering developmental loans (functionally, access to industrial machinery and infrastructure building) to kick-start this process.
Thank you for the detailed response, I genuinely appreciate and have come to a deeper understanding of the concepts.