A Nice Primer on Chartalism and MMT
The invaluable Cory Doctorow looks at the origin and meaning of money.
I’ve written about this earlier, but (unsurprisingly) Doctorow’s account is both clearer and more engaging.
The short version is that what we were all taught in elementary school, that money began when people found that barter was too inconvenient, is a lie.
There is no archeological or historical evidence of this ever happening.
Chartalism, on the other hand, posits that money was created by the central government to support its infrastructure, particularly a professional military.
In this system, the government demands taxes from the farmers using an token of value (money) using the threat of violence, who have to get this token from the soldiers who are paid.
In a remarkably shot period of time, money permeates the society.
We do have evidence, both archeological and historical, of this happening, as recently as the last century, where the British enforced a “Hut Tax”, where people under British colonial rule were forced into a money economy by being required to pay a tax to prevent their homes from being burnt down.
They would have to work for the British to get the money that they would pay to the British to keep their homes intact.
When you look at money this way, that money is an artifact of the needs of a government and ability of said government to use violence to pursue its interests, you end up with a very different view of money, one from which we get Modern Monetary Theory. (MMT)
The big change is that governments, at least those with their own currencies, are not currency users, they are currency issuers, and they create demand for this currency by using the power of the state.
It better represents the history, and better describes and predicts current and future events, than does the conventional monetary theory of Milton Friedman or Alan Greenspan.
MMT is associated with the left, because it tends to be more friendly to some level of deficit spending, but it is not necessarily so.
In any case, read Mr. Doctorow. It is a clear and refreshingly brief explanation of all of this.
