It has been over four years since Stephanie Kelton, the vocal professor and champion of Modern Monetary Theory, publicly challenged me to “find the hole” in L. Randall Wray’s argument for “chartalism” (the claim that money is largely a state invention). Whereas I soon answered the challenge in the form of an article in the Quarterly Journal of Austrian Economics, Kelton did not respond. Instead, she skedaddled and pretended that a challenge was never posed.
What is interesting here is not Kelton failing her academic responsibility, but the failure of the whole MMT movement to defend chartalism, a core tenet of their framework, from my peer-reviewed take-down. Certainly, quite a few proponents of MMT have attacked both me and my article in ways that one should expect from political activists. They basically amount to online mudslinging, which is neither important nor interesting. But there are scholars in the MMT tradition too, albeit very few, who should both be interested in and have a responsibility to defend Kelton, Wray, and chartalism. But they are nowhere to be found.
In part, the lack of responses should probably be interpreted as acquiescence of the points I make. In my article, I take Wray’s argument as stated and assess it on its own merit. Simply put, I assess the logic of his argument, its internal consistency, and whether Wray makes a persuasive case. (Spoiler: he does not.) I find that Wray relies on examples that do not, per his own presentation of them, support his claims, that his recounting of monetary history is simply wrong and only works if one first accepts his conclusions, and that the overall argument suffers from several inconsistencies and contradictory statements. But I am sure there are weaknesses in my rebuttal and points to be made that can potentially save Wray’s chartalism from its terminal fate.
So where are those responses? My article has thus far been cited only three times and among those sources only one, an article written by Philip Armstrong, is an attempt at rebuttal. In his article, Armstrong attacks primarily what he believes is my position rather than recognizing that the article—my critique of Wray’s chartalism, in response to Kelton’s challenge—is a critical assessment of Wray’s argument. He is thus wide of the mark and ultimately fails to understand the nature of what he believes he is attacking. Armstrong’s failure here is symptomatic of how MMTers argue and why they are not and cannot be taken seriously.
Armstrong’s response starts “with a brief summary of the methodological commitments of the Austrian school contrasted with my reading of MMT,” as he puts it in the introduction. This would undoubtedly be relevant in a debate between MMT and Austrian economics. Perhaps he intended his response to be part of a greater MMT versus Austrian economics battle, which would explain why he refers to my critique of Wray’s argument as “Bylund’s Austrian approach.”
The problem here is that there is nothing about my critique of Wray’s argument that is particularly Austrian. Assessing an argument on its own merit is hardly an Austrian approach, although Austrians have always excelled at this particular activity. Böhm-Bawerk’s well-known takedown of Marx’s economics in Karl Marx and the Close of His System is a case in point.
While unfounded, Armstrong’s attempt to make my critique of Wray out as an “Austrian” critique serves several purposes. First, it suggests that my critique is invalid because it is a fallacy—it transposes a different framework in order to uncover flaws in the argument. (This fallacy is what critics of Austrian economics commonly are guilty of when they dismiss Austrian economics for its failed “predictions,” thereby assessing Austrian apriorism from the perspective of empirical Popperian testing.) Second, Armstrong deflects from the actual critique of Wray’s argument by making it out as merely a part of a greater debate in which the details of the critique should not be considered very important. And third, Armstrong can commit the fallacy by assessing my critiques of Wray’s argument not on their own merit but as parts of a supposed Austrian argument.
When Armstrong’s article was published in the Real World Economics Review, I congratulated him on producing the first serious attempt to rebut my critique but also questioned the relevance of discussing praxeology in it. I was told, by one of the MMT fan boys backing him up, that “it is relevant.” It certainly would be relevant if these three articles—Wray’s, mine, and Armstrong’s—are read as parts of an ongoing intellectual battle between MMT and Austrian economics. But that is hardly what Wray had in mind when publishing the original argument in an obscure but friendly journal—he cites no Austrian sources in his article. It certainly is not what I had in mind when responding to Kelton’s challenge and choosing to write up my critique as a journal article. The greater debate is all a figment of Armstrong’s imagination.
But it is not limited to Armstrong. The fact is that most, if not all, MMTers who have commented on my article have failed to read it as it was written. They all choose to read it as an Austrian attack on MMT rather than an assessment of a specific argument on its own merits. For this reason, they can attack it as flawed based on my being an Austrian economist rather than the actual arguments made in it. In a similar vein, Marxists could dismiss Böhm-Bawerk’s critique of Marx’s economics based solely on the fact that he was Austrian—regardless of what he said.
Needless to say, this is highly unscholarly and unserious. Such fallacies may be fit for online shouting matches and such attacks are indeed par for the course for political activists, both left and right. But, for a theory or school of thought, an intellectual movement, it is entirely improper. Sadly, for MMT, it is an idea and inchoate theory that lacks serious defenders.
