In my recent episode with Bob Murphy I noted that Karl Marx himself was actually against inflationary monetary policy; or, since such a concept didn’t really exist in the same way it does in modern times with central banking, he was against paper money or what Mises referred to as fiduciary media (money substitutes not backed by money itself— see my Misesian taxonomy of money here).
Bob mentioned that readers/listeners might find it peculiar to find a critique of MMT (which of course is an inflationary school of thought inasmuch as inflation refers to an expansion of the money supply) in a socialist outlet, especially given Ocasio-Cortez’s endorsement of MMT. As an aside, I believe she only “endorsed” it because she has Stephanie Kelton, an avid MMTer, advising her, not because she is well-studied or well-read enough to actually have an informed opinion about it. In any case, I don’t think seeing this essay of critique show up in a socialist outlet should be all that surprising.
After all, the author was clearly familiar, even if he didn’t explicitly say so, about sort of the Marxist instinct toward money expansion. Given Marx and Lenin’s anti-bourgeois sentiment, it makes sense that they would look at inflationary schemes as “capitalist” scams and prefer instead a hard money. Inflationary policy, as we know so well by reading Mises and Rothbard and so on, benefit the early recipients of the money creation. This isn’t the core reason why such schemes are bad (ethically or practically) but it is an actual side effect. Thus, Marx and Lenin would oppose it because it favors the rich; while we Austro Libertarians would oppose it because it distorts the capital structure, can lead to the boom bust cycle, and undermines private property theory.
Louis Rouanet’s short post, also linked on the show notes page, elaborates on all this. But the point is that Doug Henwood’s essay is not shocking. He’s just taking the traditional Marxist perspective on inflationary schemes and one can see this in his complaint that the MMT advocates never pay attention to what Henwood considers to be the most pressing “real life” issues of the economy; related, in good Marxist form, to exploitation, resource allocation, and then production of goods “for profit” rather than for the benefit of the masses.