I believe that there is an alternative to finance driven capitalism as the only way to organize an economy. This system, let’s call it neoliberalism, insists on a market culture as the master design for all human affairs. Profit making and market freedoms are viewed as the essence of democracy. Consumerism is citizenship and capital is sacrosanct. Banks are allowed to monopolize the money supply, using these funds to speculate rather than financing the real economy, then when their bets go bad, taking billions in bailouts, while insisting on savage austerity for the citizens of western democracies as the way to pay for it.
From Greece, to Spain, to Romania, ordinary people are reacting with dismay as the results of this experiment in mass suffering play out. They are required to pay for the bailouts, thereby rectifing bankers sins, and, also asked to sacrafice pay and benefits. Among them there is a real hunger for an alternative to neoliberalism.
There is a school of economic theory, based out of the University of Missouri at Kansas City, UMKC, entitled Modern Monetary Theory, or MMT, that articulates an alternative to this banker feudalism. One of the prominent economists who advocates MMT is Michael Hudson. Hudson, with his colleges from UMKC, was recently in Italy, to lecture on MMT, where he and his colleges were greeted like rock stars by Italian citizens who packed a stadium to hear this alternative articulated.
Essentially, MMT posits that a country with a sovereign currency. like the United States, need not borrow from banks, or even sell bonds, to finance their spending. All money is created with the click of a mouse, whether by commercial banks or the Treasury. Allowing commercial to create money rather that a central bank is a political decision not an economic one.
And what is the solution? According to Dr. Hudson. “It is to have a central bank that does what central banks were founded to do: monetize government budget deficits so as to spend money into the economy, in a way best intended to promote economic growth and full employment.”
But that would hurt the bankers little feelings, and cause David Brooks and Megan McArdle to rend their garments. And, more saliently, it would take away a huge chunk of campaign cash from both Republicans and Democrats.