Just when there was no more budget constraint is when the Left seemed to absorb the idea that there is a budget constraint.
I wrote an earlier post about this same Mitchell post.
http://diaryofarepublicanhater.blogspot.com/2015/07/the-failure-of-european-left-to-oppose.html
Here I will quote him extensively as what he says is so on point and important.
"O’Connor, in the introduction to the 2009 reprint of the book by Transaction Publishers, was aware of the contextual place of his work in history. He said that:
"… the book was a study of one particular historical conjuncture of the U.S. economy and society, and the U.S. state on state budget. Yet one can find many “fiscal-crisis type” phenomena in other countries in the same year and also in today’s globalist era."
"In the period following the publication of the Fiscal Crisis of the State a myriad of left-wing and socialist orientated articles, academic papers, books emerged which reflected the fact that the authors had begun to absorb the underlying message – that currency-issuing governments were financially constrained."
"At that point, these intellectuals started steering the progressive agenda down the wrong road. The essential ideas that we find in Abba Lerner’s work on Functional Finance were lost to this group of scholars."
"It didn’t take too much imagination to understand that once the ‘left’ stopped questioning whether governments faced financial constraints or not, their capacity to articulate a broad, wide-ranging progressive policy agenda became deeply compromised."
"The same holds today of course. I often have conversations with The Greens at various levels, who hold themselves out as the progressive force in Australian politics. The conversations come to a dead-end when they tell me in one form or another that the Government cannot ‘afford’ or cannot ‘pay’ for full employment or some such, or needs to ‘tax more fairly’ to ensure the rich pay for the spending."
"At that point, I know that their social and environmental plans are ‘dust’ because they would accept voluntary financial constraints on government spending that would limit the scope of the federal government to achieve the desirable ends they articulate."
"But in the early 1970s, just as governments were becoming financially unconstrained and floating their exchange rates, which freed their central banks from engaging in official foreign exchange market intervention, the intellectual (Marxist) ‘left’ was becoming besotted with notions that the deep crisis was to be found in the lack of taxing capacity of governments."
"The situation became worse when the ‘left’ started incorporating the increasing global nature of finance and production-supply chains into their analysis. They wrongly assumed that these trends further undermined the capacity of states to spend and maintain full employment."
"The ‘fiscal crisis of the state’ and ‘globalisation’ were held out as the two major impediments to state sovereignty. Nothing could have been further from the truth. But the ‘left’ bought it and in the 1970s, the neo-liberal resurgence as Monetarism, then privatisation and austerity, became virtually unchallenged and the ‘left’ disappeared up its own post-modern whatever."
"Academic journals became overwhelmed with all sorts of post modern deconstructions of this and that, while the main game, the macroeconomics debate was lost – in a no contest. James O’Connor had taught the ‘left’ that the government was financially constrained and could not run continuous deficits because it would run out of money."
"In the European context, the unchallenged domination of the Monetarists was an important reason why France and Germany were able to come together and advance the move towards monetary union."
http://bilbo.economicoutlook.net/blog/?p=31403#more-31403
At the end of the day the euro system can't work. This is something that hopefully the leftists of Europe have a conversation about because at this point their contributions are counterproductive. You know how I feel about the Right but in Europe regarding the euro the Right is Right. .
Mitchell is one of the few on the Left who gets it. Again, a vital conversation to have.
I wrote an earlier post about this same Mitchell post.
http://diaryofarepublicanhater.blogspot.com/2015/07/the-failure-of-european-left-to-oppose.html
Here I will quote him extensively as what he says is so on point and important.
"O’Connor, in the introduction to the 2009 reprint of the book by Transaction Publishers, was aware of the contextual place of his work in history. He said that:
"… the book was a study of one particular historical conjuncture of the U.S. economy and society, and the U.S. state on state budget. Yet one can find many “fiscal-crisis type” phenomena in other countries in the same year and also in today’s globalist era."
"In the period following the publication of the Fiscal Crisis of the State a myriad of left-wing and socialist orientated articles, academic papers, books emerged which reflected the fact that the authors had begun to absorb the underlying message – that currency-issuing governments were financially constrained."
"At that point, these intellectuals started steering the progressive agenda down the wrong road. The essential ideas that we find in Abba Lerner’s work on Functional Finance were lost to this group of scholars."
"It didn’t take too much imagination to understand that once the ‘left’ stopped questioning whether governments faced financial constraints or not, their capacity to articulate a broad, wide-ranging progressive policy agenda became deeply compromised."
"The same holds today of course. I often have conversations with The Greens at various levels, who hold themselves out as the progressive force in Australian politics. The conversations come to a dead-end when they tell me in one form or another that the Government cannot ‘afford’ or cannot ‘pay’ for full employment or some such, or needs to ‘tax more fairly’ to ensure the rich pay for the spending."
"At that point, I know that their social and environmental plans are ‘dust’ because they would accept voluntary financial constraints on government spending that would limit the scope of the federal government to achieve the desirable ends they articulate."
"But in the early 1970s, just as governments were becoming financially unconstrained and floating their exchange rates, which freed their central banks from engaging in official foreign exchange market intervention, the intellectual (Marxist) ‘left’ was becoming besotted with notions that the deep crisis was to be found in the lack of taxing capacity of governments."
"The situation became worse when the ‘left’ started incorporating the increasing global nature of finance and production-supply chains into their analysis. They wrongly assumed that these trends further undermined the capacity of states to spend and maintain full employment."
"The ‘fiscal crisis of the state’ and ‘globalisation’ were held out as the two major impediments to state sovereignty. Nothing could have been further from the truth. But the ‘left’ bought it and in the 1970s, the neo-liberal resurgence as Monetarism, then privatisation and austerity, became virtually unchallenged and the ‘left’ disappeared up its own post-modern whatever."
"Academic journals became overwhelmed with all sorts of post modern deconstructions of this and that, while the main game, the macroeconomics debate was lost – in a no contest. James O’Connor had taught the ‘left’ that the government was financially constrained and could not run continuous deficits because it would run out of money."
"In the European context, the unchallenged domination of the Monetarists was an important reason why France and Germany were able to come together and advance the move towards monetary union."
http://bilbo.economicoutlook.net/blog/?p=31403#more-31403
At the end of the day the euro system can't work. This is something that hopefully the leftists of Europe have a conversation about because at this point their contributions are counterproductive. You know how I feel about the Right but in Europe regarding the euro the Right is Right. .
Mitchell is one of the few on the Left who gets it. Again, a vital conversation to have.
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