…deciphering and applying a paradigm change is several magnitudes of positive effect higher than any and all theorizing possible.

The recent back and forth between Steve Keen and several of the leading advocates of MMT dramatizes this well. Keen makes excellent theoretical points, but compared to the positive general economic effects and “knock on” beneficial and resolving effects in entirely separate areas of human endeavor that integrating the new monetary paradigm of Direct and Reciprocal Monetary Gifting into the economy would have….they all pale to virtual insignificance.

I also agree that some of the advocates of MMT seem arrogant, rigid and overly orthodox in certain ways. However, there is also the orthodoxy of the current paradigm itself. Until one clearly deciphers the old paradigm and understands the signatures all paradigm changes….all theoretical insights still fall within the orthodoxy of the current paradigm.  Paradigm perception where it is urgently needed and sorely overdue should be the first and last order of business. That is how true progress is accomplished, NOT with epicycle perturbations and theoretical fine points….that remain squarely within the old paradigm.

HS:  Thank you Lars, this has left us NO-WHERE-and will therefore lead us and all associated with us and this “Science” to NO-WHEREISM. It has long gone past the stage of neither here, no there.

Me:  Even though Lars levels a well deserved critique of Krugman, you are correct. All current theories are merely perturbations of the orbit of Mars via imaginary epicycles. What is required is the fundamental breakthrough known as a paradigm change, and that is characterized by inversions of current realities like from monetary scarcity to abundance, from inflation to deflation, from inherently halting, conflicted and confused unworkability to rationally and intelligently crafted free flowingness.

And all it takes for such change is a new look in a place no one is currently looking, and a new realization about an economic significance that exists there.

E:  Thanks for your excellent work on this, Asad, and I am distributing all three parts. I will simply offer that we can identify several elements in the development of freemarket neoliberalism as the dominant political economic philosophy since the 70s:

1. The publication of The Powell Memo in 1972, a document commissioned by the U.S. Chamber of Commerce that is a roadmap that lays out the institutional development needed to effect the corporate domination;

2. Pat Buchanan’s speech during the 1988 Republican Convention that declared cultural war on those of us who oppose this development;

3. The relationship between the Koch Brothers (and others) and the work of James Buchanan (no relation to Pat), as described in Nancy MacLean’s fine book, Democracy in Chains.

I could include some other stepping stones, such as the work of The Project for a New American Century, but these three are the most noteworthy in my view.

I will add that, although I agree with your timeline, my time at Berkeley in the 1960s showed me that far too many political liberal economists there were already hooked into Friedman’s freemarket ideology, even as they taught Samuelson’s version of Keynes.

Me:  Yes, this is all accurate history. One needs to ask oneself

1) who/what is the behind the scenes power that benefits from the return to Chicago School capitalist theories and

2) why was it so easy to morph Keynesianism into the neo-classical “synthesis”

And here are the answers:

1) The business model of Finance with its monopolistically dominating paradigm for the vehicle and form in which money is distributed, namely Debt Only. Of course multi-national corporations with global reach are complicit with Finance as they stand partially above that paradigm.

2) Keynesianism was only a reform. In fact it was Finance’s fall back position against another contemporaneously burgeoning world wide movement that was way ahead of its time, but would have probably been overturned as well because it still had the taint of general equilibrium theory. Innovating that movement’s policies plus adding a strategically placed third one and a structural change elevates them to paradigm changing status.

Reforms can be undone/reversed. Only a paradigm change is truly progress because as history shows us EVERYTHING adapts to a new paradigm NOT the other way around.

…of a new paradigm because of allegiance to a prior theory, then you’re utterly paralyzed by orthodoxy and just as thoroughly blinded by same.

…the absolute integrated/integrative grounding of commerce by double entry bookkeeping, and how its digital nature (equal amounts of debits and credits sum to zero), tuned to the terminal summing and ending points for costs and prices and the terminal expression point for all inflation, can unobtrusively yet powerfully reverse modern economies’ deepest problems with policies that ascend to paradigm changing status.

Me:  The way to tame/remedy capitalism’s suave dominance is the same remedy for socialism’s tendency toward rather un-suave dominance. Love and its active form grace/graciousness as a zeitgeist/ethic and applied monetary and economic policies that align with and effect its primary aspects. Like a universal dividend and discount/rebate policies at strategic points throughout the entirety of the legitimate economic/productive process. Abundant, direct and reciprocal monetary free gifting IS the new monetary and economic paradigm….because it will bring rational, ethical and good and appropriate order to economic systems.

KZ:  Craig, maybe it will bring torture and death squads. Lots of ways to solve the problems of group coherence and cooperation. Some you obviously like. Others you just as obviously do not like. What’s your plan when the job is done well by those you hate, as with fascist, racist, violent groups in America today? Once debated this issue in a Boston Unitarian Church. One of the panelists agreed with your proposal. But she said something interesting about the issue I’m raising. What if the offer of free gifting is met with violence? Her response – bury the bodies and pray, but don’t give up on the idea. Thankfully, we’ve not come to this yet. But it is something you ought to consider.

Me:  Violence as a reaction to receiving a gift is fundamentally unbalanced. Now you may have such anecdotal reactions, in fact you absolutely will have them, but the vast majority of individuals despite their not being perfectly rational or ethical will have positive and constructive reactions to it. Man is basically good yet flawed. To recognize this as true think about how many truly evil and incorrigible people you’ve met in your life compared to how many flawed but basically good ones you’ve known. We have a justice system to deal with broken and violent people. We must press on for evolution toward a society based on the wisdom of the natural philosophical concept of grace/graciousness and its reflective economic policies of monetary free gifting,and not let fear or hair splitting analysis get in the road of it.

DT:  Negative claims are debts –. The principle we have so often mentioned, that the State maintains existing debts, is better stated in the following way: “The State maintains in each
individual case both negative and positive debts,” or, if you like, ” The State maintains in each case both negative and positive claims.” When the State introduces new means of payment, this takes effect in reference to the negative and positive debts of each person, or – what comes to the same thing – his negative and his positive claims.

“Each individual has an amphitropic position in trade, i. e. he is in some quarters a debtor and at the same time in other quarters a creditor. This amphitropic position of the individual in
economic transactions was so obvious that it was completely overlooked.

“The objection of the layman to means of payment like the much-decried inconvertible paper money is always based on his mistake of looking at the position in economic transactions monotropically ; he thinks of himself as always creditor. He makes two mistakes : he regards such Chartal means of payment under their natural, not their legal aspect, and secondly, he considers his own position in trade monotropically, not amphitropically.”

Me:  Dave,  monetary gifting doesn’t alter the relationship between debtor and creditor. It simply makes the economic system workable and free flowing.

PB:  Ok. But remember banks enjoy a special legal status. Banks are uniquely and explicitly granted the legal right to commingle customer funds. Brokerages for example may not use customer funds to purchase securities. You or I cannot lend money we don’t have. Only bank charters explicitly give banks freedom to do these things. I think this fact holds great explanatory power when asking what money is and how the economy works. Richard Werner teaches at length about this.

Me:  Correct. For a single business model to have a monopolistic grip on the money creating right, and the even more deeply negative reality of the sole paradigm for the form and vehicle for money’s distribution, namely Debt Only,….is unworkability, dominance and felonious action waiting to happen.

The only reason why the individual, economists and economic pundits tolerate such nonsense is habituation and hence de-sensitization to that paradigm’s negative effects.

We need to wake up, stand up on our hind legs and demand that such obvious stupidity end yesterday.

Marcel Proust

My old foil Mish Shedlock has been on this development for some time now, and of course advocates against any idea of a universal basic income or government deficits. The deal between Lega and Five Star is another compromise/reform with the current paradigm of Debt Only and so will accomplish nothing in the bigger picture that actually deals with paradigms.

In fact it may actually result in a desired (by finance) invalidation of the concept of UBI/universal dividend because the Italians do not know how to implement it, and so inflation will inevitably result.

The trick is to increase individual incomes sufficiently to create a new paradigm while simultaneously implementing painless and beneficial price deflation. (It truly is tricky unless you understand the digital nature of the costing/pricing, money and accounting systems and the exact place and times to implement the policies).

The policies and structural changes (one of which is resigning private money creation to the dust bin of history and the creation of a National Public Bank with a confederate system of state public banks) of the new paradigm of Direct and Reciprocal Monetary Gifting will indeed “do the trick”.

In His Critique of MMT’s Assertion That Every Nation Should and Can Run A Trade Deficit.

Of course if every nation (within its current productive capacity) implemented the policies and structural changes of the new paradigm of Direct and Reciprocal Monetary Gifting…the urge and need to be either an export platform or run a trade deficit….would largely be eliminated. Why? Because they could then create sufficient individual incomes to keep the domestic economy in a free flowing state without having to worry about unemployment or practicing the economic, historic and geo-political vice of mercantilism that modern economies find “necessary” as a means of staving off the inevitable instability, rigidity, dominance and collapse that the old paradigm makes inevitable.

National self sufficiency is an economic virtue which is inhibited by the current international coalescence of Finance’s paradigm of Debt Only, and the new paradigm ends that inhibition and enables a new international confederacy of nations that all benefit from it.

If Keen would examine the transformative policies and structural changes of the new paradigm he would see this and could then get on its bandwagon so as to do more to advance economics, rejuvenate profit making systems and prevent eventual chaos and war….than arguing with terminally orthodox academics or even progressive ones.

The three primary and chronic problems of modern economies are:

1) they inherently create a scarcity ratio of free and available total individual incomes in ratio to total costs and so by dint of the (correctly applied) cost accounting convention that all costs must go into price…total prices

2) the above continually occurring cost inflation accompanied by no rational, ethical or appropriate way to remedy the upper bound of price inflation and

3) the by definition totally insane (doing/allowing the same thing over and over and expecting a different result) continuance of private Finance’s paradigm for the form and instrument of monetary distribution, that is Debt Only

The policies and structural changes of the new paradigm of Direct and Reciprocal Monetary Gifting specifically address and resolve these problems.

All theorizing and argumentation within the current paradigm amounts to nothing more than “epicycle” “tempests in a teapot”. The recent debate between Steve Keen and Warren Mosler about MMT, replies to it by Bill Mitchell and Keen’s counter reply are excellent examples of this.

The real insight of MMT which virtually all MMTers miss is simply that fiat money systems can be directly distributive. The problem is neither of them presently or in the future will be able to ethically or systemically control them…unless they recognize the digital nature of the costing/pricing, debt based money and accounting systems, and the significances of the point of sale/retail sale in the economic system…..and then craft policies to benefit all agents and completely align with the concept behind those policies, namely the natural philosophical concept of grace, and as it applies to economics and the money system, grace as in free gifting.

I’ve observed the excellent research and debate of heterodox economists like Keen, Hudson, Mitchell, Mosler et al for going on ten years now, and I’m in agreement with probably better than 99% of it, but their nit picking with each other and address primarily to opposing academics are sure signs of being stuck in an old paradigm and an ignorance of what really counts in all political movements and what happens with all new paradigms….and that is an awakening in the minds of the individual.

What these men together need to do is diligently search for and open their minds to the new paradigm and its policies and thus become a part of the solution instead of an erudite but niggling part of the problem.