Modern Monetary Theory and the public purpose

Modern Monetary Theory and the public purpose
Dirk H. Ehnts, Maurice Höfgen
Institute for International Political Economy Berlin, 2020
Level: advanced
Perspectives: Institutionalist Economics, Post-Keynesian Economics, Other
Topic: finance, green new deal, industrial policy, macroeconomics, money & debt
Format: Working paper/Journal article
Link: http://hdl.handle.net/10419/214647

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Modern Monetary Theory and the public purpose

Dirk H.  Ehnts, Maurice Höfgen | 2020


Abstract: This paper investigates how the concept of public purpose is used in Modern Monetary Theory (MMT). As a common denominator among political scientists, the idea of public purpose is that economic actions should aim at benefiting the majority of the society. However, the concept is to be considered as an ideal of a vague nature, which is highly dependent on societal context and, hence, subject to change over time. MMT stresses that government spending plans should be designed to pursue a certain socio-economic mandate and not to meet any particular financial outcome. The concept of public purpose is heavily used in this theoretical body of thought and often referred to in the context of policy proposals as the ideas of universal job guarantee and banking reform proposals show. MMT scholars use the concept as a pragmatic benchmark against which policies can be assessed. With regards to the definition of public propose, MMT scholars agree that it is dependent on the social-cultural context. Nevertheless, MMT scholars view universal access to material means of survival as universally applicable and in that sense as the lowest possible common denominator.

Key words: Modern Monetary Theory, Public Purpose, Economy for the Common Good, Fiscal Policy, Monetary Policy

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