But, it is here that the problem with MMT can be most clearly seen. If we take such a society in this first stage of communism, as described by Marx money disappears. Each labourer obtains a certificate of the labour undertaken, and so their claim on an equal amount of value/social labour-time, less deductions to cover social insurance, general social provisions, and funds for investment etc. The only remnant of similarity of such a certificate (which would today probably take the form of a credit card) with money would be the fact that both represent a claim on a quantity of social labour-time.
Unlike money, which remains in circulation, as soon as these certificates/credits are redeemed by drawing out products from society's store, they cease to exist. But, now, consider this in terms of MMT. Its proponents. like John Law and the Pereire Brothers, turn to the government and say, there is no need for you to reduce the amount of credit that citizens can be granted for consumption. Instead, you can pay for the new hospitals, schools and so on that society desires, just by going to the Magic Money Tree and picking fruit from its boughs. All you need do is print more credits for yourself, and then redeem them in society's store to buy more bricks, cement, steel, machines, and to employ additional workers.
But, of course, when framed in this way the lunacy of the MMT, and its money illusion and commodity fetishism becomes obvious. It becomes quite clear, as Marx described, why The Law of Value imposes itself in such conditions. The whole reason that the amount of credit provided to workers had to be reduced, corresponding to the spending by the government is that society is only able to produce a certain amount of value, and given the level of technology, of use values/output.
You could, for example, give every worker a certificate giving them a claim on twice as much social labour-time as that they have provided. You could, but the result would be that there would not be enough output to meet their demands. This illustrates the madness of the current lockdowns and provision of furlough payments. Furlough payments are frequently defended on the basis that they “keep people in employment”, but of course, what they actually do is keep people in non-employment. They are a payment made to people not to work, not to produce goods and services! It is directly a means of pumping money tokens into circulation, whilst using those money tokens as payments to workers not to produce the goods and services that are their value equivalent!! You don't have to be a genius or an economist to understand what happens when you increase monetary demand, in that way, at the same time as reducing the available supply of goods and services that can be bought.
Indeed, this is a problem that occurred frequently in Soviet Russia. What would then happen is that the “price”, i.e. the value of every item in the store would double, just as if you printed double the amount of money tokens required for circulation, it simply cuts the value of each token in half. Where the state implements rationing and administered prices, this simply results in the creation of a black market, and even higher “prices”.
In fact, in Russia, in the 1920's, the Stalinists implemented the idea of the Magic Money Tree. Like the present day proponents of MMT, they said they could send the market to the devil with such bureaucratic manoeuvres, implemented from on high. When Stalin engaged in his policy of super-industrialisation, he adopted this method of printing roubles to finance the state spending, but, as Trotsky describes, not only did it result in inflation, which always hits the workers hardest, but it also meant that factory directors and workers no longer needed mind the quality of their output, because the state could always print money to buy it from them, just as now central banks print money tokens to buy up worthless bonds etc. This problem is seen with all state capitalist enterprises, which also leads to the creation of bloated bureaucracies and inefficiency.
“The platform of the Opposition (1927) demanded “a guarantee of the unconditional stability of the money unit.” This demand became a leitmotif during the subsequent years. “Stop the process of inflation with an iron hand,” wrote the émigré organ of the Opposition in 1932, “and restore a stable unit of currency,” even at the price of “a bold cutting down of capital investments.” The defenders of the “tortoise tempo” and the superindustrializers had, it seemed, temporarily changed places. In answer to the boast that they would send the market “to the devil”, the Opposition recommended that the State Planning Commission hang up the motto: “Inflation is the syphilis of a planned economy.””
The belief by the Stalinists that they could simply print money to finance their spending is the same mentality as that of the Left reformists, today, who propose such state spending, including the nationalisation of businesses that have gone bust due to a misallocation of capital. It is a form of Economism that limits itself to short-term measures to protect the wages and jobs of this or that group of workers – or in the case of the furlough schemes, theoretically all workers – at the expense of the working-class overall. (In the case of the furlough scheme its described as “keeping workers in employment” whereas it is keeping them in non-employment, paying them not to work, not to produce, and so inflating monetary demand at the same time as reducing the physical supply of the goods and services those workers would have produced had they actually been employed, which must result in rampant inflation, rising interest rates, with all of the consequences of that for actual employment down the road). By facilitating a continuation of such misallocation of capital, it sucks surplus value from elsewhere in the economy, thereby slowing growth and jeopardising the condition of workers as a class.
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