In theory, at least, therefore, if a country only has a limited amount of money, a limited amount of value in commodities, whether in the form of a stock, or of a flow of current production, then the government of such a country, clearly, also, has a limited amount of money, and so, in theory, can run out of it. Because money is not currency/money tokens, it does no good, as Richard and the proponents of MMT claim, and as John Law and others such as Attwood did, in the past, to argue that a country, or a government, can simply print more of these money tokens. The amount of money is not changed by simply printing more representations of it, any more than printing more pictures of cows increases the quantity of cows. All that happens is that each token simply becomes proportionately devalued – inflation.
A country, even one as big and powerful as the US, cannot simply print more currency to pay for its consumption. That was seen in 1971, when France demanded that it be paid in gold, at the official exchange rate, for all of its Dollar holdings. When a country, such as the US, sees its currency devalued, which occurs, now, openly and continually, as a result of the system of floating exchange rates, what this signifies is that each Dollar represents a smaller quantity of social labour-time. It means that an hour of average social labour-time in the US has fallen in value, compared to an hour of social-labour time internationally. Put another way, if the Dollar falls by 10%, US labour has to work 10% more to buy the same value of imports prior to the devaluation. It is why, in the end, although currency devaluations have the appearance of making a country's exports cheaper, and more competitive, they simply amount to demanding that its workers work longer/harder. Like tariffs or import controls, it acts to protect domestic capital at the expense of domestic labour.
And, of course, a look at what happened in respect of the landed aristocracy, as with all who run up debts collateralised on assets, shows where that leads. The landed aristocracy continued to receive rents on their estates, but, the more they had to sell off parts of their estates to cover their debts, the less their stock of assets, and the lower their rental incomes, so meaning they needed to borrow even more to cover their consumption. The Thatcher government in the 1980's, covered some of the state's debts/spending, not from raising taxes, but by selling off state owned financial assets, i.e. its shares in various nationalised industries. As Arthur Daley put it in an episode of “Minder”, she managed to pull of the con-trick of selling back to the public things the public already owned. But, the consequence was that the interest/dividends on those shares, then, no longer went to the state, but into the pockets of private individuals, an increasing proportion of whom, were in other countries.
In practice, countries do not run out of money, for the simple reason that they have natural resources, and they have labour-power. But, when Richard says that a government can't run out of money that is not what he means, because he confuses money, as the equivalent form of the value of these resources/assets and labour-power, with currency/money tokens, which the government can simply print ad infinitum. A country has resources/assets whose value can be either realised through sale, or which can be used as collateral to fund its borrowing. But, as set out above, if you sell such assets, they are no longer revenue producing for you. You can, then, not use the revenue from those assets to cover your own spending/consumption, whether productive or unproductive. That is most significant where that spending/consumption would have been productive consumption/investment, because such investment, in turn, raises productive capacity, and the ability to create both wealth (use-values) and new value, required to finance future consumption.
A country can continue to consume for a time, by simply selling off its land, mines and so on to foreign states or companies, but, having done so, it simply undermines its own future ability to fund its continued consumption. Poor countries that lack capital, i.e. do not lack money, but lack the ability to create the social-relationship in which productive-capital exploits labour, so as to create surplus-value/profit, are placed in this position. It is why Lenin, after the 1917 Revolution, sought to bring foreign capital (not money) to Russia, even though that meant giving them ownership of Russian resources, including the ability to exploit Russian labour. It is why, similarly, Trotsky advised the Mexican government in the 1930's, to establish joint agreements with foreign companies, saying,
“Lenin accorded great importance to these concessions for the economic development of the country and for the technical and administrative education of Soviet personnel. There has been no socialist revolution in Mexico. The international situation does not even allow for the cancellation of the public debt. The country we repeat is poor. Under such conditions it would be almost suicidal to close the doors to foreign capital. To construct state capitalism, capital is necessary.”
(On Mexico's Second Six Year Plan)
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