Top ten posts of 2019

As has become customary since I started this blog, here is the annual summary of content on my blog this year.  This year, there have been 450,000 viewings of the blog site, with the last quarter hitting a record number of viewings since I began the blog back almost exactly ten years ago.  Over those ten years, I have posted 882 times with just under 3 million viewings. There are 4300 regular followers.

The Michael Roberts Facebook site, which I started exactly five years ago has just under 8000 followers.  On the Facebook site, I put short daily items of information or comment on economics and economic events.

How are my efforts received?  Well, here is a review of my work by Danish economist Karen Helveg Petersen.

You can make up your own mind.

Anyway, here are the top ten posts from my blog this year, as measured by the number of viewings.  And as you might expect from a blog that concentrates on Marxist economics and on a Marxist perspective on the world capitalist economy, my blog viewers are mostly interested in Marxist economic theory and its critique of political economy.

The top posts of the year were on Modern Monetary Theory (MMT).  MMT has become the flavour of the year as the economic theory of anti-austerity economics, if not anti-capitalist.

Having been confined to the esoteric fringe of even heterodox economics, MMT really kicked off when the US left-wing Democrat Alexandria Ocasio-Cortez started promoting the theory as the basis for economic policy; and a leading MMT exponent discussed the theory with UK Labour’s left-wing economics and finance leader, John McDonnell.

MMT now has some traction in the left as it appears to offer theoretical support for policies of fiscal spending funded by central bank money and running up budget deficits and public debt without fear of crises – and thus backing policies of government spending on infrastructure projects, job creation and industry in direct contrast to neoliberal mainstream policies of austerity and minimal government intervention.

So, in a series of posts, I analysed MMT from what I consider is a Marxist perspective.  I argued that separating money from value and indeed making money the primary force for change in capitalism fails to recognise the reality of social relations under capitalism and production for profit.  MMT ignores or denies a theory of value.  So MMT enters a fictitious economic world, where the state can issue debt and have it converted into credits on the state account by a central bank at will and with no limit or repercussions in the real world of productive capital.

In contrast, Marx’s law of value integrates money and credit into the capitalist mode of production and shows that money is not the decisive flaw in the capitalist mode of production and that sorting out finance is not enough. So it can explain why the Keynesian solutions (and MMT is a variant of Keynesian economics) do not work either to sustain economic prosperity or avoid crises.  I covered MMT in several posts, two of which made the top ten. Digital Commons has collated my posts into one paper which you can read here.

But the debate on MMT continues.

Rising government spending and unemployment are positively correlated in the OECD – the opposite of what MMT expects.

Also the debate that I conducted on the blog with Professor David Harvey on Marx’s law of value was in the top ten.

I argue that DH’s interpretation of Marx’s law of value is incorrect when he suggests that Marx did not have a ‘labour’ theory of value and that value only exists in ‘the market’.  From this flows the view that crises in capitalism are caused by a failure to ‘realise’ value through dislocation in the market ie underconsumption; and are not due to the failure to appropriate enough surplus value in production.  In the debate, DH strongly refutes my interpretation of his position and suggests my own view on crises is far too narrowly based as an explanation.  As I said in the post, this debate could be considered like a medieval religious debate about how many angels there are on the head of a pin; but it may be that it leads to something really worth knowing.  As it has made the top ten, it seems viewers think the latter.

Investment not consumption is the main swing factor in slumps – contrary to the underconsumption view –

% chg in personal consumption, business investment and GDP

The debate between David Harvey and me on the relevance of Marx’s law of the tendency of the rate of profit to fall was continued in person at the recent Historical Materialism conference in London.  You can read my report on that session here.

The other theoretical discussion that made the top ten was on the economics of imperialism.  In another session which I organised at the Historical Materialism conference, John Smith, author of Imperialism in the 21st century, a widely praised and important book, presented with Andy Higginbottom of Kingston University, Sam King from the University of Victoria, Australia and myself on the economic foundations of modern imperialism.

The discussion revolved around how value is transferred from the periphery (or the ‘global south’, if you prefer) to the imperialist centre (the ‘global north’), through transfer pricing, international trade, and capital flows.  In particular, we debated the relevance of the concept of ‘super-exploitation’ in the south as the main source of value transfer.  Again, the debate on this continues.

% of GDP of value transfer between major emerging economies and the G7

It was not just Marxist economic theory that attracted viewings of my posts but also analyses of the current state of the world capitalist economy.  Recessions, monetary easing and fiscal stimulus got into the top ten, I suppose, because it summed up my view of the likelihood of a new global recession and whether the official economic policies of central banks and governments were working to get capitalism out its low growth, low investment stagnation and could avoid a new slump.  My final sentence was: “Another recession is on its way and neither monetary nor fiscal measures can stop it.”

I’ll revisit this story in a future post on the prospects for the world economy in 2020.

Global business profits are stagnating

One of the developments in the world economy in 2019 was the emerging trade and technology war between Trump’s America and Xi’s China.  This war, even if temporarily in truce, will break out again in 2020 and has already had detrimental effects on the world economy.  In a post that made the top ten, I argued last May this war would be one of the triggers for a new global slump “before the year is out”.

Well, that ain’t happened.  But, in my view, it remains at the heart of any future dislocation of the world capitalist economy.

Global trade is declining

One post that I do every year and which always makes the top ten is Credit Suisse’s annual measure of the degree of inequality of wealth globally.  Once again, the report revealed the staggering degree of wealth inequality in the world.  The top 1% of adults own 45% of all global personal wealth; 10% own 82%; the bottom 50% own less than 1%.  So poor are the bottom 50% (they own no wealth at all), that it means that the likes of you and me who might own (partly) a house or flat in the advanced capitalist economies are actually in the top 10% of wealth holders!

I did quite a few book reviews during 2019.  See my post:

But only one review made the top ten posts.  That was Stolen! by young British economist and activist, Grace Blakeley.  This book on the cause of crises in capitalism and policies for solving it in Britain was widely circulated and sold, not only in the UK but in Europe and the US.

“All our wealth has been stolen by big finance and in doing so big finance has brought our economy to its knees.  So we must save ourselves from big finance.” That is the shorthand message of the book.  Unfortunately, like most post-Keynesian analyses, Blakeley ignores Marx’s law of value in explaining the contradictions in modern capitalist economies and instead leans on the Keynesian analysis that the root of all evil is money, credit and finance.  As a result, in my view, because this analysis is faulty, her policy proposals are also inadequate.

Indeed, Joel Rabinovich of the University of Paris has conducted a meticulous analysis of the argument that now non-financial companies get most of their profits from ‘extraction’ of interest, rent or capital gains and not from the exploitation of the workforces they employ. He found that: “contrary to the financial rentieralization hypothesis, financial income averages (just) 2.5% of total income since the ‘80s while net financial profit gets more negative as percentage of total profit for nonfinancial corporations. In terms of assets, some of the alleged financial assets actually reflect other activities in which nonfinancial corporations have been increasingly engaging: internationalization of production, activities refocusing and M&As.” Here is his graph below.

The debate on the right policies for the left in Britain has become somewhat academic with the victory of the hard-right Conservative government in the December general election.  I don’t usually post much on the UK because it is not the most important capitalist economy, but how and why the opposition leftist Labour party failed to win is under hot debate at the moment.  So my short response immediately after the election result on Brexit and on the underlying economic consequences made the top ten this year.

It is the economic situation that will become the testing ground for the Conservative government in 2020 if a global slump should emerge.

The economic well-being index (chg in real disposable income minus unemployment rate) shows that when the index is rising before an election, the incumbent government usually wins.

Finally, there is Venezuela. It has disappeared off the media headlines in recent months now that the attempted coup organised by the US to overthrow the Maduro regime failed (unlike in Bolivia, where it succeeded).  What is interesting is that my post on Venezuela was written in 2017!

But viewers picked up that old post to get my understanding of why the Chavista revolution has failed.  In 2020, we shall see if Maduro can survive another year.

Venezuela real GDP falling near 30% since 2012.

17 thoughts on “Top ten posts of 2019

  1. ” MMT ignores or denies a theory of value. So MMT enters a fictitious economic world, where the state can issue debt and have it converted into credits on the state account by a central bank at will and with no limit or repercussions in the real world of productive capital.”

    MMT has 3 basic axioms:
    1. A currency-issuing government faces no purely financial constraints.
    2. Governments DO face real resources constraints, including labour.
    3. Government can purchase whatever is available for sale in the nation’s currency.

    I consider #2 and #3 to be incompatible with your words: “with no limit or repercussions in the real world of productive capital.”

    “MMT ignores or denies a theory of value”.

    No. money is created in private banks when they write loans for credit worthy customers; it can also be created in the central bank, if there is spare productive capacity including labour in the economy.

    The ‘value” of the money is determined by availability of resources and the economy’s productive capacity.

    “Rising government spending and unemployment are positively correlated in the OECD – the opposite of what MMT expects”.

    The mistake here is that any examples of “rising government spending” you care to consider are presently funded by drawing on private sector savings (ie by taxation or selling interest bearing bonds), NOT by central bank deposit creation as posited by MMT.

    One last thought about the ‘value’ of money; if a government had access to sufficient data on citizens, skills, and available resources, it would be possible to manage a planned economy in which the production and distribution of necessary goods and services was realised without recourse to money at all.

    So your statement: ” separating money from value and indeed making money the primary force for change in capitalism fails to recognise the reality of social relations under capitalism and production for profit.” seems somewhat muddled in relation to MMT.

    The primary force in MMT results from utilising available resources at full sustainable productive capacity, NOT from making money the primary force for change.
    Money creation in “both” the public and private sectors is merely a means of ensuring continuous sustainable economic activity, at full employment (U6 < 2%).

    1. All you points are dealt with in my posts. Of your three points, accepting 1) does not take us very far in avoiding or overcoming crises caused by a collapse in investment and profitability. 2) governments face constraints not just because they run out of employment but because they dont control the capitalist sector that only invests for profit 3) purchase what from whom? So government purchases things and services from capitalists, leaving them to take the profit and employ? Or does government take over the capitalist sector – this is not what MMT advocates. On the contrary, MMT sees its policy aaproach as an ALTERNATIVE to replacing the capitalist mode of production.

      Your understanding of value theory is limited. Marx’s value theory depends on the exertion of labour and the exploitation of labour power by capital. MMT ignores this. Government doe snot just need “sufficient data’ to plan, it needs ownership of the commanding heights of the economy. I have yet to hear any MMT exponent to advocate that. Instead they concern themselves with arguing that creating money is enough to do the trick. “Money creation” is not sufficient “means” to ensure “continuous sustainable economic activity at full employment” while capital controls the means of production.

    2. “1. A currency-issuing government faces no purely financial constraints.
      2. Governments DO face real resources constraints, including labour.
      3. Government can purchase whatever is available for sale in the nation’s currency.”

      What was it Ripley said in Aliens? “Did IQs just drop sharply when I was away?”

      A government serves a class, a configuration of ruling classes, and its function is to preserve the property accumulating power of that ruling class. You don’t think so? Tell that to the workers in Chile, today or in 1973; in Greece; in Turkey; in France; in Bolivia.

      Maybe you haven’t been paying attention to current events, but the ruling class, that configuration of bankers, capitalists, bureaucrats, managers, political professionals, etc. will take any step necessary to maintain that power; will use any means.

      You think Bolsonaro, Duterte, Erdogan, Orban, Macron, are just free agents?

      It all comes down to power, and taking that power requires a class struggle, which is much more than a struggle for the right monetary policy.

  2. Hello Michael,

    I’m reading your collected posts on MMT with interest. However, I’m confused by one set of figures. You say that “Government spending in modern economies … like the US or the UK or the G7, is around 30-50% of GDP. This compares with capitalist sector investment of 15-
    25%, while household spending varies between 55-70% of GDP”

    30%+15%+55%=100%, but those are the lower figures of the ranges given. Any higher, and we are over 100%. I’m assuming the three sectors exclude one another. Is there something I’m missing, or is this a typo?



    p.s. No rush to reply. Christmas very soon, after all!

    1. Ross, yes it is misleading. The answer is that government spending includes transfers of tax to welfare and social benefits and it therefore not value added. It is double counting to included transfers in GDP. Government services and investment (what is officially called government consumption) is much less, around 15-20% of GDP. So in the US for example, personal or household consumption is about 70% of GDP, government consumption is about 15% and capitalist investment is about 15%. In Europe, the ratios are about 65% personal, 20% government and 15% investment. In China, the ratios are 40% personal, 20% government and 40% investment (much of which is no capitalist).

  3. Michael Roberts:

    You haven’t commented on my explanation of the error in your statement: “Rising government spending and unemployment are positively correlated in the OECD – the opposite of what MMT expects”.

    As I said, government spending in our neoliberal economies reduces private sector savings (via taxation or bond sales), which explains the positive correlation you mention above, because lower private sector savings reduces real demand in the economy. (Keynes’ principle of lack of real aggregate demand).
    MMT *eliminates* unemployment by direct credit creation in the central bank, in order to *eliminate* unemployment in the private sector.

    As to some of your other points:

    “So government purchases things and services from capitalists, leaving them to take the profit and employ?”

    No, government purchases goods and services from the private sector *to the extent necessary to ensure full employment*. The profit generated by the capitalist private sector is paid in competitive wages levels for workers in the private sector. The government ‘buys’ unemployed labour (and spare goods and services) to realise its Job Guarantee program, which is a variable buffer pool of workers at above poverty wages (to fill local work needs not met by the private sector). Nationalisation in certain industries may be most appropriate.

    In MMT, government spends into the economy *first* (via credit creation in the central bank), and then afterwards taxes specific private sector activity as or if required, to prevent over-heating/inflation.

    (Note: if the private sector could operate with continuous real full employment (zero un+underemployment) at constant prices, then all would be fine: but in practice we need a public sector that can act as employer of last resort to deal with the variable employment capacity of the private sector business cycle).

    [Note: my hypothetical scenario, in which I imagined perfect government access to all necessary data, was designed merely to show that money has *no intrinsic value*….never mind].

    Finally, MMT does NOT “see its policy approach as an ALTERNATIVE to replacing the capitalist mode of production”. but rather as COMPLEMENTARY to a private sector capitalist mode of production.

    Anti-Capital says: “a government serves a class…”

    No, government presently serves our obsolete *neoliberal macroeconomic orthodoxy.

    A less ideological view of government would be helpful: we don’t need the ‘purity’ of a Marxist, anti-capitalist revolution, we DO need to realise the Marxist goal of an economy that works for everyone: MMT proposes COMPLEMENTARY *planned* public, AND *capitalist* private sectors.

    1. I agree, MMT advocates policies designed to ‘complement’ capitalism not replace it. Indeed, as you suggest that it will act as a backstop to capitalism. Or in other words, save capitalism when it starts to fail – the Keynesian objective. In my view, in that objective MMT will fail.

    2. ‘No, government presently serves our obsolete * neoliberal macroeconomic orthodoxy’.

      He has left a very loud, overwhelming but … nonexistent dominant political subject. Who are they? Successor macroeconomics teachers at the Chicago-M. Friedman school, etc.? Are they the invisible and hidden matrix that dominates and rules the world? Any intellectual in every historical moment only serves the dominant economic class (the capitalist class today). It’s just the ‘’ palace clerks ’’. When economic theory speaks, today capital speaks (Alejandro Nadal).
      On the other hand, a spear in favor of the MMT. And a spear in favor of any other reform: support for dismissed workers, Labor Party, Podemos, Syriza, etc … As long as there is not enough political and social hegemony (a majority), a socialist revolution is not possible. It is impossible. Meanwhile, while this socialist hegemony does not occur, I do believe that a socialist can support a reform movement: climate change, feminism, pensioners, companies with layoffs, MMT.etc … Why? Because these reformist actions can save and improve many lives. The Guaranteed Work of the MMT would do so. How should that support be given? In giving it, in the same place and moment, support must also be expressed for a socialist revolution. That support, that of a revolutionary to a reformer, will also gradually get more followers of revolutionary socialism. Said simple but correct, the solution should be: R (reform) + R (revolution) at the same time. I estimate that Rosa Luxemburg would agree. In his work ‘Reform or Revolutión’ he said so.

    3. “No, government presently serves our obsolete *neoliberal macroeconomic orthodoxy.”– NH

      Well, strip my gears and call me shiftless. The problem is one of thought, of ideology, of “orthodoxy.” Those are the determinants of the material condition of society. And all this time I thought the material condition of society determines the ideology. So… when the rate of profit in the US staggered and fell in 1970, and the bourgeoisie knew that they had to get rich by transferring wealth up the social ladder, by attacking the working class, that’s when we got the neo-liberal ideology, the old “greed is good” and the poor are just poor because they are coddled while poor.

      Yeah, and Pinochet’s overthrow of Allende, and the subsequent lowering of workers wages and living standards– just a mistake of ideology, not a response based on class struggle.

      Oh Neil– here’s something to keep in mind– money talks and bullshit is a marathon jogger. The bourgeoisie do what they do to protect their money– ideology is, like religion, an excuse.

  4. Just a quick comment on the ‘law of the TRPF’ debate:

    CNBC reports that the EIA has come out saying: Normal growth (accumulation part of business cycle) in 2020s will be only half that of the 2010s + “patterns of growth are changing, and growth itself can no longer be taken for granted.”

    If they’re right, I imagine that supply and demand side stimuli of every kind will be deployed and the debate about ‘What is causing this?’ will dominate the next decade.

  5. “He is usually not involved in everything, but is a busy man of a certain age, who drifts in and out of the conference rooms and, on the whole, holds an astonishingly high level of activity.” -The Danish Piece

    This makes you sound like the hard-bitten hero of a noir story.

  6. We could have a perfect plan to fix the US economy and the Republicans and Republican Lite will just vote against it. They fundamentally do not care about improving the future. They are just going to ride the horse they got into the dirt of Neo-Feudalism.

  7. Hi Mr Roberts,

    Sorry to bother you with another technical question, but just wanted to get your take on it if you have time.

    In Marx’s reproduction model we need to assume that there is a uniform profit rate among all industries – that the average profit rate of all industries are equal.

    But according to empirical evidence from Shaikh, it is profit rate of a ‘regulating capital’ – new market players – rather than average profit rate of industry that exhibit this qualization trend.

    If this is correct, does it have major implications, and would you recommend any further reading?

    Thank you very much

    1. Hi
      When you believe that rate of profit is equalized you are in a specific level of abstraction . Meaning you assume that the movement of capital from one industry to another is completely free and can happen in a blink of eye . But in reality there are some obstacles for this fast and free movement 1- there is a cost for transferring capital from one industry to another ( you need to sell your fixed capital which has low profit rate . 2- there are long term contracts that you have to fulfill before changing your line of work , 3- there are regulations against fast changing of your industry , 4- you need to hire experts and get to know the new industry and so on
      So the new capital which is in the form of money can flow to higher rate of profit industries but there is a significant laziness for old capital which is entangled in machinery and long term commitments to move
      Any way the equlization of rate of profit works as a tendency
      On the other hand the denial of this equalization-undermines the theory of rent of Marx
      I will give you an adress for dither reading after this

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