Lecture by ICE Fellow Graham Hubbs

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Progressive members of the U.S. House of Representatives—including, most prominently, Representatives Ocasio-Cortez, Tlaib, Omar, and Pressley, who call themselves “The Squad”—have championed the ideas of Modern Monetary Theory (MMT) as a way to achieve policy initiatives such as a universal jobs guarantee and a Green New Deal. At its core, MMT rests on an account of the ontology of money called chartalism. I will explain chartalism by contrasting it with the what has historically been the orthodox theory of money, which I call the catallactic theory. The standard way of depicting the difference between these two accounts is in terms of the competing origin stories that each tells of the invention of money. Proponents of MMT commonly insist that understanding money’s origin is important, if not essential, for understanding the financial aspects of policy proposals based on the theory. Some opponents to MMT have asked how money’s history could be relevant to present-day policy. I will argue that the difference between chartalism and the catallactic theory that matters to policy is the order of explanation that each offers for money’s functions. Once we understand the difference between these accounts as a difference in explanatory order, we can then see chartalism’s argumentative power as a form of critique. The point of critique is to expose dogmatic assumptions for the historical contingencies that they are. The political significance of understanding the ontology of money, then, is the critical perspective enabled by this understanding to combat economic and political dogma. I close by focusing on one of these dogma: the function of taxes.