15 – Tragedy of the Commons

Cohosts Will Beaman, Natalie Smith and Maxximilian Seijo discuss Maxx’s recent article in the Journal of Environmental Media, titled “Governing media information through a Green New Deal: History, theory, practice.”

Featuring a special report by Australian Twitter Correspondent @moltopopulare from inside the Superstructure, and a surprise call-in from friend of the show, Liz Bruenig.

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.

Twitter: @actualflirting

Link to Maxx’s paper: www.academia.edu/43950105/Governi…_theory_practice.

Money After Redlining With Rebecca Marchiel

In this episode, Money on the Left hosts speak with Rebecca Marchiel, Assistant Professor of History at University of Mississippi, about her important new book, After Redlining: The Urban Reinvestment Movement in the Era of Financial Deregulation (University of Chicago Press, 2020). After Redlining tells the story of the anti-racist urban reinvestment movement in early post-New Deal era Chicago. Transforming from a focused politics of housing into a broader politics of money, the movement began in the neighborhood of Austin and grew into a nationwide effort between the 1960s and the 1980s. We talk with Rebecca in depth about the central figures and pivotal moments of this story and also about her disciplinarily unique focus in After Redlining on the central role of credit in the urban reinvestment movement. Together, we reflect on the implications of her findings for the field of U.S. political history and the lessons the contemporary left can learn from the movement’s insights and blindspots.

Theme music by Hillbilly Motobike.


The following was transcribed by Richard Farrell and has been lightly edited for clarity.

William Saas: Rebecca Marchiel, welcome to Money on the Left.

Rebecca Marchiel: Thank you for having me. I’m excited to be here.

William Saas: So we’ve asked you to join us today to discuss your important, recently published book, After Redlining: The Urban Reinvestment Movement in the Era of Financial Deregulation, which is just out from University of Chicago Press. Perhaps we can begin by asking you to tell our listeners a little bit about your personal and professional background and how it is that you came to this project?

Rebecca Marchiel: Sure. So I grew up in Frazier, Michigan, which at the time, was an all white suburb outside of Detroit. My parents grew up in Detroit and moved to the suburbs in the 1970s. They have a lot of nostalgia for Detroit–a lot of stories about the old neighborhood. Growing up, already the importance of urban neighborhoods and the relationship between the city and the suburbs was something that was very much on my radar. But even more important for the project, I worked in fundraising and media for a nonprofit law center in Chicago right after I graduated from college in 2005. While I was working there, I learned about this 1977 legislation that was called the Community Reinvestment Act. Now and then, in my job as a fundraiser, we would sometimes ask banks to fund our programs in financial literacy or children’s savings accounts. And every once in a while, if we had a program that meshed with their priorities, we might raise some money. So I learned about the CRA from that experience.

But to jump forward about two years to when I was back in graduate school and trying to decide on a dissertation topic, it was the summer turning into fall of 2008 and I was out for a jog listening to a podcast. And I heard financial lobbyists talking about the role of the Community Reinvestment Act in causing this emerging global financial meltdown. I actually stopped running to make sure I was hearing this correctly. I knew enough about the CRA from my time in nonprofits to know that it did not have the power to produce what was turning into a global economic crisis. And so, when I got back home, I literally sat down at my computer in my jogging clothes and started searching around to see if anyone had written about the CRA’s origins. And there are some really great works by sociologists, urban scholars, and legal scholars. I was really grateful to learn about the work of Dan Immergluck, but none of them told exactly the story that I was looking for that really put the CRA in a longer and broader historical context. I was really interested in questions like, how does the CRA fit into the story of the rise of neoliberalism? How was it shaped by the Black freedom struggle and other social movements for inclusion? What did it mean in the context of attacks on the labor movement that were also happening in the 1970s? What did it tell us about white flight and the political power of the postwar suburbs?

So I started digging around with those questions in mind and was just so excited to find out that there was a social movement behind this story. And even more excitingly as an historian that they also have a treasure trove of documents in the basement of this organization. It was called National People’s Action. Now, they just go by People’s Action. They’ve dropped the national in recognition that their solidarity is extended beyond national borders. But they granted me unlimited access to the documents in their basement. I could just dig around and see what I found in there. That’s sort of how I found the project.

Scott Ferguson: Wow, that’s amazing. It’s also kind of amazing that your dissertation and your book came out of this profound experience jogging to a podcast–it somehow feels appropriate to talk about that on a podcast. So your book tells the untold story of the anti-racist reinvestment movement in the neighborhood Austin in Chicago that grew into a national and, as you say now, international movement from roughly the 60s to the 80s. Before we dive into that story, maybe you could briefly flesh out the kind of origin story, prehistory, or backdrop out of which your particular story emerges? You do that in the book really, really nicely by laying out the discriminatory politics of investment in the post-New Deal era, out of which this whole thing kind of emerges.

Rebecca Marchiel: Sure. So the story ends up being about a social movement that wanted broadly defined reinvestment. One of their demands was for an end to redlining. Redlining means the practice when banks would refuse to make loans in certain sections of a city because those places were integrating, majority-minority, or sometimes because the housing stock was old and the assumption was that the value would just continue to decline. The activists that I wrote about came of age really during the heyday of the New Deal financial regime. When they were upset about redlining, they were upset about the behavior of very specific kinds of banks–banks that were created by New Deal laws and regulations. These are historically specific financial institutions. Here, “thrifts” were the most important for this story.

Thrift savings and loans banks were really locally oriented savings and loans institutions. And as activists saw, the relationship between these thrifts and a local community was supposed to be a two way street, in that the thrift survived by collecting community savings as they saw it. And then, the thrift’s job was to act as a kind of steward of local wealth or to give people a safe place to put their money–just as safe as under the mattress but with some interest since there was deposit insurance–but also to give people access to mortgages that would help them buy their own homes. There was a particular image of thrifts as community institutions, much like the image of George Bailey’s bank from It’s a Wonderful Life. And a lot of that idea that’s forged in this post-Depression, New Deal period, comes from thrift’s own self fashioning. They named themselves after local neighborhoods, local streets, or Catholic parishes nearby. They’d open their parking lot so people could park there during community events. They’d create savings programs for children and sponsor programming at schools, like art contests. And a lot of white people seem to feel a real connection to this local thrift, this local institution.

They’d go in there to cash their paychecks or to take out spending money. This is the era before ATMs so a lot of thrift transactions are taking place face to face. And I think a lot of folks of that generation, of the activists I write about, or those of us who have parents in that generation, might understand the relationship I’m describing. It’s kind of a joke in my family that my dad is the only customer who still goes into the Comerica Bank in my town. But I think it’s more than an anecdote. I think it’s reflective of a larger historical trend of how people used to interact with these local financial institutions–face to face relationships that often felt personal and meaningful to the customers. Like they always gave me a Dum Dum sucker when I had to go in there with my dad. But it was more than thrift’s own self fashioning that created this image of thrifts being a part of the community’s social fabric. It was also the state that shaped these ideas about thrifts.

The laws and regulations that were forged during the Depression and during the New Deal really created a financial policy infrastructure that made thrifts the type of financial institution where white people of modest means would encounter most and go for their banking needs. For example, it was New Deal legislation that made sure that thrifts would lend primarily in mortgages. By regulation, they were supposed to have 80% of their assets be in residential mortgages. Thrift legislation also encouraged ordinary people of modest means to open their banking accounts at the thrift. They would get a slightly higher rate of interest than a commercial bank was allowed to offer on its accounts. New Deal regulations also standardized the long term, often 30 year fixed-rate self-amortizing mortgage, which was a huge improvement over previous generations, or previous eras of mortgage lending, wherein you’d have shorter loan terms, which meant bigger payments and interest rates that could change year to year and make it really hard to predict how much one was going to pay for their housing.

Sometimes borrowers would owe the entire principal at the end of the loan. If you think about what that meant, then you needed a rich relative, a rich friend, or maybe a second loan to afford homeownership before these New Deal regulations. For white people in the post-Depression era, this was a huge improvement in home financing. It put homeownership in reach for a lot more people of modest means. But, and this won’t surprise your listeners, access to thrifts, their savings accounts, and their mortgage products hinged on whiteness, like many other New Deal benefits. The assumption by the real estate industry and by thrifts who relied on appraisers to decide how much a home was worth was that Black residents drove down property values. Thrifts would refuse to loan in neighborhoods that were understood to be Black. They would refuse to lend to the first Black family that might move into an all white neighborhood.

To speak of the discriminatory policies in relation to being without access to thrifts and these sort of regulated mortgages that were more affordable, Black homebuyers were often left to buy on contract–the system was called “buying on contract.” And this was essentially a form of home buying that was kind of like “rent to own.” Black homebuyers would sign a contract to purchase a home and it often stipulated that they did not actually have claim to the home until the entire cost was paid off. A lot of times, if they missed even one payment, it would mean the loss of the home. They didn’t build equity through contract sales so they’d make payments over and over and never build equity. They had no wealth to take out of the house to buy a new one or to borrow and pay for something else, like the cost of school or something like that. That’s kind of the story of how thrifts function during this period.

When neighborhoods like Austin started to integrate, white Austinites found that savings and loans started to treat their neighborhood like they had long treated the neighborhoods that were understood to be Black. These activists started to hear anecdotally of a neighbor’s kid who couldn’t get a mortgage, or Black members of the community organizations started to report that there suddenly seemed to be more contract selling happening in Austin where previously it might have been happening in a nearby neighborhood but not in Austin yet. So there was this sense that these thrifts that were supposed to be a part of the social fabric of the community had really reneged on their social obligation to the communities in which they were located. As activists saw it, they really thought that their neighborhood built the thrift–that there would be no thrifts without these customers as they understood it.

This changing relationship between the neighborhood and the thrift really politicized a lot of folks and got them asking questions about home financing that white activists had previously just taken for granted. Around the same time, there was the passage of the Fair Housing Act, which was in 1968. This was civil rights legislation that was supposed to make race-based discrimination in housing illegal. It still happened, of course, but the expectation was that discrimination in housing would now be illegal. At the same time, you start to see Black activists in Austin and other communities who have an expectation that they’ll finally be able to access the benefits of the New Deal financial regime, and then they’re frustrated by the reality that they’re still not given access. So that’s a sort of origin story on the role of these discriminatory politics of investment.

Maxximilian Seijo: Transitioning then, could you introduce us to some of the key figures in this urban reinvestment movement that you sort of began to talk about and perhaps walk us through some of its key phases? Coming out of that civil rights context, what spurred the beginning of the activism?

Rebecca Marchiel: I would love to talk more about some of the central players, because there are some really interesting characters who emerge from the archive. To tell the story of this social movement, I focus more narrowly on the national network of community organizations that’s called, National People’s Action, which I mentioned is still around today under the name, People’s Action. There’s a larger movement of folks working on these issues, but National People’s Action, or NPA, is sort of recognized by contemporaries as really leading the grassroots arm–the community organizing arm–of this broader effort. And so, the story of where NPA comes from really starts on the west side of Chicago at this moment when the neighborhood was on the brink of racial integration. It was an all white neighborhood, but integration in Chicago and many other cities took place in a kind of block by block pattern. There’s a great book by the historian Amanda Seligman that explains this phenomenon really beautifully, and it’s also set on the west side of Chicago.

In Austin, a group of white residents already living there and Black residents moving in, decided to work together under a Saul Alinski-style community organization. Their goal was to try to keep the neighborhood a decent place to live, with decent and safe housing, and with viable schools that weren’t overcrowded. But most importantly, they wanted the neighborhood to stay integrated at the moment of integration rather than see it resegregate as had been the case for a lot of other nearby neighborhoods. A lot of those neighborhoods became majority or all Black neighborhoods, rather than staying racially integrated. In that effort, they developed this critique and argument that it was real estate agents and abusers who were causing problems in integrating neighborhoods. They made it a point not to blame folks along the lines of race. Instead, they argued that there were these exploitative real estate practices called “panic peddling,” also called “blockbusting,” that were hurting white sellers who would panic and sell their homes for really cheap. This would also harm Black buyers who would pay more for housing because segregated housing markets mean more expensive homes–they have fewer options and higher prices. And so, they said it was really these real estate agents that were causing harm and not their neighbors.

One of the most important figures who emerges early on is a woman named Gale Cincotta. She was a white stay at home mother and became an activist when her youngest son’s kindergarten class became overcrowded. She was really worried that if no one did anything about it, his education would suffer. So that was the thing that first sort of politicized her and got her involved in local organizing. But according to a close friend, she had already had a history of thinking about politics from a leftist angle. The rumor was that her family owned a restaurant and sometimes she listened to them talk about socialist politics around the tables of the restaurant. But Cincotta also had a really strong preference for urban living, specifically. She was not a person who loved the idea of being in the suburbs where everybody needs to be in their car–t sounded just terrible. She liked to go to bingo nights in the city and she didn’t want to have to get in her car to do it.

Also importantly, she and her husband owned a two-flat in Chicago, which is a kind of structure where you have two separate units on top of each other. They had six kids. They lived in the upper unit, and then Gale Cincotta’s aging parents lived downstairs so she helped to take care of her parents in her home. That kind of setup is also much harder to swing in a single family home in the suburbs. She really was committed to staying in the city and there were a lot of things that she liked about city living that she didn’t want to give up. But I think she was also very angry about injustice. She did not like the idea that people were trying to extract wealth from Austin. She didn’t want other people to tell her that her neighborhood was a bad neighborhood. And that sense of righteousness drove her to organize as well. She emerges as one of the key figures in Austin and then will be one of the co-founders of this national organization as they progressed through the 60s and 70s.

The second key leader who co-founded National People’s Action alongside Sincotta was a man named Shel Trapp. He was a professional community organizer, he was also white, he was known for his chain smoking, and apparently he was very good at swearing. But interestingly, he was also a former Methodist minister–who’s very good at swearing. He described his own commitment to racial justice as being really inspired by the Black freedom struggle, and specifically its iterations in the south. He thought that community organizing would be a career that would give him a good shot to achieve the social change that he wanted during his finite amount of time on the planet. So these two ended up working with several other activists and organizers and neighbors to build an interracial group in Austin starting in 1966.

You also asked to move through some of the key moments. They started this local organization. All of the demands and concerns are very much at the level of what’s going on in Austin. But when they start to organize against this real estate abuse and this panic peddling, the Chicago organizers conduct more research and they learn that there are actually new federal housing policies that are providing a financial infrastructure that really helps panic peddling. These are the programs from the Federal Housing Administration that come out of the HUD Act of 1966 that Keeanga Taylor just wrote her brilliant award winning book, Race For Profit, exploring these programs in greater detail. But the long and short of it is that activists learned that these new programs created by the FHA, that were supposed to support low income homeownership, are actually quite exploitative, and make it such that a house missing plumbing, needing roof repairs, or infested with rats can actually be an insurable home, according to the FHA’s new standards.

The activists realized that this new FHA system, these new FHA programs, have supplanted an older system of home buying and selling that whites in the neighborhoods we’re used to under the New Deal financial regime and working through thrifts. These Chicago organizers, who had been trained to organize at the local level, realize that it’s a federal agency that’s helping create some of these problems. And so, on that logic, if it’s a federal agency and they’re federal programs, they imagine that there must be other neighborhoods like theirs in cities around the country, because this federal legislation must be having similar impacts in other parts of the country. The story from NPA’s lore is that a group of organizers and volunteers actually went up to O’Hare Airport, because they thought that was the nearest place where they could get their hands on a lot of different phone books for metropolitan areas around the country.

These volunteers went up to O’Hare to flip through pages and find organizations with words like housing or community in their titles, and then sometimes just cold-called to say, “Have you seen this pattern of home flipping in your neighborhood, too?” They sort of compiled this list of organizations from there. And they also built on organizer relationships. Some of these community organizers are linked up with each other through clearing houses, training programs, and those kinds of things. That’s sort of how they move national. They recognize that it’s these FHA programs that are causing problems all over the place. As they work to stop the abuse in these FHA programs, they begin calling more broadly for reinvestment. They want these savings and loans to return to their neighborhoods, because from where they’re standing, it seemed like those regulated banks have really disappeared at the moment of racial integration. This does not seem coincidental to them.

I show in the book that even as the organizers were thinking about the role of thrifts, they were always very aware of the idea that more bank loans would not be enough to solve the problems that older urban neighborhoods were suffering from by the 1970s. These problems included: losses of good jobs, buildings in need of serious repairs, rising energy costs, and so on. It was also really interesting that in a lot of these neighborhoods a lot of elderly folks, especially elderly white people, were living in these communities as well. You also start to see the needs of urban seniors living on fixed incomes as one of the things they’re concerned about. They called for federal programs that would help themselves too, with things like reduced costs for senior prescriptions. I can’t recall now if that part is actually in the book, but there’s this awareness that there are a lot of urban seniors who need a lot of help too. When they’re talking about reinvestment, there’s always this more robust vision of public and private cooperation to revitalize the neighborhoods that had suffered the consequences of redlining.

Then, the mid 1970s is really when the movement hits its peak and accomplishes its most important, independent victory, I would say, because in the next part in 1977, they get a lot more legislative help. But with the Home Mortgage Disclosure Act (HMDA) of 1975, also known as “hum-uh,” which is very fun to say, at this moment, the members of this organization in working with allies and Congress, they’ve convinced enough members of Congress to vote for this legislation that said that depository banks–thrifts and commercial banks that held deposits–those institutions had to disclose the geographic location of where they made their loans. Before this moment, activists had been researching deeds of local government buildings and trying to gather evidence to show that there were discriminatory lending patterns. But it was almost impossible. There was a lot of legwork to try to actually document these patterns. So this new information could help them show what before they could only describe anecdotally. This disclosure law in 1975, I’d say, is really when the movement hits its peak.

Two years after that, an ally, Senator William Proxmire of Wisconsin introduced the Community Reinvestment Act–that legislation that made me almost trip when I was jogging in 2008–and this really codifies the notion that depository banks had an obligation to lend in low and moderate income communities outside their offices. The rationale here is that Proxmire really built on that 1975 “hum-duh” law. The idea was that, if you had all these activists who knew where banks were making loans, then they could hold these commercial banks and these thrifts accountable as kind of grassroots financial regulators. Then, the CRA would give these community groups some kind of standing to do something with the information that they finally had. The way it worked was that, if a bank was going to merge with or acquire another bank, then community groups could file what was called a CRA challenge. They could stall that business deal if one of the banks in question had not been responsive to the local lending needs of low and moderate income communities. This is very important for them. It creates a mechanism for community groups to really act like financial regulators. It extends the power of the state to regulate financial institutions. It also gives community groups a new tool to create partnerships with local thrifts or local banks and to try to achieve some of those reinvestment goals that they’ve had in mind for redlined communities. Things like affordable housing developments, home improvement loans, and fair lending trends on older homes–all of these things become possible to ask for with the CRA challenge.

And so, I think the turning point in the book is, after activists have “hum-duh” in the CRA, they lose their ability to shape the national legislative conversations around community reinvestment and bank regulations more broadly. Toward the end of the story moving into the 1980s, the activists moved into using the CRA as a tool for goading banks into helping them acquire more mortgage money–and sometimes small business loans too, but more often than not it’s mortgage money. The CRA is kind of an imperfect tool. It relies very heavily on community bank partnerships to repair the harm that was caused by redlining. But even with those types of restraints, it still creates some opportunities for community groups to win some impressive victories and get new mortgage money into communities where there had been no access to regulated bank loans. And then, I end the story in the late 1980s and leave it at that.

Scott Ferguson: Yeah, that’s great. Can you tell us about maybe one of the, I mean, do you call them in the book sting operations? I don’t know if that’s fair. But they did some pretty crafty stuff, right?

Rebecca Marchiel: Sure. So the activists often used rather confrontational tactics to try to accomplish their goals of increasing mortgage lending and stopping panic peddling. There was an interesting story early in the Austin part of the story when the group is still working at the local level, where Cincotta and her colleagues would sometimes do what they called, “setting up a panic peddler.” What they would do in a case like this is one of the members of the organization might call a real estate dealer, a panic peddler, to say that they wanted to sell their house, to come on over, check it out, and then they’d make an appointment for the agent to come over. When that real estate agent arrived, he would sometimes find 20 to 30 people waiting for him. In one instance, he went down into the basement and found that that’s where they’ve been hiding. Then, they would sort of badger him and tell him to stop working in Austin. And in this one case, in the basement, they surrounded this real estate dealer, so he couldn’t get to the stairs until he agreed that he would not work in the neighborhood anymore.

It was interesting, in interviewing one of the activists a few years ago about his reflections–it was a man named, Joe Mariano–I was asking him to reflect on organizing in the 60s and 70s compared to today, and that was one of the things that he thought was making it harder for activists today. He felt activists have less ability to confront people who have power face to face given the increased concerns about security and those kinds of things. So it’s an interesting tactic, but it turned out to be pretty effective in a lot of cases.

William Saas: As we move into the Volcker era, at the beginning of our conversation, you mentioned that one of your driving research questions was what’s the relationship between this CRA and the dawn of neoliberalism? I’ll just invite you to share what you found there as we move forward into the glorious 1980s.

Rebecca Marchiel: That’s an excellent question. I’d love to talk more about that. At first, I thought I was going to interpret the CRA as kind of bucking the larger trend of neoliberalism, and this seemed at first to be a way in which the state was reaffirming some social commitment to its citizens or the social good by saying that banks had to do something for low and moderate income people. But the more I thought about it, the more the CRA seems to fit more tidily into the story of the rise of neoliberalism, especially when you think about this legislation in the larger context of what activists were really asking for. There was a call for a more robust set of federal programs that would specifically target communities and people who had been struggling in American cities–a call for better access to decent jobs, affordable energy, and so on. It was a very robust platform. But what the activists are really left with is just this tiny little piece of the platform, which is a bank regulation. Read in the moment of the 1970s, the CRA for policymakers in the 1970s, it gave them an out to seem like they were doing something to support low to moderate income people and urbanites without having to address questions of federal resources or federal spending.

One of the reasons that the CRA had so much traction while these other versions of reinvestment didn’t is because, as policymakers saw, this wasn’t going to add any new items to the federal budget. Asking banks to do their part didn’t mean the federal government had to distribute resources at all. I end up seeing it more in line with the shift towards neoliberalism and privatism, then bucking the trend as I originally thought it might.

William Saas: They’re deputizing these community organizations as financial regulators, as you say, and they’re not empowered to do that much, right?

Rebecca Marchiel: Yeah, and I mean, ultimately, it’s a tool that can work. But it’s still a solution to repair the past harms of redlining that’s focused on increasing the debt of the people who it’s being served to. There’s a question about that strategy as a way to move forward to say, here’s new debt for you to manage without awareness about whether or not people are in a position to handle more debt. Maybe they need loans and to repair the past harms?

Maximilian Seijo: Yeah, I think speaking in this vein, one of the things we most appreciated about your book is the way it puts these questions of credit and debt, which is to say, money, at the heart of political history. And very often one imagines overt monetary politics occurring in a bygone past of populist movements of the pre-New Deal era. But you show how similar political impulses motivated this urban reinvestment movement during the mid to late 20th century, as we’ve been discussing. At the same time though, you’re careful to at once recover this movement’s impulses and recognize their limits. Could you spell out perhaps some of the ways you thread this needle?

Rebecca Marchiel: Thank you for reading the book that way because I did try it to be careful about that. I wanted to recover activist worldviews and their beliefs about how banks ought to behave, and to really use activist terms to describe the problems as they understood them. But I also wanted to be able to kind of zoom out, historicize their ideas, and see the ways that historically specific thought processes, ideologies, and institutions really shaped their understanding of what they were seeing. And so, one of the places where I tried to thread this needle, to use your term, was in thinking about banks as intermediaries.

In the book, I use the term the “intermediary myth.” Activists made this claim that they had the right to exercise some influence over thrifts, and eventually they’d say this about commercial banks too, because thrifts were lending their money. That’s the language that they used. That’s our money. And they argued that, as depositors who held savings accounts or passbook accounts at those banks, the money that banks were lending out was literally their dollars and cents being transferred from their savings account into someone else’s mortgage. That’s kind of like that famous moment from It’s a Wonderful Life, where your money is in Joe’s house and yours is in Mrs. Smith’s house, or whoever their names are in that bankruptcy. I was actually reading David Freund’s recent work on monetary orthodoxy and Mehrsa Baradaran, who helped me to think about whether or not this claim of “it’s our money” actually reflected how things work.

I’ll be honest, that’s how I always thought about things, too. I hadn’t really thought much about the relationship between deposits and loans before I started working on this project. I hadn’t thought about banks at all. I was kind of like, “Oh, my goodness, I have to learn all of these things in order to contextualize this social movement. What am I getting myself into?” So I learned from those works, and also following along conversations in Modern Monetary Theory groups, there are folks who’ve been really generous in answering my questions. I learned about the ways that banks create money. It wasn’t that this is our deposits going into Joe’s house–banks create money. The intermediary myth, the way that activists understood banks, it really ignored the reality that financial institutions create money when they make a loan. Actually, embarrassingly, I use the word debit in the book when I should have used the word credit. So I apologize to any MMT listeners who might read the book and know this is banking 101 but there’s always room to learn and grow.

But this intermediary myth really matters because banks are doing the work of the state when they create money. A loan brings into existence new spendable money that’s backed only by a smaller dollar amount in reserve and activists seemed to overlook this idea that banks were creators of state backed money–that thrifts, and banks more generally, were doing the work of the state. At the same time, banks and thrifts had the luxury of acting independently of making their own lending choices without much of a mandate from the state even though they were doing a state function. And so, the decisions that they made really had enormous consequences for resource distribution in the United States. And those choices also had enormous consequences for people living in neighborhoods like Austin.

If St. Paul Federal of Austin decided they wouldn’t make mortgages in one corner of the community, it meant property values could go down there and also meant there might be more vacant or abandoned buildings. If Tolman Federal said they weren’t going to make home improvement loans in that neighborhood, it could mean that a house otherwise in decent shape but needed a new roof might be really hard to purchase if you’re a person with modest means. So even though thrifts and other banks were doing the work of the state in creating money, all these thrifts got to make atomized and independent choices, and in doing so, they really shaped the obstacles and opportunities for people living in neighborhoods like Austin, where people wanted Austin and other neighborhoods to remain good places to live with decent and safe housing. Thus, when an activist said “that’s our money” about a thrift, they weren’t exactly right. A new loan doesn’t literally come from their deposits. But those claims are nonetheless persuasive because they were rooted in what I call the “financial common sense” of this New Deal financial regime.

By that I mean a lot of Americans, including many members of Congress who needed persuading, thought this way too–that it is our money that’s being lent out and goes into Joe’s house. I tried to take seriously the reality that this myth about banks as intermediaries obscured some important truths about banks as creators of money. But it also really mattered because the myth was a powerful one that had really consequential results to help persuade members of Congress to support new legislation. Because those policymakers also believed in the idea that thrifts moved the community’s money around. And so, of course, Gale Cincotta and her neighbors should have some knowledge about where their money was going or not going.

Scott Ferguson: Maybe now we could walk through how neoliberalization really changes the politics and economics of this history? I guess I’m thinking of at least two vectors, one being deregulation. What happens to the thrifts through deregulation processes? And then, at the same time, what happens with the Volcker shock, the rise of monetarism, and the decision of the Fed to try to control interest rates and really jack them up and supposedly try to combat inflation or stagflation?

Rebecca Marchiel: Yeah, so in the instance of deregulation, what I found was an interesting story in which, as activists are making these demands for reinvestment and trying to double down on this New Deal, George Bailey-vision of local financial institutions that are rooted in specific communities, they unknowingly enter this larger debate about the future of thrifts. And it’s a debate that’s being shaped by instability in global financial markets. It’s a debate that is being shaped by concerns about inflation and questions about what interest rates should do to try to address inflation. But as I tried to chart it in the book, you have one group of free market enthusiasts and their allies in congress who think that the way that savings and loans have to weather this unpredictable 1970s moment and its high interest rates is that savings and loans need to become more competitive. They need to act more like commercial banks, they need to have more powers to lend, and they need to not be tied so closely to mortgage lending, in part because if they make a lot of loans or issue a lot of mortgages at a moment of high interest rates, and then 10 years down the line interest rates are much higher, savings and loans are locked into those mortgages at lower rates, and it becomes difficult for them to keep up.

And so, with this group of free market enthusiasts operating from some principles laid down in a 1971 document called “The Hunt Report,” they’re calling for deregulation and saying that thrifts will be able to survive if they are given more freedom to lend in new ways. At the same time, there’s another group of folks in Congress who are calling for a very different vision of how the financial system should respond to this instability in the 1970s. And those folks are calling for more state mandated lending that will look like credit allocation. It’s the idea that Congress needs to become more involved in the way credit is being distributed through the banking system to ensure that hospitals and affordable housing and farmers are getting the loans that they need in order to survive. And so, early in the 1970s, these free market enthusiasts don’t have quite the audience or the votes that they need in Congress to see their vision come to fruition.

Activists, really unknowingly, start to sound like the folks who are calling for credit allocation. They don’t realize that those conversations have been going on before they get to come to Congress in 1975 and ask for “hum-duh.” But by the end of the 1970s, there is an opening because the economic downturn of the era had lasted for so long. There are more members of Congress who are starting to say, “Maybe we need to experiment with something new.” And you also see the emergence of a new regulator of the thrifts through the Federal Home Loan Bank Board. McKinney, who sees it as his goal to help the thrifts survive this period, he imagines a way to do so that is speaking the language of reinvestment by saying that the thrifts will provide services to low and moderate income people, while at the same time asking Congress to grant increasingly liberal lending opportunities to the thrifts who had for so long been tied tightly to the mortgage market. And so, by the end of the 1970s, there is this push to follow the Hunt commission’s 1971 recommendations and let thrifts try to compete as the way to reform the industry.

I don’t remember how much I go into this in the book but there is a real separation between the big thrifts and the small thrifts about whether or not those executives are excited about this possibility, because a lot of the smaller institutions recognize that they’re not going to survive. They’ll be merged or they’ll go out of business as the brave new world unfolds in front of them. For activists, they gain the Community Reinvestment Act in these tools, but they do it at a moment when thrifts are behaving less and less like community institutions. And they increasingly have to rely on commercial banks to partner with them for community mortgage programs. And those commercial banks did not have the same kind of institutional culture that focused on service or community the way that the thrifts had. And so, it’s really an uphill battle, such that in 1979, the activists staged a protest at the American Bankers Association’s annual convention to try to demand more responsiveness for the CRA. A lot of the bankers in attendance didn’t even know what the CRA was even though it had been a law for two years. So there’s this moment of recognizing that getting what they need from commercial things in this era of deregulation is going to be quite difficult. 

There’s another interesting moment during the Volcker shock wherein activists are trying to make the most of the CRA by that point. And what they realize is that in an era of high interest rates, it doesn’t matter if a community bank partnership has been forged and banks are willing to make loans. If interest rates are 15%, then the interest rates are essentially pricing neighborhood folks out of being able to get the loans that a bank might have promised. At that moment, the NPA and some of its allies really start to target the Federal Reserve. They see Paul Volcker and the Fed as having the power to bring down interest rates to ease up on the monetarist experiment. And they say that the Federal Reserve is already controlling credit by allowing interest rates to be so high. So they raised the question: credit control in whose interest? There is already credit control and we need it to work for us instead of for more elite and wealthier people.

At one point, the activists in April of 1980 organized a protest outside the Federal Reserve building in Washington DC to confront Paul Volcker in person. This is an instance where there’s no corroboration in the records about how many people were there; activists say there were 2000, local police say it was maybe 350. But they carried signs that said they were at Volcker’s loan shark headquarters, accusing him of exploiting people because of these high interest rates. Also, one of the protesters involved was this guy named Richie Gallagher who had a friend who worked for Saturday Night Live. They borrowed the land shark costume that was famous from that era and brought it to the protest to have someone drive home the point that Volcker was a loan shark.

Out of this moment, you can imagine activists don’t have very much success trying to target the Federal Reserve to bring down interest rates. They do get a few hearings and a few meetings. But throughout this conversation, Volcker’s Fed repeatedly made the claim that they were not a political decision making institution–that those kinds of political questions about resource allocation were best left to Congress. And so, as the wonderful historian David Stein has shown, in making these claims, the Fed was really ignoring its historic mandate that it was supposed to combat unemployment as well as inflation, in which fighting inflation was the priority at this time. In the end, the NPA does not win this particular fight with Paul Volcker. But what they do walk away with is the sense that a democratic president, Jimmy Carter, appointed this person to the head of the Federal Reserve who is not going to look out for the best interest of working class people. For them, this was a lesson in the bipartisan nature of the shift towards neoliberalism.

William Saas: Awesome. So like several of our guests, you and your work is particularly geographically specific. How would you say that you treat regional history, and why is it important to your overall project?

Rebecca Marchiel: Well, when I first started working on the project, I thought I was seeing activists respond to changes that were specific to the Rust Belt. A lot of older industrial cities in the Northeast and Midwest had these neighborhood groups and these patterns of racial integration and resegregation that looked similar in Buffalo, Cleveland, or Detroit. And in large part that was because the policy framework that structured profit making opportunities to flip houses from white to Black owners was a national policy framework. But then I realized there were other neighborhood groups in my sources from places like Richmond and Atlanta, San Antonio and Birmingham, and some in California like in Oakland and Los Angeles. So I started seeing some of these big and medium sized cities in the Sun Belt where activists were also talking about similar patterns. That raised questions for me about how to characterize what I was seeing in the sources. It seemed it wasn’t just a Rust Belt story.

Then, looking at the language used by these activists, I started to pay more attention to this term, “transitional neighborhood” that many of the activists used to describe their own communities. People would use this term to suggest a neighborhood that occupied both a spatial and imagined middle ground between the suburbs and the “inner city.” These were often largely residential neighborhoods within the city, or sometimes they would be inner ring suburbs, like Oak Park, Illinois, which is the first suburb outside the city’s limits on the west side of Chicago. It was in these transitional neighborhoods that redlining was really a common occurrence. Here, it was really the metropolis–when I was thinking about the importance of the region, it’s really the metropolis, the city and the suburbs together, that mattered more than the Rust Belt, per se. I thought what was really significant to my reading about transitional neighborhoods was that there seemed to be emerging from the sources a shared political worldview that was rooted in the shared experience of living in a transitional urban neighborhood. For folks looking at urban renewal or highway construction, those phenomena and those federal decisions look different in a transitional neighborhood than they might in a suburb or in other neighborhoods of the city.

I was really thinking about a lot that I learned in the existing historical scholarship about the way that the experience of living in the suburbs for white people shaped their aversion to government intervention. A lot of whites in the suburbs associated federal programs with handouts for the undeserving and couldn’t really see the ways that they themselves had benefited from state programs. But in transitional neighborhoods, these processes look very different. Folks living in transitional urban neighborhoods were very aware of the ways that federal policy bolstered residential segregation, or that federal programs, like the FHA programs that I talked about earlier, some of those actually made it harder to live where they live. They actually reduced their quality of life. And so, while many white suburbanites didn’t really see the hand of the federal government, or the role of structural racism structuring their lives out in the suburbs, folks in transitional neighborhoods are very attuned to the role of the federal government and the role of racism stacking the deck against them. I think that transitional neighborhoods were the instance where attention to place was really important to me, more so than a geographic region of the US.

Maximilian Seijo: Moving forward from there, we’re wondering how you see your book contributing to the field of history itself, including the subfields in which you work? In your eyes, what have historians overlooked? And what does your particular case study make newly thinkable for writing history specifically in the future?

Rebecca Marchiel: Well, for urban history, I tried to show a concurrent storyline that was happening alongside the story of white flight, because a lot of the stories of white flight chart the influx of African Americans from the south and an exodus of working and middle class whites who moved to the suburbs and brought their tax dollars with them. Sometimes the assumption built into this narrative is that Black people left in cities were left behind using cities as laboratories for innovative politics, but seemingly because they had no choice but to make do with what they were left with–underfunded governments, shrinking job pools, and growing crime. And so, with that narrative I feel the spotlight is often on the power of suburban white people and all the material and political benefits of suburban living, and that can sometimes make it difficult to imagine that anyone might have chosen to live in postwar American cities if they had the option to. I think that bringing in the story of the way that financial deregulation and attempts to win free investment helps us make sense of the obstacles and uneven access to resources that shaped some city people’s efforts to preserve the places where they lived. So I’d say that’s the contribution in urban history.

In political history, my research reveals other developments that occurred alongside the conservative ascendancy. And those are the histories that often seek to explain the rise of conservatism in electoral politics, and often most visibly in Reagan’s election in 1980. That scholarship sometimes seeks to explain the fraying of American liberalism during the late 20th century. And sometimes working and middle class whites, like the folks who joined the reinvestment movement, will be seen playing a starring role in which some historians think of them as by the late 1960s changing the Democratic Party much the same way they were changing cities by leaving. In my work, I try to suggest that place was really important to this moment of political transformation, given the focus on suburban voters, national elections, and the conservative ascendancy story. Sometimes the playspace politics of the reinvestment activism and other kindred spirits is absent from some of our stories. But what I try to show is that these activists from transitional urban neighborhoods who are thinking about life in the cities, they embrace a populist politics that was opposed to power brokers, whether they be politicians or thrift executives. But all of those people they thought had power used that power to write off their neighborhoods as risky places with no future.

I call this their “strand of social democratic populism” in the book. They demanded that social priorities trump profit motives. As I see it, they came to understand that there was no home for their vision, for their politics, and for national political parties by the end of the 1970s, as I mentioned with their take away from that Volcker moment and the fact that Carter was the person who had appointed him. But their local organizing for urban reinvestment shows the persistence of this social democratic worldview even late into the 20th century and early 21st century in cities. So even as conservative politics gain traction in the suburbs and in Washington, you still see this social democratic worldview among some urban organizers and city dwellers. Seeing the rise of folks like AOC or Rashida Tlaib in Congress, it’s no surprise that they represent urban communities. We almost don’t stop and think about that reality. But they share a lot of the ideas that many urban activists and city dwellers held throughout the late 20th century, and there’s been this kind of continuity of social democratic populism in some of these spaces, even as national electoral politics has rejected these ideas from national political platforms.

Scott Ferguson: Getting back to the potentials and limits or blind spots question, I think about the work of Jakob Feinig, our friend who we interviewed several podcasts ago. He’s trying to tell a story about democratic monetary politics and populism in the United States before the founding. And he sees the New Deal as a compromise–and of course it is in many ways–on the money question where the the Roosevelt administration and that Congress were ready and willing to think and make big legislation and reshape the world anew, but basically foreclosed the big questions about how money is organized, who has control of it, who doesn’t have control of it, and so on. And this is a messy history, but I wonder to what extent the social reinvestment movement you’re talking about doesn’t have a national rhetorical purchase as we move into the 80s. Because that money question, in a deeper way in terms of its endogenous creation, had been foreclosed for so long.

Rebecca Marchiel: I think that’s very persuasive. No, really. I’ve read Jakob’s work. And I’m a big fan of his piece on the moral economy of money. I think that bears out what I found in these sources too. In terms of some of the limits they have when they get to that Volcker moment about what demands they might make on the Federal Reserve, they’re asking for things like a secondary discount window. And they’re asking for things like lower interest rates that the Fed would give to commercial banks that would agree to lend to them. But at no point do they say, money is a social relation or money is something we all need. Foreclosed is exactly the right word to describe what you see in the 70s and 80s. I think it’s consistent with Jakob’s work too because the effect of having some of these regulations and this financial infrastructure put in place starting in the New Deal for a lot of people seemed to be working pretty well through the postwar period, especially for a lot of white people. And so, they came to see the way that it worked as the way it was supposed to work. This was the new common sense. Those older questions about what is money and who ought to control it did not seem to be on their radar.

Maximilian Seijo: One of the lessons that I really take from your work, Rebecca, is that social movements around money and around banking and finance ought to be historicized very particularly and thoroughly. Coming then through the looking glass of neoliberalism, you mentioned Rashida Tlaib and Illhan Omar, it’s interesting thinking about today and the paradigm crisis around banking and finance that we seem to be going through in the COVID-19 crisis and depression as perhaps a new moment for learning from the social movements that you have just told us about–that his reinvestment push is perhaps being able to transform some of their limits, but also really honor the approach that all of these activists take. And so, I suppose that’s not much of a question but more of a compliment and framing for the work that you do in the present.

William Saas: How do we get Powell in a basement…just kidding.

Rebecca Marchiel: Yeah, thank you. Thank you for saying that. I agree, it’s sometimes hard to take one for one lessons from the past. But the lesson that everything needs to be deeply historicized is one that I definitely agree with.

William Saas: Are there any specific lessons you think folks might draw on in left social movements today from this social reinvestment movement?

Rebecca Marchiel: Well, I guess one thing that comes to mind is the way National People’s Action was a reading, writing, and thinking organization. Folks have said about the 20th century populace that a lot of their organizing had to do with educating members about how redlining worked, how the FHA worked, which Federal Bank regulator was responsible for overseeing which kind of banks, and what does the Federal Reserve do? This was all information that the Chicago organizers, Gale Cincotta, Shel Trapp, and their colleagues–the folks at the helm of NPA–they compiled this information and disseminated it to their members. A lot of those member organizations worked on local issues most of the time. And so, folks who might have joined a local community group because they were mad about dog poop all over the sidewalk of their Denver neighborhood would also learn about redlining or the Federal Reserve and how they might spot redlining and what strategies they might use to combat it.

And so, in the current moment, the first thing that comes to mind is the folks who are connecting local community needs like problems of unemployment, especially in the midst of the pandemic, school funding, health care, and linking those local problems to the federal government’s ability to issue currency. I think that those folks are probably on the right track if you follow the model of a reading, writing, and thinking organization. I also think we’re just so lucky that Stephanie Kelton’s The Deficit Myth just came out when it did since it’s such an accessible primer for folks who want to understand how it is that the United States can be such a rich nation with so many resources, but still have so much suffering. Kelton really takes down these myths about federal spending and the impact of the federal deficit, and then gives readers or organizers a different and an evidence based way to explain how the federal budget works. And it’s a description of the federal budget that can provide resources to accomplish what people need to live in dignity and security.

So I guess that’s what comes to mind making those connections. I will say there are some amazing organizations and organizers doing that kind of work right now, like Fed Up, today’s People’s Action, and the work of folks promoting that Uni proposal, as y’all have been doing, asking universities to see the shared interest they have in appealing to the Federal Reserve to survive COVID-19 rather than asking students to come back to campus so they don’t lose revenue from student housing and fees. So some of this work is being done, but there is a long way to go. But I still think that there are some reasons to be optimistic even in these grim times.

Scott Ferguson: Well, Rebecca, thanks so much for this incredible conversation. Congratulations on your new amazing book. Everybody should buy this and gobble it up as soon as you can. Thanks for joining us!

Rebecca Marchiel: Thank you so much for having me. I really enjoyed this conversation.

William Saas: One thing before we go, what was the podcast? If any of our listeners are like me, they’re gonna need to know what you were listening to in 2008. 

Rebecca Marchiel: Oh, you know, you know…

* Thanks to the Money on the Left production teamAlex Williams (audio engineering), Richard Farrell (transcription) & Meghan Saas (graphic art).

Money on the left: History, Theory, Practice – Instructions for Authors

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Resisting Predatory Finance with Raúl Carrillo

Organizer for economic justice and scholar of law, race, and money, Raúl Carrillo, joins Money on the Left to explore the promise of the public money framework for advancing antiracist, anti-imperialist, and democratic politics across the world. We discuss how the public money or MMT perspective shapes his work as an attorney fighting against predatory finance and for an international, rights-based approach to full employment. A significant portion of the conversation is also devoted to Raúl’s ongoing critique of the “taxpayer money” trope in U.S. political culture. In both his recent article for the UCLA Criminal Law Review and a 2017 piece (coauthored with Jesse Meyerson) for Splinter, Raúl persuasively shows that the myth of “taxpayer money” is not only incorrect in operational terms, but also a significant threat to marginalized communities and a major rhetorical obstacle for progressive politics. 

Raúl Carrillo is an attorney, chair of the board of the Modern Money Network, Research Fellow with the Global Institute for Sustainable Prosperity, and member of the advisory board at Our Money. You can read his article for the UCLA Criminal Law Review here: https://escholarship.org/uc/item/7rp8g89c. See his article on “The Dangerous Myth of Taxpayer Money” here: https://splinternews.com/the-dangerous-myth-of-taxpayer-money-1819658902

Theme music by Hillbilly Motobike.


The following was transcribed by Richard Farrell and has been lightly edited for clarity.

William Saas: Raúl Carrillo, welcome to Money on the Left.

Raúl Carrillo: Thanks, Billy. I’m really happy to be here–long time hype man, first time participant.

William Saas: Thank you so much. It’s a long time coming. And we’re really thrilled to have you here. As we normally do, we’d like to ask you to start by telling us a little bit about your personal, political, and professional background as they relate to your appearance on the show today.

Raúl Carrillo: Sure thing, Billy. I’m on this podcast in my capacity, as you all know, as the co-chair of the Modern Money Network, the power vacuum behind the throne so to speak. But I’m happy to walk through my journey and how I got to MMT, which is rich and a little bit unique, just like everybody else’s. That’s sort of how it happens. You don’t come into heterodox economics, much less heterodox interdisciplinary studies, without a wild ride. So I’m happy to take it from the top. I grew up in the US Mexico borderlands, southern New Mexico, west Texas, which is where my folks have been for a very long time on both sides. It is a financial as well as biophysical desert. I grew up in a lot more relative material comforts compared to my community, my family, and my friends, but that allowed me to start to gain an appreciation of the wide gaps between the level of wealth, income, and resources in our area versus others. And so, I’ve always had this economic justice bent given my own family’s history, which has always been focused on racial justice.

I grew up on the stories of the Chicano civil rights movement, the Poor People’s Campaign, alliances with Black activists in the south, as well as stories about indigenous rights. I started to study economics when I got to college in order to better understand the extraction and massive inequality that I had seen back home in the United States and during my time in Mexico and other places. For me, it’s always been about intertwined injustices. When I was studying economics in college, the bottom fell out in a way like it does with everybody else. I was an undergrad learning about why all the things I believed in weren’t technically feasible. For me, this was instruction from a lot of the folks who have written textbooks; a lot of people who had made a career out of capturing political energy, filtering it through neoclassical or orthodox economics, and constraining it. That is essentially what happened to me as an undergrad–upwardly mobile dreams of people of color are cast in a certain way and the economics that attends that is a neoliberal set of economic ideas. So when everything fell apart, I couldn’t explain to anybody back home why things happen the way they happen despite all my time with these economists. This became increasingly frustrating. And so, I turned more broadly into the social sciences and law in particular.

The first MMT thinker I ever read wasn’t Dr. Kelton or Dr. Tcherneva, even though I’m very close to both of their work at this point. It was the work of William Black, who is a law professor and white collar criminologist that wrote a book called, The Best Way to Rob a Bank Is to Own One, after the crisis. He also has an interesting life. He was an assassination target of some financers back during the savings and loans crisis. He has traveled across multiple continents. But what he did that was special to me–and he wasn’t the only one who did this but he was the first one I was introduced to–was to connect some grand theses about austerity and public finance to predation. And I’d say that this is the site of my work today. Again, after the crisis, I abandoned economics in general and then went into law. I spent some time working in California on the multi-state mortgage fraud settlement. Then, I went to law school with a financial reform and racial justice lens. I didn’t really understand money or the deeper roots of the financial system, although I very much wanted to. I was lucky enough to meet Rohan Grey in law school. He was a year ahead of me and had already formed the corpus of the Modern Money Network. Over time, we turned that into what it is today with the help of y’all and many, many other great folks.

Maxximlian Seijo: As you’re alluding to already, you clearly work across myriad areas of law and political economy, and when we were preparing for this conversation, we tried to pour through your work once again and articulate a more or less single thread that links to various projects, which you’ve done just now in one framing and fashion. In our reading, it seems that your work insists that really we can only fully detect, resist, and overcome racism across the globe in a powerful and systemic way if we adopt the public money lens, or the Modern Monetary Theory perspective, which we all variously share. Would you consider that to be a fair assessment? And perhaps could you say more about how you came to this particular conviction?

Raúl Carrillo: Absolutely. Thanks, Maxx. I think that’s a fair encapsulation of the aim of my work as a scholar, organizer, activist, and someone who’s in this space with y’all. For me, certainly my focus has been race. Again, that’s the background and the lens through which I came to this, but it’s more about predation and depression in general, and the monetary architecture that creates those dynamics and lends itself to the exploitation of people of color but also any folks who are marginalized or oppressed in myriad ways. A lot of people have done some really great work about austerity, financial regulation, and social reproduction theory, for example, Zdravka Todorova, Donatella Alessandrini, and others who have been involved in the MMT community. I came to start focusing on race again because of my background, but also because it struck me that knowledge of the monetary and financial system has been used as a cudgel against movements for racial justice, social justice movements for emancipation, and other more egalitarian aims.

We discuss all the time how the “pay for” question is used as a trump card, but it’s really used as a trump card in specific contexts. Usually, it’s to tell people of color or other people demanding rights to shut up. That’s not the case when we think about, for example, the broader security state, the military, the surveillance state, war, incarceration, deportation, etc. The right wingers demand blank checks for the security of a small group of people that they imagine are deserving of care. I know you all touch on these things in MMN-HD especially, but that is also a guiding premise of my work. Having studied how Wall Street and Silicon Valley prey on people, working in a field on how public money finances rights, social justice, socialism, or to paraphrase Dr. King, you can call it whatever you want but it’s a system within which all of God’s creatures are entitled to a certain amount of resources, you really have to confront the monetary architecture. To stop the predation, you have to have a vision of abundance that cuts at the very roots of why the predation happens in the first place. For me, MMT crystallizes that in a way that most other bodies of work and thoughts across the social sciences withhold from doing.

The way that I frame it is that it is extremely difficult to have your eyes on all the balls that are in the air right now. We can’t afford to be in silos as far as movements go. We need to be talking about the holy trinity–race, gender, and class–but also immigration, nationalism, surveillance, climate change and ecology more broadly all the time. And so, the way I try to approach talking to fellow activists, fellow organizers–especially those working towards racial justice–is to try to meet folks where they’re at and also come with an open mind as to what I might learn. I think there’s a tendency, especially among the white Left, to zoom in on the organizers or just everyday people trying to make their communities better, and think that they’re not demanding a certain thing because they don’t get it conceptually. However, I don’t think that has been the case in my experience.

I was a financial regulator after law school. Then, I was a direct services attorney for three years. I worked in an organization in New York where we had a financial justice hotline where folks who were experiencing problems with debt collectors, landlords, or credit bureaus, problems of financial nature, could pick up the phone and call and ask for help in English, Spanish, and sometimes Mandarin. What I remember is that people on the ground have an extremely sophisticated view of money. I remember that from my community, my family, and from other folks. Because that was brainwashed out of me by neoliberal economics, which forces MMT into a position where it’s explaining things that strike people as really jargony and aren’t always articulated in an inclusive register despite the great work that a lot of us have done here and despite the great work that Stephanie Kelton has done, etc.

And so, I think that poor folks across the board, they’re used to making money to pay off loans. They understand where every penny has gone. In my experience, when you talk to people about the public nature of money, even not necessarily MMT, but whether it be public banking, complementary currencies, or another kind of economic development initiative, people actually get it. It’s no more counterintuitive than the premises of Orthodox economics, which are like, assume there is an apple and two white guys on an island and they’re redistributing the apple back and forth, and there’s no society. This is not a good model for analysis in the social sciences, as we can go on and on about.

What I try to do when I engage with folks on the ground, which is maybe a little bit different from when I engage with critical race theorists who have a different jargon problem, is that I tell folks I think you know that money is a public thing, that money is a government thing, and look at how the system is jacked in all these different ways. And people get that. Academics sometimes have a little bit more trouble, partially because they’re locked into the tropes of their own interlocutors, for which I don’t blame academics of color at all. Nor am I here to say that I have all the answers. But I do think that when you massage, interrogate, or just get in conversation with a lot of things that critical race theorists say, for instance, the assumptions are there, and they just need to be teased out.

For instance, there are tons of critical tax scholars who have talked about the ways in which white taxpayers do not necessarily see taxpayers of colors as part of the same social class. And yet when it comes to the macroeconomics or political economy, we still find the tropes of taxpayer money, of the deserving benefit recipients, as Angela Harris at UC Davis says–and that’s to credit Professor Harris on bringing in MMT and interrogating it in a very constructive way compared to some other theorists. So, I think the seeds of thinking about money, more critically, are already in a lot of critical race theory. From my understanding of feminist legal theory, they’re also there as well. What needs to happen is an evolution in the bridging more so than necessarily a course correction, if that makes sense.

Scott Ferguson: I really appreciate that. I’ll say in my own experience just talking to folks in my own community, they tend to have an easier time than a lot of academics I know who I try to talk to about it. Because they can begin with like, “Oh, yeah. Money comes from the government. I guess that makes sense.”

Raúl Carrillo: Yeah, I mean property comes from the government. Whether a contract is a contract is something that comes from the government. All of these basic things that construct our society that economists want to say are brought from the market or whatever it may be, once those people take a minute, they get it. So why would money be so much different than all these other things that leftists and social movements interrogate every day?

Scott Ferguson: Absolutely.

William Saas: Let’s stick with taxpayer money for just a little bit. This is an area that you’ve consistently set your critical sights on, talking about the political and legal construction of the taxpayer as a racialized and racist identity. Recently you published about this in the UCLA Criminal Justice Law Review. Before you published something in Splinter Magazine with Jesse Myerson, called “The Dangerous Myth of Taxpayer Money,” which, by the way, I’ve found to be a very useful article to use in the classroom, so thank you for that. Could you walk us through your argument here and while we’re also on the subject of reception, maybe reflect a bit about how people intuitively understand the publicity of money? Is it the same case with the taxpayer money versus public money argument?

Raúl Carrillo: Yeah, excellent bundle of questions that I really think is particularly important and I’m happy to talk about this right now because of the moment that we’re all experiencing with the uprising and all the very courageous movements shaking what’s going on around the country. This figure, the legal and cultural figure of the taxpayer, is very central to the creation of mass incarceration, the policing system, and the general security apparatus that protects private property. This is obviously not just my insight. My friend, David Stein, the very first guest of Money on the Left, will tell you that. Virginia Eubanks, a scholar of surveillance, will tell you that as well. And many, many, many other people will. It’s no secret that in the United States taxpayer forces have often been reactionary.

I think the best encapsulation of this vision that I’ve come across thus far is the book Racial Taxation by the legal historian, Camille Walsh at the University of Washington. Dr. Walsh has done us all a great service by actually going back into court doctrine, digging into archives and letters between supreme court justices, and finding out the extent to which the figure of the taxpayer, taxpayer money, or taxpayer rights in terms of taxpayer citizenship, is central to the story of the failure of the liberal vision of integration in this country. One reason for that is in order to prevent schools from being segregated, a lot of reactionary forces just reverted to the cultural primacy in the United States of the idea of the taxpayer, of protecting taxpayer funds, and having local fiscal control over that which we consider to be critical to society or to social reproduction.

Just to give a little bit of background on Walsh’s book because my work wouldn’t exist at all without it, Jesse and I wrote this Splinter Magazine piece a year before Dr. Walsh’s book came out, but her book absolutely fundamentally changed the game. Dr. Walsh tells the story of racial liberalism of the Warren court just as much as she tells a story about taxpayer money. For Dr. Walsh, the attempt by the judiciary during the 50s and 60s to not integrate analysis of identity with analysis of economics, as you all discuss frequently, resulted in the material failure to integrate schooling and eventually led to a loss in the journey of Chicano civil rights activists, children, families, and educators in South Texas to achieve equal funding at schools. Essentially, our team in this lawsuit, which was called San Antonio vs. Rodriguez and heard in 1976, had folks who were Mexican-American in Chicano schools alleging that their fundamental constitutional right to education was being violated by local property financing, or a predatory property tax financing scheme.

To an MMTer, of course, that makes intuitive sense. Like if something is supposed to be a right, or something is supposed to be of critical importance, then why is it not supported by the power of the public purse? Essentially, they were saying, we do not have equal schooling because we do not have equal funding, and thus our rights are being violated. What happened in that case, as Dr. Walsh outlines, is extremely interesting and important. Justice Powell, who was formally the superintendent of a local school board back home, turns out is extremely interested in this case and is having back and forths with representatives, taxpayer associations, and other reactionary folks. His ruling eventually stands on the idea of taxpayer money, saying it may be true that under some state constitutions, or perhaps even under the federal constitution, there is a right to education, but that doesn’t trump taxpayer rights.

That’s not exactly the whole thing but that’s what’s important for this conversation. It’s no lie to say that the federal fundamental right to education died at the feet of the taxpayer money trope. And in our fight for new rights now, that is extremely, extremely important. I hope we can discuss that in a little bit but I would like to circle back to this UCLA article and the abolitionist moment in general. So right now, we are seeing calls to defund the police, which while it can be perceived as an abolitionist demand, is not necessarily as I understand it from folks like the organizer, Mariame Kaba. Of course, the question is, after you defund police, what do you fund? What do you invest in and at what level? And other folks are doing great, great work in this area.

My friend and fellow MMT traveler, the sociologist Tamara Nopper, wrote an interesting article in Jacobin a couple of weeks ago, talking about how the defund demand is an evolution in and of itself that should be lauded, and I absolutely agree. Back after the Rodney King beatings and what went down in LA afterwards, a lot of folks bought the idea of minority owned business development and corporate investment and it’s taken a long time to get to the defund movement. Now, the question is: what sort of funding for the nurturing world, for the actually safe world, do we want? I think that fundamentally has to be federal, as any MMTer will tell you for technical reasons. But it also has to be federal for political reasons. And in no small part, it’s to avoid this mess of the myth of taxpayer money.

So the myth of taxpayer money essentially says, whether folks want to admit it or not, the more that you pay in taxes, the more of a damn voice you have in society. There’s this liberal idea that we are all a monolithic taxpayer class and because I pay sales taxes on things, I have a lot in common with someone who pays a lot of capital gains taxes. And I just fundamentally don’t think that’s true. Dr. Walsh’s work makes it abundantly clear that that’s not true. When we think about taxpayers to be extended to social class at all, it’s extremely stratified, it’s racialized, it’s gendered, it’s sliced up, and it’s diced up. People don’t look necessarily horizontally at each other as peer taxpayers. In fact, taxpayer money–this idea that you’re entitled to more because you are a taxpayer rather than a citizen or a human or any other kind of subject–is replete within right wing movements.

It’s obviously essential to the Tea Party, but it’s also essential to the Charlottesville torch bearers and every other white supremacist force in this country. And it’s not just the United States to be clear, even though that’s where we’re situating this conversation. There’s a fiscal sociologist at the University of Alberta named Kyle Willmot, whose work I have been recently diving into, who is a scholar of indigenous taxpayer identity, but is also just investigating the global role of taxpayer associations generally. He finds that taxpayer associations serve a particular role within neoliberalism and within crafting subjectivity, in encouraging people to bound their government and see it as a resource extractor rather than a resource generator, which I think is something that’s very familiar to all of us. I should take here to note that Dr. Wilmont, like Dr. Walsh, takes care to note that taxpayer identity doesn’t necessarily have to be reactionary. It’s in some ways a mercenary concept as they say, but it has been wielded, I think, irredeemably by the right in this country. Although, I know folks have done other work about that, and I’m happy to discuss the ways in which perhaps you all see where it’s recoverable.

But that’s pretty much where I’m at at this point. The UCLA article, which is really more of a short reflection piece, complicates the taxpayer identity within the movement to end monetary sanctions. What I’d be welcoming or open to doing here is having a more integrated and more detailed conversation about the role of taxpayer identity and whether it’s recoverable or not. Maxx, I know you have thoughts on that and I’m sure that other people have thoughts on that, but I don’t want to push it too hard.

Maxximilian Seijo: No, that’s cool. I think Billy has also done some thinking about this. So I can defer to Billy first if he’d like.

William Saas: I think this is more about your work but I really appreciate you opening up space for it. Maybe one of the things I was trying to get to in a roundabout way was talking about reception. I think that’s one of my ways of thinking about whether or not it’s recoverable. It strikes me that even though it is, and I agree with you, probably irredeemable, the taxpayer identity that looms large in all the ways that you’ve identified is also super firmly ingrained and even mobilized by people with good intentions frequently. I know currently we’re talking about cutting university budgets and things like that and the taxpayer trope is showing up. I wonder if you might offer some advice for somebody who is concerned about that long insidious history that you’ve outlined for us, and that Dr. Walsh outlines well in her book, how to, with compassion and respect, offer an alternative? I guess maybe the answer is in the question there, but how do you present this to people humbly and how is it received?

Raúl Carrillo: Sure. This is a great set of questions, Billy. I do spend a good deal of time sort of just shouting to stop saying taxpayer money and say public money instead.

Scott Ferguson: Yeah, so do we.

Raúl Carrillo: Haha, as many of us do. But I think that there’s not a monolithic answer. It is different strokes for different folks. The first question you have to ask is: what are folks using the trope to try to achieve? To give a basic example of one end of the spectrum, if folks are arguing for racial or gender equity literally as taxpayers, like as they’re filing their tax returns, for instance, then that’s not necessarily a frame within which to inject this whole argument. It’s not gonna be as successful. But of course if we’re talking at the federal level, then it’s a lot easier. I think folks are starting to understand that all the money that the Fed is lending out is not taxpayer money. How could it be taxpayer money? We’re all broke right now so how does that make sense? Also, and this weaves into the pertinent questions regarding the UCLA article and the protest, what happens when people feel a sense of injustice as taxpayers, especially at the local level? Lots of folks have argued against incarceration, against utility gouging, against all sorts of things as taxpayers, and they are clearly not right wingers. I have some thoughts as to why this is strategically still unhelpful for us, but I want to pause here because I think that you’ve identified an essential question for this project and for all of us. Given that we pretty strongly think what we think and believe what we believe–and other folks do as well–how do we form a bridge here for people who are very interested in economic justice and social justice?

Maxximilian Seijo: I really like this conversation because it’s an open one that still necessarily insists on some hard values. We’re explicitly thinking critically about the historical and contextual framings that are within this concept of the taxpayer identity that you so well draw together out of some important scholarship. I’ve thought about this in the past and what strikes me is as interesting about the question of public money versus taxpayer money, is that it seems to be about framing, ultimately, because if you’re thinking with public money, there are, of course, operations of taxation inside of the public money framework, inside the fiscal-tax circuit, and many different ways of thinking about that. But it also seems what’s crucially important for synthesizing what has been said already is how one rhetorically frames one’s claim to being accounted for by governance, or another version of some democratic claim on fiscal authority? The taxpayer identity is a problem because it refracts an exclusive vision rather than an inclusive one, which is what the public money vision conversely offers. And so, it’s not that taxpayers aren’t inside a public money framework. It’s precisely that in foregrounding what taxation actually is, what it actually does, the taxpayer is resituated within an inclusive structure of claims on democratic governance and accountability. It seems like that’s what’s at stake in these questions, and I’d be curious to hear your reflection on it.

Raúl Carrillo: Damn homie, I agree with all of that. The problem is that, right now, taxpayer money is the encompassing frame. It’s the bounding frame. And there are claims for equity and justice or revolution that could be made by taxpayers within a public money frame. For me, the more immediate question is, what do we do given how not only exclusive the concept has become in the United States, but how stratified it is? It’s not just that taxpayers, and people who primarily identify as taxpayers, don’t see black and brown taxpayers as taxpayers in the same way that they are. It’s also because of what a progressive taxation structure is, because people pay different amounts of taxes and are in different tax brackets which also quantifies the concept. I would also say it corporatizes the concept. In other words, you become more like a shareholder and less like a rights holder, if that makes sense? Your claim isn’t as a political subject; your claim is as a fiscal contributor. And it’s not an economic contributor in general, to go back to your previous point, much less a social contributor or just a general contributor to the public. It’s about how much dough did you cough up for the taxman when it came around, because that’s the only kind of public finance we understand.

It’s so twisted in the United States that we call all sorts of monetary sanctions that aren’t taxes, but should be thought of as taxes, as not taxes. Fines and fees, court restitution, student loan debt, and all of these sorts of sanctions that are levied on various people throughout the economy aren’t even encompassed within the taxpayer money framework. And that becomes especially problematic when we’re talking about somewhere like Ferguson, Missouri, which is an open air debtors prison, because the local taxpayers association has destroyed the municipalities ability to raise property taxes. In fact, now they run on fine and fee money. The concept is exclusive, as you were saying in the contemporary American context, but it’s also stratified. It sets people at each other’s throats in a way that it doesn’t have to. Even if you just want to highlight everyone as a member of the economy as well as a society, there are many other categories that we can use to describe people. Public money, I think, is one of the broader ones.

William Saas: A critical difference between public money and taxpayer money that I’ve thought about is that the taxpayer identity is something that individuals can latch on to and identify as and then identify themselves as part of a collective and join a taxpayer association, for example, whereas public money is a bit more abstract, and like you say, there are a lot of different categories that we can identify. But there also doesn’t seem to be something that has such a strong rhetorical cachet as “taxpayer” that’s readily available. And maybe that’s an important part of that bridge work you were gesturing towards before.

Raúl Carrillo: Yeah, I think that’s another excellent point. Perhaps we still are on a quest for embeddedness and we’ll find other terms that create individual connection as well as making the points that we make–that money is public at the end of the day in terms of its origin, in terms of its generation, in terms of the source of the enforcement and patrolling of its use that occurs throughout the society, the legal system, and that scaffold. I like public money because for the same reasons, I like public schools still, for instance. But it does not accomplish that yet, or perhaps isn’t capable of accomplishing that connection yet. No term is perfect.

Scott Ferguson: Yeah, I think one other great term other than public money is the framing that Delman Coates is running with, which is “Our Money.” Another way of putting it is this is collective money. This relationship already belongs to us. But yeah, we need to be turning it in other kinds of directions

Raúl Carrillo: Yeah, “Our Money” establishes a social claim while avoiding the abstract term public. And I just said public schools, I like public schools, but a lot of people don’t like their public schools. A lot of people don’t like their public assistance, a lot of people don’t like public public X, public Y, or public Z. So yeah, I’m very here for “Our Money” as a board member and frequent collaborator with Dr. Coates.

Scott Ferguson: Thanks, maybe we can shift gears here. One of the things that you’ve influenced me a lot on is the important but also tricky question about a “politics of rights.” And so, I was wondering if you could lay out why a “politics of rights” really matters? How do you conceive of rights? What’s a bad way to conceive of rights? And what’s the necessary way to fight for certain rights?

Raúl Carrillo: Thank you, Scott. So this is the conversation that is going to make everyone hate me. I swear my whole vibe is synthesizing different intellectual traditions and trying to get them to talk to each other, but this is one area in which I think building a bridge, for instance, between the legal Left and Left economists requires a lot of folks to give up their premises. I know that’s a bold claim but I’m here to back it up and have some scholarship coming out about this in the fall.

So if you were to ask the most lefty lawyers right now whether we should be fighting for rights, I think that a great deal of them would say: “Screw rights, what have rights ever gotten us, rights are abstract and indeterminant.”

Maximilian Seijo: They’re Superstructure.

Raúl Carrillo: Haha, they’re slippery; too slippery to fight for. They’re liberal proceduralist stuff. They’re utterly epiphenomenal. I heard about that on another podcast; everyone listen to Superstructure with Maxx and Will Beaman. Anyways, so a lot of the legal left, and about 60% of those people live in Brooklyn, will tell you that. And I don’t mean that in a good way. It’s not a care-based Marxist approach to the law. It’s one that is predominantly held by white folks. The back and forth within the left legal academy about rights is often really split along racialized lines, as well as gendered lines, to say nothing of comparative constitutional law debates, etc. I’m trying not to be too crass about it, but I see this dynamic reproduced amongst lawyers my age. Just to give some brief background, in the 80s, professor Mark Tushnet, whose work I love, wrote an essay called “The Critique of Rights,” which pretty much outlines what I just said–rights are too slippery, too shallow, and too vague to actually achieve. And it was pretty compelling. I have felt persuaded by that argument at times. This argument was replicated in terms of its ethos with respect to property and contracts throughout this school of thought.

And then what happened is a legal scholar by the name of Patricia Williams, who is a critical race theorist as well as someone who engages in a wide variety of spheres, wrote a book called The Alchemy of Race and Rights. To paraphrase another critical feminist legal scholar, Robin West, I believe she characterized it as unwittingly eviscerating Tushnet’s essay. What Professor Williams said is, yes, rights can be all of those things, but rights are the only thing that has ever achieved a damn thing for marginalized and oppressed people in this country. And that wasn’t to say that there isn’t a generative force or power within, for instance, striking or any other sort of real political activity, but that the rights were also a necessary component of achieving any modicum of justice, much less equality for especially folks of color. That is the perspective that I have pretty much adopted. I think that there are good points made within this debate over the last few decades, on all sides that are really, really important and outstanding, but one thing that this whole sphere of discourse suffers from is an utter reliance on the premises of orthodox economics and also the trope of taxpayer money.

Scott Ferguson: So can you talk about some of your work on specific rights, like rights around our collective work on the job guarantee or a right to a job?

Raúl Carrillo: Absolutely. Most of my work on this has been presentations and other things, but this fall some of this stuff is going to start to see the light of day. For instance, there’s an essay coming out in a book called, Tipping Points in International Law, about the state of international labor law and labor generally. What I try to accomplish in this essay, drawing on the work of some of the people that I’ve just discussed as well as various other legal scholars and economists in the broader MMT and critical money world, is to say that, one, the job guarantee should be pushed through international law, which is messy, difficult and aspirational. But also international labor law, and specifically human rights law, is totally underpinned by a vision of austerity. One sort of expects that is this point now given that the Bretton Woods institutions are thoroughly neoliberalized, but a lot of the covenants in the international human rights law, for instance, are basically trying NAIRU or even something akin to NAWRU, the non-accelerating wage rate of unemployment, which they use in Europe because they don’t like to hide the ball.

There’s this sort of problem that MMT comes at about the public nature of money, which you’d think a lot of otherwise extremely incisive legal scholars would be aware of or dig a little, it plagues the very idea that there is a human right to work, which is something that is promoted by, of course, the Universal Declaration of Human Rights, but also the International Covenant on Economic, Social and Cultural Rights, as well as CEDAW, the new treaty on international women’s rights, and all these sorts of other canonical documents from international law. And this myth is, of course, replicated in various national constitutions and labor laws across the globe, but it’s presence in international law is truly staggering. And of course, there’s no global body to coordinate fiscal policy or anything like that. In placing membership mandates on the members of these covenants, it’s utterly, utterly orthodox, and in a way that it’s damaging to any future for these places.

Maxximilian Seijo: This totally connects up to the recent Democratic primary and some of the questions around candidates’ different plans for an internationalist vision not only for climate change mitigation with the Green New Deal, but as a new way to think about how we address things like trade or other global questions of political economy. The vision that you seem to be offering here is one that takes all of the planet into account and doesn’t then seek to fracture, like perhaps Elizabeth Warren’s plan for a Green New Deal with an American first base approach to what one could call “rights,” into a more nationalist approach to addressing these international questions. And that’s a sort of mosaic, but perhaps you could reflect upon what your vision of a more internationalist framework for rights in relationship to employment means for the Green New Deal?

Raúl Carrillo: Sure thing. Perhaps this should have been the preface before talking about this book chapter. I’m not under any illusion that liberal internationalism is going to save us. That being said, I do believe that there is a more social democratic form of international human rights that is available. That’s a bit of a contentious thing to say in the legal discourse at this point, but that’s because I’m an MMTer. I think that a lot of the reasons that rights are abstract and indeterminant, vague and slippery, are fiscal and administrative. The person I owe extreme debt to here is Phil Harvey at Rutgers University. Phil has been a scholar of, as he says, the law and economics of the right to work–I would say the law and political economy of the right to work–for about 30 years. And Phil began his journey by investigating human rights law, but also investigating the transmission of some New Deal insights into international law via the United Nations Foundation and the creation of these various covenants. Phil mapped how FDR’s “Four Freedoms” were eventually transported to Geneva and became the basis of a lot of second generation of rights that actually is enshrined in international law but that we do not have in any real way in the United States.

Phil pointed out that, amongst other problems, the issue here is that the bills, the actual legislation for direct job creation, caps things at inappropriate levels. It creates no clear maps for courts to follow when they’re trying to determine if the government should try to redress a violation of a right to work and all these sorts of other operational and administrative problems. Now, Phil’s not an MMTer. And in fact, professor Harvey and I disagree on how the job guarantee should ultimately be financed, for instance. But he did make this point that this connection between public finance and rights has to be totally revisited. My contention is that if they’re fundamental rights, then they demand blank checks in the same way that the Pentagon does with their atrocious demands without anybody batting an eye. I mean, we bat an eye over here on the left, and the liberals do too, but it never really changes. Speaker Pelosi shepherds in Trump’s military bill. And the reason for this is not just that I am an MMTer. It is that the resiliency and stability of rights enforcement depends upon full funding and service.

Dr. Harvey said the distinction between a job guarantee and direct job creation is that enforceability is the individual right. And there’s an allergy to judicial enforceability of rights on the Left, because we don’t trust the courts, and that’s understandable, but Dr. Harvey empirically showed that if you have clear tests for what’s supposed to happen, for instance, when someone can no longer work in a particular job or there’s an ecological problem within that job site, what’s supposed to happen in terms of redress, is the courts are more willing to follow these sort of rubrics. Yet, the missing piece is, again, the funding. The funding has to be open ended if it’s to be a fundamental right. And that doesn’t mean that everyone’s going to flood the job guarantee all of a sudden, because you still have to want to do that type of work with that wage level and benefits. But if people can’t gain redress if they’re kicked out of the job guarantee program or not allowed in because of their race, gender, sexual orientation, or whatever it may be, then the rights aren’t real. You need something like an MMT vision to ballast anything like a social democratic or Green New Deal vision of rights.

If you bound them to a pot of money, a trust fund, or tether it to attacks, and God forbid attacks on your enemies, then you’re gonna run out of money. Not in the grand sense, but you’re going to run out of money in the administrative sense and the program is going to fail. People are gonna hate it. If the job guarantee can’t consistently hire people to produce things in the public eye so that people are perceived as successful, then it’s not going to take off as a political enterprise. And the Green New Deal doesn’t just include the job guarantee; it also includes a housing guarantee, an education guarantee, and a healthcare guarantee. So we’ve got four rights we need to fund. I think we need to be just as voracious and as fucking loud as the right wingers when it comes to providing the resources and the structure that we need to create and reproduce anything like a just society.

Scott Ferguson: Beautifully put. And this actually recalls a slogan that I came up with last year that I actually haven’t thought about in a while which is: “Inalienable rights require inalienable money.”

Raúl Carrillo: Exactly, Scott. I think yours is better, haha.

Scott Ferguson: Yours is the explanation, mine’s just the sign you hang out front.

William Saas: We’ve talked a bit about your work across various important fields. I wanted to wind us down by letting you talk a little bit about the advocacy that you’ve been up to recently on the hill, and to include things like your critique and commentary on the Libra Facebook currency and anything else you might like to talk to talk about.

Raúl Carrillo: Thanks, Billy. For about 10 months now, I have been working with a consortium of labor groups, consumer advocates, financial reform advocates, antisurveillance advocates, digital rights advocates, antitrust advocates, and various other folks on a progressive left response to what’s going on in financial technology. I know y’all have had Rohan and various other techie people on here before. My role is not really as an engineer, but as an architect. I get to break shit. I get to say when things shouldn’t be allowed to exist as they’re proposed based on various bodies of financial regulation, law, privacy, etc. That’s what I’ve been up to for roughly the last year and we’ll be continuing to do for the foreseeable future. To connect it to our discussion, I’ll tell you that in my work around the hill with all these advocates, the MMT perspective has actually been essential. Because what’s happening right now in the financial technology or #FinTech sector, is what we can loosely call the automation of finance, to quote Brett Scott.

But it’s also much bigger than that. What we’re seeing is Silicon Valley starting to exercise monetary power and vie for monetary agency in a way that mostly banks have done previously. And because they’re not banks legally, they get away with a lot of shit. This is predation in the same way as Wall Street targeting certain people to bring into a shadow financial system is. But I would argue, in terms of magnitude, it is more scary because of surveillance. Because the way that the internet works is that it takes our data, or on some occasions, it creates data about us in ways that are punitive. And so, all these big tech companies are starting to move into the financial services space, and particularly into the payment space. And the reason for that is that it’s the next data frontier. Right now, Facebook knows what you like and it has the content of your communications with people who are near and dear to you in your life. It doesn’t necessarily know what you want or what you would spend money on beyond what you like and the ads you click on, etc. Despite the existence of various thin legal firewalls and a few technological firewalls, they want the payments data and your social media data and also they know more about you so they can sell you another goddamn ad, but also so that they can increase their general economic and political power.

And the worst example of this is something called the Facebook Libra project, which as I argue in something called “The Libra Black Paper” that was created with the Americans for Financial Reform in Education Fund and the Demand Progress for Education Fund, is they’re creating a combination shadow banking system and local financial surveillance tracking. The money is going to serve as the basis for broader financial infrastructure, as every MMTer knows. That’s the goal. If you want to create power, mimic the ways of the sovereign. But also the goal is to watch how you move the money. Now, banks already do this to a far greater extent than most people are aware of. But their business model is not selling that data or sharing it as Facebook will do. And so, what we’re seeing is a giant collision between Silicon Valley and Wall Street. It also includes all these ticky tacky startups, which can be predatory and dangerously exploitative in their own way. But we’re seeing Amazon, Facebook, Google, and Apple, not to mention a bunch of larger companies in China, who are entering the monetary realm. And in the United States it’s particularly troubling because we don’t have any fucking privacy law.

This is another instance in which folks think they have rights, but they’re like consenting in a boilerplate contract to having your face analyzed. And otherwise, you don’t get to use the service and sometimes it’s “opt out.” No one gets punished to the extent that they should. I might be exaggerating a little bit, but not too much. We’re seeing, as of now, an utterly unregulated, wild west, unnecessarily imperialist Silicon Valley start to do some of the things Wall Street did with the added layer of surveillance, which also connects to state surveillance because the NSA and other organizations, as Edward Snowden showed us, have a backdoor into Facebook’s facial recognition database of protesters, for instance, where people who aren’t following the rules about pandemic guidelines are targeted. So sorry to ruin your day but that’s what I’ve been working on.

Another thing I haven’t really touched on is the color of surveillance and fitting that within the racialized predation framework I talked about earlier. Again, the Facebook Libra project is basically a combo of financial extraction and data extraction. But it’s hard to really overstate the ambition here. When this project started, it was sort of just a middle finger to regulators and policy makers generally. And my sort of personal thesis is that Facebook was doing this because that’s just how it roles. The old slogan is “move fast, break things” regardless of whether they’re laws, apparently. 

And so, the idea is to create these coins which are called stable coins. As opposed to unstable coins like Bitcoin, they’re supposed to maintain value as a medium of payment across various jurisdictions and economies across the globe. And for now, it’s just these coins. And then Facebook gets to create a digital wallet that people use for transactions which collects its own data, etc. The whole thing is actually not technically a Facebook enterprise because they’ve taken great pains to shield themselves from liability by creating an association in Geneva, Switzerland, which is of course famous for its very strong banking laws. And it has this nonprofit techie altruistic clause, which is fundamentally neoliberal. It says we’re going to create a payment method, and eventually a whole financial infrastructure, including lending, credit scoring, and all kinds of things. It is going to bank the unbanked, not just in the United States and Europe, but across the world and perhaps especially in the global south. That was the message that came out. 

In fact, in September of 2019, the CEO Facebook’s Libra enterprise, a guy named David Marcus, boasted that “Libra is going to allow the free world of Western nations to preserve the influence that, in my opinion, is necessary to maintain a good balance in the world.” It’s not difficult to just call this an imperial grab, right? And the way they’re going about this is equivalent to monetary primitive accumulation, as Mat Forstater in the MMT world describes it. They are defining what the method of payment is. The idea is that maybe it’s not accepted as taxes right away, but it’s needed for various other services if you’re interested in quick payments or if you’re interested in digital payments at all. There’s a socio-legal necessity that’s there given a weak infrastructure in the financial sectors of some economies around the world. And so, the data grab doesn’t work unless you get the currency grab. It’s currency substitution. The idea is instead of dollar-izing these economies, you Libra-ize them, and then you can Hoover up data as well. And maybe folks don’t have IDs in a certain country. In that case, what they’ll do is allow them to use their Facebook profile and a facial, retinal, or fingerprint scan, and all kinds of other things to get into the banking system. And they have all these sort of nasty techtopian plans.

Of course, the casting is altruistic because if you’ve ever been in the unfortunate spot of being next to a finance bro at a bar, you know that they know they’re jerks. But Silicon Valley people think they’re good still. They see this really as a civilizing force throughout the world. And so, it’s fundamentally an imperialist enterprise in many ways. Why in the world would anyone who cares about any sort of justice at all allow this to happen? No one asked Facebook to do this. What is it going to mean if folks like Dr. Sylla, who is fighting against the CFA Franc in Senegal, have to contend with the internet trying to beam in and take away its monetary sovereignty even after they’re successful against Macron? How is that supposed to be good for anybody for any of the things that we believe in? But yeah, Iza Kaminska at the Financial Times has called this “imperialism by stealth.” It’s just as naked when you look at the facts, but it’s coated in this California ideology gloss.

Scott Ferguson: Yeah, it also reminds me, to bring this back to the Fed, that recently Jerome Powell is on record weighing the idea of public Fed banking and banking all the unbanked, which is what this California ideology in Silicon Valley is purportedly wanting to do. What is his answer? Oh, no, no, that’s a terrible idea. The private sector will hate it.

Raúl Carrillo: I’m glad you brought this up because the war on cash isn’t just the war on cash, or the gentrification of payments, as Brett Scott calls it. As our colleague Rohan Grey says, it’s a fight for the soul of the future of digital money. It’s becoming pretty clear that the monetary system is going to become increasingly digitized. Obviously, most money is digitized. Most of the layperson MMT metaphors get it that money is increasingly keyboard strokes, digital electrons, etc. But really what we mean by this is the decreasing presence of cash as a form of money and therefore of privacy in many ways. The innovative work that’s being done around money as private cash in the digital world is mostly being done by people I have a lot of respect for, but they are not interested in a public money framework. These folks are interested in private-private money; they’re not interested in private-public money. That really is what’s going on here. There’s this conversation about creating essentially digital bank currency systems, some people call it the digital dollar, that really involves the core of this debate. And I just want to make clear that I absolutely support bank accounts for all, basic financial services for all. I don’t think that’s a neoliberal idea. I think that’s necessary.

The issue, of course, is when private credit or lending becomes the purported vehicle for curing poverty. That gets predatory real, real quick. It gets extra predatory with FinTech because, again, we’re not just talking about potentially outrageous interest rates. We’re talking about the data. We’re talking about increasingly building a scored society, as Dr. Nopper and also law Professor Frank Pasquale have both written about. These apps, as Dr. Nopper says, analyze one’s digital character. They create an image of you which has been shared, probably not just within the financial world, but within a whole sphere of industries that now rely on data collection. And finance becomes another gateway by which corporate tycoons gain more and more information about people. But it’s not just the ads and the antitrust violations. It’s the insane surveillance that crosses over to state surveillance.

Because again, the government is usually just one subpoena away from getting this information. It requires these big tech companies, in something called the Upstream Program for the NSA, to release certain kinds of data that includes the contents of communications, including your texts, for instance. And this becomes especially dangerous when you consider the color of surveillance. A lot of these FinTech products are marketed specifically to communities of color and other marginalized folks because they are folks who are more likely to not have a traditional bank account or to be excluded from the “mainstream system.” And I would argue that this is predatory. And it’s not just predatory because of the financial extraction, which is bad enough, but it’s predatory because you are jeopardizing the health and safety of people of color in a white supremacist state that is running absolutely bonkers right now.

We know that these companies have to fork over data to federal law enforcement and some of them willingly fork over data to local law enforcement. That’s what Amazon Ring is–in order to protect the white suburbs, protect their property and their goddamn taxpayer money from super predators in the embryonic criminal class, as Khiara Bridges would say. You have to create more surveillance. Workers must be watched, delivery people must be watched, people who borrow money must be watched. Amazon has this camera that says what’s up to anybody who comes up, and then that goes to the cops. And so, what happens if a delivery worker is also a protester? What happens then? And even outside of the protest context, surveillance is the norm for black folks in the context of public assistance and predatory debt. And it’s the case for many, many other people, including Muslims, for instance, and anyone who’s considered to be a threat to the Trump administration. So this whole FinTech enterprise needs to be chilled. Everybody needs to cool it. I understand that lots of folks are into financial innovation, and I would welcome their skills at blockchain or whatever it may be within the public sector. Because if the goal really is to include people, MMTers know what the right organ is for that. I think in order to push back against predation, we have to empower public money for public power in myriad ways, and not just as it is a monetary enterprise narrowly, but as it is a social one broadly.

Maxximilian Seijo: That’s sort of exciting and depressing in its own way as you suggested. But I think with that, I just wanted to say what a pleasure it’s been Raúl to have you on Money on the Left finally after all of these episodes. I think this is episode 28 now. Yeah, it’s really been such a pleasure. We are really happy to keep having these conversations and keep making this show in ways that highlight the certain things that we’re all doing as well as bringing others into the fold. And this very much fits into the former of those two things. It’s been great. Thanks so much.

Raúl Carrillo: Thanks, Maxx. It was a real pleasure to finally jump on here. Hope to return fairly soon and I will be listening to every episode. Y’all keep on truckin’.

* Thanks to the Money on the Left production teamAlex Williams (audio engineering), Richard Farrell (transcription) & Meghan Saas (graphic art).

13 – Gramsci Overboard

Joined once again by Natalie Smith (officially a cohost of Superstructure!), Will Beaman and Maxximilian Seijo discuss the work and legacy of Antonio Gramsci. Opening with a close reading of Amber A’Lee Frost’s 2018 essay titled “Daddy Issues,” Will, Naty and Maxx critique the exclusionary assumptions at the core of Gramsci’s conceptual understanding of working class struggle as well as his understanding of the connection between education and populist politics.

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.
Twitter: @actualflirting

12 – Robinson Crusoe Didn’t Kill Himself

Re-evaluating the left’s symptomatic preoccupations with the Epstein scandal, hosts Will Beaman & Maxximilian Seijo critique the atomizing and othering “Islands Discourse” that animates such responses. Will and Maxx begin with the island obsessions behind the TrueAnon podcast and Jacobin Magazine. They then historicize such desires through critical close readings of Gilles Deleuze’s Desert Islands and Karl Marx’s analysis of Daniel Defoe’s novel Robinson Crusoe.

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.
Twitter: @actualflirting

11 – Fully-Costed is Dead (with William Sorenson)

In this episode of Superstructure, hosts Will Beaman & Maxximilian Seijo reflect on the shape of the post-Covid19 Left across the English speaking world with fellow MMTer and UK Labour activist William Sorenson.

Reaching topics from the UK’s Job Retention Scheme (JRS), to the US’ Municipal Liquidity Facility (MLF), to Scottish independence, as well as the broader horizon of possibility for a renewed and abundant left fiscal imagination, William S. sketches an analytical framework for a locally sensitive Left-MMT politics.

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.
Twitter: @actualflirting

Money, Music & Method with Alex Williams

Economist, musician & Money on the Left audio engineer, Alex Williams, joins the podcast to discuss money, music and method in light of Modern Monetary Theory and heterodox economics. At the outset, we chat about methodology and the riddles of “administrative capacity” that drive so much of Williams’ work. Next, Williams guides us through his proposal for arts and culture provisioning under a federal Job Guarantee by way of a critique of the anti-money, laissez-faire DIY music scene in which he came up. Finally, we turn to Williams’ much-touted master’s thesis & recent popular work on stabilizing state and municipal balance sheets during crises like the coronavirus health emergency. 

Check out some of Williams’ important work: 

The Job Guarantee and Cultural Equity: Gatekeeping and Popularization,” Global Institute for Sustainable Prosperity, Working Paper 127, 2020.

Intragovernmental Autonomous Stabilizers, Master’s Thesis, Bard College, 2020.

Structuring Federal Aid To States As An Automatic (and Autonomous) Stabilizer,” Employ America, 2020.

Find Alex on Twitter: @tragicbios

Theme music by Hillbilly Motobike.


The following was transcribed by Richard Farrell and has been lightly edited for clarity.

William Saas: Alex Williams, welcome to Money on the Left.

Alex Williams: Hey, how’s it going?

William Saas: We’re super excited to have you. As the listeners probably are already aware, you are our audio engineer and producer, but also you just finished up your program at the Levy Institute at Bard. We met you a few years ago at the first MMT conference, and so, we wanted to start off, as we normally do, by asking you to tell us a little bit about your history and how you came to be and do what you’re doing.

Alex Williams: Sure. So I’m from New Jersey originally. I did my undergrad at McGill in Montreal, Canada because it was cheaper to rent an apartment and go to school in Canada than to stay in state and live with my parents. At the same time, I knew that Montreal was a city with a good music scene. There’s been generations of notable artists. It was The Unicorns and Godspeed back then, and then there was Grimes and people like Mac DeMarco. So I was there during that. I was also there for the student strike in 2011 and 2012. I don’t know how much coverage you got in the US but the province was basically going to raise tuition by a couple of percentage points and there was a huge reaction against it. And so, people did sort of Occupy-style organizing and there was an Occupy-style political mood. People were out in the streets banging pots and pans, making themselves heard, and doing the whole spontaneous order approach to political action. At the end of it, they canceled the tuition raise, they didn’t bring the money in from anywhere else, and the Parti Québécois won the following election running on the charter of values, which basically says that you can’t wear a hijab on the metro. It was a big sharp shock in terms of whether this approach to organizing actually does stuff that matches up with its kind of political rhetoric.

That’s how I got interested in econ generally. I participated in that and felt there needs to be more happening here. And I was doing an econ degree because that’s the sort of the thing you do if you want to make sure that you can get a job regardless of what that job actually does. Because I was up there to play rock and roll. I’d been a studio rat the whole time. But in my third year, after all that stuff had boiled over and then faded out, instead of going to class, I would just walk around the library and pull books out in the econ section on the third floor. At one point, I got ahold of Capitalism, Socialism and Democracy by Joseph Schumpeter, which I read and was like, “Wow, you can actually make interesting arguments in economics.” You can actually say something. This isn’t all just Lagrangians that are attached to abstract abstractions. You can make a concrete argument and you can even come to actual unexpected arguments as opposed to the faux-unexpected, sort of Slate Magazine type arguments where it’s actually safe if you ride your bike without a helmet kind of thing. [Schumpeter] saying “Socialism will win but that will be bad because it will be bad for productivity, but at the end of the day, it’ll be good,” I was like, this is actually an interesting argument. That was pretty cool.

So, I finished the degree and had wanted to be a musician and had spent the whole time in the DIY scene playing guitar in a whole bunch of bands. I added it up at one point and played something like 110-120 shows in that four years. I also teched on a bunch of albums because I don’t really know how to play an instrument. The thing that I’m good at is sitting behind the desk as people can attest listening to the podcast. When I was done with school, I got working in the music industry for a company that I still work for–an absolutely lovely company. I work in the music industry now still, paying artists essentially. And one of the things that was difficult for me was that a lot of music and a lot of art generally likes to figure itself as a kind of revolutionary force. People like to say, this artistic expression will challenge people’s ideas down the line, with a bunch of question marks in the middle, and then political change. This is an argument that we’re all familiar with. And so, the combination of dissatisfaction with how things had gone in the student strike and dissatisfaction with how things tended to proceed rhetorically in music drove me to get progressively more and more serious about political economy type stuff. There’s that famous Vonnegut quote about all of the artists in the entire English speaking world focusing 100% of their energies on destroying the Vietnam War and it hit with the impact of a cream pie dropped from a six foot stepladder, or something like that. Which I think is true–I had all those specific energies and dissatisfactions.

Around that point, I found Naked Capitalism, which Yves Smith runs, and through that found Randy Wray’s book. This was Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. I read this and it was totally baffling because I had done an econ degree. I hadn’t done any accounting. I hadn’t done any political economy. I hadn’t done any of this stuff. But I fought my way through it. This was the original version, not the second edition–the one with the gray cover, not the white cover. And at the end of it was like, “Oh my God, if this is the case, and there’s a really good argument in here that this is the case, then a lot of things are not what they seem and a lot of things need to change, but also there is a lot more room for those things to change without changing other things that people usually assume.” There were even points in the Occupy movement where they were like, “We have to reinstate Glass Steagall.” But if you actually dig into it, Jan Kregel, for instance has a fantastic paper about why we can never go back, and how it’s really regulation Q and arbitrage on interest bearing deposits that led to the end of Glass Steagall rather than its repeal bringing forth daily speculation and this, that, and the other thing.

Anyway, this is getting a little bit far afield, but I read Randy’s book, moved down to Texas, and then went to the MMT conference at Kansas City in 2017. It was interesting because I basically came up through online MMT and had only heard about it because of online MMT stuff. From what I understand, it had previously been the PK conference, and this was the first year that they were doing it as the MMT conference.

Scott Ferguson: Yeah, and just for our listeners, that’s the Post-Keynesian conference.

Alex Williams: Right. It’s a long running thing that goes back to Rutgers and East Tennessee with Paul Davidson and Jan Kregel and all those guys. But they ran this one explicitly like, if you’re from the Internet, you’re welcome to come here and hang out. And I was like, “I’m from online. This is only an eight hour drive or whatever.” And so, I drove up and stayed in an Extended Stay America that didn’t have any towels. The next time I went to Kansas City my car got broken into–every time I go there there’s always something.

Scott Ferguson: I got rear-ended there, actually. It’s funny that you say that.

William Saas: I had a lovely time.

Maxximilian Seijo: Yeah, it was great.

Alex Williams: Well, yeah this is the next year when I got my car broken into. I just don’t get it. They have really good ribs though. There’s Joe’s that’s like at a gas station or whatever. But anyway, that’s also far afield. So, that’s how I met you guys. It was at that conference. After meeting you guys and meeting Tankus and everything, I realized that there was something to do in this field and that there was a reason to put energy into this and pursue it. Then, I did a reading group with Tankus where we read the The General Theory of Employment, Interest, and Money, and I got a whole bunch of other reading recs out of him–frequent Money on the Left guest, an absolute genius, runs a Substack now: Nathan Tankus.

From there, having stayed in this horrible Extended Stay America and gotten my car broken into, and not wanting to commit to a PhD, I ended up going to the Levy Institute at Bard College where Randy Wray was teaching rather than the University of Missouri at Kansas City, the other big MMT hub. That’s how I got to the master’s degree. One of the other things that has happened since the master’s degree is that there’s just a lovely community of people on Twitter. Like it’s not just online MMT but there’s also the weirder finance Twitter out there that has been very instrumental in helping me to understand how all of these big macro ideas ramified down through individual things and why all these conversations that seem serious to mainstream economists and that initially seem not serious to heterodox economists actually do attach to other stuff–there’s actually thoughts here and there. That stuff is how I eventually wound up where I’m at now, which is wanting to ask new sorts of questions.

The joke I have running right now is that my project is about material history, market microstructure, and ontology–I guess it’s not really a joke, we can take that out. Those are the three things that are broadly of interest in the imaginary program in my head. These are the things that I want to ask questions about. Because if you think of monetary theory of production in the Keynesian sense or production for profit and not for use in the Marxian sense, looking at either of those requires that you go and look into the granular mechanisms by which profit exists, which then takes you into market microstructure in lots of really gnarly ways. So yeah, that’s how I got here.

Scott Ferguson: That’s great. To take it back a little bit, when we first met in person, I believe it was when you were in the audience of our panel on “MMT and the Humanities,” and you raised your hand from the back and asked me a question I wasn’t prepared to answer about John Dewey. It was great. I was really nervous that day and wasn’t really sure what to say in response to it. But that opened up a window for me into Alex, who is so capacious and will one moment talk to you about the inner details of Deleuze and Guattari’s theoretical framework and then just wonk out on some crazy, technically detailed policy proposal. I was wondering if you can just give our listeners maybe a taste of–I mean, you’ve already mentioned Schumpeter and a few folks along the way that have been important to you–but some of the thinkers, some of the writing, and some of the schools of thought that you find really influential thus far in your career.

Alex Williams: Yeah, I actually was thinking about this the other day when I was thinking about how would one teach economics just generally. And I think this is one of the things that Fred Lee does extremely well in his textbook, which is Microeconomic Theory: A Heterodox Approach. In this book he basically starts out with ontology, or what is there, and then epistemology, or how can we know about what’s there, and then offers models as a way of dealing with epistemological and ontological questions. How can we represent what is there in a way that we can make knowable claims about it? From there begins economics. In a lot of places, that stuff gets swept under the rug or it gets pushed into philosophy of science or it gets dumped in a lot of different ways. But the thing is, having a handle on the conditions of possibility for doing economics, I think, is really helpful for doing it. Because it lets you cut through a lot of stuff when people are making abstractions, or even worse, making aggregations and then changing the definitions of those aggregations. Being able to pin that stuff down at a very molecular level almost makes it way easier to figure out what kinds of models and arguments are good. But the problem is, all of that stuff can be well and good. There are all kinds of platitudes when making models. But to actually do that and to do that in a way that you feel like you can defend, you do kind of have to take a tour through the history of philosophy in a way.

I mean, I disagree with Fred Lee and with Cambridge’s Tony Lawson and a number of other people who do the critical realist grounded theory thing. Basically, I came into econ to alter the world, which requires doing politics because the social world is as embodied as it is in politics. Politics are the juncture between thought, material action, and rhetoric. So, the first place that I ended up going through there was the postmodernists. I lucked out with an early engagement with them. They do this whole big song and dance where they’re like, “Oh, actually these metanarratives and totalizing systems aren’t real because we have to append a whole bunch of multiplicities to them and then live without this global metanarrative.” And when you’re a student, you think, “Oh, they’re taking this seriously. This is a big deal.” We had these big frameworks, and then these big frameworks had been proven not to capture sufficient detail. That all seems well and good, but then you look at what happened 60-70 years ago in the US and in pragmatism written broadly, where they’re saying, “No, all knowledge is immanent knowledge to doing something in that time and place.” Everyone is specifically embodied and different embodiments mean different things in different locations, and all these things eventually get coded as the postmodern turn.

Think about the work of Richard Wolff and Stephen Resnick at UMass, Amherst, where they argue that class is just a lens to enter into Marx as a dialectical method and is not reducible to the Marxist system. The pragmatists, by immanently defining all of this stuff and saying, “Look, everything has a local logic, everything makes sense in its little neighborhood, but those neighborhood logics don’t add up and don’t all have the same functional mapping from one neighborhood logic to another,” you have to develop knowledges that are efficacious for what you’re trying to achieve in that local neighborhood rather than having to make big broad global claims about what is known and what is knowable. So, the epistemological turn saves you from doing “I just heard about Marx” type stuff, where you hear about Marx for the first time and then you go, “Oh my God, if everybody knew about this, the world would be different because this is transcendently true. And the only reason that these proposals haven’t been enacted is because nobody’s heard about it.” Then a week and a half goes by and they say, “Oh my God, people have heard about it, but we haven’t made it sufficiently rigorous. So if we make it rigorous enough, and then they hear about it, they’ll have no choice but to accept that it’s correct and implement its policies.” And then another two weeks go by and they go, “Oh dear God, it hasn’t worked. What do we do? Epistemology has failed.” And that’s sort of the end of that line of inquiry. And people are still fighting those battles. There’s a sucker born every minute into those battles.

But if you take a broader lens, you can see pragmatism as the truth is what is warranted and assertable, or the truth is what works, or you can only adequately define knowledge relative to goals and systems and you can define an internal and an environment but that’s it–you can’t give a totality–it lets you be anti-essentialist in a way that accords much more directly with the realities of monetary production. I think the most interesting person to have outlined this is Martijn Konings, who has a book called Capital and Time that basically argues this value theory stuff, where he’s like, “First you have efficient markets, hypothesis type people who argue that value is this objective fact that’s embodied in the thing.” It is what it is and the market discovers it. We’re all familiar with this–John Quiggin’s Zombie Economics and stuff like that. So, the level one political economy argument against that, and a lot of books that came out after 2008 made this argument, is “Look, value isn’t fundamental. It’s not essential, but it is elastic. It can get stretched out in bubbles and it can get stretched and stretched and stretched to a point, but then inevitably, no matter what, it snaps back to what its fundamental value is.”

We hear a lot of Marxists make these kinds of arguments. And we hear a lot of people who have read one or two Minsky papers and take them to be the entire corpus make these arguments. It’s all elastic, but it has a fundamental that it will revert to. You even hear people on Odd Lots complaining about bearded value investors making these sorts of arguments. What Konings asks is “Well, so if we’re all very postmodern now, if we’re all very anti-essentialist now, and everything is a contingent assemblage accessing lines of flight, then why are we still being fundamentalist about value?” He outlines this third position, which is basically that value is plastic. It is what it is made into at time (t) by market participants. And he is like, “Yes, absolutely, there’s no ultimate underlying value because none of this stuff is conserved over time,” which is something that Marx admits in Capital, Volume 1, but at every time (t) there is a set of prices and they’re all correct at that time (t). But they are a function of basically the time (t)-ness of time (t). It’s almost like a Whitehead kind of framework where you don’t have objects; objects are abstracted out of specific events.

I really like that kind of anti-essentialism. I find that you can get there very quickly from pragmatism and from that model building that recognizes that these model buildings are contingent, and that everyone is outlining a local model, and that if you don’t take anyone to be outlining a total model, you can very easily make use of big ad hoc constructions. And then, these are better at explaining financial reality because that’s how people broadly approach models. There’s a great book by Donald Mackenzie called An Engine, Not a Camera that talks about how financial models are developed and then later prices behave according to those models rather than those models being inducted out of the behavior of prices. The entire thing is just an attempt at tool building. And so, what I think is important is not to reify this Marxist inevitable clash or to reify this ameliorative liberal democracy perspective of things are getting better, but as to recognize that everyone involved in the production of capitalism–forgive the endnotes-y phrase–is really only obeying local logics that they have found as tools in order to beat the folks around them in logics that they can map themselves to.

So, you have all of these isolated knowledges, none of which is capital K Knowledge. And when you come to doing economics, you come with that framework in mind so then you don’t get bogged down in either pretending all of these abstractions, like the natural rate of interest or NAIRU (non-accelerating inflation rate of unemployment), that people use to justify policy and presented as though they are total facts, you can get away from pretending that they’re real. But then you can also get away from putting a lot of energy into debunking them so as to convince people that they’re not real. And you can just kind of take them as the local logic for those actors in that space, and then accept or deny it based on whether it’s useful for you in describing local actors in the space you’re interested in. I think that that’s just a healthier way to theorize.

Maxximilian Seijo: From this epistemological or methodological perspective that you’ve outlined, this non-essentialist perspective, I think you once said to us on a call that your work proceeds from the assumption that MMT is trivially true in some sense. And then, you go onward from there with your central problematic, especially recently, which has been what you’ve called the problem of administrative capacity. And so, perhaps for our listeners, could you define exactly what administrative capacity is for you as well as why it’s important for a broader Left project aimed at radically transforming money?

Alex Williams: I was thinking about this earlier today because a buddy of mine was sending me his live running commentary on Schopenhauer’s reaction to Spinoza and its relationship to the fourfold root of the principle of sufficient reason. What I was thinking is that administrative capacity is basically capacity to affect. It’s the capacity to change material facts on the ground, but in a material sense, rather than in an ideological or intellectual sense. It’s to move things around, essentially, or to change the state of the world in a way that is what was agreed upon by the thing doing the administration. So administrative capacity is basically how capable you are of altering the world such that it is in the state that you want it to be in as an entity. And so, these are big things. You could describe geopolitics in that way. You could say, “Oh, Kissinger was doing XY and Z in order to do this and he has a certain degree of ability to do that because of the different capacities of bombers in Cambodia and such.”

But you could also say that about a company that is seeking to govern the prices for the space of particular petroleum distillates when there’s only five or so firms that have the capacity to intervene in that market. And so, you have this administrative capacity as a way of these firms determining the facts on the ground about those markets. Things like how much capacity there is when moment to moment pricing is also downstream of their agreements with one another not to compete on price and to have X, Y, and Z people have X, Y, and Z market share and A, B, and C geographical markets. But basically, it’s the capacity to affect. And it’s important for the broader Left project because you need to actually–I hate to sound like a Hobbesian or something like that–but you need to actually be able to implement the rights that you verbally guarantee to people. And you need to have a system for doing that.

So, it’s a hard thing to pin down exactly because I tend to think of it as coming from Herbert Simon’s administrative behavior perspective, where he’s like looking at how decisions actually get made in businesses. Because all of this stuff ultimately boils down to, regardless of who owns it and regardless of what the goals of running them are, all of these questions are a version of the question, “how should we operate the factory?” The Left project broadly requires a particular answer to the question of how we should operate the factory. What is it a factory of? That’s part of operating the factory. Who are the things being distributed to? That’s part of operating the factory. How are we coming up with decision mechanisms for these things? That’s another part of operating the factory.

Maxximilian Seijo: Can you spell out then how MMT and the assumptions of MMT fits into that schema for you?

Alex Williams: Right, so maybe this is more comfortable. There’s a quote that is not actually from Fred Lee, but I’ve attributed to him in my head enough times that I think it is and I tend to just cite him for it because I hate to take credit for things. But the idea is that administrative capacity as I’m thinking about it basically arises from the idea that markets are sites of market governance. They’re not things, they’re locations where markets are governed by these different participants. The Austrians and the neoclassical market socialists will tell you there are prices that are governing the market, and then everybody is showing up and engaging with these prices, and then making production decisions and this, that, and the other thing.

But if you take the administered prices literature seriously, which says that the overwhelming majority of firms who do not produce things that are simple commodities have the ability to set prices, whether this is explicitly like the McKinsey bread price fixing scandal with Mayor Pete and all that, or implicitly in terms of everybody knows how much capacity is being built at this, that, and the other place in different industries. The prices end up being products of administration, between companies, between governments, and between other actors rather than things that are determined by the market as an autonomous information processing entity. The market is just a location that the actors in the market come to to transact with one another or to ratify one another’s decisions and to not contest them. But these prices fall out of these governing mechanisms rather than coming out of the “market” market. All of the administrative capacity there is in these firms that get built up who decide what the things in the market are.

But the reason that MMT comes into this is because you have all these private actors who are doing all of this private administration of production, where they are choosing what gets produced and they are choosing how it gets produced in terms of the labor process. And what Keynes recognizes, and this is what of Keynes ratifies down into MMT stuff, is that the amount of private administrative capacity for administering production is driven by the amount of demand in the system. What MMT basically says, as it takes this functional finance approach, is “Well, we should run the economy such that all of the possible private administrative capacity for administering production is taken up.” And in its actual proponents writings, it’s very agnostic about what actually ends up getting done with that because it says you have the job guarantee as a way to guarantee people jobs, but also as a way to guarantee that sufficient cash enters the economy such that all of this administrative capacity is taken up. And whatever the private market doesn’t feel like taking up, the government will.

So, you get these administrative structures because you need to have cash in order to buy food to survive and the administrative structures administrate production in exchange for cash. Demand just affects the amount of administration rather than its direction and what kind of production is being administered. And this is something that comes up in Kalecki’s political aspects of full employment, where he talks about from a full employment alone sense, there’s not really a difference between a fascist war economy that is just dumping out armaments and a democratic economy looking to human flourishing. Both of them accomplish the demand side goal of putting enough units of administration, units of social energy as cash into the economy to ensure that all of the administrating apparatuses are administrating at their fullest capacity.

Maxximilian Seijo: In that sense, then, MMT sort of functions as the kind of infinite endowment of the capability to administer in the first place, or to affect the objects and use your analogy before?

Alex Williams: Yeah, or to ensure that the system has sufficient energy that things are running at capacity. The big point of all of the old neoclassical stuff is that unemployment never crops up because the wages just adjust and then the prices just adjust and then everybody moves to a new nominal price level where everyone is able to be employed, which was really aggressively and empirically disconfirmed in the 20th century. Now we know the way that you ensure everyone is employed is by making sure that there is enough spending happening in the economy and MMT explains why the federal government can be the guarantor of that domestically. And it explains why an economy that is not wildly balance of payments constrained will be able to ensure the full uptake of its resources. This is almost like an old Galbraith point where he talks about the loss from unemployment versus the debt incurred–and this is in the affluent society–but if we if we take seriously that one man being unemployed is one man’s worth of whatever, then anything less than that of government spending, net net, is going to get closer to the actual production frontier instead of just assuming we’re there.

Scott Ferguson: I want to shift gears and start introducing our audience to some of your specific papers and projects. And I want to begin with one from a few years ago that I think you first presented at the very first Money on the Left conference, which happened at the University of South Florida where I work. You were trying to think about a job guarantee, a full employment project, but in the realm of cultural production and aesthetic production, and taking up essentially what Gramsci would say from an “organic intellectual” perspective, some questions that had arisen for you in the course of coming up in the DIY music scene. I was wondering if you could introduce our audience to the problems that you were seeing and what you’re suggesting as a solution. I also just want to flag for people that this paper would later come out as a working paper for the Global Institute for Sustainable Prosperity that went under the title, “The Job Guarantee and Cultural Equity: Gatekeeping and Popularization.” 

Alex Williams: Everybody has a buddy who is a musician that has made to them at one point or another the argument in favor of a UBI, Universal Basic Income, that is a kind of Marcel Mauss via the Marx quote in Carlyle about the cash nexus. The argument often boils down to “Look, if we had UBI then a lot more people could just sit around playing guitar. And it would be fine. And like because of that, we’d get some sick records. And it would all work out because I’m just delivering pieces right now. What does anybody need that for?” Which is emotionally legit, but this is also a frame of analysis that we’ve all seen before.

William Saas: “The Beatles were on the dole,” I think Graeber talks about that.

Alex Williams: Yeah, exactly. This is the roommate who voted for Andrew Yang sort of argument. A lot of people in DIY land have a version of this argument. And there is something there in so far as the more cash people have, the less labor discipline they’re subject to and the more subjective freedom they have to take risks and this, that, and whatever. I mean, people even talk about this in the form of the relationship between student loan debt in millennials and new business formation. We do know that if people are better off, they will do more and more riskier things. But the thing is, people tend to pitch this as a way of (1) solving the problems of the music industry in particular, and also (2) ensuring that the art is authentic by isolating it from what they understand as the cash motive or the profit motive or money generally. There’s a very old romantic notion that there’s this constitutive opposition between the realm of art and the realm of the marketplace. And that marketplaces are interchangeable, callous, nonspecific to the individual, and playing a Keynesian beauty contest with people’s expected emotions kind of thing. And then at the same time, you have the romantic individual who has this unrepeatable experience that is valuable by virtue of its singularity that if it encounters the market it is corrupted by virtue of that encounter.

So, there’s the combination of those two things. There’s the “I’d be able to have more time to work on my record, if I didn’t have to worry about money” side, which is contingently valid. And there is the “No one can possibly make authentic music while also worrying about money, or targeting money, or encountering money generally” angle. This is an old two prong thing. And so, the way that you resolve these two prongs is you say, “Oh, UBI.” Because that way it’s unrelated to the artistic expression but it also ensures that more people can do the artistic expression. So this is cool because as it stands right now, DIY especially, just as much as regular music, is people from money or people who are already tied into pre-existing networks for this stuff. Taylor Swift’s dad has a Merrill Lynch desk. Frankie Cosmos is Kevin Klein’s daughter. A lot of the people that anyone ends up hearing about from DIY are people who are able to use DIY as a kind of clothing to launder a more obvious origin story.

The problem with UBI as a solution to this is twofold. The problem is, on the one hand, what this ends up doing is reifying these unspoken hierarchies for people who have the time and energy and willingness to dedicate that time and energy to doing DIY. Joe Freeman had a classic paper called, “The Tyranny of Structurelessness,” that was about the difficulty in accomplishing anything within the women’s liberation movement without having something explicit, like an org chart with accountability and contestability. It basically just ends up being groups of friends who hype their friends, and in the event that there’s conflict or equity concerns or any of this stuff, people just shrug and say, “Well, we’re just doing this here. It’s whatever if you want to do your own thing.” This is often the response to it because all of the hierarchies are either vague or totally unaccountable. And so, if you do UBI as a response to that, you draw people in more volunteeristically into those systems and you still have all the problems that those systems have now.

The other problem is if we’re targeting anything like equity in what people hear–equity in what is considered the broad cultural landscape–this won’t do that. Because the problem used to be that record labels control who is able to record. Recording studios were big and expensive and you couldn’t use one without a record contract. And when you used one, you only got it for like a day and you had to play your songs and get in and get out. And they’d press them and sell them but a lot of the records would go nowhere and nobody would ever hear about it ever again. You’d see it in the bin at the thrift store eventually. The record labels used to control who could record and then would control to a certain extent the work that played on the radio. And so, now recording is free, which is something people make a big fuss about. And it’s a good thing to make a big fuss about because it’s great. But the thing is, in response to that, you have these same broadly capitalist selection forces re-entrench themselves downstream. Rather than it being choosing who gets to make records, it winds up being whose records get heard about and who gets a career doing anything, as opposed to just sort of dumping records onto bandcamp and walking away.

There’s exceptions here and there, obviously, because there’s exceptions to everything, but the flip side of this is that they are controlling who the audience hears about. And we’ve known from the entire history of the American press that it is broadly racist and uninterested in women, and that it is always looking to give credit for innovation to white men who have found out about something that other people were doing rather than the people who were doing it initially. And so, there’s no reason to assume that that stuff will change if the composition of people who have the financial means to be doing music and stuff changes. So what has to happen instead of a UBI broadly is a job guarantee approach that looks at the production of culture holistically. It looks at the production of culture as being not just there is an artist who produces a unit of culture, and then we wash our hands of it and who knows what happens afterwards. The idea is that you have a job guarantee that has a publication and distribution apparatus in addition to paying cultural workers.

What this ends up amounting to is a kind of public option for culture. You could take a less radical view of this and say this is the BBC and “Oh, you had John Peel,” which is a kind of state backed eclecticism in which he would have Pavement on in 1991 before anybody had heard of them. And they’d say, “This has already been done,” and that’s true but that’s not really an argument against what this paper is arguing. It’s saying that UBI is not the way forward towards a more equitable cultural landscape because it just ends up reifying power structures in slightly different places. It becomes who we hear about rather than who gets to make music. And so, this ties back to administrative capacity. Because the idea behind the UBI is you’re just dumping cash into the system and saying, “The people, private entities, and firms that are administering this, we’re sure they have everyone’s best interests at heart. So we’re just going to let them make the decisions about content and stuff like that. We’re just going to ensure that everybody is capable of getting into the front door of this process.”

Whereas a job guarantee program that wants to develop more state administrative capacity in terms of generating culture, that targets goals that we actually have, like equity and equal representation and things like that, you have to say, “Look, we know that with respect to these goals, these existing firms are basically bad actors.” I mean, we’re not really that many years from Elvis, ultimately. And so, because we recognize that these are bad actors, if you want to be a Lefty and you want to take seriously how to do this stuff, and how to get cultural engagement that is actually interesting and worthwhile and adds its rewards to the people who actually are doing the stuff as opposed to the first white guy to hear about it, you need to develop administrative capacity within that program specifically. And that’s something that the job guarantee allows you to tailor and target, which a universal basic income doesn’t.

Scott Ferguson: Right. And there’s a creativity to that too and an argument for a strong civil service that is about building that creative administrative capacity for the artists–the artists behind the artists.

Alex Williams: Right, exactly. And also because it positions it as being accountable. I mean, Spin Magazine is not really accountable to anyone–shareholders maybe. Conde Nast is not really accountable to anyone. And so, the extent to which you introduce local democratic accountability into these frames, you can get the outcomes you want.

Scott Ferguson: Can you talk about some specific institutions or just get down into some particulars? Like in your talk, you mentioned some. You’re talking about distribution and exhibition? Are we talking about venues?

Alex Williams: The idea is that you have artists who are on the job guarantee payroll, and then you have newspapers and radio stations that are a public option that can be mainly talking about these artists from this job guarantee framework. Like if you’re trying to go maximalist and have this be a genuine public option for a culture that has the capacity to be equitable, you need to have the papers, you need to have the websites, you need to have the venues, you need to have the people who manage the tours; you basically need to insulate all of this stuff from its ability to be recaptured by private entities like Live Nation and Disney. And to do that also requires taking a serious approach to what copyright law means. And to the extent that you’re working for the government, you’re given a pension or whatever, as opposed to this goofy roulette wheel of royalties that then leads to people who make a lot of money affecting the copyright regimes so that they can continue to do that. Rohan Grey has a chapter about this on who owns the fruits of the intellectual job guarantee or something like that. But basically, there needs to be a public option, all the way down in that sort of stuff. If you were to take equity seriously as a consideration in doing this, you would need to have venues, you would need to have radio stations and magazines, you would need to have the entirety of the apparatus of artistic production, which is always more complicated and more involved than people ever really want to think about or deal with.

William Saas: So in our January episode where we talked with Alexandra Skaggs, financial journalist, I think we ended by asking her what areas of research she would like to see MMT scholars go and where does MMT need to do more? And she talked about the state and municipal levels–what does MMT mean in states and cities. And that seemed a pressing question in January of 2020. It’s definitely all the more a pressing thing in July of 2020. In the interim, your thesis project was finished at the Levy Institute and now you’ve shared and found yourself being called upon to share more about that thesis project. Could you spell out the municipal and state level finance questions, problems, and things that surround that?

Alex Williams: So, yeah, there’s probably a big way to do this and there’s a little way to do this. 

William Saas: Let’s go the medium way.

Alex Williams: I meant in terms of what the proposal is, because the real serious proposal is that all of this stuff, funding wise, should be federalized. There’s no good reason to tie school quality to local wealth. There’s no good reason to tie infrastructure quality to local wealth. That whole structure exists just to replicate inequalities. There’s like no other reason for it, which is one of those things that MMT makes very obvious. Prior to thinking through MMT, you go, “Oh, no, these have to be tied to that because where are they going to get the money to pay for it?” If you take the MMT lens, then you go, “Oh, obviously these just need to be federalized.” It’s always already federalized after a fashion. It’s just that it’s being done so using a metric for calculating it that intentionally reinforces these inequities. So the big way is this stuff should all be federalized. States are basically outdated, illegitimate forms at this point. Maybe they should exist as administrative arms that don’t decide what the funding is.

The smaller way of thinking about this is that you need to insulate states and locals from the business cycle, because they have no real ability to impact it. But it has a huge ability to impact them. And they have no ability to defend themselves from that impact. And so, the thesis project that I did was basically like, how do we provide intra-governmental stabilizers? Because there’s always been a lot of work on automatic stabilizers, generally. Things like, if unemployment goes up, there’s less spending, but then also, the government spends more on paying unemployment benefits so they kind of net out. Or like, “Oh, if income goes down, the amount of taxes taken out goes down also so the total net amount of income that leaves the economy is smaller because they automatically stabilize one another.” They ensure that the amount of demand is kept within a given band rather than allowed to vary freely. That happens for the economy as a whole, but given that states are unable to basically set up big fancy capital structures that make it so that their revenues and expenditures are correlated to one another, they need to be externally protected from the business cycle. And so, I was like, “Okay, so how do we do that?” Because, if you think about this as a condensed government balance sheet…let me take a step back here. So say there’s a recession, right? We all know that in a recession, the role of the government is to spend more money.

Scott Ferguson: I’m not sure Congress knows that.

Alex Williams: Haha yeah, although I bet Michael Bennett’s office knows this. Jerome Powell may know this. But the goal of the government as a consolidated entity–so state, municipal, and federal–is to spend more as a consolidated entity when the economy gets worse. This is easy at the federal level because of all these automatic stabilizers we were talking about. At the federal level, they can just spend. We’re in MMT land, we don’t have to provide justification for this. The problem is that as they’re doing that states and locals, because of their unique administrative status and unique legislative history and unique political orientations, are forced into doing the opposite of what should be done. In a recession, they cut spending and raise taxes because a lot of them have balanced budget amendments and a lot of them have statutory balanced budget requirements.

But what’s interesting about it is that they are done locally. Each state has one in its constitution, as opposed to the eurozone, where there is a central authority that is saying you guys can’t go above X/Y debt and deficit relative to income. The states all individually are putting this on themselves and saying they vow not to do this because of a previous era where they are trying to do a confidence play to attract investment. They say “We’re not going to go bust as a state that looks…” It’s very Deadwood era. It’s very wild west. Everybody thinks that the government is just another kind of company. We need to prove that we’re not going to go bust so we’re going to have these balanced budget amendments. Last time there was a state that was actually bailed out was in the 1840s. The problem is basically that states can’t run deficits and have a tax base that is basically on flows and have a spending base that is basically on flows. So, their tax base is all things that change as flow rate variables–their income taxes, their corporate taxes, their sales taxes. When unemployment goes up, those tax revenues go down. And when unemployment goes down, those tax revenues go up. The problem is that when their tax revenues go down, their spending requirements go up–things like Medicaid, things like state level unemployment rolls. Spending goes up. And so, they are forced into a position where they either have to raise taxes to cover the additional spending, or cut spending on unrelated projects in order to not run a budget deficit.

Municipalities are in the same scrap basically, except they are allowed to issue debt, but they’re subject to very stringent market discipline. Municipal bond yields spiked in 2008 and spiked in 2020. And we’re at a position where, if everybody suddenly gets worried, then they can no longer issue previously democratically approved bonds in order to build this, that, or the other thing. So this big systemic weakness is that everything below the federal level is mechanically procyclical. And this is the basic problem that the thesis is seeking to address. What can we implement so that is no longer the case? And the answer is we just have the federal government develop a mechanism for identifying when there is a recession, and then use that as a trigger to disperse money to states because they know that when unemployment moves, state tax revenues move. And so, we can balance those things out on net using econometric tools at our disposal and using the very safe assumption that it does not matter what size deficit the federal government runs. So that’s basically what the thesis is. And what a lot of the work since then has been is how exactly would you calculate the amount of money? How administratively would you set up the departments that would allocate that money? How should that money be allocated? How long should it go? Is there any legislative precedent? Yes, there is. There was an office of revenue sharing under the Treasury in the 1970s.

So that’s how MMT ramifies down to the state and local level. The federal level can basically insulate the state and local level from any shocks if it so desires. Ideally, it would replace them entirely in terms of funding and would be just funding allocations from a single source. But that’s a much bigger haul than introducing new intra-governmental stabilizers.

Maxximilian Sejio: Speaking of these stabilizers then in relation to the state and local problematic you sketched out for us, some of our listeners might be familiar with the common MMT macro refrain of automatic stabilizers. However, in your work, you talk about autonomous stabilizers, which will function specifically for this state and local problem. We were wondering if you could chart perhaps the differences conceptually and say why you come down on autonomy instead of this more automatic framing for these stabilizations?

Alex Williams: Ultimately, because the stabilization isn’t automatic. There’s an administrative entity interposed between the trigger being hit and the money going out. The idea behind automatic stabilizers comes out of discussions with Nathan Tankus and with the desire to come up with an exact and explicit term for trigger based fiscal policy that is not as ugly as the phrase rules based fiscal policy. And so, the idea behind an automatic stabilizer is that you have your input variable, which is income. And then it goes through a fixed transform, which is your tax system. And then it comes out to the person who’s filing their income taxes as their income minus taxes. At no point is there any specific changes made to programs, or granting allocations, or spending allocations, or anything throughout that entire process–it’s totally automatic. It’s just like a linear transform.

An autonomous stabilizer basically takes that and says, “Well, sometimes rather than constructing a linear transform that solves all these problems, some of the problems can’t be solved this way, so what we need to do is an if-then framework, which is what this basically amounts to. If an unemployment rate goes above the trigger for dispersing benefits, then the benefits get dispersed. And those benefits that get dispersed have to take place through administrative agencies that sign off on funding, that sign off on grants, that sign off on this, that, and the other thing. There is no pre-existing channel where all of these things are happening and just go through a single transform. It’s autonomous because it’s not discretionary fiscal policy in that the rules are set beforehand and totally locked in and no one has to argue about them at the time. But it’s not fully automatic because it still requires that there be administrative, so non-legislative, agencies that ensure that the things triggered by the different autonomous proposals actually go out and happen. It’s a really “angels on the head of a pin” kind of distinction. But it captures a really useful new methodology for thinking about how to go about stabilizing the economy. And I really have Claudia Sahm of the Federal Reserve and equitable growth and her work to thank for this kind of stuff. Her work on the Sahm rule as a way of detecting when recessions begin is fantastic.

Scott Ferguson: I think it also helps to move political economy and the MMT project further down the path of thinking in terms of governance and administration that can be structured out in a number of ways, instead of going down the mechanistic pump priming, there’s an economy out there and we can push cash out into it to make it hum along. This is really taking on the problem of the whole consolidated economy and the way that credit structures that economy and saying, “Well, how can we make it more just, more healthy, more robust, etc.”

Alex Williams: Yeah, definitely.

Maxximilian Seijo: Also the bathtub metaphor is sort of left behind here. We’re not just filling up a bathtub with money when a recession hits.

Scott Ferguson: Right, through congressional spending and then taxing it out. I mean, that can work sometimes. But this is related, obviously, to some of the work that our colleagues have done about an MMT approach to inflation management or control. It’s not just about taxing and spending and waiting for Congress to get off their butts and doing something. It’s about designing a system that can, in the moment, react and adjust to needs and demand.

Alex Williams: It’s very funny because, in a way, it’s very old school cybernetics. Right, because you’re introducing if-then’s with feedback loops. I mean, that’s sort of Norbert Wiener early stuff.

Scott Ferguson: Is there an equivalent of the federal government in a Wiener kind of way?

Alex Williams: Oh, I just mean formally. It’s sort of alt-Cybersyn in a way–a Keynesian Cybersyn project. You know, like the storied Chilean attempt to have a socialist computer in the 70s–always a fun Google.

Scott Ferguson: Cool. Well, can you tell our audience perhaps where we can all find you on the interwebs and elsewhere?

Alex Williams: Yeah, so I’m gonna have a website at some point. I’m getting there very slowly. Right now, I am basically just @tragicbios on Twitter. It’s very funny that this account has wound up being serious econ stuff. It’s an old song by a band called Blanche Blanche Blanche, who are a tremendous band and we will have to have as one of the interludes here. And I also have a thesis. I have stuff at the Levy Institute’s website. I have stuff at Phenomenal World, the Jain Family Institute’s publication. And I have a piece out through Employ America. I’m sure we can add links. Yeah, there are lots of explanations and lots of explorations of overlapping problematics and sets of interests.

William Saas: Alex, thank you so much. And we would be absolutely remiss if we didn’t bring up that you are one half of Hillbilly Motobike who has produced not just one but song that we’ve used for a theme song on this podcast. Where can people go to listen to more Hillbilly Motobike?

Alex Williams: So it’s the Stereolab song title. It is at hillbillymotobike.bandcamp.com.

William Saas: Great music to think and write to.

Alex Williams: We try.

William Saas: Thanks, Alex.

Scott Ferguson: Thanks for coming on.

Alex Williams: Happy to do it.

* Thanks to the Money on the Left production teamAlex Williams (audio engineering), Richard Farrell (transcription) & Meghan Saas (graphic art).