G. A. Epstein’s critique of MMT re-estimated

Abstract

This is a review article on G. Epstein’s new book What’s Wrong with Modern Money Theory?: A Policy Critique (2019). The first section reviews the main contributions of this book in clarifying the characteristic contents of Modern Money Theory (MMT), and their worrying limitations if applied generally in the world. The second section demonstrates that the Japanese economy in the past decades in fact cannot be a model case to support the applicability of MMT, though it is often cited as a favorable model case for MMT by MMT theorists like R. Wray. We have to wonder and rethink why mere expansive fiscal state policy in cooperation with the central bank could not successfully work for so long, especially from the view of the majority of working people. The third section argues how Marxian political economy can coordinate with such post-Keynesian research fields on monetary policy as MMT. The necessity of a more concrete level of analyses of contemporary capitalism, based on principles of the political economy like in Marx’s Capital and stages theory of capitalist development, is methodologically underlined.