Economics and the political and social environment; lessons for MMT advocates

Phil Armstrong, Solent University, Southampton 

Sara Holland, Claire Jackson-Prior and Prue Plumridge, Gower Initiative for Modern Money Studies

Published online 5th April 2020

Full article

Introduction

I would argue that paradigm shift requires both the availability of a cogent alternative approach and the existence of a political and social environment conducive to such change. I here refer to the work of Laybourne-Langton and Jacobs (2018) who also make use of a ‘Kuhnian lens’ when analyzing political and economic change in the twentieth century. To facilitate their exposition, they widen the application of Kuhn’s approach and utilize the idea of a ‘politico-economic paradigm.’ Such a construct might be viewed as a wider concept than a purely economic paradigm.

Modern economic history can be roughly split into different eras in which certain sets of ideas have dominated politics and policy. We shall refer to a dominant group of ideas as a politico-economic paradigm. Such paradigms generally encompass political/economic goals, analytical/theoretical frameworks for understanding the functioning of economies and societies, narratives which describe and justify the goals and analytical framework, as well as economic and social policies, based on the analytical framework, that seek to achieve specific goals (Laybourne-Langton and Jacobs 2018: 113).

Key terms: paradigm, pluralism, heterodox economics, Modern Monetary Theory