October 30, 2020

Public Money and the Road to Revolutionary Recovery

William Saas
Graffiti reading “student debt ruined me!!” (Photo by Quinn Dombrowski CC BY-SA 2.0).

Much of the human tragedy and financial fallout from the COVID-19 crisis has been senseless, avoidable and, at least in the United States, unsurprising. Recovery efforts have predictably fallen short, signaling widespread economic devastation for months and years ahead. Yet in this liminal moment of political transition, looming depression, and a nascent “third wave,” a clear and direct road to revolutionary recovery sits now before us. Aligned with the core insights of Modern Monetary Theory (MMT) and grounded in deep understanding of the boundless possibilities of public money, this road to revolutionary recovery promises to fundamentally reconstitute our political economy rather than resuscitate the ailing neoliberal status quo.

Recently the subject of some notoriety in Congress and the international press, MMT is a school of heterodox economic thought that undermines and identifies alternatives to the dodgy economic ideas that support neoliberal hegemony and presently constrain our recovery. Central among these is the myth of “taxpayer money,” which holds that the U.S. federal government must generate revenue (by taxing its citizens) before it can spend any money. Universalist and reparative social programs—like a federal jobs guarantee and the Green New Deal—are all but impossible to implement under this zero-sum and historically racist model of the U.S. fiscal situation. In contrast, MMT assembles millennia-worth of economic, anthropological, and jurisprudential evidence to demonstrate that there is no such thing as taxpayer money; there is only public money.

For MMT, money is the representation of a boundless reserve of public credit, the uses of which are constrained only by the availability of real resources and the political economic imaginations of a given polity. Rather than viewing money as a scarce commodity that must be collected and recirculated by fiscal custodians, money is now, and has always been, an indispensable, inexhaustible and inescapably public tool for organizing production and provisioning social goods—especially in periods of great crisis.  

Several Congressmembers in Washington have already made headway down the public money-driven road to post-COVID recovery. Unlike their counterparts in Congressional leadership, Representatives Rashida Tlaib, Pramila Jayapal, Ayanna Pressley, Alexandria Ocasio-Cortez, and Ilhan Omar have moved quickly and decisively throughout the crisis to advance forward-thinking proposals for keeping people paid, housed, fed, and cared for in the aftermath of COVID-19.

In April, for example, Representatives Tlaib and Jayapal introduced the Automatic Boost to Communities (ABC) Act, which would have provided debit cards pre-loaded with $2,000 to every adult in the United States, with monthly payments of $1,000 to be wired to those cards for a year following the end of the COVID-19 crisis. Co-sponsored by Reps. Ocasio-Cortez, Omar, Pressley and other members of the progressive caucus, the ABC Act would have kept its beneficiaries safe, less anxious and less precarious throughout the pandemic. By anchoring the direct payments system to government-issued debit cards, the Act would simultaneously have broken ground on critical new infrastructure for a national payments system. The ABC Act would further have tapped our government’s nearly-limitless fiscal authority to revolutionize our financial system, setting the stage for implementing digital fiat currency (DFC) and digital wallets for all in future. As part of a national payments system, the DFC program—through which the central bank formally creates and distributes its own e-currency units and payments system—would restore greater control over the financial system to the public sector. Likely as a result of widespread fear and uncertainty early in the crisis, all that was missing from the ABC Act was a mass of supporters mobilizing in support of these pathbreaking Congressmembers’ vision for immediate, durable, and equitable recovery.

The ABC Act was only one in a series of critical—and still readily actionable—fiscal policy proposals advanced by Tlaib, Jayapal, Pressley, Ocasio-Cortez and Omar early in the crisis. Indeed, each had already long supported universalist and public money-driven policy programs like Medicare for All, a federal jobs guarantee and the Green New Deal—programs that have only grown more necessary in the wake of COVID-19. Today’s introduction of the Public Banking Act by Representatives Ocasio-Cortez and Tlaib signals that these Congressmembers remain committed to channeling the power of public money to expand the horizons of political and economic possibility throughout and beyond this crisis. When enacted, this proposal will make establishing public alternatives to predatory private banks easier and more likely for states and municipalities across the country.

The Squad and their allies know well the history and particulars of our public money system. Far better, evidently, than chair of the Federal Reserve Jerome Powell who, in a February 2020 Congressional hearing, thanked Representative Pressley for schooling him on why he was required to attend that meeting in the first place. If we are to have any hope of surviving and thriving throughout this pandemic and, further, avoiding crises of this scale in the future, including the existential threat to humanity—the climate crisis—we would do well to follow their lead.

Of course, Tlaib, Jayapal, Pressley, Ocasio-Cortez and Omar have not been alone in answering the urgent call to affirm and mobilize the democratic potentialities of the modern money form to overcome the multiple interconnected crises fomented by the COVID-19 crisis. In April, the Debt Collective scaled up their ongoing student debt strike and doubled-down on their demand for a debt jubilee. With unemployment at or near record highs, mass evictions on the horizon, and ever-widening disparities in access to quality healthcare, the abolition of educational, medical and housing debt is more necessary today than ever. 

With Scott Ferguson, Benjamin Wilson and Maxximilian Seijo, I co-developed a proposal for revolutionizing the financing of the U.S. public higher education system to obviate COVID-19-related austerity through the development of a robust network of complementary university currencies, called “Unis.” Our Uni project leverages the insights of MMT to activate the latent fiscal authority of colleges and universities in service of their local communities. Unis will be, at bottom, public money that is locally created and administered according to local needs. When implemented, the Unis program will restore financial autonomy to colleges and universities by empowering students, workers, and local community members to participate in their college or university budgeting processes. Unis will also provide much-needed liquidity to cash-strapped municipal and state governments at the same time as they stoke the political economic imaginations of new and broad audiences regarding the contemporary public money system.

Though initially designed to help public higher education institutions avert austerity during the pandemic, the Unis system would ideally extend beyond the crisis, serving as an essential policy complement to extant Free College for All proposals. While #College4All offers free higher education to anyone who wants it, #Unis4All promises to remake public colleges and universities into spaces that are democratically run and so more inclusive and inviting to diverse student bodies.

Plans to leverage the tremendous fiscal authority of the United States to advance revolutionary recovery at the international level are, unfortunately, woefully under-considered by the U.S. left at present. But Nathan Tankus’ MMT-driven proposal to reduce the global dollar shortage by empowering the Federal Reserve to swap dollars for the International Monetary Fund’s Special Drawing Rights (SDRs) without limit indicates a critical first step. Through provisioning essentially bottomless swap lines for those governments who need dollars most, this action would set the stage for a new, decolonial approach to international finance after COVID and should be embraced by the left.

Uniting each of these proposals for an uncompromised and international post-COVID-19 recovery is a profound commitment to harnessing the tremendous fiscal and monetary powers that obtain for a government sovereign in its own currency—like ours—to serve the global public purpose. Unadulterated by the regressive and discredited neoliberal precepts of the budget hawks and doves, these proposals turn on the revelatory fact that the obstacles to revolutionary recovery are today political and rhetorical, not material or financial. Whatever happens in the election, the left must commit now to organizing for the rapid development and implementation of these and other public money-driven steps toward a truly revolutionary recovery.

William Saas is an Assistant Professor of Rhetoric at Louisiana State University and Research Fellow with the Global Institute for Sustainable Prosperity.