The Most Important Econoblog Post This Year: The Steve Keen/MMT Convergence

Neil Wilson has done yeoman’s duty to (perhaps) achieve a convergence that has been too-long delayed.

A Double Entry View on the Keen Circuit Model.

Steve Keen is, to my knowledge, the only person who is actually encoding a Godley-esque, MMT-style, accounting-based, stock-flow-consistent dynamic simulation model of how economies work. But many MMTers have been quite hostile or at least resistant to Steve’s work, based on some different concepts of endogenous/exogenous money, and — this may seem trivial but it isn’t, at least as it has played out over time — based on details of single- versus double-entry accounting.

The debate has been quite acrimonious at times, and that acrimony has greatly hindered a convergence that in my eyes would be the most salutary event possible in the development of economic thinking and practice.

You can read the details in Neil’s post, but in short he’s re-jiggered Steve’s accounts to make them conform better to (at least Neil’s view of) standard bank-accounting practices. I’m not qualified to evaluate his new formulation, but I am excited to read Neil’s comment on the post, replying to uber-MMTer Scott Fullwiler:

We need to get all this pulled together into a coherent overall model.

Steve’s up for it. I hope you are too.

I’ll just say: I’m very much up for watching it happen.

Also: run don’t walk to read Steve’s Debtwatch Manifesto, posted last week.

Cross-posted at Angry Bear.






One response to “The Most Important Econoblog Post This Year: The Steve Keen/MMT Convergence”

  1. Clonal Antibody Avatar
    Clonal Antibody

    And there is Fred Decker at Modern Monetary Theory slaving away on a unifying simulation model as well.

    The optimizer and risk management features are actually very useful. Here’s what I’ve got so far. Will explain more later and show some interesting simulations. This model has three worker classes, the top 1%, the bottom 20%, and the remaining middle. I’ve modeled income tax, a potential federal sales tax (VAT), FICA taxes, and corporate taxes and have put significant effort into creating a fairly realistic disparity of wealth and income.