MMT traps the U.S. in a paradox between

In this system, what individual businesses experience as the competitive pressure for profit is a result of a system-wide drive to always increase productivity, regardless of the bounds of the market—the key dynamic of capitalist production. From the standpoint of the owners of capital, this effectively reduces all the diverse forms of labor to the same measure: comparable, compressible expenditures of time. Yet by imposing this reduction on labor and constantly pushing to produce more in less time, capital sears coercion, violence, stupefaction, and hostility, the raw materials of class conflict, into the core of money itself. The blind pursuit of money by banks and businesses is only the flip side of this systemic, relentless drive for higher productivity and the social antagonisms it engenders.43

As a universal equivalent, then, money becomes an abstract, normative measure of time, the way the system evaluates, regulates, and disciplines everything from the different kinds of work people do, to the time society allots to different productive activities, to the temporal pressures of everyday life. As such, "money" names an alienated form of power: something created through relationships between human beings that takes on an impersonal, independent existence from its creators and in turn dominates them.44 To everyday perception, as well as in the theoretical elaborations of everyday perception that make up economics, money appears to represent different things, like market relationships, material goods and services, or state authority. Actually the reverse is the case: these things now represent money as an autonomous power, which invests them all with its holy aura.

Through this reversal, or fetish, which perceives money to be valuable for its own sake, material resources are produced and distributed only as incidental byproducts of the universal, limitless drive for money. Accordingly, money does not conveniently exist to help circulate material goods and services, but is rather the reason goods and services exist in the first place. It functions as a means that becomes its own end, which is still only a means—a contradiction rooted in the class relations of commodity production itself.

The point is that money regulates the social organization of time. It coordinates the productive life of society, but from behind the backs of the producers, the workers of the world who form an interconnected, interdependent association of thickening density—the planetary laborer. Debt-enserfed American university students compete for a shrinking number of jobs on laptops assembled by Chinese manufacturing workers in Shenzhen, whose computer chips are manufactured by factory workers in Taipei, the metal and minerals for which are extracted under brutal conditions by cobalt and lithium miners in the Democratic Republic of Congo and Chile, perhaps with the completed product transported on container ships piloted by Danish sailors supplied with wheat harvested by Russian farmers. The more extraordinarily productive and efficient this planetary assemblage becomes, the more surplus time it generates in the form of the surplus product—interest, rent, capital gains, in general the astronomical financial profits that define our era. These are the excess time of human association extracted and captured by the transnational capitalist class, the top one percent who owns nearly half the world's wealth.45

Money did not, and does not, enable this planet-spanning productive formation. Rather, it is itself the result of a process of reconfiguration that occurred outside of any state actor's conscious intent. As the global division of labor has become transnationally integrated over planet-spanning supply chains and logistics channels; as work itself has become increasingly molded by its dependence upon the whims of the stock exchange and the broader financial markets, themselves dependent on the continued largess of the central banks; as the very reproduction of the basic social relations through which material goods are provided becomes the mere residue of this gargantuan monetary edifice; and as the experience of labor, paradoxically, grows more fragmented, precarious, and uncertain the more a fully interconnected world market for labor comes into existence—in short, the more transnational social labor becomes, the more abstract money becomes as its adequately transnational representation. The abstraction of labor and money are two sides of a single historical dynamic through which the productive association of human beings appears as its opposite: an independent power with a life of its own. As a socially necessary form of misrecognition, the money fetish is constitutive. It is how capitalist money works.

A Dialectic of Centralizing Disintegration

Governmental practices of money, and the way these are ideologically imagined, theoretically rationalized, and legally institutionalized, are how bureaucratic elites attempt to reconcile the contradiction at the heart of the money form. State actors, above all central bankers, respond to economic events—particularly crises—as if they were forces of nature, exogenous, natural disasters that must be fought with the alacrity of emergency first responders. To do this, and successfully prevent the entire system from collapsing, they must as a matter of practical necessity believe that money is essentially a unit of account chosen by the state, tout court, for at this point they have no other option. In other words, they must fetishize it.46 MMT, as well as its more radical, neo-chartalist variations, make a virtue of this necessity, hallucinating an entire transhistorical ontology of credit money on the basis of how contemporary states are pulverized and remade by a single, global crisis cycle broader and deeper than any one of them.

Since the watershed of 2008, the Federal Reserve has become a kind of dealer for the entire dollar zone of the global economy, swelling its balance sheet to over seven trillion dollars from just under one trillion dollars in 2007. The Fed's staggering expansion of its balance sheet in 2020 has fed a binge of corporate borrowing that has led to a full 20 percent of the 3,000 largest American companies no longer earning enough to pay their interest expenses, mutating into “zombie companies,” de facto wards of the state.47 However, 2020 only solidified an already existing trend, which was well in place prior to the COVID-19 pandemic. The other major central banks of the G10 countries have to varying degrees followed a similar pattern, with the tab of total commitments to monetary stimulus currently standing at $15 trillion.48 This amounted to nearly a fifth of the entire global economy in 2019.49 Some forecasts believe the balance sheets of the Fed and the ECB could top 50 percent of GDP or more in the US and Eurozone by the end of 2021.50 This is separate from the US federal debt, which currently stands at over 27 trillion dollars. US state debt has been steadily rising since the early 1980s, but since 2008 it has been rising exponentially, with some estimates expecting it to reach 130 percent of US GDP by the end of 2021.51

The flood of US debt marks a worldwide trend. Japan's state debt is currently at 230 percent of GDP, while China's domestic (non-foreign) debt is over 300 percent of GDP.52 Taking the 37 countries of the the Organisation for Economic Co-operation and Development (OECD) area, by the end of 2019 sovereign debt had expanded to 72 percent of total GDP, feeding a huge buildup in non-financial corporate debt, the heart of the so-called "real economy" of production and investment, which reached a record high of 13.5 trillion dollars in the same year.53 Overall global debt-to-GDP was already over 300 percent before the onset of the coronavirus pandemic in the first quarter of 2020.54

The most striking development, however, is not the absolute debt levels themselves, but the sclerotic productive apparatus this supernova of debt is built upon. Across the capitalist world, pre-pandemic 2019 was already one of the most dismal years for productivity growth in recent memory, again dashing hopes that, finally, the world economy would bounce back from the nadir of the Great Recession.55 In fact business profits were back at recession levels, trending downward to the low point of a decade before.56 Contemporary investment, when it does provide jobs, seems mostly able only to provide low-wage, low-productivity work, which, in the OECD area, indeed makes up the vast majority of what new work has been created over the last decade. The anemic level and inferior quality of investment underlies the well-documented, decades-long trend of flat or falling wages for workers, whose share of income has continued to decline over the last 15 years.57 The great mass of that income has flowed into capital gains, basically rents, for the owners of financial assets—made possible, of course, by a delirious, never-ending rally in asset prices stoked by unlimited central bank stimulus. This trifecta of decaying growth, widening inequality, and exploding state debt is transnational, affecting virtually every country producing for the world market.58 But beneath the indicators as their common source is stagnating systemic productivity, appearing in a steady supply of graphs and charts like an electroencephalogram showing at once the fading vital signs of a terminal social order and the flatlining mental abilities of the rulers responsible for it.

Given the world organization of labor and the types of capital investment it allows, the global economy in its current form has basically exhausted its potential for productivity growth. The result is a gradual process of diremption. As money evolves into a centralized, governmental instrument of global monetary management, it is accompanied by a parallel return of the fragmenting politics of space and place: nostalgia for a lost, better past, the basic fantasy that fuels every form of communitarian nationalism. The ever tighter fusion between state institutions and private financial markets, and the political fission of nationalist reaction it feeds, propels a dialectic of centralizing disintegration: the contradiction between the state as the general custodian of capital and the general interest of its citizens, intensified and set into historical motion by the earthquake of the general crisis.

Consider the US dollar, the currency at the top of the world hierarchy of monetary sovereignty. The dollar makes up 60 percent of global currency reserves. It is involved in fully 90 percent of foreign exchange trading.59 It is the unit of account for invoicing most of world trade, for pricing key commodities, like oil, and for nearly half of a 544 trillion dollars global derivatives market. Its central position makes it the most desired currency in the world, a universally-accepted store of value, unit of account, and means of payment for international transactions, credit creation, securitization, and flows of funds. But what lies behind the dollar? When the US government “prints money,” it buys bonds and other assets from multinational corporations and a small class of rich asset owners, replacing their securities with cash; likewise, when it “borrows,” it issues Treasury debt to the private market, where it then circulates as the standard, international safe asset for investors. This, in turn, fuels further credit creation by banks and, crucially, other non-bank financial institutions in the shadow banking system. As “the financial mirror image of larger underlying trends of economic inequality,” this unregulated, unmonitored agglomeration of private equity funds, mutual funds, insurance companies, pension funds, bank-spawned legal entities (“special purpose vehicles”) and a host of other shady outfits are the cauldron of world money creation.60 Its total size has grown exponentially over the last two decades, now holding some 183 trillion dollars or 49 percent of the world's financial assets. At 212 percent of global GDP, this dwarfs the balance sheets of even the biggest banks.61 Little wonder it is the shadow banking sector that is financing the bulk of the recent, record-breaking rise of corporate debt, which reached an all-time high in 2019.62

Shadow banking revolves around the intrinsic link between sovereign debt, issued by national treasuries, and liquidity, or the option easily to convert a security into its cash equivalent with no change in price. Liquidity is the circulating blood in the veins of the global financial system. Without it markets cannot be made, prices cannot be formed, no one can sell what they need without huge losses, sending the entire system into a sort of heart attack—a liquidity crisis. To prevent this from happening, states are compelled to manufacture liquidity by issuing bonds to be used as premium collateral for borrowing and lending in the enormous and expanding shadow-banking sector, mainly through a deceptively simple legal instrument called the repurchase agreement, or "repo."63 Repo is the legal form that most funding, and thus liquidity, takes in the shadow banking complex. Standing repo trades finance more than $12 trillion, 75 percent of which is based on government collateral, thus playing an instrumental role in making the $16 trillion global market for US Treasury bonds.64 This is where law and money meet at the apex of the global monetary hierarchy. The convolution of sovereign debt, shadow banking, and repo makes up the dark architecture of contemporary world money.

The shadow banking network is the molten core of the global financial system, and the sovereign debt-repo relation is in turn the center of that network. As Daniela Gabor observes, “sovereign debt has become the cornerstone of modern financial systems, used as a benchmark for pricing assets, to hedge positions in fixed income markets and as collateral for credit creation via shadow banking.”65 Government debt is required as repo collateral in two thirds of both the US and European debt markets, which are the largest in the world. Consequently, “the state has become a collateral factory for shadow banking, and for big banks’ activities in the shadows.”66 In other words, for currencies like the dollar or the Euro to serve as reserve money for the global economy, to function as a means of exchange and payment, the dominant unit of account, a measure and store of value—in short, to serve as a universal equivalent—states must subordinate their national economic policies to the needs of a distended, dysfunctional, transnational money nexus whose full scope and depth is unknown, perhaps unknowable.

Money, Class, Geopolitics

When the US Fed and Treasury act to shore up world money through the shadow banking complex, they effectively act as the general interest of capital, as the custodian for the interests of the transnational capitalist class as a whole, whose struggle for profit between its individual members constantly works to destabilize and destroy the very system that enriches them. Yet the state is also, supposedly, the general representation of its citizens, of their collective interests as a national community. This contradiction paralyzes the “monetary sovereign,” which cannot simply pick one side or the other but must remain suspended between both, subjugated from above by the anonymous, abstract sovereignty of world money and threatened from below by the new nationalists, whose objective function—regardless of ideological hue—is to advance domestic corporate interests pushing for more protectionism from the state, and less competition from globalization.67

The paradox of monetary sovereignty is that its condition of possibility as an idea lies in the profound weakness of the broader political economy that spawned it, a symptom of the long-term decalescence of the capitalist mode of production. The neo-chartalist proposal to redirect the monetary largess of the state toward the reinvigoration of national growth, or even some ambitious socialist program, completely ignores the systemic basis for current, actually existing chartalist practices. The objective function of these practices is to prop up the asset values of the transnational ownership class, an increasingly complacent mob of lumpen billionaires whose private competitive dynamic is no longer enough to accumulate capital at a level that would smoothly reproduce global society. This class is a global formation whose social power stems from their control over the laboring lives of billions of people, a form of control mediated by money. This is the actual material basis for sound money ideology and the politics of debt hysteria, which, however much MMT economists vociferously denounce it, will easily retain its firm grip over popular thinking and political common sense unless the power of this class is confronted and broken.68

Nevertheless, assume the entire problem of class power away, in the usual MMT fashion. Can a monetary sovereign like the US switch from monetary policy to a fiscal footing, and just print all the money it needs for a full, social-democratic renovation of the country, perhaps including a federal jobs guarantee, regulating away whatever problems might arise?

The same problem returns in the form of geopolitics. In the increasingly brittle, crumbling edifice of financial globalization, the class question and the geopolitical question are closely linked, just as they were in Knapp's time. All the partisan rancor that supposedly afflicts the US political establishment miraculously evaporates as it marches in lockstep to confront the supposed Chinese threat. The untimely return of great power conflict is happening amid a synchronized international shift away from support for free market globalization and toward revanchist nationalism—the same trend that has thrusted MMT and other chartalist ideas into the spotlight. This political and ideological transformation reflects the slow death of the global regime of social reproduction once known as neoliberalism, turning politics into a morbid contest about who will bear the cost for a dying society. While the US government can technocratically massage many financial and monetary problems into a manageable form, it cannot by itself resolve the productive exhaustion of the system as a whole, which is the underlying, objective tendency ripping the US apart from the inside and driving it into a posture of open conflict with China. In the political climate formed by this antagonism, the ideology of unlimited spending will be channeled into the need to strengthen strategic industries to prepare for confrontation with the national enemy. Without shifting a balance of class forces and political terrain that inherently favors the right, it will only serve corporate power.