It’s the extension of Modern Monetary Theory beyond monetary theory where I start to have reservations. Using Modern Monetary Theory as the basis for public policy is tricky because in addition to justifying liberal priorities like funding safety net programs or a job guarantee, it can also be used for neoliberal ends like slashing taxes and eliminating the minimum wage.
When Modern Monetary Theory stops being a monetary theory, vague notions like “public purpose” and “productive capacity” come into play. Marshall admits we already have Modern Monetary Theory for big banks, as evidenced by the bailout and other extraordinary measures. Who is to say public purpose hasn’t been served by that? Who’s to say there isn’t an abundance of productive capacity bottled up in our entrepreneurial job creators just waiting to be unleashed by the elimination of the capital gains tax?