Marxism vs Modern Monetary Theory MMT

Marxist Theory · 2026-05-13

Core Argument

The central thesis is that Modern Monetary Theory (MMT) is not a radical break from capitalist orthodoxy but a repackaged Keynesianism that fundamentally misunderstands the nature of money, value, and class society under capitalism. Booth argues that MMT offers the left a dangerous illusion: that governments can fund transformative social programmes simply by printing money, without confronting the underlying relations of production, the profit motive, or the power of the capitalist class. The article claims that MMT's analytical framework — rooted in chartalism and demand-side management — cannot explain why capitalism experiences recurrent crises, and therefore cannot offer a genuine solution. The real task, Booth insists, is not to manage capitalism more effectively but to abolish it through socialist revolution.

Theoretical Grounding

The analysis draws on Marx's theory of money as developed in Capital and the Contribution to the Critique of Political Economy. Booth grounds his critique in the labour theory of value: money is not a creation of the state but a social relation that arises historically from commodity production and exchange. Money represents value, and value is created by socially necessary labour time in production. The state can print money, but it cannot guarantee that money has any value — that depends on the productive economy behind it.

The article situates MMT within the broader Keynesian tradition, arguing that both share a fatal flaw: they treat the capitalist economy as a system that can be managed through fiscal and monetary policy, ignoring the class antagonism between capital and labour. Booth invokes Marx's observation that the capitalist state is "a committee for managing the common affairs of the whole bourgeoisie" and Lenin's remark that capitalism represents the "dictatorship of the banks." The critique also draws on Marx's theory of crisis — specifically, crises of overproduction arising from the contradiction between the productive forces and the narrow limits of the market — to explain why Keynesian demand management has historically failed.

Conjunctural Relevance

The article was published in September 2019, at a moment when MMT was gaining significant traction on the left, particularly around the campaigns of Bernie Sanders in the US and Jeremy Corbyn in the UK. Alexandria Ocasio-Cortez had publicly endorsed MMT as a framework for funding the Green New Deal, and Stephanie Kelton was serving as an economic adviser to Sanders. In the UK, Richard Murphy — self-proclaimed author of "Corbynomics" — was promoting MMT to left-wing Labour MPs, though the Labour leadership had "categorically rejected" it.

Booth situates MMT's appeal within the context of a decade of crisis and austerity following the 2008 crash. He cites Larry Summers' concept of "secular stagnation" — permanently subdued demand and muted private investment — and notes that interest rates at the zero bound have left mainstream policymakers with few conventional tools. The article points to the failure of Quantitative Easing: trillions pumped into the economy have inflated asset prices (stocks, property, cryptocurrencies) while business investment and GDP growth remain subdued. This is presented as empirical proof that the state can create money but cannot ensure it is put to productive use.

The article also draws historical parallels: the 1976 IMF bailout of the UK Labour government, Mitterrand's 1983 austerity turn in France, and the failure of the original New Deal to end the Great Depression (unemployment actually rose; only wartime mobilisation resolved the crisis). These examples are used to argue that any left-wing government attempting MMT-style policies within capitalism would face capital flight, currency collapse, and forced austerity.

Where the Argument Continues

The article is part of a sustained Marxist critique of reformist economic strategies. It leaves several questions open for further development:

• The precise mechanics of the tendency of the rate of profit to fall are gestured at but not elaborated. The article mentions crises of overproduction and the contradiction between productive forces and market limits, but a fuller treatment of Marx's law of the tendency of the rate of profit to fall would deepen the explanation of why Keynesian stimulus fails.

• The relationship between money and the state under socialism is raised but not developed. Booth notes that a national bank under workers' control would be a vital element of socialist planning, but the article does not explore how money would function in a transitional economy or whether it would be abolished entirely.

• The political strategy for winning a workers' state is not addressed. The article critiques MMT for avoiding class struggle, but does not itself outline how the working class can organise to seize state power.

These themes are developed in other IDOM articles on the Green New Deal, the nature of the state, and the Marxist theory of crisis. The broader corpus of the Revolutionary Communist International — including Against the Stream episodes and texts on the transition to socialism — would provide the strategic complement to this economic critique.

Connections

• Marx, Capital (especially Volume 1, chapters on money and commodities) — the theoretical foundation for Booth's critique of chartalism and the labour theory of value.
• Marx, Contribution to the Critique of Political Economy — the source for the four functions of money.
• Keynes, The General Theory of Employment, Interest and Money — the Keynesian framework that Booth argues MMT merely repackages.
• David Graeber, Debt: The First 5,000 Years — cited for Locke's critique of nominalist theories of money.
• Larry Summers on "secular stagnation" — the mainstream economic diagnosis that Booth uses to contextualise MMT's appeal.
• IDOM articles on the Green New Deal and the crisis of capitalism — these extend the analysis of why Keynesian demand management cannot resolve capitalism's structural crisis.
• Lenin, The State and Revolution — relevant for understanding the Marxist theory of the state that underpins Booth's critique of MMT's depoliticised conception of government.

Key Quotes

1. "Money itself is not wealth, but is a claim to a portion of the total social wealth created in production – ultimately by the labour of the working class."

2. "The state can create money. But it cannot guarantee that this money has any value. Without a productive economy behind it, money is meaningless."

3. "It is not the state that creates the demand for money, but the needs of capitalist production. And this production is ultimately driven by profit. Businesses invest, produce, and sell in order to make a profit. Where the capitalists cannot make a profit, they will not produce."

4. "There is no such thing as a free lunch when it comes to capitalism. Whilst the state can print money, it cannot print teachers and schools, doctors and hospitals, or engineers and factories."

5. "Under capitalism, it is the market – and the laws of the market – that dictate to governments."

6. "The aim of the left, therefore, should not be to strengthen the money system, but to abolish it. Implementing MMT's policy conclusions might end up destroying the value of a currency, but it will not put an end to the power of money. This can only be done by abolishing the system of commodity production and exchange out of which money has historically arisen."