EARLIER this week Jonathan Reynolds, Labour’s shadow economic secretary to the Treasury, set out what he said were the reasons “why Labour doesn’t support Modern Monetary Theory” (MMT). But Jonathan’s analysis is flawed, and although he might not support MMT, increasing numbers of grassroots Labour Party members do.  

In a piece he wrote for Labour List earlier this week, he incorrectly suggested that people like me think: “…countries with a sovereign currency (such as our Pound Sterling) can print as much money as they like to meet spending commitments, without any adverse consequences occurring, because the central bank can always print more money.”

But that isn’t what I am saying at all, and I haven’t come across anyone else who supports MMT saying that either. MMT merely recognises that governments can use their sovereign currencies to pay for anything they want to do. Not by simply “printing money,” but by investing to utilise any spare capacity in the economy that is available for sale in that currency, including unemployed and under-employed workers.