Steve and his guest, Scottish political economist William Thomson, use the fight over Scotland’s independence to dissect how class power hides inside “neutral” economic rules.  

Will, founder of SCOTONOMICS, talks about his journey from neoclassical training to a heterodox, political-economy perspective grounded in MMT, ecological economics, and class analysis. 

He recently wrote a paper (with friend-of-the-podcast Dirk Ehnts) showing how the Scottish government’s plan to copy the EU’s Stability and Growth Pact and delay its own currency would lock an “independent” Scotland into permanent austerity and dependence on markets and foreign owners. 

Will explains that more foreign direct investment, supply-side reforms, and 3% deficit caps aren’t “responsible” policy – they are mechanisms to protect external and domestic elites at the expense of workers and communities. 

Steve and Will stress that MMT is just a lens without an explicit socialist or working-class political economy. The same monetary tools can be used for empire, war, and repression. They argue for an independence project built on monetary sovereignty, full employment, ecological limits, and economic resilience... not on appeasing markets and Brussels. 

William Thompson is a Scottish political economist and founder of SCOTONOMICS. He worked for almost a decade in the financial services sector in London. He has an MSc in the Green Economy and MEcon in the Economics of Sustainability. Based in Dunblane, Will writes regular blog posts and articles on economics in various publications including The National newspaper in Scotland and the Scottish Left Review. Support SCOTONOMICS: patreon.com/Scotonomics. 

@Williamgallus on X 

https://scotonomics.org/ 

STEVE GRUMBINE:

All right, folks, this is Steve with Macro N Cheese. My guest today is

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from Scotland. His name is William Thomson. He's a political economist and has worked

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for almost a decade in the financial services sector in London, holding positions at

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the British Bankers Association and the Council of Mortgage Lenders. William has a Master

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of Science in the Green Economy and a Master of Economics of Sustainability based

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in Dunblane. William writes articles on economics in various publications including the National, Brave

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New Europe, and the Scottish Left Review. He hosts the Scotonomics podcast and curates

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Scotland's Economics Festival. And he wrote a paper, co-wrote a paper with our friend

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Dirk Ehnts that we're going to be discussing today. And the title of that

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paper is Undermining Economic Resilience: the Economic Impact of Adopting the European Union's Stability

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and Growth Pact in an Independent Scotland and Introducing Scotland's Sectoral Balances. This is

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exciting to me. I mean, we talked to various economists and various political figures

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and various journalists and authors all around the world. And I think it's really

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important, as we assess our own country and assess the things that are going

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on within our own worlds, wherever you reside, okay? That we understand the struggle.

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Because regardless of where you are, all of our struggles are interconnected. There are

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different rules. There are different actors. There are different geopolitical angles. But at the

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end of the day, all of our struggles are connected. And the one unifying

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factor in most of this, aside from hopefully a fight against the capitalist predatory

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class, is also an understanding of the ledgers that back the monetary system and

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understand how money is created, where its origins are, and who has the power.

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So with that, it's good to hear from Scotland because Scotland is still part

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of the UK and I think it would like to be independent. At least

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a lot of folks would like that. And I think Will is one of

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them. So without further ado, let me bring on my guest, Will Thomson. Welcome

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to the show, sir.

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WILL THOMSON:

Thanks so much, Steve. It's nice to talk to you.

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STEVE GRUMBINE:

Absolutely. You guys wrote a great paper here. I mean, I love Dirk, and this is our

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first time getting to talk on the podcast. So for folks that haven't really had a chance

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to get to know you. Why don't you introduce yourself to the Macro N Cheese community?

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WILL THOMSON:

This is always the hardest thing to talk about, isn't it? It's yourself. Well, I studied

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economics apart from neoclassical economics. So when I did my degree in Dundee University, it was

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solidly neoclassical, but I didn't know that it was neoclassical because I wasn't aware of any

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other school of economics. I just thought we were learning economics. And I don't think that's

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changed for the vast majority of people in most of our Western democracies who are completely

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unaware that there are very different thoughts, ideas, assumptions that underpin other schools of economics. Most

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by things that you can't really argue against, you know, like supply and demand curves, that

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people will act on their own self-interest. All of these things kind of seem self-evident and

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it was really simple to follow that. So I studied economics, secondary school, and then in

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the first year at university and then I remember doing a paper on price and elasticity.

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And the example I used was drugs. And Dundee, which is the fourth biggest city in

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Scotland, has always had for maybe 40, 50 years real serious problems around drug abuse, drug

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addiction. And I wanted to use what I was learning at university to help me understand

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these problems. So I did an essay talking about how it doesn't really matter what the

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price of something is when you're addicted to it. So how do we tackle these problems?

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And I remember my lecturer saying to me, "This is okay, but this is just not

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a subject or a topic that we would want to cover in economics." And I can

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remember just feeling like someone had just, you know, just punched me in the face. And

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I said, "Well, but that's why I want to understand economics." And he said, "You just

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won't get to those answers studying economics." So I very quickly, in my second year dropped

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economics and tried to find something that would help me better understand the problems that were

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going on. So I really wanted to study economics because I thought it was a way

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of seeing the world that would help the issues that I could see from a real

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progressive, you know, social consciousness. And I was turned off economics for maybe 15 years until

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does a better understanding of economics point me to decide whether or not Scotland should be

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an independent nation or not? And this is when I started reading, getting into politics and

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also into economics. And when I started reading a lot of the left-wing commentary around our

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economy, I started to realize that money was something that we didn't really understand. And since

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that moment, that kind of reawakening of my political and economic understanding, which was 10 years

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ago, I've started to really concentrate on how I can help other people. Because so many

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people are either on this kind of journey from ignorance to understanding, or how can I

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explain and understand myself even better? So this is what I've been doing over the last

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five years by studying a Green Economy Masters and then a Economics of Sustainability, setting up

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Scotonomics, running a festival of economics, trying to do as many of these types of interviews,

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writing articles as I can, because I feel that there's an understanding that we can come

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to and we have a clearer idea of the options available to governments and to other

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institutions.

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I want to just tack on, you said something really, I think, very

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important for folks to zero in on, and that is that when you're

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ignorant of economics and you're also looking at political economy, your political economy

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will be shaded by your lack of understanding of economics. Because the thing

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that makes such common sense isn't really common sense at all. It's oftentimes

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a misunderstanding or an outright lie, as much of neoclassical economics tends to

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be. But if your brain has been clouded with false-scarcity narratives and fake

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ideas about how money comes to be, and fake ideas about "printing money,"

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or fake ideas about a whole host of things, the limits to your

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political economy, to your imagination, to your willingness to fight for better, is

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dumbed down to the point of anemic.

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I agree completely.

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And so when I heard you saying that, I was like, wow, okay, you know,

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the two do work hand in glove, right? Your ignorance of economics creates a poor

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political economy and your poor political economy creates bad economics. Until we dislodge them, people

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are just trapped in a world of false narratives and really misery.

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Absolutely. And I really like Stephanie Kelton's idea of learned helplessness. And I think this is

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exactly where we are as a broad society. But specifically, when I'm having conversations with a

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lot of people in the climate movement, I talk about learned helplessness. And I wrote a

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paper a few months ago which tried to go out to the climate movement and say,

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"Look, there's a lens that you can use, which is a modern monetary theory lens that

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will actually support you in your understanding of what the state can do right now." Because

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I did a small literature review and just found that almost 50% of the time when

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people were talking about solutions, they would mention some kind of economics. And most of the

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time they're constrained by this idea that, "We have to tax someone to pay for something," or,

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"It has to be the rich governments that give money to the poor governments." And I

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think this just really stymies the opportunity for change within so many of our areas within

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society that we think are super important. And it does all come back to this. Clearly,

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if we better understand the role of money within our governments and within our society, we

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can achieve so much more. And you know, that's really what I've been doing for the

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last year. The paper that we're going to focus on is very similar as to say,

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"Well, actually if a government does view money differently, it can do so much more."

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One of the things we talked about offline that I would like to get you

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to say online here, which I think is really powerful. You know, when I started

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learning MMT, modern monetary theory, for folks that are just tuning in, maybe have never

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heard of this before, one of the things that I found myself doing was just

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hyper focused on the fact that I was coming to this bemused, if you will,

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that so much of the battles between the duopoly, the two parties in the United

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States, so much of the conversation stemmed around, "You're wasting my hard earned tax dollars,"

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and "Hey, you want to raise taxes for me to blah, blah, blah." And so

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everything died on the hill of how you're going to pay for it. And that

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moment of awakening that I had was very brief because then I started realizing, to

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a lot of MMT'ers chagrin, that without having an understanding of political economy, without having

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a not this neutral ledgers, "Hey, you know, it's just this ledgers thing." Until you

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had something, you end up with Ronald Reagan, you know, and the Cold War, you

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end up with this Genocide Joe funding Gaza slaughter. You have to have a political

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compass, you have to have a guidepost. And I am very much a socialist in

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some way, shape or form, whatever that means. I am definitely more on the eco

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side because I understand the ecological side of things, which is another thing that I'm

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excited to talk to you about today. But you made the great point offline that

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if we don't have a good political economy guiding these neutral ledgers, that it's not

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enough to just know ledgers, we've got to have the other side too. You can't

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clap with one hand, you have to have two hands to clap. And I feel

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like that was vital. And I get a lot of pushback, folks. [Yeah] I mean,

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an insane amount of pushback within the community even, when I try and bring this

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stuff up. And my political economy is one that I fight for the working class.

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I fight for the little guy, not for a bunch of Wall Street traders. I'm

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not going to J.P. Morgan to give a talk. And I think that those that

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do, maybe are not necessarily on Team Working Class. I think maybe they are part

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of the bourgeoisie and part of the oppressors. So for me, this political economy thing

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is guided 100% by my understanding of MMT. You came into this as an ecological

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guy. I mean, MMT is a great lens, but it's insufficient. It's not a theory

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of everything like Bill Mitchell says.

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I think it's really important. And I would say the vast majority of people who

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I know support MMT in the UK and also a little bit wider in the

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States and into Europe. See, MMT is a really useful lens to do something progressive.

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And I always love conversations with people who say, to me, "No, no, MMT is

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just a lens. It's just a description of how the economy works." And I think

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this narrative is really strong within the MMT community. And in no way am I

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saying that's wrong. I'm just saying that I disagree with it. And I was at

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the Levy Summer School just north of New York in June, and we had a wonderful

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presentation. It was saying that we really need to look at MMT like other schools

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view their lens. For what is the point? Why are we all here talking about

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how the economy works and how money works? [Yes] We all need to come up

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and see. An MMT lens without it being underpinned by a philosophical position is pointless.

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And it was really powerful. It was Randy Wray who made this presentation.

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I love him.

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Straight away, three of the hands from the people who he'd spent 25 years teaching all

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shot up in the air. And they were saying, "Hold on, can we just check? Did

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you say what we just think that you said? And what?" And it's online. I would

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recommend, if everyone hasn't read it, go to the Levy Institute and read that. It's from

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about June and it's Randy's take. And I think it's probably the most important bit of

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MMT literature that will come out this year. And I think it was saying to the

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movement, "These simple phrases are all really useful and the lens is great, but unless we

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understand the political economy and the ideology behind MMT, it's useless." So it's really, really powerful.

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And it just spoke to everything that I believed about MMT because I see it as

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one of the maybe three main lenses on how I see the economy. You know, that

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sits alongside institutional economics, ecological economics, and then MMT, but within a wider, heterodox understanding of

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the economy that touches on feminist, political economy, some Marxism, but we need to just take

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a step back and see if you're looking through a few lenses, you're going to have

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a slightly different view and you're going to be influenced by all these other schools.

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Yes.

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So you just need to accept that and run with it. You know, of all

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the economics books I've read, probably my favorite is a book called Butterfly Economics by

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Paul Ormerod, an English economist. It's got nothing to do with money, nothing to do

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with MMT, but it's fundamentally one of the most important books that I've read, and

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I use that every day because it talks about how we are socially influenced when

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we're making decisions, and we need to understand this wider, heterodox framing of our economy.

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And that's why I call myself a political economist, first of all. But if anyone

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says to me, "You know, and what particular area do you concentrate?" I'll say, "Ecological

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economics or modern monetary theory." I'm not scared by those titles, but I think political

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economy really speaks to a much wider understanding of our economy and our society.

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Yes. You know, it's funny you say that, because I had, you know, in scheduling all

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my interviews here for Macro N Cheese, I had been turned on to a feminist economist.

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And ironically, her book is called Deficit. Okay, not Deficit Myth, but Deficit and it's how

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feminist economics can change, you know, on and on and on. And her name is Emma

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Holton, and we will be talking with her sometime in December. I'm not exactly sure what

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the date is offhand, but she's going to be coming onto the show. And interestingly enough,

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Randy Wray, he's our last interview here prior to you. So this is exciting. A lot

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of good synergies coming up here. All right, let's go ahead and pivot here, folks. You

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heard it from Will. And you heard it from me. You know, ledgers without political economy

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is kind of like clapping with one hand, okay? So this paper you and Dirk Ehnts

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wrote: fascinating paper. It starts out with a lot of bullets, and I would recommend reading

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the full 30 [pages], but if you're not given to reading the full 30, some of

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the really, really Important high points are broken out in this elongated executive summary. I think

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it's fantastic. I think it's great.

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WILL THOMSON:

Thank you.

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Let's start first off with how did you hook up with Dirk, who has been a guest

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on the show many times. And what was the genesis of writing this paper to start with?

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Well, I interviewed Dirk on Scotonomics when we started our podcast a few years ago because there's not

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many European MMT economists. And I got pally with Dirk and then I started doing my Economics of

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Sustainability degree at Torrens University and Dirk was one of the lecturers, but it was more like, "Hey,

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Dirk, what are you doing here?" You know, so it was really nice to see him. And we

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got chatting and I said to him what I wanted to do, which I'll go into detail. And

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he said, well, I'd love to support you on that. That fits very well where we are. And

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I said, you know, I need your kind of gravitas because we're talking about the European Union and

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the impacts of some of the decisions if Scotland did move towards the European Union, where it became

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independent. And Dirk said he was happy to help. So we were really lucky we got him just

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before he got his job at the European Parliament, which he's working on now. Took us about six

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months to write the paper and I thought it would take us then a month to publish it,

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but it takes a lot longer because things move so quickly and then you're going back and you're

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checking. And I also wanted to make sure that, you know, we sent it out to a fairly

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broad group of left-wing economists to get their take on it as well, because I think it had

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to be really important. It's not an MMT paper, but it talks to so many MMT talking points.

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It was really important that we felt like we had something that could have been read and understood

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much more broadly across the progressive economic space.

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This is totally a sidebar, but I want to get right back to

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it. You know, when Bill Mitchell, Randy Wray and Martin Watts put out

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the MMT textbook, it was just called Macroeconomics, because that's what it is.

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Absolutely.

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I just found that to be quite interesting. So you say it's not specifically.

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Well, you know what? It kind of is, isn't it? It's still macroeconomics.

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I'm just thinking about that paper. I don't even know if we see monetary theory in the paper.

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It's so kind of like, well, we either did or we didn't. There was no decision to include

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it or not include it. So I'm going to just check to see if we did say that.

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But anyone who reads it who's influenced by MMT will see most of the talking points there.

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There are two instances of MMT and guess where

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they are: in the references section referencing other works.

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So, yeah, there you are.

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Okay, so let's go ahead and get started here. Back to the paper. You've given

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us the modus operandi for how you hooked up with Dirk and so forth. Let's

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go in. Obviously, your point of this is focusing on an independent Scotland, like everything

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else is going to be ancillary to that. That is the primary purpose of a

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lot of your work here as well. And your very first bullet here is an

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independent Scotland has all the necessary resources, skills and institutional capacity to enable its citizens

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to prosper. And we can go from there man.

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WILL THOMSON:

Well, I think it's important for the audience to understand who was our audience of this paper.

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We generally wrote it so that everyone could understand it and could start having a wider understanding

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of some of the decisions or the path dependency that was already being created. But our target

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very much was the Scottish government and the Scottish Civil Service. And it was to say to

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them, you've got a published economic plan for what will happen on the lead up to when

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Scotland becomes independent and then what we'll do in the first five or 10 years. And no

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one has looked at this in detail. So what we're going to do is we're going to

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take one section of that, which is the decision to align with the European Union's Stability and

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Growth pact, which is their fiscal rules, and we're going to spend a year and we're going

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to look at that and we're going to see, well, what impact would that have? And we

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are still the only paper that's looked at that in detail. And there's maybe 15, 20 things

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that you could look at for the economic direction that the Scottish government are taking and you

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can look at in detail. And that's what we decided to do. And then we've sent it

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to the Scottish government and we've said, "[Here's a] thoroughly strong academic bit of work that says

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this would be a terrible decision. Can you tell us why we're wrong?" And that was really

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our principal aim. And we've had quite a bit of engagement so far from the Scottish government,

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from this. But it is really to say, "We support independence and that's why that first point

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is so important. But this is completely the wrong route." And it's really important because papers like

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WILL THOMSON:

this can so easily be picked up from the other side, which we call the Unionist side,

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WILL THOMSON:

the people who want to retain Scotland as part of the United Kingdom. And saying, "An academic

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WILL THOMSON:

paper completely demolishes the idea that Scotland could be independent." And that's not what the paper's saying.

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WILL THOMSON:

It's saying that the direction that we are taking and the path dependency that the Scottish government

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WILL THOMSON:

is planning will undermine independence. And that's what our principal point was in the paper.

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STEVE GRUMBINE:

Let me ask you a question. You know, a lot of colonial projects, and

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STEVE GRUMBINE:

let's be fair, Scotland is, I don't know whether you would call it a

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STEVE GRUMBINE:

colonial project or not, but it's definitely under the thumb of the UK. I've

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STEVE GRUMBINE:

not seen too many of the caretakers of colonies be very open to independence

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STEVE GRUMBINE:

of any variety. So, you know, I'm a little bit more revolutionary than a

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STEVE GRUMBINE:

lot of the United States folks that frequent us. But in Scotland, I mean,

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STEVE GRUMBINE:

let's be fair, you're calling for independence, period. And that comes with a lot

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STEVE GRUMBINE:

of strings, right? That comes with a lot of conversation angles because you may

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STEVE GRUMBINE:

want independence, but somebody's either got a grant it or you've got to take

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STEVE GRUMBINE:

it. So how does an independent Scotland come to be?

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WILL THOMSON:

Yeah, well, that's a really interesting question and it is something I'm going to sidestep

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WILL THOMSON:

deliberately because that is the politics of it. And what was really important for us

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WILL THOMSON:

when we were writing this paper was to say the assumption is Scotland becomes independent.

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STEVE GRUMBINE:

Ah, okay.

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WILL THOMSON:

Because we're at the point where we're saying to people we need to argue for it

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WILL THOMSON:

to be a benefit or it's not our job to see how this comes about. For

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WILL THOMSON:

your audience, Scotland was granted independence referendum when support for independence was about 30%. And we

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WILL THOMSON:

lost that independence referendum 45% to 55% 10 years ago. And at the time, our leader

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WILL THOMSON:

of the independence movement, Alex Salmond, said "This is a once in a generation referendum," which

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WILL THOMSON:

was taken pretty much out of context by the mainstream media in the UK to say,

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WILL THOMSON:

"Well, there can't be another referendum in a generation," you know, because someone on the Left

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WILL THOMSON:

said something, right? It had to be true and you had to be held to it.

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WILL THOMSON:

So this was a huge issue, especially after Brexit, because Scotland voted 65% to remain while

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WILL THOMSON:

the rest of the UK, well, England and Wales voted to leave, but Scotland had to

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WILL THOMSON:

leave the European Union even though a big majority voted to stay. So we said, "This

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WILL THOMSON:

is time for another independence referendum." And then what did they say? "Nope, it's a once

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WILL THOMSON:

in a generation." We're now at the point where it's more than 10 years away, so

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WILL THOMSON:

we can say it's nearly another generation, so we've got time for another referendum. But the

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WILL THOMSON:

big difference is Steve, is that we'd win this time. So it's very unlikely that we

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WILL THOMSON:

will be granted a referendum because we'll win. But as a movement in Scotland, we've come

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WILL THOMSON:

to this kind of general conclusion I would say, that you can win a referendum with

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WILL THOMSON:

51%, but you can't create the state that you want with 49% of people who vote

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WILL THOMSON:

against it. So we really need to start pushing our movement to get 60, 70% of

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WILL THOMSON:

people who would say they would vote yes in a referendum. And once that happens, for

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WILL THOMSON:

a period of time, then it really becomes politically extremely challenging for the United Kingdom or

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WILL THOMSON:

for England and Westminster not to grant a referendum. But at the moment, they can just

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WILL THOMSON:

say, "It's not the will of the Scottish people. It's once in a generation, so you're

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WILL THOMSON:

not going to have another referendum." But these are huge problems. And without going into the

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WILL THOMSON:

politics of the history of it, which is incredibly interesting [indeed] I do think it will

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WILL THOMSON:

detract slightly from the core of the paper and the economics of it.

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STEVE GRUMBINE:

With that in mind, let's do this the way you're saying. Let's

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STEVE GRUMBINE:

just cosplay that we are jumping from, how does this happen to

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STEVE GRUMBINE:

it's happened. Voila. We're now independent. Take us through the paper.

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WILL THOMSON:

Yeah, well, after a considerable period of recovering from a hangover, we would have to start

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WILL THOMSON:

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WILL THOMSON:

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WILL THOMSON:

And I think this is really interesting because it speaks completely to this idea of monetary

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WILL THOMSON:

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WILL THOMSON:

the Scottish government's position on currency. And what Alex Salmond said was that we would continue

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WILL THOMSON:

to use the pound and we would be in an economic union with England. And I've

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WILL THOMSON:

interviewed Alex Salmond. Unfortunately, he passed away last year. I interviewed him just a couple of

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WILL THOMSON:

years ago and I put this to him and he said, "Looking back, I still think

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WILL THOMSON:

I made the right decision, but if it was now, I would make a different decision."

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WILL THOMSON:

So there's a politician speaking for you there, Steve. But what he said was, too many

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WILL THOMSON:

things changing. So we just thought if we kept the pound, then we wouldn't be arguing

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WILL THOMSON:

about that. And that's one of the reasons that we lost the referendum and most people

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WILL THOMSON:

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WILL THOMSON:

we'll have our own currency, but we'll only have our own currency when these six tests

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WILL THOMSON:

are passed." And basically it was saying, we'll have our own currency, but it'll take us

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WILL THOMSON:

quite a while to get there. So in effect, we're still going to be using sterling.

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WILL THOMSON:

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WILL THOMSON:

sits around this idea that we'll become independent, but not monetary independent. And there's a group

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WILL THOMSON:

in Scotland called Scottish Currency Group who've commissioned a wonderful French academic to look at the

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WILL THOMSON:

impact of this. And this paper is going to be out next year. So we decided

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WILL THOMSON:

to look at one of these other particularly peculiar decisions that the government was making if

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WILL THOMSON:

it wanted to be independent. And the one that we focused on was the decision to

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WILL THOMSON:

mirror the fiscal rules in the European Union. And that's really what our paper focused on.

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WILL THOMSON:

And the conclusion was that this type of decision made so early, would put Scotland in

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WILL THOMSON:

a position where it was making all of its rules, all of its decisions, because it

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WILL THOMSON:

wants to get back into the European Union. And we just said this puts you on

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WILL THOMSON:

a path that you probably don't want to be on. And a really important point to

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WILL THOMSON:

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WILL THOMSON:

this in the paper, it says, "The great thing about independence is it allows you to

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WILL THOMSON:

set up the types of institutions that you want." And then a little bit later in

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WILL THOMSON:

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WILL THOMSON:

economic plan is just completely inconsistent. And you can see that these decisions are being made

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WILL THOMSON:

from political point and perspective rather than an economic one. Because when you start looking at

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WILL THOMSON:

detail of what the impacts of things like fiscal rules will have on a new state,

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WILL THOMSON:

it's just clearly impossible that any new government or new state would come into being wanting

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WILL THOMSON:

to have fiscal rules. It really undermines the whole economic plan. So to go back to

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WILL THOMSON:

your question, it was trying to say, "Hold on, before we become independent, we need to

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WILL THOMSON:

have a plan that actually supports Scotland's economic resilience and is likely that independence will be

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WILL THOMSON:

a success, because what you're planning at the moment won't do that."

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STEVE GRUMBINE:

It's funny you say that, because I think to myself, you know, as an MMT-minded

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STEVE GRUMBINE:

individual, going back to the adoption of the euro and the concept of the European

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STEVE GRUMBINE:

Union and so forth. There were several layers of conversation there, okay? And one of

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STEVE GRUMBINE:

them, probably the most important one, was the euro-adopting countries had given up their monetary

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STEVE GRUMBINE:

sovereignty. They had given up their ability to act in the way that you're seeking

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STEVE GRUMBINE:

to have Scotland act, in the way that England had chosen to act. And unfortunately,

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STEVE GRUMBINE:

because of the way it was sold, because of the economic illiteracy of the loudest

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STEVE GRUMBINE:

voices, it was cast off. And there may be some truth to this, by the

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STEVE GRUMBINE:

way. There I'm sure there are factions, but they just tried to poo poo it

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STEVE GRUMBINE:

as, "Oh, you're just a bunch of racists that don't want immigrants in the country.

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STEVE GRUMBINE:

You just don't want this, that and the other." But there was a legitimate economic

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STEVE GRUMBINE:

reasoning, rationale for not adopting euro in general, and that has been lost by almost

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STEVE GRUMBINE:

everyone other than the MMT community. And those fiscal rules just seem like common sense

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STEVE GRUMBINE:

because of cultural hegemony and the use of the institutions to promote these ideas that

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STEVE GRUMBINE:

everybody just considers, you know, "Yeah, it's just common sense. It's just, yeah, of course

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STEVE GRUMBINE:

that's what we should do. Right? That makes all the sense in the world." Because

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STEVE GRUMBINE:

these are the things, in my opinion, that this paper address[es] in different ways. But

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STEVE GRUMBINE:

people, I think they get lost in the political because no one sits down with

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STEVE GRUMBINE:

their tea or their coffee just for, you know, the sake of listening to an

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STEVE GRUMBINE:

economic conversation other than folks that like economics. They listen to political speech. And so

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STEVE GRUMBINE:

the way that these politicians present things is rarely straightforward, rarely correct even.

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WILL THOMSON:

Yeah.

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STEVE GRUMBINE:

And almost entirely propaganda. How do you help people who have been, maybe I

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STEVE GRUMBINE:

don't know what the word for it is, but like, their view of anything

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STEVE GRUMBINE:

you have to say has been colored by that fight for independence.

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WILL THOMSON:

Heavily influenced.

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STEVE GRUMBINE:

Yes. Yes.

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WILL THOMSON:

I think it's really important to not pick a fight when you don't need to. And

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WILL THOMSON:

when Dirk and I sat down to write the paper, we said, "Look, it'd be really

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WILL THOMSON:

easy to make this a paper that says that the European Union is a horrible institution

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WILL THOMSON:

in Scotland should have nothing to do with it." But that's not the argument that we're

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WILL THOMSON:

making. We want to say to people, we're going to look at this and work out

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WILL THOMSON:

what would happen if we followed the European Union's fiscal rules. And what we said in

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WILL THOMSON:

the paper was we're just going to make assumptions here. We're going to make assumptions that

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WILL THOMSON:

we become independent. We follow these rules when we try and get into the EU and

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WILL THOMSON:

then we try to have the euro. So we've just got very basic assumptions. And we

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WILL THOMSON:

say in the paper, if Scotland became independent this year, we would be applying to join

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WILL THOMSON:

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WILL THOMSON:

you know what? Seen 15 years, Scotland joining the European Union, joining the euro might be

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WILL THOMSON:

the best thing. Who are we to say that in 15 years' time, we know what

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WILL THOMSON:

the best decision for a small nation would be considering the speed and the amount of

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WILL THOMSON:

upheaval that we see, and not just economics and culturally and socially at the moment. So

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WILL THOMSON:

we just said, let's not pick a fight. Let's just say that might be a decision

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WILL THOMSON:

for us to take further down the line. But near term, if you're talking about independence

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WILL THOMSON:

coming in the next few years, what would be the impact of trying to align with

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WILL THOMSON:

the European Union? And let's focus on this one thing. So not picking fights, I think

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WILL THOMSON:

is really important. But making it clear to people that Scotland can have the Euro until

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WILL THOMSON:

it has its own currency is also another way of kind of undermining the opposition to

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WILL THOMSON:

what you might be saying, because it's absolutely true. And again, you can say to someone,

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WILL THOMSON:

it might be the best thing for us to have the euro, but we can't do

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WILL THOMSON:

that until we have our own currency. So let's make sure that we do that in

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WILL THOMSON:

a way that enhances our economic resilience rather than negatively impacts it. So that was how

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WILL THOMSON:

we tried to address it. And as you said at the start, it was in no

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WILL THOMSON:

way to say independence is not a good idea. It's to highlight that it is. And

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WILL THOMSON:

it's the main reason to support independence, because of the ability of Scotland to start with

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WILL THOMSON:

a clean slate. So why throw that out by copying fiscal rules set by a body

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WILL THOMSON:

that you're not even a member of? And this is a really important point because I

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WILL THOMSON:

just want to make sure the audience know, the Scottish government wants to apply the EU's

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WILL THOMSON:

fiscal rules before- I'll say that again- before it becomes a member of the European Union.

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WILL THOMSON:

And we were just kind of saying it's taken all of the stick without any of

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WILL THOMSON:

the carrot. It's saying that we will follow these rules without even being a member. That's

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WILL THOMSON:

how ludicrous the political position is. And we wanted to get into the economics of that.

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STEVE GRUMBINE:

When I look at the IMF [International Monetary Fund] and you know, a lot of

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STEVE GRUMBINE:

the US's empire is controlled or leverages the stick of the IMF. Structural adjustments imposed

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STEVE GRUMBINE:

upon typically Global South countries that take on debts. Suddenly they come into this agreement

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STEVE GRUMBINE:

with the IMF to provide liquidity in a foreign currency or whatever, but they have

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STEVE GRUMBINE:

to sell their soul. They have to do all these things. They have to give

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STEVE GRUMBINE:

up protectionism. They have to open up all the markets. They have to open up

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STEVE GRUMBINE:

everything. It sounds a little bit like that's what they're saying to you all. It's

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STEVE GRUMBINE:

like, "Hey, before you can join us, you've got to become an austere nation. You've

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STEVE GRUMBINE:

got to do all these austere things and then maybe we'll let you in."

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WILL THOMSON:

Well, no, Steve, because they're not even asking. It's the Scottish government just volunteering.

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STEVE GRUMBINE:

Oh, boy.

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WILL THOMSON:

This is where the political economy comes into. The Scottish government wants to portray itself

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WILL THOMSON:

to the markets as being the kid in the class that turns up with the

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WILL THOMSON:

apple and gives it to the teacher. Right? "Because if you want to invest in

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WILL THOMSON:

Scotland, then we're much safer for your investments if we have some kind of fiscal

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WILL THOMSON:

rule, and to prove to you that we're going to be such a wonderful independent country,

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WILL THOMSON:

we'll have the European Union's fiscal rules before we're even a member." So this points

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WILL THOMSON:

to who they're trying to persuade and who they're trying to engage with in terms

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WILL THOMSON:

of what the economics and what the economy of an independent Scotland will be like.

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WILL THOMSON:

And we are just saying this is not your target market. You need to go

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WILL THOMSON:

out to a society where only 50% of people support independence and say to another

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WILL THOMSON:

25%, you need to vote independence because we will deliver the type of economy that

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WILL THOMSON:

you want. We will deliver investment, we will deliver a much better healthcare system and

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WILL THOMSON:

educational system. We will have a place in the world that doesn't align itself with

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WILL THOMSON:

Israel and with other powerful hegemonic issues around the world. But we will be much

420

WILL THOMSON:

more of an independent nation fighting a progressive path. You need to create some kind

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WILL THOMSON:

of narrative that inspires people. And 3% fiscal rules do not do that. And this

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WILL THOMSON:

helps you understand who they're trying to persuade. And we think the only way we

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WILL THOMSON:

can get to that group of people who would vote independence is by explaining to

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WILL THOMSON:

them the potential that's available when you become independent, when you take a step back

425

WILL THOMSON:

and you understand the power of currency, when you understand the power of money. And

426

WILL THOMSON:

that's really what we wanted to hint at with this paper.

427

STEVE GRUMBINE:

So you addressed the fiscal rules up front. Let's talk about the sectoral balances

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STEVE GRUMBINE:

of Scotland. Take us through this. I mean, obviously sectoral balances are core to

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STEVE GRUMBINE:

modern monetary theory. Even if you don't use the words here, let's just be

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STEVE GRUMBINE:

crystal clear, sectoral balances are an accounting identity. And that identity, the economics lens

431

STEVE GRUMBINE:

can be, you know, foo foo at times based on neoclassical stuff. But when

432

STEVE GRUMBINE:

it comes down to accounting identities, this is science. This is tried and true.

433

STEVE GRUMBINE:

This is, "I'm looking at a mirror. Here's what it says." Boom. And there

434

STEVE GRUMBINE:

is no wiggle room there. So talk to us about Scotland's sectoral balances.

435

WILL THOMSON:

Well, that's why we wanted to use it, because of its simplicity. And I've met

436

WILL THOMSON:

some members of the Parliament in Scotland and simplicity helps when you're talking about economics.

437

WILL THOMSON:

And I've also met some of the civil servants and looking at it through this

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WILL THOMSON:

lens helps as well. So we didn't want to write an overly technical paper because

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WILL THOMSON:

we wanted to be able to talk to ministers and say, if you do this,

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WILL THOMSON:

then this will happen using this framework of [sectoral] sectorial balances. So I think it's really

441

WILL THOMSON:

important just to highlight, because I don't think we've covered it yet exactly what the

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WILL THOMSON:

fiscal rule is. And certainly some people will know this, but the fiscal rule that

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WILL THOMSON:

we concentrated on was that the government can't have more than a 3% deficit every

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WILL THOMSON:

year, so it can't spend and tax any more than a 3% difference between its

445

WILL THOMSON:

spending and its taxation. And that's the fiscal rule that Scotland wants to adopt. So

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WILL THOMSON:

we just said, "Okay, where are we right now?" So we looked to find Scotland

447

WILL THOMSON:

sectorial balances, and no one had ever done them before. So our six months went

448

WILL THOMSON:

to nine months because we had to work what those sectorial balances were. So we

449

WILL THOMSON:

designed them. We put everything together. We had quite a bit of support and advice

450

WILL THOMSON:

from within the MMT community for this. And it just showed that normally going back

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WILL THOMSON:

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WILL THOMSON:

very rarely net saved. I think it was like seven years out of 25 years

453

WILL THOMSON:

when the Scottish private sector was able to net save. And this shows really clearly

454

WILL THOMSON:

on the sectorial balances. And the first thing you say is, "This is not good."

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WILL THOMSON:

This is what creates a very fragile private sector, you know, and private sector, households,

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WILL THOMSON:

businesses, financial services sector, very rarely with net saving. This is not good. So that

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WILL THOMSON:

came out really clearly from the sectorial balances. What it also showed was that normally

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WILL THOMSON:

the foreign sector had a surplus of roundabout 8 to 10%. So what it showed

459

WILL THOMSON:

was clearly that a lot around about 8% of Scotland's GDP was leaking out of

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WILL THOMSON:

Scotland every year. So the financial wealth sectorial balances only looks at the financial wealth,

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WILL THOMSON:

and we could see that every year about 8% of GDP was leaking out of

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WILL THOMSON:

the country. Another serious issue for any nation, even if it's independent or part of

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WILL THOMSON:

a bigger nation. And then the third thing that the sectorial balances were able to

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WILL THOMSON:

show was that even though our public sector deficit was round about 10%, it was

465

WILL THOMSON:

consistently between 10 and 12% since the financial crisis. Everyone in the UK talks about

466

WILL THOMSON:

how big Scotland's public sector deficit is, and at 12%, it's large compared to other

467

WILL THOMSON:

nations. But it's not enough to allow the private sector in Scotland to net save.

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WILL THOMSON:

So we were able to say, "Hold on a minute. The UK is not spending

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WILL THOMSON:

too much on Scotland. It's not spending enough on Scotland because of the structure of

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WILL THOMSON:

our economy." And when you see this amount of money leaving the country, this speaks

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WILL THOMSON:

to wealth and the ownership of wealth, and that's really what we wanted to get

472

WILL THOMSON:

into. So our main points to the Scottish government were you need to focus much

473

WILL THOMSON:

more about the financial health of the private sector when considering independence. And you need

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WILL THOMSON:

to look at wealth and the ownership of wealth, because we can't be in a

475

WILL THOMSON:

position where we become an independent nation. But 8% of our wealth still leaves the

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WILL THOMSON:

country every year because that means the ownership of those stocks of wealth is also

477

WILL THOMSON:

abroad. So the sectorial balances, despite being a really simple framework, allow you to have

478

WILL THOMSON:

some really deep, powerful and hidden lens on what's happening in an economy. And that's

479

WILL THOMSON:

really where we've had our biggest successes. Now, we might be wrong, but here's what

480

WILL THOMSON:

sectorial balances tell us. So tell us how we're wrong and how you're going to

481

WILL THOMSON:

achieve a prosperous society, when we can see the only way of doing that was

482

WILL THOMSON:

reducing the wealth of the private sector. So really, really powerful stuff.

483

STEVE GRUMBINE:

I think this is worth noting. We talk about, in a fiat system, when

484

STEVE GRUMBINE:

you have a fiat currency, that there isn't really anything like capital flight, because

485

STEVE GRUMBINE:

the government has the ability to do all kinds of different things to offset

486

STEVE GRUMBINE:

that kind of flight. However, we know political economy will tell us that whether

487

STEVE GRUMBINE:

or not that may be true and whether or not we know that the average

488

STEVE GRUMBINE:

person doesn't know that. Where would you consider capital controls in such a thing?

489

STEVE GRUMBINE:

I know that's not necessarily in the paper, but I'm curious if you consider

490

STEVE GRUMBINE:

that as part of a potential bridge or...

491

WILL THOMSON:

I don't think that's specifically an issue where we would be focusing on, because it's almost

492

WILL THOMSON:

like looking at bolting the door once the horse has left. And we really need to

493

WILL THOMSON:

look at the ownership of wealth. If you've got ownership within the country, then capital flight

494

WILL THOMSON:

is not a problem. The problem is that the ownership of your resources is based externally.

495

WILL THOMSON:

And that's what we are really trying to address with the sectorial balances. And we don't

496

WILL THOMSON:

cover this in the paper, but I think it's an illustrative example, is that 70% of

497

WILL THOMSON:

the Scottish whiskey industry is owned abroad. Now, it's probably one of our biggest industries in

498

WILL THOMSON:

the UK. It's certainly one of the biggest industries in Scotland, but 70% of the profits

499

WILL THOMSON:

go abroad. So we have our First Minister going across to the rest of the world

500

WILL THOMSON:

saying, "Buy more Scottish whiskey. This will be great for Scotland." That might be true, but

501

WILL THOMSON:

it doesn't improve your sectorial balances because 70% of that money is still flowing outside of

502

WILL THOMSON:

the country. And these are really important points because when we speak to government ministers and

503

WILL THOMSON:

they say, "Qell, all we need to do is increase the exports, we'll increase the exports

504

WILL THOMSON:

and then we'll be able to achieve this 3% public deficit rule." And we say, "Well,

505

WILL THOMSON:

you won't because of the state of ownership of our exporting industries. This might reduce it

506

WILL THOMSON:

a little bit because you're exporting more, but if those profits still leave, then your sectorial

507

WILL THOMSON:

balances are still in the same position as where we started and that money has to

508

WILL THOMSON:

come from somewhere. So that's not an answer, Minister. How are you going to achieve this

509

WILL THOMSON:

3%?" So you can really get to the details of this when you look at the

510

WILL THOMSON:

financial flows. I certainly think the currency flight is really important, but it's another area where

511

WILL THOMSON:

we would have to properly address what is the plans if you've got that concern.

512

STEVE GRUMBINE:

Very, very good. So you talk a little bit about foreign direct investment [FDI]

513

STEVE GRUMBINE:

and I see a lot of countries that are maybe not as stable looking

514

STEVE GRUMBINE:

into that, and it does come with some serious downfall, some serious problems. Talk

515

STEVE GRUMBINE:

to me a little bit about the role of foreign direct investment in Scotland.

516

WILL THOMSON:

Well, one of the really interesting things is this is a systems dynamics point. But every

517

WILL THOMSON:

year Ernst and Young come out with a report that talks about the region of the

518

WILL THOMSON:

UK which has been the most successful in attracting foreign direct investment. So already you can

519

WILL THOMSON:

see some significant assumptions placed under that idea when they're writing that report. But for the

520

WILL THOMSON:

last three or four years, Scotland has been second only to London, which means our government

521

WILL THOMSON:

has been able to stand up and say, "Once again, Scotland is the second most desirable

522

WILL THOMSON:

region of the United Kingdom for direct and foreign direct investment." And considering all the other

523

WILL THOMSON:

things that might be going not terribly well in Scotland's economy, this is like the one

524

WILL THOMSON:

thing where the Scottish government are able to stand up within a neoliberal framework, in front

525

WILL THOMSON:

of neoliberal parties like the Labour and Conservative Party in Parliament and say, "Look, we are

526

WILL THOMSON:

doing it well because we're getting loads of this foreign direct investment." So to start challenging

527

WILL THOMSON:

that and saying to them, "No, the more foreign direct investment you bring in, the worse

528

WILL THOMSON:

it is for the medium- and long-term success of our nation," is hugely challenging. But we

529

WILL THOMSON:

didn't want to walk away from the challenge, so we covered it in the paper and

530

WILL THOMSON:

we said, "You know what investment is? Someone gives you 10 pounds so they can get

531

WILL THOMSON:

15 back. And the only way that they can create that wealth is by transforming natural

532

WILL THOMSON:

resources into human made capital. And those resources are the resources of Scotland. So long term,

533

WILL THOMSON:

this is what you're doing. So it shouldn't be anything we're celebrating." We should actually be

534

WILL THOMSON:

looking at how we pare that down right now, because it's round about 11 and a

535

WILL THOMSON:

half billion pounds each year net flows out of Scotland, with figures going back just until

536

WILL THOMSON:

537

WILL THOMSON:

to allow you to get to this 3% fiscal target. It's going to make it worse.

538

WILL THOMSON:

So it's incredibly frustrating that the government think the solution is something that we know is

539

WILL THOMSON:

going to make the position worse.

540

STEVE GRUMBINE:

 In the paper, and I want to address this one right on the heels of that,

541

STEVE GRUMBINE:

is the supply side changes and removing regulations. This is the neoliberal playbook. I mean, you

542

STEVE GRUMBINE:

address the neoliberal playbook in here quite well. And it's like all this entrepreneurial culture, the

543

STEVE GRUMBINE:

digital economy, artificial intelligence, et cetera, these are all alluring. And if you look at the

544

STEVE GRUMBINE:

stock market, there's a huge bubble coming anytime now. Scotland would be wise to avoid some

545

STEVE GRUMBINE:

of that. But my question to you is, how does that play into your paper.

546

WILL THOMSON:

It's interesting because Dirk's in his mid-40s, right? So he's not an old man. But when

547

WILL THOMSON:

we were talking about this, he was saying, "I remember back in the dot com bubble

548

WILL THOMSON:

549

WILL THOMSON:

of Europe were saying, "brilliant, we can afford these fiscal rules now because our economies are

550

WILL THOMSON:

going to become so productive because of the Internet." And he said, "I'm just looking at

551

WILL THOMSON:

now and there's no conceivable increase in productivity from that point." He said, "so we just

552

WILL THOMSON:

kind of really need to say, well, what impact would that have?" And what we decided

553

WILL THOMSON:

was that these supply side policies do have a big impact on the economy. You can't

554

WILL THOMSON:

deny that. But what they do is they redistribute wealth, they don't increase, they don't speed

555

WILL THOMSON:

up growth, they're not adding to the productivity, they just simply make the wealthy wealthier. And

556

WILL THOMSON:

we say that clearly in the paper. This idea that you could find this missing 5%

557

WILL THOMSON:

of GDP by removing some regulations or by increasing innovation or entrepreneurial-ship is just simple madness

558

WILL THOMSON:

and there's absolutely no evidence for it. So we had to tackle that head on because

559

WILL THOMSON:

we had to look at the reasons that people would say, "oh no, this is fine,

560

WILL THOMSON:

but you've misunderstood. If the economy grows, then all these things won't be a problem." So

561

WILL THOMSON:

we said, "what will make the economy grow then?" And we've been able to basically undermine

562

WILL THOMSON:

all of these kind of central ideas and foreign direct investment, as you highlighted one. But

563

WILL THOMSON:

so many countries have the same issues when they're just focusing on regulation, innovation, entrepreneurial-ship, as

564

WILL THOMSON:

if this will solve all of the problems. And what we really wanted to highlight was

565

WILL THOMSON:

the problem's not the size of the economy, the problem is the current state of the

566

WILL THOMSON:

private sector in Scotland and it cannot in any way face another round of austerity after

567

WILL THOMSON:

what's happened over the last decade, decades and maybe even centuries, if you wanted to go

568

WILL THOMSON:

that far back.

569

STEVE GRUMBINE:

You know, when I think about the world, I mean, I am a little bit

570

STEVE GRUMBINE:

an older man. I'm older than Dirk for sure. I'm not sure how old you

571

STEVE GRUMBINE:

are. You don't need to tell me, but I'm approaching 60, I'm 56 years old

572

STEVE GRUMBINE:

and I remember an analog life where we picked up a rotary phone or a

573

STEVE GRUMBINE:

push button phone that was hung on the wall with a long spiral cord that

574

STEVE GRUMBINE:

you stretched around the corner and it would be staticky and you had call waiting

575

STEVE GRUMBINE:

and all these things. And a lot of times when I think about the world,

576

STEVE GRUMBINE:

I try to remember where I came from and look at all the changes that

577

STEVE GRUMBINE:

have taken place. But when I think about MMT and I think about the economic

578

STEVE GRUMBINE:

conversations that we have, a lot of these conversations feel at times like people that

579

STEVE GRUMBINE:

are trying to talk ledgers are talking back to the days of call waiting and

580

STEVE GRUMBINE:

are talking back to the days of, you know, really honestly very physical. There's no

581

STEVE GRUMBINE:

Internet, pre-Internet days. When I see like for example, the Federal Job Guarantee, which I

582

STEVE GRUMBINE:

imagine jobs would be a core component of an independent Scotland. And when I think

583

STEVE GRUMBINE:

about what AI and I think about these other things do. You got [Warren] Mosler's

584

STEVE GRUMBINE:

law that says, "Hey, there's no problem that we can't have a sufficiently large deficit

585

STEVE GRUMBINE:

to fix? You know, we can take care of it." But when it comes down

586

STEVE GRUMBINE:

to the political economy and watching in the United States right here, right now, major

587

STEVE GRUMBINE:

global national corporations like IBM and Amazon and a host of others are using the

588

STEVE GRUMBINE:

veil of advances in AI to lay off tens of thousands of people. Workers, okay?

589

STEVE GRUMBINE:

Workers that, you know, just having a quick hand. Oh, just give a job guarantee.

590

STEVE GRUMBINE:

Well, no you won't, because these guys are making a hundred thousand a year, making

591

STEVE GRUMBINE:

150,000 a year. And their families have bills and debts based on that pay. Whether

592

STEVE GRUMBINE:

that seems excessive or not to some folks, this is their material conditions, this is

593

STEVE GRUMBINE:

their reality. And when I think about Scotland and I think about things like that,

594

STEVE GRUMBINE:

I think a lot of people underestimate the powers that are allied against us. And

595

STEVE GRUMBINE:

I think to myself, how does Scotland avoid that pitfall? Obviously, using sectoral balances is

596

STEVE GRUMBINE:

a way of elucidating the idea that we can have nice things if we understand

597

STEVE GRUMBINE:

the role of the currency issuer, et cetera, understanding the relationships between public, private and

598

STEVE GRUMBINE:

rest of world kind of balances. But employment, that's a different story. The business cycle

599

STEVE GRUMBINE:

wants to purge people because they see labor as a cost, not a benefit. This

600

STEVE GRUMBINE:

concept feels foreign. I'm in a MMT chat group with people that "No, no, no,

601

STEVE GRUMBINE:

Steve, that's just, you know, we can always do this thing." And I'm like "but that

602

STEVE GRUMBINE:

is completely not considering political economy. And there's a lot of people that are going

603

STEVE GRUMBINE:

to die between when your idea comes true and the idea that these guys are

604

STEVE GRUMBINE:

selling is happening." Help me understand that from your vantage point, because I know that's

605

STEVE GRUMBINE:

a core part of sectoral balances, understanding real resources and so forth.

606

WILL THOMSON:

I think it's really important that when you talk to people about anything within MMT,

607

WILL THOMSON:

you have to say to them, and this talks back to the paper that Randy

608

WILL THOMSON:

wrote, you have to say to them, you can't look at an individual policy and

609

WILL THOMSON:

think how does it fit into this neoliberal world that we have? If any country

610

WILL THOMSON:

starts implementing policies supported or evidence provided by MMT, it has to do under a

611

WILL THOMSON:

completely different policy framework. It has to understand how the economy works completely differently. So

612

WILL THOMSON:

when you're talking about a job guarantee, it really needs to understand who and where

613

WILL THOMSON:

the power is and what the values are of society. And how do you measure

614

WILL THOMSON:

and align your values with the outcomes that you want. It really needs a completely

615

WILL THOMSON:

different view of the economy. And I just don't think as an MMT movement we're

616

WILL THOMSON:

there yet. You know, there's no way that, let's say the British government could just

617

WILL THOMSON:

start paying no interest on reserve balances. Of course it could do that if it

618

WILL THOMSON:

wanted to. It's really easy. But this talks to a value that sits under the

619

WILL THOMSON:

neoliberal framework or the neoclassical framework that we need to give money to the wealthy

620

WILL THOMSON:

so that they save it because we need their savings for investment. So we can't

621

WILL THOMSON:

not pay interest on government bonds because less money will go to the wealthy, which

622

WILL THOMSON:

will mean we'll have less investment, which will mean less growth and we'll have less

623

WILL THOMSON:

wellbeing. So these are the fundamental assumptions we have to challenge. And I would say

624

WILL THOMSON:

to anyone, I challenge any MMT person to think that they can answer these challenges

625

WILL THOMSON:

with the assumptions underpin MMT. Of course you can. You've got to have a much

626

WILL THOMSON:

clearer, wider view of how you want an economy to work if you want any

627

WILL THOMSON:

of these MMT policies that you support to come into function, because they just won't

628

WILL THOMSON:

happen without a wider framework that properly understands wealth, properly understands power. And that's why

629

WILL THOMSON:

I think, as I said at the start, Steve, this idea of a political economy

630

WILL THOMSON:

and understanding the lens of MMT is really helpful. So that's what I would encourage

631

WILL THOMSON:

people to do who are very supportive of MMT is just get a wider understanding

632

WILL THOMSON:

of the institutions in the country you operate in and really look at how do

633

WILL THOMSON:

you point towards changing the values and the assumptions that underpin the economic framework.

634

STEVE GRUMBINE:

I'm going to throw something at you and this is my own thing, so you

635

STEVE GRUMBINE:

can tell me "Steve, that's just crazy stuff" okay? But one of the things that

636

STEVE GRUMBINE:

I have come to believe and I'm looking at your paper as part and parcel

637

STEVE GRUMBINE:

of this. Okay? A lot of people can exactly show you the reserve flows. They

638

STEVE GRUMBINE:

can break out those T-graphs and they can show you map the way reserve accounting

639

STEVE GRUMBINE:

works. They can do it all, right? But at the end of the day, until

640

STEVE GRUMBINE:

you had an awakening, and I'm not talking about education, we all know these things.

641

STEVE GRUMBINE:

We understand these economic truths that MMT has, you know, lit the light for and

642

STEVE GRUMBINE:

lit the roadway for, et cetera. It's all these baffling and mystifying thoughts that people

643

STEVE GRUMBINE:

lack and they haven't been able to see through it. I think the awakening, which

644

STEVE GRUMBINE:

is the pivot point where you take knowledge and it turns to action, is missing.

645

STEVE GRUMBINE:

Right? There's a lot of folks that want to talk about the balances, the accounting,

646

STEVE GRUMBINE:

the this and that, and that's all very good and very important, but to your

647

STEVE GRUMBINE:

point, and really a point that I make frequently, it's inadequate. And I think to

648

STEVE GRUMBINE:

put it into an MMT OG's world, Bill Mitchell flat out says, "MMT is not

649

STEVE GRUMBINE:

the theory of everything. Stop trying to make it the theory of everything. It is

650

STEVE GRUMBINE:

a lens to support other things." Right? So you apply political economy to this. And

651

STEVE GRUMBINE:

one of the other things that came out of this was the idea that money,

652

STEVE GRUMBINE:

it really stops being neutral the minute it's spent into existence. That's political economy immediately.

653

STEVE GRUMBINE:

All those decisions, anything that's a decision is political economy. So unwinding those political decisions

654

STEVE GRUMBINE:

is political economy. Is it absent of MMT? It shouldn't be. MMT should be the

655

STEVE GRUMBINE:

lens that informs it. But I think that there's a delta there. And I think

656

STEVE GRUMBINE:

this is why MMT feels so impossible to people. Because that awakening typically doesn't come

657

STEVE GRUMBINE:

in a coherent political economy/MMT conversation. It comes in the sanitary MMT ledgers conversation without

658

STEVE GRUMBINE:

superimposing the values that would make that person say, "I see it now. Oh, my

659

STEVE GRUMBINE:

goodness, yes. Oh, wow!"

660

WILL THOMSON:

Absolutely. It's really peculiar. And trying to be as broad an economist as I can, I read

661

WILL THOMSON:

from heterodox schools. I'm reading a book at the moment about neoliberalism, and it's called Masters of

662

WILL THOMSON:

the Universe. It's fascinating. And right from the start, the neoliberal economics was underpinned by a philosophy,

663

WILL THOMSON:

and it was that freedom was the most important thing and individuals had to have as much

664

WILL THOMSON:

decision over their life as possible. And from that there grew an economic school. And it's the

665

WILL THOMSON:

same with, you know, you can look at Marxism, you can look at feminism, you can look

666

WILL THOMSON:

at ecological economics. It all comes from a position of saying, "Something's wrong, we need to fix

667

WILL THOMSON:

it. How do we see the world so that we can fix it?" And I don't know

668

WILL THOMSON:

if MMT is unique, but it's certainly peculiar that it didn't start from this perspective. Well, actually,

669

WILL THOMSON:

do you know, I will take a step back. I think it did start from that perspective

670

WILL THOMSON:

because Warren looked at this from a progressive lens. Bill Mitchell was a Marxist in the '70s,

671

WILL THOMSON:

looked at this from a how do we create a better society? But somehow over the '90s

672

WILL THOMSON:

673

WILL THOMSON:

the people who were attracted to MMT who just said, "This is a great lens. It explains

674

WILL THOMSON:

how the mechanics work." And as I said, I mentioned it a couple of times now, but

675

WILL THOMSON:

Randy Wray's paper, I think is really important because he's saying now is the time to use

676

WILL THOMSON:

this and think about the society that we want to create.

677

STEVE GRUMBINE:

Yeah, no, that's fantastic. Well stated. Well, we're at time. I would like to give you an

678

STEVE GRUMBINE:

opportunity. I'm sure we missed something in this call. I don't know what it was, but I'm

679

STEVE GRUMBINE:

sure we did. Is there anything, your parting word that you would like to leave the listeners

680

STEVE GRUMBINE:

with? By the way, Fantastic. I really appreciated this conversation. Thank you so much for this.

681

WILL THOMSON:

Well, yeah. Okay. Well, a couple of things. I think the first thing is that, that it's really

682

WILL THOMSON:

important that when we criticize stuff like fiscal rules, we don't just leave it there and we don't

683

WILL THOMSON:

just say, "Fiscal rules, hopeless. We should do without them." And what we spent a little bit of

684

WILL THOMSON:

time in the paper was saying, and I think this speaks to the political economy. You know, people

685

WILL THOMSON:

do need to feel like there's some kind of guidelines that the government's making decisions based on something.

686

WILL THOMSON:

So we said, rather than having this 3% fiscal rule, the government should say, "We'll make all of

687

WILL THOMSON:

the decisions based on sustainability, full employment, price stability and resilience." And then we broke down what those

688

WILL THOMSON:

four things are, and we just said we need to offer people an alternative. And I think we

689

WILL THOMSON:

do that in the paper. And what I've been focusing on, and it's in the title, is this

690

WILL THOMSON:

idea of economic resilience. When I've been having conversations with members of the Scottish Parliament and I've been

691

WILL THOMSON:

talking to them from a degrowth perspective, they're kind of saying, "You cannot come into this Parliament and

692

WILL THOMSON:

talk about degrowth." Right? "Because it just will not fly." Right? And I say, "Okay, I get that,

693

WILL THOMSON:

but what about if I talk about resilience?" "Oh, now you're talking," so, you know, so you say,

694

WILL THOMSON:

"I want an economy that's more resilient, and I want to support economic resilience." This is quite a

695

WILL THOMSON:

lot of talking points that a lot of people can kind of coalesce around. And then you say

696

WILL THOMSON:

to them, "Well, how do you become more resilient?" And you say, "Well, you have to have more

697

WILL THOMSON:

public transport. You have to have less private consumption. You have to get rid of some industries." "Oh,

698

WILL THOMSON:

so you mean degrowth? "Well, yeah, I suppose I do, in a way" but I think it's really

699

WILL THOMSON:

important that it's the same with MMT. You know, I think you can come into people and you

700

WILL THOMSON:

can talk about MMT but I think if you take this step back and you say to them,

701

WILL THOMSON:

look, let's use my context. Scotland's going to become an independent nation, right? And if we want a

702

WILL THOMSON:

progressive society, then we need to look at the lenses that we can use to allow us to

703

WILL THOMSON:

do that. And this lens here, this modern monetary theory lens, is fantastic for that because it helps

704

WILL THOMSON:

us create a progressive economy. Now, I think that's much more appealing to policymakers than someone saying, can

705

WILL THOMSON:

I just explain to you how the system actually works? Because most policymakers don't care how the system

706

WILL THOMSON:

works. They want to achieve some form of society. That's why they're trying to make policy. So I

707

WILL THOMSON:

think we've got to engage in this vision. What is it we're trying to create, and how does

708

WILL THOMSON:

this lens help? So I think that's really important, and I hope that when people are having conversations

709

WILL THOMSON:

with their family, with their friends, they start to realize the power of this lens. If they can

710

WILL THOMSON:

focus on the type of economy that not everyone, but certainly me and you, Steve, want to create.

711

STEVE GRUMBINE:

You know, I think of that very, very slick acronym WIFM "What's in it

712

STEVE GRUMBINE:

for me?" And we are a very, very atomized, you know, we have been

713

STEVE GRUMBINE:

destroyed mentally by this virus called neoliberalism. The world has been just destroyed, both

714

STEVE GRUMBINE:

spiritually, mentally, culturally. And more wars have come from this extreme privatization and all

715

STEVE GRUMBINE:

the, "Hey, if you succeed, it's your fault, and, hey, if you fail, it's

716

STEVE GRUMBINE:

your fault." "There is no society." [said] Margaret Thatcher, all these moments of lies

717

STEVE GRUMBINE:

that we have baked into ourselves. I guess my final question to you is

718

STEVE GRUMBINE:

that, you know, based on that, it sounds like one of the key aspects

719

STEVE GRUMBINE:

of what you're putting forward is meeting people where they are on those kinds

720

STEVE GRUMBINE:

of subjects because we can't ledger them into un-atomizing. This has been a heavily

721

STEVE GRUMBINE:

financed project of atomization, of expecting the individual to survive and thrive regardless of

722

STEVE GRUMBINE:

whether your neighbor is in the gutter. This kind of, "Hey, you know, let's

723

STEVE GRUMBINE:

just step over the dead and dying. As long as we're heading towards financial

724

STEVE GRUMBINE:

success and my portfolio says whatever," would you say that is a core component

725

STEVE GRUMBINE:

to how you're advancing? Because, like, "What's in it for me with economics of

726

STEVE GRUMBINE:

sustainability?" I mean, there's a lot in it for you, right? There's a whole

727

STEVE GRUMBINE:

lot. People don't think about that. I mean, hey, by the way, that's tsunami

728

STEVE GRUMBINE:

you're avoiding right now. That's courtesy of, you know, understanding sustainable economics. But that's

729

STEVE GRUMBINE:

tsunami that is about to sweep you and your family out to sea. That's

730

STEVE GRUMBINE:

the result of not, I don't know, I'm just, just positing. What are your

731

STEVE GRUMBINE:

thoughts on that as we close out here?

732

WILL THOMSON:

Yeah, it's really important to listen to what people's concerns are. And I think that all too often

733

WILL THOMSON:

we can jump in expecting to know what underlines people's thoughts. And especially in the UK at the

734

WILL THOMSON:

moment, there's a lot of people who are voting for Reform, which is without doubt a right-wing party,

735

WILL THOMSON:

but a lot of people are thinking about voting Reform because they're offering change. Especially in Scotland. They're

736

WILL THOMSON:

not voting Reform because they're bigots or they're racists. They just see a party that's offering change. And

737

WILL THOMSON:

I think it's really important to sit down with people and say, "What is it that you want?"

738

WILL THOMSON:

Rather than just assuming that they're going to say less immigration or whatever you've come to the table

739

WILL THOMSON:

with thinking they're going to say. And you'll often find that people say, "I just want some more

740

WILL THOMSON:

security. My kid can't go out now. I'm really worried about them." And these are the points that

741

WILL THOMSON:

I think that we can talk to from a progressive perspective. I really think we can say to

742

WILL THOMSON:

people, "Hey, you and I, I'm a Green voter or a Scottish National Party voter, and you're a

743

WILL THOMSON:

Conservative or a reform voter. But we've actually got so much in common because we see that the

744

WILL THOMSON:

society we've got right now is broken and we see it's not working. And maybe you don't want

745

WILL THOMSON:

to give money to foreigners because you think we should treat people at home first. Well, I'm just

746

WILL THOMSON:

saying treat people at home and treat foreigners. And you can do that when you've got a clearer

747

WILL THOMSON:

understanding of money and taxes and government expenditure. So we're on the same page here." So that's how,

748

WILL THOMSON:

you know, that underpins the conversations that I have with people is trying to say I'm not going

749

WILL THOMSON:

to focus on what separates us, but what do we want? And I believe, you know, I moved

750

WILL THOMSON:

back to Scotland a year ago from living in Catalonia and Spain for 10 years, and I've come

751

WILL THOMSON:

back to a society which is still, I think, very similar to the one that I grew up

752

WILL THOMSON:

in when I was a kid and I was a teenager. I think it's a deeply progressive, democratic,

753

WILL THOMSON:

caring society. I just think we've lost that lens to see it as such because of the influence

754

WILL THOMSON:

of the media, which pulls people to the Right when really they've got the same views that you

755

WILL THOMSON:

and I have Steve.

756

STEVE GRUMBINE:

 That's fantastic. All right, well, we are at time. I appreciate that so much,

757

STEVE GRUMBINE:

obviously, Scotonomics podcast, but tell everybody where they can find your great work.

758

WILL THOMSON:

Yeah, well, I'm going to create something a bit different next year, which hopefully I

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WILL THOMSON:

can come on and tell you about next year. But for the moment, you can

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WILL THOMSON:

find a lot of what I do on scotonomics.org and we've just launched the Scotland's

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WILL THOMSON:

Economics Festival at scoteconfest.org we'll have three days of amazing heterodox sessions in Scotland. I've

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WILL THOMSON:

already got a few people coming across from the States. Your friend John Harvey is

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WILL THOMSON:

coming over to join us. So we'll have a wonderful festival in March next year.

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WILL THOMSON:

But on X as @williamgallus and scotonomics.org is where you find a lot of our

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WILL THOMSON:

stuff, a lot of our blogs and even some of our papers as well.

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STEVE GRUMBINE:

Fantastic. All right, well, I'm going to go ahead and take us out. Thank you so

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STEVE GRUMBINE:

much for this. I really appreciate it as a great conversation. I hope you all enjoyed

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STEVE GRUMBINE:

this as well. So with that, my name's Steve Grumbine. I am the host of this

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STEVE GRUMBINE:

podcast, Macro N Cheese. I'm also the founder of the nonprofit Real Progressives, which is the

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STEVE GRUMBINE:

sponsor of this podcast. We survive by your donations. We are literally a bunch of volunteers

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STEVE GRUMBINE:

that put our time and effort and energy to trying to educate the public. We need

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STEVE GRUMBINE:

you to share this stuff on social media folks, believe me when I say this. I

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STEVE GRUMBINE:

look around and it is just tough sledding to get people to share. We need your

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STEVE GRUMBINE:

help all over the place. Don't think someone else is doing. I assure you, you they

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STEVE GRUMBINE:

aren't. We also require donations. It's the only way we pay for these services and the

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STEVE GRUMBINE:

systems that we operate under. And it also helps us get our message out. So if

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STEVE GRUMBINE:

you agree with us, you want to see it thrive, please consider becoming a monthly donor.

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STEVE GRUMBINE:

You can go to our Patreon, which is patreon.com/real progressives. You can go to our Substack

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STEVE GRUMBINE:

which is realprogressives.substack.com you can also go to our website which is realprogressives.org and become a

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STEVE GRUMBINE:

monthly donor as well. One time donor. There's no amount too small. Really, honestly, no amount

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STEVE GRUMBINE:

too great. And it is tax deductible. We are in November for folks that are in

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STEVE GRUMBINE:

the United States and that means you're in the fourth quarter of the annual tax season.

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STEVE GRUMBINE:

So these are tax deductible. If you're looking for a place to sink some money, we

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STEVE GRUMBINE:

could definitely use the help. And with that, on behalf of my guest, William Thomson. Great

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STEVE GRUMBINE:

guest. Thank you so much for this. Have to have you back on soon.

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WILL THOMSON:

Thanks so much.

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STEVE GRUMBINE:

Yes sir. And myself, Steve Grumbine. The podcast Macro N Cheese, we are out of here.