Recently, I was interviewed by Steve Grumbine at Real Progressives about the idea of Public Purpose. Public Purpose is a term which first came to prominence during the 1970s when it occurred in the title of John Kenneth Galbraith’s Economics and the Public Purpose. Galbraith never made clear what he meant by public purpose in his book, but the term was picked up again during the 1990s when economists developing the Modern Money Theory (MMT) approach to economics began to use the term frequently, also without offering either a definition or more importantly a specification of the term.

As MMT has become more and more widespread and popular, MMT writers (see for example) have referred to public purpose as though it were the standard for evaluating economic and perhaps all public policy. And other political writers using the MMT approach in their work have followed them and also invoked the term in normative and policy arguments they have used.

This history summarizes the background for Steve Grumbine’s interest public purpose and his desire to get my thoughts on the idea. The result was a lengthy interview in which I stated my general interpretation of the idea and discussed examples of how the term might apply in the areas of fiscal and trade policy specifically, and in political discourse more generally.

A lot of ground was covered in this nearly hour-and-a-half interview, but a detailed specification of “public purpose” wasn’t attempted there because there is nothing so boring in an interview as enumerating and providing minimal characterizations of a sizable number of aspects of an abstraction, and I did not want to subject viewers of the interview to that. So, at the end of the interview I provided some links to books where I presented the dimensions of public purpose and I also promised to make available the dimensions in an excerpt on the subject.

The dimensions are presented below in the context of an excerpt from one of my books. As you read the excerpt please be aware that I consider this list of dimensions as part of a normative theory of public purpose.

Since I present it as a theory I expect you to take it in that spirit and to offer criticisms and alternative theories in response. I want that because I think that the only way to arrive at a dominant theory of public purpose is through the process of critical review, reformulation, refutation, and continuous development which never ends, but does yield explicit formulations of public purpose that have best withstood criticism at any point in time.

So, I hope that this initial statement will be viewed as fair game in a long process, and that it will lead to deeper and better thinking about public purpose and its use as the evaluative standard needed to produce more integrative and effective public policy across any number of issue areas in all public political systems. I know that I am calling for more and better political theory. So be it, because, I believe that will be a very important tool in transcending the malaise of neoliberalism threatening democracies worldwide.

 

Excerpt from Real Fiscal Responsibility, Vol. I: The Progressive Give-up Formula

By

Joseph M. Firestone

Before I get to fiscal sustainability and fiscal responsibility I must set the context properly. After that, I’ll develop an understanding of these ideas that is very different from the one reflected in the kinds of statements you hear about them by most every one in the political sphere.

Problems Setting the Political Context

What are problems? They are gaps in our knowledge about how to close perceived intention or purpose gaps, which in turn are discrepancies we perceive and are motivated to end between states of the world and the states we want to, or think ought to, exist. Purpose gaps are only a problem for which we seek a solution, when we don’t know how to close them. Otherwise, they can be handled in known and agreed upon ways.

Here is a list of serious purpose gaps and problems faced currently by the people of the United States: comprising the dimensions of “public purpose” for the US today, expressed as a set of public policy intentions. I don’t believe that this list is a general set of categories sufficient to describe and evaluate progress toward public purpose in all nations. But, it perhaps specifies the dimensions of public purpose currently important for the US. Knowing what I think these are will create greater clarity in what I mean when I write later on about “net benefit relative to public purpose.”

─ 1. Maintaining or creating the monetary sovereignty of nations who are parties to trade agreements. Monetary sovereignty is the right of a government to choose to continue to have, issue, and maintain their own currency and reserves, and its use in whatever way a signatory State chooses, without challenge from any private non-governmental entity on grounds that the fiscal or monetary policy of that State has interfered with the profits or potential profits of a private entity;

─ 2. Replacing a stagnating economy with one operating at its full potential, closing the current output gap;

─ 3. Creating and maintaining full employment along with implementing the right to a living wage;

─ 4. Creating and Maintaining Price stability;

─ 5. Implementing the right of no cost at the point of access health care for everyone; including by providing it through legislation using public institutions to provide insurance, or even health care itself;

─ 6. Creating a world class no cost educational system for everyone;

─ 7. Preventing further environmental degradation and ending climate change-inducing impacts of human activity before reaching the climate tipping point to the extent possible through actions and policies of the United States;

─ 8. Reinventing/repairing US Infrastructure and transportation systems;

─ 9. Reinventing US energy foundations to rely primarily on renewables;

─ 10. Ending inequality based on racial, ethnic, religious, gender, sexual orientation, age, or other ascriptive, categorical distinctions;

─ 11. Ending involuntary inequality of educational opportunity;

─ 12. Ending involuntary inequality of opportunity to the extent possible;

─ 13. Reducing economic inequality over time to a level that is not threatening to democracy;

─ 14. Ending poverty with a basic income guarantee large enough to do that;

─ 15. Ending control frauds in economic institutions especially ones having considerable economic impact by prosecuting and punishing people who commit control frauds;

─ 16. Creating a legal system providing equal justice for all rather than preferential treatment for the wealthy and large corporations;

─ 17. Compensating working people for economic suffering caused by the crash of 2008;

─ 18. Reducing political inequality undermining political, social, and economic democracy to a minimum;

─ 19. Ending constitutional violations by the Executive Branch (including the White House, the Intelligence services, Homeland Security, the Defense Department) the Congress, State and Local Governments, and the Supreme Court;

─ 20. Reducing political violence, both from the privileged and from those seeking change, to a minimum;

─ 21. Ending trade agreements that compromise US sovereignty and undermine the right of people to get their desires and preferences implemented by the Congress;

─ 22. Ending fiscal policy budgeting for deficit reduction and fiscal neutrality.

─ 23. Maintaining political democracy which can be undermined by the impact that trade deals can have on economic concentration and the political power of corporations and the wealthy;

─ 24. Maintaining or creating social safety net programs and the rights of national governments to expand them regardless of the effects of public policy on private profits without incurring any financial liability;

─ 25. Maintaining and expanding labor rights to organize and negotiate regardless of the effects of the exercise of these on private profits;

─ 26. Fulfilling the right to a living pension benefit for all retirees, through legislating programs that will pay such a benefit along with a living fringe benefit to each retiree;

─ 27. Implementing the right to meaningful/operational free speech in relation to whatever communications media occupy the public space, including the internet;

─ 28. Implementing the right to virtually assemble and exercise civil liberties on such media without surveillance or disruption by governments, or by private sector providers of internet — based or other communications — based or social media — based services;

─ 29. Implementing civil rights including the right to pay equity wherever it is denied by using ascriptive criteria like race, ethnicity, gender, sexual preference, or any other ascriptive criterion;

─ 30. Implementing the right to free high-quality public education at all levels;

─ 31. Implementing complete freedom for governments at all levels, consistent with Federalism, to manage and regulate the financial sector for the public purpose under law, without any interference from private tribunals operating outside the public court system;

─ 32 Implementing the right to complete freedom at all levels, consistent with Federalism, for governments deciding to depart from free trade principles to protect, subsidize, or otherwise favor businesses in relation to areas of economic activity the government views as necessary for both current and future sustainability of the nation, including its democracy, national economy, national security, public safety, public welfare, innovation capability, or energy foundations.

─ 33. Creating a trade policy and trade agreements achieving sustainable net benefits relative to public purpose for both our trading partners and ourselves.

This list of purpose gaps goes beyond the kinds of concerns normally entertained in fiscal policy discussions. That’s because fiscal policy impacts other policy areas, and vice versa. Nevertheless, there are some problems in this list that aren’t addressable by either fiscal policy, or fiscal meta-policy, which are nevertheless included because they are components of my view of public purpose.

I propose that the overall abstract goal of all government policy ought to be net benefit for public purpose. But, if that is taken as the standard, then that ought to be applied to policy across-the-board, not just fiscal policy; and all areas of policy ought to be integrative crossing multiple policy categories, so long as the impacts of these policies also cross policy categories.

This is certainly true for the areas of fiscal policy and international trade. Where the 33 public policy intentions are involved, the Congress should retain the right in trade relations and agreements to erect and maintain those trade barriers, or national fiscal policies, it deems necessary to safeguard public policy intentions and the purposes they are based on, without being subject to legal or quasi-legal actions from private entities seeking redress for lost profits, or “reasonably expected” profits.

In short, living within our means for the United States doesn’t mean constraining spending because we may run out money. It means always trying to use fiscal policy for public purpose, because that standard is most likely to ensure that we live within the constraints of our real productive, resource, knowledge, and technological capabilities.

Of course, this list of dimensions of public purpose gaps and problems is incomplete, and I’ve stated these gaps as I see them. Others would state these somewhat differently, with different nuances and expressions of their values. Nevertheless, we can observe certain useful things from thinking about this list.

First, problems 2-9 on the list, as well as problems 11-14, 17, 24, 26, 30, will require much larger amounts of Government spending to solve than is customary now. Second, problem 1 is a concern for the United States, because, “trade” treaties such as the Trans-Pacific Partnership threaten monetary sovereignty, which, if weakened or lost would reduce the fiscal policy space available to the United States for implementing solutions to other fiscal policy problems.

Third, problem 22 also stands in the way of solutions to the problems that do require Government spending, because any political will to find solutions to public purpose problems is immediately undermined by political fights over spending cuts and taxes. So, getting past the idea that fiscal budgeting for deficit reduction must be pursued is essential to fulfilling public purpose.

Fourth, all the problems listed, including the ones not involving substantial spending, are problems related to the decay of democracy and the rise of plutocracy and oligarchy in the United States. Since all of them would either not exist or would be far less severe if the US Government could be made more responsive to what a majority of Americans want, based on polling data.

I won’t deal much with the problems of American Democracy, and their solutions in this book (though I plan to in future books). Instead, I will focus here on a number of the other problems and on 22, since that is the key to various problems requiring more spending on my list.

Right now, the Congress won’t confront these problems, because its members are unwilling, for a variety of reasons, to provide the funding necessary to be effective in helping to solve them. And they rationalize this unwillingness by appealing to Government’s inability to “afford” the spending they think will be necessary. They talk about the importance of fiscal sustainability and fiscal responsibility, and claim that it requires long-term deficit plans to create fiscal sustainability and to be fiscally responsible.

They also claim that these concerns are non-ideological and that it is only common sense to act in the way they do and want to continue to do. They never explicitly define either fiscal sustainability or fiscal responsibility, but simply assume that their meaning is obvious to everyone. And, in that way, they tacitly import their own bias to fiscal policy debates. Specifically, they use these terms as slogans to impose budgets targeted at deficit reduction and imposing austerity.

But, it is not true that these views are non-ideological. The rumors during the 1990s about the end of history and the death of ideology were, as the saying goes, a bit premature. Instead, all that happened was the victory of an ideology called neoliberalism that became dominant in the wake of the electoral victories and policies of Margaret Thatcher and Ronald Reagan in the late 70s and the 80s of the 20^th century.