economics – Page 2 – Stephen Hinton Consulting

Real Capital supports Modern Monetary Theory

Modern Monetary Theory (MMT) and Real Capital Frameworks both stress the importance of understanding the capacity of the economy to deliver, using real resources.

MMT demonstrates how the economic system works: a government budgets for a year at time, planning its expenditures and expected levels of tax returns. The expenditures are calculated on resources being available to purchase. Real Capital frameworks offer ways to measure production capability and capacity, and the status of the real capital that will be employed through the budget year. This article explores how MMT and real capital align.

Should we tax the rich more?

Much ado is being made (rightfully) on Gary Stephenson’s exhortations to tax the rich – all over the internet and BBC, getting people of all ilks to wade into the debate.

Applying Real Capital to the Circular Firm

Several thinkers (including, for example, Boyd 2020 and Hazel Henderson) have suggested that the concept of real capital – or multi-capital – be introduced into the political economy to aid decision-making at policy level as well at corporate level. This may overcome one of the failings of standard economics: Policy makers often rely on economists to provide their decision bases. However, one of the failings of standard economics when preparing decision bases for policy makers, is that anything that cannot be valued in money is seen to have no value or little value. The Earth does not send a bill for the use of its atoms so the stewardship of the material world is left out. Without a comprehensive valuation framework, policy makers and strategists are likely to miss the full picture by just relying on monetary values and make decisions that could be detrimental to society, counter to the intentions of the policy.

This article gives a general explanation of the category of real capital that is built capital, and how to use its valuation in preparing decision bases. The Real Capital approach gives a more robust decision basis, helping identify long term investment needs and policy that steers investment and activities to avoid capital degeneration and promote capital regeneration.

Not degrowth, but economic maturity

Economic growth sounds great! But as with all growth you have to ask yourself what it will look like when it’s fully grown. So too with the “economy”. I’m not talking about the monetary system that produces tokens and circulates these tokens around between citizens, companies, governments and back. I’m talking about the arrangement for keeping a roof over your head, food on your table and a load of other essential services.