Tom Orlik, Columnist

Voodoo Economics or Keynes Redux? How Lawrence Summers and MMT Align

In its prescriptions, modern monetary theory recalls the economic orthodoxy that lasted from World War II through the 1970s.

March 11, 2019 at 11:00 AM UTC

By Tom Orlik

Tom Orlik is the chief economist for Bloomberg Economics. He’s the author of “Understanding China’s Economic Indicators,” a guide to China’s economic data. He’s based in Washington, DC, following more than a decade in Beijing.

Keynesian demand management at work in the 1950s.
Photographer: H. Armstrong Roberts/Hulton Archive/Getty Images

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It’s an intense period for modern monetary theory. After decades in obscurity it finds itself under the flashlight of public attention. Federal Reserve Chair Jerome Powell and BlackRock CEO Larry Fink have both taken a swing. Economics heavyweight Lawrence Summers compared it to the “voodoo economics” peddled by supply-siders in the late 1970s.

An alternative comparison – one that might come closer to the mark – is to the extended period from World War II to the 1970s, when monetary policy played second fiddle to public spending in keeping growth on track.