by

Robert Cauneau

20 September 2024

The discovery of a monetary approach, which, in this case, not only relates to a field that I was not familiar with, but also constitutes a total challenge to my own knowledge of public finance management, which I have practiced throughout my career, is not something trivial. So I decided to tell my own story.

I would like to start by talking about my professional career. I entered the financial administration at a very young age, at 18, where I was able to take advantage of the opportunities for internal promotion, which still exist today. I was able to successively climb the ladder of treasury agent, then controller, then inspector. Preparing for the competitive examination for access to this last grade represents an intense intellectual effort. For example, the private law and public law program for the first 2 years of university must be completed in 4 months. Access to this grade is first gained through a one-year stint at the Ecole Nationale des Services du Trésor, now Ecole Nationale des Finances Publiques, since the merger of Public Accounting and Taxation. President Giscard d’Estaing, at its inauguration in June 1978, described this school as a “small, great school”.

After graduating from the Ecole Nationale des Services du Trésor, I was assigned to a tax office as a public accountant, accountant for the State and local authorities. I spent almost the entire first half of my career in this type of position, in France, with an unexpected stint with the Orchestre Philharmonique des Pays de Loire (OPPL, now ONPL), an organization that is 90% funded by public funds, which therefore requires sustained monitoring. Then, a meeting with a colleague reminded me that it was possible for us to be assigned to cooperative positions. I applied for and obtained an assignment in Senegal, as an advisor to the Treasurer General, then to the Director of the Treasury, with the main mission of designing and implementing an accounting plan for local authorities. This assignment turned out to be fascinating. It lasted 8 years and gave me what most civil servants in France lack, namely the very rewarding opportunity to take initiatives, to create, to innovate.

Then I returned to France, where I found a position as a public accountant, but which I quickly abandoned, requested by Bercy to develop IT specifications for the development of software for the accounting of French-speaking African states. This position at the Ministry of Finance was then a springboard for an assignment with the World Bank, the Director of Public Accounting at the time wishing to position executives in international organizations, with the aim of making French public finance management techniques known. Most international organizations are in fact dominated by Anglo-Saxon culture. For me, it was a question of supporting country economists in their work in French-speaking African countries. After a 5-year contract, I remained in the same type of activity, acting as a consultant for several multilateral and bilateral organizations working in the development sector, and this until my retirement.

I gradually left these functions and, when, about ten years ago now, I found myself retired full-time, I looked for an activity with the dual objective of maintaining an intellectual activity and making myself useful. I thus discovered, while surfing the web, the concept of basic income. I became passionate about this idea, and I joined the French Movement for Basic Income. Then, carrying out research, beyond the economic and social aspects, on its philosophical foundations, I came across an article which reading was very decisive for me. This article developed, among other things, the importance for basic income activists to control the process of monetary creation. So I dug into this avenue, which seemed important to me, and I came across, again while surfing the web, an article presenting MMT. That was about 6 years ago.

In this article, a sentence by Warren Mosler, who I later learned is the father of MMT, resonated with me like a shock, like a revelation, namely that a floating exchange rate state that controls its currency has never defaulted on its own currency, except voluntarily. This fact, which has never been empirically denied, immediately appeared to me to be very important. On the other hand, it called into question what I knew, what I had used throughout my career, namely that public spending is financially limited and therefore must be financed by taxes or by borrowing. My curiosity was therefore deeply piqued and, to move forward, to learn, I sought to meet other people who were interested in the subject, which led me to join a discussion group on Facebook, a group that I quickly left, finding only superficial knowledge of the subject and an atmosphere not very conducive to research.

Quite quickly, after watching a short video showing an Italian MMT activist, Ivan Invernizzi, who spoke, in French, about his wish to see MMT develop in France as well, I discovered that this monetary approach was experiencing sustained activism in Italy. So I tried to get in touch with him. I later learned that, on many occasions, he had accompanied to Italy and interpreted the economists at the origin of MMT, notably Warren Mosler, who first had the intuition of MMT, in 1992, then that he developed it in collaboration with academic economists, notably the Australian Bill Mitchell and the American Randall Wray.

Since Ivan had learned MMT directly from Warren Mosler, this meeting was a fantastic opportunity for me. I was indeed able, thanks to him, to delve deeply into the workings of this approach, into its line of reasoning, and to discover the importance, the power, of the concept of the monopolistic State of its currency. Ivan also taught me the fact that, even if there is a certain proximity, MMT is fundamentally different from the post-Keynesian approach.

But I would also like to mention the late Jean-Baptiste Bersac, who died prematurely at the age of 27, whom I unfortunately only knew through his blog and his book « Devises – L’irrésistible urgence de la monnaie ». Jean-Baptiste had understood everything about MMT, which he preferred to call neo-chartalism. We would have had so much to say to each other. His disappearance was an immeasurable loss for MMT in the French-speaking world.

It is certain that, for me, this discovery of MMT was a profound culture shock. First of all, although I had spent my entire career in contact with public finances, using the tools themselves, in terms of preparation, execution and control of public budgets, I had never thought about monetary issues. I therefore had to tame the language as well as understand the workings of the monetary system, it being specified that my knowledge of accounting was very useful to me. Indeed, the description of the monetary system by MMT makes extensive use of accounting. But I also had to understand the basis of totally new ideas, a priori « crazy », often counter-intuitive, such as the one which consists in considering that government expenditure necessarily precedes the payment of taxes and the subscription of government securities, these having a use other than that of their financing.

I must therefore consider that I have made a leap that is not easy, because it requires great intellectual flexibility, as well as a great capacity to accept new perspectives. Recent discussions with former colleagues from the French Treasury, most of whom reacted by clearly saying that it was out of the question for them to change their reasoning, have allowed me to realize how frustrating it is to come up against the rigidity of our own system of thought.

But in reality, the discovery of MMT, which immediately appealed to me, confirmed some of my intuitions, particularly on the role of the public deficit. And the deepening of this monetary approach made me discover its power, showing in particular that the ignorance of public decision-makers as to the real functioning of the monetary system leads them to self-impose completely useless financial constraints, but which serve to justify the austerity policies that they too often advocate.

Regarding the description of MMT itself, I will not go into more detail here, which are however available on our blog https://mmt-france.org/ through its most important fundamental articles, as well as articles written by Ivan and myself. Readers will be able to discover how MMT gives States the keys to optimally open up their public policy space, thus allowing them to work much more effectively in the interest of the populations.

I hope this description of my own journey to MMT will interest and perhaps inspire some readers. Ivan and I can be reached via the “Contact” link on our blog.