Chapter 17: Money as Constraint

Throughout this chronicle, we have treated money as a coordination technology—brilliant, powerful, limited. But what if the limitations are more fundamental than we've acknowledged? What if money itself is the bottleneck?

This chapter explores a set of heterodox perspectives that challenge the monetary system at its root. They ask not how to manage money better but whether money, as currently constituted, prevents us from solving problems we know how to solve. They suggest that the constraints we experience as natural—the scarcity of funds for healthcare, infrastructure, climate action—may be artificial, products of a system that could be redesigned.

These are radical critiques. Radical in the original sense: going to the root. Whether or not they're correct, they force us to see what we've been taking for granted.

Modern Monetary Theory: The Sovereign Exception

Modern Monetary Theory, or MMT, begins with a simple observation: governments that issue their own currency are not like households. A household must earn or borrow money before it can spend. A currency-issuing government creates money when it spends. It doesn't need to "find the money" for programs; it is the source of the money.

This sounds like a license for unlimited spending, but MMT theorists insist it's not. The real constraint is not money but real resources. A government can always create more dollars, but it cannot create more workers, more factories, more raw materials. If government spending exceeds the economy's productive capacity, the result is inflation—too much money chasing too few goods.

The policy implication is provocative: for a sovereign currency issuer, deficits are not inherently dangerous. Taxes serve to control inflation and shape incentives, not to "fund" spending. The question is not "can we afford it?" but "do we have the real resources to do it?"

MMT emerged from obscurity during the COVID pandemic, when governments around the world did essentially what MMT described: created money, spent it into the economy, and observed that the predicted disasters (hyperinflation, currency collapse) did not immediately materialize. This doesn't prove MMT correct in all respects—inflation did eventually arrive, and its causes are debated—but it shifted the terms of discussion. The taboo had been broken.

The deeper challenge MMT poses is to our understanding of monetary constraint. If governments can create money, why do we accept scarcity in public goods? Why are hospitals underfunded, bridges crumbling, teachers underpaid? The answer cannot be "we don't have the money"—the money can be created. The answer must lie in real resource constraints, in political choices, in the distribution of power. MMT strips away the mystification and asks: what are we actually choosing, and why?

Commons Economics: Beyond Market and State

We encountered Elinor Ostrom earlier, demonstrating that communities can govern shared resources without either privatization or state control. Commons economics takes this further, proposing commons as a third mode of economic organization alongside markets and states.

Commons run deeper than their current marginality suggests. For centuries, European peasants managed common lands, forests, and fisheries through shared rules and mutual monitoring. Enclosure—the privatization of these commons—was not natural evolution but political imposition, often violent, serving the interests of landowners at the expense of commoners.

Today, new commons are emerging. Wikipedia is a commons: a shared resource, produced through collaboration, governed by participant-developed rules. Open-source software is a commons: code freely shared, improved collectively, owned by no one. Creative Commons licensing creates a legal commons for cultural works. These digital commons demonstrate that cooperation can produce at scale without either market incentives or state direction.

Commons economists argue for extending this logic. Healthcare could be organized as a commons—resources pooled, access universal, governance participatory. Housing, education, care work—all could be removed from market logic and organized through commoning.

The challenge is scale. Ostrom's successful commons were typically local, governed by communities who knew each other. Can commoning work at national or global scale? The digital commons suggest it might—Wikipedia operates globally—but the governance questions are formidable. Who decides? How are conflicts resolved? What prevents capture by well-organized interests?

Degrowth: Questioning the Growth Imperative

The most radical challenge comes from degrowth: the argument that perpetual economic growth is neither possible nor desirable, and that wealthy societies should deliberately reduce their material throughput.

The growth imperative is built into capitalism's DNA. Firms must grow or be outcompeted. Investors demand returns. Governments depend on growth for tax revenues and employment. The entire system assumes that tomorrow's economy will be larger than today's.

But infinite growth on a finite planet is a mathematical impossibility. Resources are limited. Waste sinks are limited. Ecosystems have carrying capacities. At some point, growth must stop—the only question is whether it stops through deliberate transition or catastrophic collapse.

Degrowth proponents argue that for wealthy societies, that point has arrived. Further growth brings diminishing returns in wellbeing while accelerating environmental destruction. Beyond a certain threshold, more stuff doesn't make people happier. What matters is sufficiency, not maximization.

The policy agenda includes:

• Shorter work weeks: Share existing work among more people, freeing time for care, community, and creativity.
• Universal basic services: Guarantee healthcare, housing, education, and transportation as public goods, reducing the need for market income.
• Caps on wealth and income: Limit accumulation, preventing the concentration that threatens democracy.
• Ecological limits: Set boundaries on resource extraction and pollution, letting prices adjust rather than treating the environment as free.

Degrowth is easily caricatured as primitivism, as wanting everyone to be poorer. Proponents respond that they're questioning a specific metric—GDP—not quality of life. A society with less consumption but more leisure, more community, more equality might be richer in what matters even if poorer in what's measured.

Money as Coordination Technology: Reaching Limits?

These three critiques—MMT, commons economics, degrowth—converge on a common insight: money may be reaching the limits of its usefulness as a coordination technology.

MMT reveals that monetary constraints are often political choices masquerading as natural laws. Commons economics shows that non-market coordination can work at significant scale. Degrowth questions whether the system money coordinates is oriented toward the right goals.

From a coherentist perspective, these critiques identify forms of dissonance:

MMT identifies artificial scarcity: When governments claim they cannot afford essential services while their currency-issuing capacity lies dormant, resonance breaks down. The constraint is imaginary; the suffering is real.

Commons economics identifies suppressed alternatives: When communities successfully govern shared resources, but the dominant ideology insists on privatization or state control, viable coordination mechanisms are being excluded. Resonance could exist but is being prevented.

Degrowth identifies misaligned objectives: When the system optimizes for growth while growth undermines wellbeing and sustainability, the coordination is technically successful but substantively wrong. We're efficiently pursuing the wrong goals.

None of these critiques provides a complete alternative. MMT still operates within monetary logic; it challenges how we think about constraints but not the system itself. Commons economics works in some domains but faces governance challenges at scale. Degrowth describes a destination but offers limited guidance on the transition.

Yet together they point toward something: the intuition that money, as currently structured, may be blocking solutions more than enabling them. The coordination technology that served us for five millennia may be approaching obsolescence—not because it's stopped working, but because the problems we now face exceed what it can coordinate.

The Thread Forward

These radical critiques prepare the ground for even more radical visions. The question they raise—what comes after money?—will only become more urgent as automation advances, as ecological limits tighten, as the legitimacy of existing systems continues to fray. The answers are not yet clear. But the questions must be asked.