Governments around the world have responded to the COVID-19 crisis by engaging in an unprecedented amount of government spending to support jobs rendered impossible due to lockdown.

According to the Office for Budget Responsibility (OBR) the UK government deficit is set to rise to £322 billion this year, with the debt/GDP ratio rising above 100% of GDP for the first time since 1963 and the story is similar for other advanced economies.

These unprecedented measures have received widespread support from across the political spectrum, with politicians on the left and the right accepting that spending must rise in the short term to protect jobs and the wider economy.

But, there is equal agreement that these measures can’t go on indefinitely, and that, in the medium term, a mixture of spending cuts and tax rises will be necessary to bring the public finances back into balance. As the chancellor, Rishi Sunak put it in his statement to the House of Commons:

Over the medium-term, we must, and we will, put our public finances back on a sustainable footing.

It seems like common sense to most people that the government can’t keep on running deficits forever. As Conservative politicians never tire of reminding people, there is “no magic money tree” to finance government spending.

Or, to quote Thatcher’s famous critique of socialism, the problem is that “eventually you run out of other people’s money.” This simplistic account sees the national economy as being no different from the household.

It argues that, just like my credit card has a limit, so does the national credit card. If I keep spending, eventually I’ll run out of money and go bust.

Or, even worse, current reckless spending will cripple future generations — our children and grandchildren — with the cost of paying for our profligacy.

According to Modern Monetary Theory (MMT) this view is mistaken because a government doesn’t operates like a household, which has to earn currency in order to pay taxes and bills.

Instead, governments with monetary sovereignty issue their own currency, which means that they can never run out of money.

This doesn’t mean the government is unconstrained in its spending, but the budget deficit is not a constraint and nor is the amount of tax revenue.

The real constraint, according to MMT economists, is the capacity of the economy to produce goods and services without producing inflation.

In an economic crisis like the one we are in, they argue, the constraint imposed by inflation doesn’t exist because the economy has lots of spare capacity (land, labour, capital) that isn’t being employed. So policy should aim to put this capacity to work to produce goods that we need, even if that means printing money.

Hence, the government should spend until the economy reaches full capacity and inflationary pressure starts to build. Only then, should it think about using fiscal policy to cool the economy down — or so the theory goes.

In her new book, The Deficit Myth, Stephanie Kelton argues that MMT provides a powerful new lens for looking at economic problems, enabling policymakers to stop focusing on the national debt and to instead argue about what the priorities are for spending.

In other words, she argues that MMT doesn’t solve the political question, it simply re-frames it so that worries about the debt don’t needlessly constrain what is politically possible.

Despite this supposed political neutrality, the theory has only really gained traction on the left with prominent advocates such as Alexandria Ocasio-Cortez and The Guardian newspaper amongst the most well known acolytes of this new orthodoxy.

Leaving aside the economic debate, and assuming for a moment that MMT is correct, the large unanswered question is how to build a political movement that can fight against an orthodoxy that is so well established in the minds of the public.

The prevailing discourse is powerful because it appeals to concepts that people are already familiar with and which can be linked to our real fears about the future.

It’s much easier to motivate voting on the basis of a fear of debt because it’s a fear that is already very real to people. It’s also common sense to the voting public that profligacy now will lead to penury later.

This, for me, represents the real challenge for those who wish to advance arguments on the basis of this new economic theory.

In order to be as successful as the prevailing orthodoxy, advocates of MMT need to find a way of translating their economic theory into language that people can easily understand and relate to their day-today experiences. In politics, it’s no good being right, you need to be able to convince people that you’re right.

My worry is that MMT will fail this crucial challenge.