Glossary of Terms
Key Terms & References
Modern Monetary Theory (MMT)
A macroeconomic framework that describes how sovereign currency-issuing governments (like Australia) can use public spending to mobilise real resources for public purpose. MMT explains that such governments cannot "run out of money" like a household can. The real constraint is inflation, not budget deficits. Core to MMT is the understanding that taxation does not fund spending, but helps manage inflation and shape the economy.
Heterodox Economics
An umbrella term for schools of thought that challenge mainstream (neoclassical) economics. This includes MMT, ecological economics, institutional economics, post-Keynesian, and feminist economics. Heterodox economists often critique assumptions like market efficiency, rational actors, or the primacy of GDP growth.
Doughnut Economics
A visual economic model developed by Kate Raworth. The doughnut represents a “safe and just space for humanity” — between a social foundation (basic needs and rights) and ecological ceiling (planetary boundaries). It encourages regenerative, distributive economies rather than extractive, growth-driven systems.
Job Guarantee (JG)
A policy proposal associated with MMT where the government offers a standing job to anyone willing and able to work, at a living wage, doing socially useful work. It acts as an automatic stabiliser — increasing employment during downturns and easing pressure during booms — while supporting full employment and price stability.
The Lucky Country
A book by Donald Horne, published in 1964. Though often quoted positively, the title was meant ironically — Horne critiqued Australia for relying on its natural wealth and inherited institutions rather than visionary leadership or innovation. His concern was that mediocrity, not merit, governed public life.
Nordic Model
A blend of free market capitalism and strong welfare states as seen in countries like Norway, Sweden, and Denmark. Characterised by high taxation, universal public services (health, education, care), strong unions, high trust in government, and reduced inequality. The model shows that equality and economic dynamism can coexist.
Sovereign Currency Issuer
A government that issues its own currency (e.g., Australia, UK, US) and does not borrow in a foreign currency. Such governments are not revenue-constrained and can fund programs by crediting bank accounts — subject only to real resource limits and inflation, not tax revenue or bond issuance.
Full Employment
The condition where everyone who wants to work at a living wage can find employment. In heterodox economics and MMT, this is seen as a policy choice rather than a market outcome. A Job Guarantee is one tool to achieve it.
Inflation Constraint
The idea that the real limit on government spending is inflation — the risk of too much money chasing too few goods or services. MMT acknowledges this constraint and proposes mechanisms like targeted taxation, resource mapping, and production planning to manage it.