Steve Laughton joined The Mint to talk about money. Not money in the everyday sense but as a political story — so badly misconstrued that it has trapped governments, parties and voters inside a false economy of fear.
Steve Laughton is not a conventional academic economist, although he has a master’s degree in the subject. But his route into the subject was anything but conventional. His day job was running a language school. His politics came through Labour Party activism. His first serious engagement with economics came not through theory but through events.
“When we fell out of the exchange rate mechanism, I suddenly realised that everything that the economists and the media had been saying about economic policy didn’t tally with what happened,” he says. From there he became involved with John Mills, the businessman and long-standing Labour figure, reading Mills and Brian Gould and attending fringe meetings at Labour Party conferences. “That got me involved in practical economics, which, I felt, related to the real world.”
“One of the reasons why economists don’t understand money is because they’re not familiar with double-entry bookkeeping. It just doesn’t figure anywhere on the syllabus.”
One of the reasons why economists don’t understand money is because they’re not familiar with double-entry bookkeeping. It just doesn’t figure anywhere on the syllabus.
There was another unlikely preparation: bookkeeping. As an employer, Laughton learned double-entry accounting because he resented paying accountants large sums for what he realised was a relatively simple task. Later, studying economics, he saw that this mattered. “One of the reasons why economists don’t understand money is because they’re not familiar with double-entry bookkeeping. It just doesn’t figure anywhere on the syllabus.”
Modern Monetary Theory (MMT) came late in this journey. Laughton encountered it after his formal studies, through Steve Keen and Devrim Yilmaz, who pointed him towards the literature on money creation. He read Warren Mosler, the former banker and one of MMT’s founding figures, and Richard Vague on private debt. Slowly, he says, “a light turned on”.
That light was not instantly comforting. The conventional story of money is so deeply embedded that to reject it can feel almost deranged. “Can this really be true?” he remembers asking himself. “Money is something so fundamental. How can all these people in the rest of the world have a particular idea of money and all be wrong — and you be right?”
So many politicians are just frightened of money.
His answer is The Money Sham: his book aimed at economists but also at what he calls “the intelligent layperson”. Politicians, especially Labour politicians, are central to his targeted readership. “So many politicians are just frightened of money,” he says. “They won’t look at it, because they’ll be shot down by all the conventional wisdom. ‘The bond markets will run a mile.’”
For Laughton, that fear is politically disastrous. He cites Andy Burnham as an example of the contradiction now running through Labour politics: denouncing neoliberalism while promising to appease bond markets and follow Rachel Reeves’s fiscal rules. “That is a complete contradiction,” he says. “If he goes on with this austerity lite, he will not be able to deliver. And when he doesn’t deliver, the far right will continue to be on the ascendancy.”
The central obstacle, he says,is the acceptance of the household analogy for national economies. This is the idea that governments must “balance the books” like a family or business. Laughton believes this is not just wrong but disabling. He reaches for other metaphors. A football team’s performance is not determined by the number of tickets sold. A theatre does not need to borrow tickets before it can stage a show. The issuer of the tickets is not constrained in the same way as the users of the tickets.
But he is wary of relying too much on metaphor. “These analogies might open the door a bit,” he says, “but until you’ve really conceptualised what money actually is, there isn’t an analogy that makes instant sense.”
That is why the book starts slowly, with childhood ideas of money: the piggy bank, the coins from a parent, the sense that money is a thing that comes from somewhere else. Even as adults, wages arriving in a bank account can still appear to be “given” by an employer. What most people never ask, Laughton argues, is more fundamental: “What is the source of the money? And even if they ask what the source of the money is, they still don’t ask what it actually is.”
The stakes are not merely technical. For Laughton, the false story of money serves vested interests. “We’ve had 40 years of people with vested interests disguising the truth,” he says. Those interests include central bankers whose authority depends on the ritual of interest-rate changes, free-market economists hostile to public power, and private wealth that has done exceptionally well from the existing order. “Why on earth would Bill Gates or Jeff Bezos want to change the financial system?”
He traces the turn back to the neoliberal revival after the oil shocks, when older free-market ideas were rebranded as the future and Keynesianism as the past. The result, he argues, was not simply a retreat of the state but a deliberate weakening of public and local capacity. Local government, in particular, has been “starved of money” so that councils either cut services or raise council tax and become unpopular.
Yet Laughton insists MMT does not automatically mean a bigger central state. It is, rather, a description of the monetary system that can support different political programmes. Some MMT thinkers, he notes, want the private economy to flourish with minimal state employment. Others favour more public ownership. The necessary condition, in either case, is to understand money.
Unemployment is not only socially destructive but economically absurd.
The job guarantee is where MMT becomes most concrete. Instead of using unemployment as a buffer stock to control inflation, MMT proposes publicly funded employment at a basic wage for anyone willing to work. Crucially, Laughton argues, this need not be a top-down bureaucracy. “The money comes from central government,” he says, “but the job guarantee is administered locally and run locally.” The proposal has been constructed after careful consultation with chief economist for the International Trade Union Confederation (ITUC), Daniel Kostzer, who implemented it in Argentina.
He points to examples in Argentina and Austria, where local stakeholders identified work that needed doing: parks restored, houses improved, social needs met. Churches, clubs, charities, housing associations, football clubs and councils could all help define useful work. Local government would employ people, but with central funding. “They look at what’s going on in their area and say, we would benefit if this park was cleared up. We would benefit if these old houses were tidied.”
This matters because, for Laughton, unemployment is not only socially destructive but economically absurd. He cites estimates suggesting that keeping someone unemployed costs far more than employing them through a job guarantee. More fundamentally, unused labour is wasted real capacity. “If there is slack in the economy, if the economy has real resources which aren’t being used, then the government can always spend more money without causing inflation.”
The difficulty is that the false story is intuitive. The true story is harder.
The caveat is important. MMT is often caricatured as saying governments can spend without limit. Laughton says the real limit is not money but resources. Spending that simply increases demand without increasing productive capacity can be inflationary. Spending on investment, production and useful employment is different.
That distinction is the heart of his argument. The economy is not constrained by a shortage of government money in the way politicians pretend. It is constrained by labour, skills, materials, productive capacity, ecological limits and institutional competence. Money is the scoring system, not the game itself.
The sham is not simply that politicians misunderstand money. It is that this misunderstanding has become a governing weapon.
The difficulty is that the false story is intuitive. The true story is harder. Laughton admits that after years of explaining it, even friends and family still resist.
Still, he remains stubbornly optimistic. The people most likely to listen, he believes, are those without a vested interest in the existing monetary myths — especially younger generations hammered by austerity, debt, unaffordable housing and insecure work. Baby boomers, he says, have often benefited from asset inflation without labouring for it. Younger people are living with the consequences.
“They will listen to an alternative narrative,” he says, “if it’s presented to them clearly.”
The Money Sham is Laughton’s attempt to present that narrative. It does not claim to invent MMT. Its ambition is more political and more urgent: to make the monetary system intelligible enough that fear of “the markets” no longer closes down democratic possibility before the debate has even begun.
For Laughton, the sham is not simply that politicians misunderstand money. It is that this misunderstanding has become a governing weapon. Until it is challenged, promises of renewal will keep shrinking into fiscal caution, and the public will keep being told that the real resources all around them cannot be used because the ticket issuer has somehow run out of tickets. The book explains the history of money and is a political economic history of the UK. It concludes with seven concrete policies including a new institutional framework for controlling inflation, investing in a sustainable future and transforming the UK.
