With a federal election on the horizon, economic policy is once again taking centre stage. Yet missing from the national debate is a serious reckoning with the failures of neoliberalism and the urgent need for alternatives.

A continued adherence to neoliberal policy, and the fiscal austerity it entails, risks deepening social divides and strengthening the electoral prospects of the far right (absent a compelling populist left). To meet today’s challenges, parties must explore more progressive schools of economic thought like modern monetary theory.

Liberal Leader Mark Carney, with his experience across banking and global finance, is one figure who could potentially steer that shift. Carney’s career, spanning Goldman Sachs, the Bank of Canada, the Bank of England and Brookfield Asset Management, has exemplified his competence within the bounds of economic orthodoxy.

As the Bank of Canada’s governor, Carney pre-emptively cut interest rates to cushion the blow of the 2008 financial crisis. Standard measures like interest rate cuts and quantitative easing are meant to keep economies afloat during downturns. While necessary, these steps remained squarely within the bounds of conventional economic thinking.

Today, however, those old tricks aren’t enough. The twin crises of climate collapse and socioeconomic inequality demand bolder policy and braver leadership from policymakers.

Modern monetary theory (MMT) offers a more ambitious economic toolkit to policymakers than current approaches do.

MMT scholars argue that countries that issue their own currency, like Canada, have monetary sovereignty. These governments don’t need to rely on bond markets for funding; instead, they can create money directly through public spending. And, when they do sell debt, there’s never a shortage of demand for it.

Read more: Explainer: what is modern monetary theory?

From this perspective, the real constraint isn’t money, but........

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