Can MMT and Developmental Monetary Architecture Be Enshrined in a Constitution?

Modern Monetary Theory (MMT), particularly through scholars such as Randall Wray and Stephanie Kelton, has spent decades explaining how sovereign currencies function. It has paid far less attention to a deeper question. What constitutional structures are necessary to preserve monetary sovereignty itself, particularly in postcolonial states marked by dollarization, weak developmental legitimacy, and external dependency?

In 2024, I intervened directly in this question through a constitutional initiative in the Democratic Republic of Congo (DRC). I submitted a constitutional revision project to the Presidency, Parliament, and Senate arguing that constitutional reform in the DRC could not remain confined to elections, executive power, or institutional design alone. It also had to confront the social contract and the monetary architecture of the state itself. Copies of the proposal were also transmitted to political parties, religious institutions, civil society organizations, and embassies throughout the DRC while television and radio debates across the country sought to broaden the national conversation surrounding monetary sovereignty and constitutional reform. The project remains publicly accessible through RDC Constitution Révision 2024.

The argument was simple. Dollarization is not merely a technical monetary phenomenon or a market preference. In many Global South states, it reflects a weak social contract and a failed developmental monetary architecture. Populations often abandon national currencies because states fail to generate sufficient developmental legitimacy, fiscal credibility, and public trust around the national monetary system.

This essay argues that Global South MMT must increasingly move beyond macroeconomic operations alone and toward constitutional political economy. Monetary sovereignty cannot survive on legal sovereignty alone. It requires constitutional structures capable of linking sovereign monetary capacity to developmental transformation, infrastructure expansion, and long-term social legitimacy. Constitutional Developmentalism therefore reframes money not merely as a legal instrument or accounting capability, but as an institutional relationship continuously reproduced through developmental legitimacy, public trust, and materially experienced reciprocity between the state and society.

The Constitutional Blind Spot in MMT

Modern Monetary Theory transformed debates surrounding sovereign spending, deficits, taxation, and public debt by demonstrating that states issuing their own non-convertible currencies are not financially constrained in the same manner as households or firms. Despite these contributions, one question remains underdeveloped within the literature. What institutional structures are necessary to preserve monetary sovereignty itself across political crises, developmental transitions, and long-term struggles over state legitimacy?

Modern Monetary Theory emerged largely from advanced industrial contexts in which state legitimacy, taxation capacity, and institutional monetary authority were comparatively consolidated. Postcolonial contexts present a different institutional terrain. In many Global South states, the central challenge is not simply whether sovereign monetary capacity exists operationally, but whether the institutional and developmental foundations necessary to sustain public confidence in the national monetary system exist at all.

This question becomes unavoidable in the Global South. Many postcolonial states formally possess constitutions, central banks, taxation authority, and nationally recognized currencies while simultaneously remaining trapped in fragile monetary systems marked by dollarization, external dependency, and weak public trust.

Dollarization as Institutional Judgment

Dollarization is often presented as the natural outcome of market rationality. Citizens and firms adopt foreign currencies because they are more stable, more liquid, or more internationally accepted than domestic currencies. Some MMT scholars emphasize a different dimension. Warren Mosler, for example, has argued that critics of dollarization often overlook its contribution to net exports through the suppression of domestic consumption. From this perspective, externally anchored monetary arrangements may be viewed as successful because they support external competitiveness. These explanations contain elements of truth, but they leave a deeper institutional question unresolved.

As dollarization expands, governments increasingly become users rather than effective issuers of currency across large segments of the domestic economy. The issue is therefore not simply whether dollarization improves certain macroeconomic outcomes. It is whether it weakens the monetary foundations necessary for long-term developmental policy. Export competitiveness may improve under certain conditions, but a state that loses the practical capacity to mobilize domestic resources through its own monetary system faces a different challenge altogether. Monetary sovereignty is not valuable simply because it exists. It is valuable because it creates developmental possibilities.

The DRC illustrates this dynamic clearly. The dollarization of the Congolese economy should not be understood as a simple capitulation of the state. It is more accurately described as the progressive institutional accommodation of a monetary reality that emerged from decades of instability, inflation, armed conflict, and weak developmental legitimacy. The dynamics are especially visible at the household level. Families save in dollars, keep cash in their homes, price assets in dollars, and use foreign currency as a store of value. These actions are not merely financial calculations. They represent millions of decentralized judgments about the credibility of public institutions and the future reliability of the social contract. Every decision to save in dollars, keep cash under a mattress, or price property in dollars becomes a small but meaningful referendum on the credibility of national institutions.

This is where the Social Contract Ratio (SCR) becomes important. Citizens are more likely to trust, hold, and transact in a national currency when sovereign expenditure visibly produces roads, schools, hospitals, electricity systems, transportation infrastructure, and employment opportunities. From this perspective, dollarization is not merely a monetary outcome. It is a political economy indicator of the strength or weakness of the social contract itself. If dollarization became institutionalized through decades of accommodation, its reversal will require more than monetary policy adjustments. It will require rebuilding the developmental legitimacy upon which monetary sovereignty ultimately depends.

Constitutionalizing Monetary Sovereignty

The constitutional proposals introduced in the DRC in 2024 emerged from a broader institutional observation. The Congolese Constitution organizes political authority in considerable detail while remaining comparatively underdeveloped regarding the relationship between monetary sovereignty, developmental allocation, and fiscal legitimacy. Like many postcolonial states, the constitutional framework largely assumes that the existence of a national currency automatically guarantees monetary sovereignty. Decades of persistent dollarization suggest otherwise.

The challenge is therefore not merely issuing a currency. It is constructing institutions capable of making the national currency socially credible and developmentally legitimate over time.

One of the central proposed revisions appeared in Article 2 Alinéa 7:

“Public fees and taxes, as well as the state budget, must be exclusively denominated in the national currency. All transactions, whether for the collection or disbursement of funds by a public institution or on its behalf, must be conducted in the national currency and electronically. Any indexing of public fees, taxes, or budgets to a foreign currency is strictly prohibited.”

The objective is not merely administrative coherence. It is to constitutionally de-dollarize the operational structure of the public sector itself in order to rebuild institutional trust in the national currency. While chartalist and Modern Monetary Theory scholars such as Georg Friedrich Knapp and Randall Wray note that taxation helps establish a currency’s baseline demand, Constitutional Developmentalism argues that this legal obligation cannot sustain long-term monetary legitimacy without an underlying architecture of developmental reciprocity and institutional trust.

In many highly dollarized economies, governments attempt to defend the national currency while simultaneously organizing taxation, contracting, pricing, budgeting, and portions of public administration through foreign currency logic. Such contradictions weaken monetary legitimacy directly within the institutions responsible for defending it. When the state itself behaves as though the national currency lacks sufficient credibility, populations rationally internalize the same judgment. A state cannot sustainably consolidate monetary sovereignty while internally reproducing the behavioral logic of dollarization.

A second major intervention focuses less on currency denomination itself and more on the developmental architecture necessary to sustain long-term monetary legitimacy and move the Social Contract Ratio (SCR) toward parity. Under this arrangement, the constitutional objective is to establish an SCR floor equal to 1, meaning sovereign expenditure generates developmental and social outcomes at least proportionate to the economic obligations, resource mobilization, and legitimacy claims through which the state reproduces monetary authority within society. Article 20 Alinéas 2 et 3 proposed the following:

“Expenditures related to the operation of institutions cannot exceed 50 percent of the budget. Of the remaining amount, 50 percent should be allocated to social spending, 25 percent to infrastructure and 25 percent to investments.

The determination of allocating 25% of the national, provincial, and administrative budget is designated for civil society organizations registered at each respective level.”

The underlying premise is that monetary sovereignty alone does not automatically generate developmental transformation. Sovereign monetary capacity can coexist with elite extraction, weak infrastructure, institutional distrust, and persistent underdevelopment when developmental allocation mechanisms remain structurally weak. The broader objective is therefore to constitutionally direct sovereign expenditure toward visibly experienced developmental outcomes capable of strengthening fiscal legitimacy, increasing public trust, and reinforcing developmental reciprocity between the state and society.

This is where the concept of Monetary Architecture for Development Transformation (MA for DT) becomes central. MA for DT argues that monetary sovereignty must be institutionally linked to visible developmental outcomes capable of reproducing social legitimacy over time, irrespective of the monetary and fiscal instruments through which sovereign expenditure is operationalized. Citizens are more likely to trust national currencies when public expenditure visibly expands roads, hospitals, schools, electricity systems, transportation infrastructure, and productive capacity. From this perspective, the long-term legitimacy of money depends not only on central bank operations, but also on whether constitutional structures continuously transform sovereign monetary capacity into materially experienced developmental reciprocity between the state and society.

The CFA Franc and Postcolonial Monetary Dependency

The CFA franc region illustrates how formal political sovereignty can coexist with externally constrained monetary architecture. As critics of the CFA system such as Ndongo Samba Sylla and Fanny Pigeaud have argued, member states have possessed constitutions, governments, central banks, and juridical sovereignty since independence while continuing to operate within monetary arrangements historically shaped by colonial institutional structures. The result is a configuration in which political sovereignty and monetary sovereignty do not necessarily evolve with the same degree of autonomy.

Defenders of the CFA system often point to exchange rate stability and relatively lower inflation compared to neighboring states that experienced severe monetary crises. Critics, however, argue that externally anchored monetary governance simultaneously constrained monetary flexibility, reinforced dependency, and narrowed the developmental policy space necessary for industrial transformation and long-term economic coordination. The broader issue is therefore not monetary stability alone, but the developmental trade-offs accompanying externally anchored monetary systems.

The CFA case reveals a deeper constitutional paradox within many postcolonial states. Constitutions frequently organized political authority while remaining comparatively silent on developmental monetary architecture itself. Monetary governance remained insulated within technocratic or externally inherited structures only weakly connected to broader constitutional debates surrounding development, fiscal legitimacy, and economic sovereignty. The broader lesson for Global South MMT is therefore straightforward. Formal sovereignty alone does not guarantee developmental monetary autonomy.

Why Global South MMT Must Become Constitutional

Modern Monetary Theory in the Global South cannot remain purely macroeconomic or narrowly policy-oriented. While MMT transformed debates surrounding sovereign spending and fiscal space, postcolonial contexts require a deeper institutional extension of these ideas. In many developing countries, the central challenge is not simply whether sovereign monetary capacity exists in theory. The challenge is whether institutional structures exist to protect, legitimize, and developmentally organize that capacity across time.

In many Global North states, long-standing Social Contract Ratio (SCR) parity or conditions exceeding parity allowed forms of Monetary Architecture for Development Transformation (MA for DT) to become progressively normalized and institutionally embedded to the point of appearing almost as entitlements of modern statehood itself.

In many Global South states, sovereign spending capacity coexists with weak infrastructure, limited industrial transformation, institutional distrust, chronic dollarization, and persistent developmental fragmentation. The problem is therefore not merely insufficient fiscal capacity. It is the absence of constitutional mechanisms capable of protecting monetary sovereignty from elite capture, external dependency, and weak developmental allocation. This concern echoes the constitutional political economy tradition developed by James M. Buchanan. Through Public Choice Theory, Buchanan challenged the assumption that governments automatically act in the public interest, while his Leviathan framework, developed with Gordon Tullock, suggested that governments naturally tend toward expansion in taxation, spending, and administrative control unless constrained by constitutional rules. Constitutional design therefore becomes more than a legal framework. It serves as an institutional safeguard capable of aligning state incentives with broader developmental objectives while limiting the diversion of sovereign capacity toward narrow political interests. Monetary sovereignty cannot survive on currency issuance alone. It requires constitutional structures capable of linking sovereign expenditure to visible developmental transformation and long-term social legitimacy.

The broader implication for Global South MMT is therefore straightforward. The future of monetary sovereignty may depend less on proving that sovereign spending is technically possible and more on demonstrating how states can constitutionally organize monetary systems that remain socially legitimate, developmentally productive, and institutionally resilient over time.

Beyond Monetary Technocracy

Dollarization is not simply a monetary phenomenon. In many Global South states, it is the institutional expression of weakened developmental legitimacy, fractured public trust, and postcolonial monetary dependency. A national currency cannot become socially credible when populations experience the state itself as developmentally absent, extractive, or structurally incoherent.

The constitutional proposals introduced in the DRC in 2024 seek to confront this problem directly. The objective is not simply monetary reform. It is to constitutionally reorganize the relationship between sovereign expenditure, developmental allocation, and monetary legitimacy itself. The silence of major political institutions toward these proposals may itself reveal how uncomfortable many postcolonial systems remain with confronting the structural implications of monetary sovereignty. It may also reflect the extent to which orthodox economic assumptions have become culturally embedded within political institutions and society itself, limiting broader awareness of alternative understandings of money, sovereignty, and developmental coordination.

The broader challenge for Global South MMT is now difficult to avoid. Monetary sovereignty cannot survive on central bank operations alone. It requires constitutional structures capable of transforming sovereign monetary capacity into visible developmental legitimacy over time. The future of Global South monetary sovereignty may therefore depend less on technocratic monetary management and more on whether postcolonial states are willing to constitutionally redefine the relationship between currency, development, and the social contract.

Jo M. Sekimonyo
Political Economist, Université Lumumba

The framework discussed in this essay is developed further in the working paper: 

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