Jayson Funke wrote:
I think it important to understand
monetary practices as hegemonic systems of control, because at
their core
they are predicated on trust and the ability of social institutions
to lend
credibility to money by guaranteeing that money (in whatever form)
can be
exchanged for its equivalent value in goods or services (or another
"proper"
money). In this way then, money as a measure of value (whether
measured in
gold or any other commodity or abstract phenomenon) must be
predicated on
similar social understandings of value: there must be a similar
understanding of the measures and values among the users of money
so they
trust in it. If that trust is gone the money is bunk.
Wray's "Post Keynesian" "chartalist" theory of money misinterprets
Keynes. It ignores the irrational "feeling about money" - the "aurie
sacra fames" - underpinning the "love of money as a possession," i.e.
what Keynes described as "a somewhat disgusting morbidity, a semi-
criminal, semi-pathological propensity which one hands over with a
shudder to the specialists in mental disease." This is an irrational
source of "trust" in the value of money.
Keynes used the "deep instincts by which the love of money protects
itself" to explain the necessity of resorting to cuurrency
depreciation rather than a capital levy as the way of lightening "the
weight of capitalism and the dead hand upon the active workers."
"The active and working elements in no community, ancient or modern,
will consent to hand over to the rentier or bond-holding class more
than a certain proportion of the fruits of their work. When the
piled-up debt demands more than a tolerable porportion, relief has
usually been sought in one or other of two out of the three possible
methods ['repudiation,' 'currency depreciation,' and the 'capital
levy']." (vol. IV, p. 54)
Repudiation and currency depreciation are the usual methods, but
"repudiation" is "too crude, too deliberate, and too obvious in its
incidence."
On the other hand, "the scientific expedient, the capital levy, has
never yet been tried on a large scale; and perhaps it never will be.
It is the rational, the deliberate method. But is is difficult to
explain, and it provokes violent prejudice by coming into conflict
with the deep instincts by which the love of money protects itself.
Unless the patient understands and approves its purpose, he will not
submit to so severe a surgical operation." (vol. IV, p. 55)
The result is that "a country will prefer the inequitable and
disastrous courses of currency depreciation to the scientific
deliberation of a levy." (vol. IV, p. 55)
For this reason:
"There is no record of a prolonged war or a great social upheaval
which has not been accompanied by a change in the legal tender, but
an almost unbroken chronicle in every country which has a history,
back to the earliest dawn of economic record, of a progressive
deterioration in the real value of the successive legal tenders which
have represented money.
"Moreover, this progressive deterioration in the value of
money through history is not an accident, and has had behind it two
great driving forces - the impecuniosity of governments and the
superior political influence of the debtor class." (vol. IV, p. 8)
It has "armed enterprise against accumulation," "benefited the active
and constructive elements in the economic scheme," "benefited new
wealth at the expense of old." (IV, p. 9)
The role given to "chartalism" is Keynes is, therefore, the opposite
of the role given to it by Wray. It enables the state to use
currency depreciation to lighten "the weight of capitalism and the
dead hand upon the active workers."
"When first the use of money supplants barter, a coin is no more than
a quantity of bullion, of which the stamp may certify the quality and
indicate the quantity, but which will not circulate except for its
bullion value. In this elementary stage the expedient of debasement
is not available. It cannot appear, until with the development of
contract the conception of a money of account has emerged, and the
coins issued by a state have acquired the character of legal tender
and enjoy a cours forcé as the legal discharge of obligations
calculated in this money of account. It is at this stage that money,
in the sense in which we understand it, makes its entry into human
institutions.
"For this reason the History of Money begins with Solon,
the first statesman whom history records as employing the force of
law to fit a new standard coin to an existing money of account. The
scarcity in Greece of the precious metals must have caused in his age
an appreciation of the standard, that is to say a tendency of prices
to fall, which was intolerably oppressive to that indispensable class
in ancient, as in modern, society, which carries on the business of
agriculture with borrowed money.
"As in all later ages, the appreciation of the standard
called for the remedy of debasement. Solon, perceiving in his
wisdom, that in such circumstances the interests of society required
that the weight of capitalism and the dead hand upon the active
workers should be lightened, so became the first of the long line of
statesmen, of whom the latest is Lenin, who, throughout the ages of
private capitalism, have employed debasement wisely to diminish its
weight or rashly to sap its foundations. The sage who first debased
the currency for the social good of the citizens was suitably
selected by legend to admonish Croesus of the vanity of hoarded
riches. Solon represents the genius of Europe, as permanently as
Midas depicts the bullionist propensities of Asia." (vol. XXVIII, p.
266)
Ted
