E-Book, Englisch, 220 Seiten
Chambers Money Has No Value
1. Auflage 2023
ISBN: 978-3-11-079674-2
Verlag: De Gruyter
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)
E-Book, Englisch, 220 Seiten
ISBN: 978-3-11-079674-2
Verlag: De Gruyter
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)
Zielgruppe
Scholars interested in money in anthropology, economics, English,
Autoren/Hrsg.
Fachgebiete
- Wirtschaftswissenschaften Finanzsektor & Finanzdienstleistungen Finanzsektor & Finanzdienstleistungen: Allgemeines
- Wirtschaftswissenschaften Volkswirtschaftslehre Wirtschaftspolitik, politische Ökonomie
- Sozialwissenschaften Soziologie | Soziale Arbeit Spezielle Soziologie Wirtschaftssoziologie, Arbeitssoziologie, Organisationssoziologie
- Wirtschaftswissenschaften Volkswirtschaftslehre Volkswirtschaftslehre Allgemein Geldwirtschaft, Währungspolitik
- Wirtschaftswissenschaften Volkswirtschaftslehre Volkswirtschaftslehre Allgemein Wirtschaftstheorie, Wirtschaftsphilosophie
Weitere Infos & Material
Preface Introduces readers to the biggest questions about money and articulates the essential argument of the book: money has no value, because money is nothing more or less than a relation of credit/debt between at least two parties. The preface also gives readers a brief overview of the entirety of the book, indicating the importance of exploring: the history of money, the history of theories of money, and contemporary accounts and debates over money. Shows clearly why theories of money cannot be adequately divided into "orthodox versus heterodox" and gives the reader the outlines of my alternative theory of money which rejects orthodoxy while moving well beyond the so-called heterodox account. Chapter One: How to Do the History of Money This crucial framing chapter opens with an important note on methodology, where I engage in some crucial epistemological and historiographical questions. Money cannot be determined and understood simply by its empirical history, nor can it be explained without reference to that history, and this is because history cannot stand in for theory, while at the same time, theory cannot itself explain history. This book responds to this fundamental epistemological and ontological issue by addressing the theories of money that history has itself produced. This means that in this first chapter it is necessary to provide an overview of the history of theories of money. Most heterodox accounts of money attempt this, but they fail to give a rigorous, subtle, or deep sense of that history because they lump everything into the categories of orthodox or not orthodox. Instead, I set out here to create a "matrix" of money theories based on answers to three basic questions that any theory of money most address: 1) real or monetary analysis, 2) commodity or claim, and 3) quantity theorem, yes or no. Working through these choices I produce a matrix of 8 different money theories, giving the reader a more fine-grained accounting of the history of theories of money than has heretofore been available. Chapter Two: Money is Credit This chapter is the cornerstone of the book, as it makes the primary case for the basic credit theory of money. It does this by returning to Mitchell Innes’s crucial work from the early twentieth century, a source that has already been identified by the leading lights of money theory today (see chapter three), but which I argue has never been fully appreciated for the depth of its insights and the radicality of its overall implications. Starting with Innes, I argue for a fundamental rethinking of the very idea of economic exchange. Both classical political economy and the neoclassical paradigm of economics conceptual "exchange" – the fundamental economic activity – as the swapping of one commodity for another. I argue instead that in a capitalist social order we must grasp economic exchange as something utterly different: the swapping of a commodity (with intrinsic use-value) for a credit (a relation of debt that has no intrinsic value). This redefinition of exchange, based on a far-reaching interpretation of Innes will serve as the foundation for all the arguments to come in the book Chapter Three: Money Theories Today The first of these arguments takes the form of a sympathetic but still biting critique of the two dominant theories of money today: Randall Wray’s post-Keynesian "modern money theory" and Geoffrey Ingham’s heterodox account. Both authors are to be repeatedly praised for moving the debate on money forward, and for uncovering so many of the pervasive myths and falsehoods of the commodity theory of money that has undergirded the neoclassical paradigm for almost 150 years. But I show here that both theories come up against significant limits and that neither can serve as an adequate guide to understanding money rigorously in twenty-first-century capitalist social orders. In Wray’s case, the correct instinct that the orthodoxy is wrong leads often to a false logic by which anything not orthodox must be right. In some ways Wray simply fails to develop a robust theory of money because he skips that step, rushing from the false orthodox theory to a set of policy proposals (particular around government debt). Ingham’s work is much more rigorous, significant, and imposing, and I affirm that to date his has been the best theory of money available. But in addition to oversimplifying the history of money, Ingham fails to pursues the credit theory to its radical and logical ends. He therefore traps himself in some sociological faults, particularly the idea that money as debt could be a "debt to society." I show that credit and debt can only be a relation between identifiable parties, and that "debt to society" not only proves conceptually incoherent but also leads us astray in trying to make sense out of today’s money practices (see Chapters Five and Six). Chapter Four: All Credit is Money Here I push beyond Ingham and all other extant theories of money by taking the credit theory to its logical conclusion. Many writers have affirmed Innes’s basic point that all money is credit while trying to hold onto a fundamental (ontological) distinction between credit as a mere promise to pay, and money as the instrument of payment itself. I show here that to take the credit theory of money seriously, we have to admit that in conceptual terms, it is impossible to distinguish strictly between credit and money. The practical distinction proves crucially important (some credits do not function as money, while some do), but this empirical fact cannot substitute for theoretical proof. Accordingly, this chapter makes the case for the following five theses, which could be understood as the book’s fundamental theses on money:
- Both empirically and ontologically, all money is credit
- Empirically, money is credit that circulates
(money that is transferred)
- Ontologically, all credit is transferable
- Ontologically, all credit is "money" (or "money" does not exist)
- Both ontologically and empirically, not all money-credit is the same; there is a hierarchy of money
Chapter Five: Money Markets At this juncture my book takes a turn that has truly not been attempted in other efforts to theorize the nature of money: it directly addresses today’s money markets, the site of trillions upon trillions of turnover in denominated money value, and attempts to make sense of them in terms of the theory of money advanced so far. I open the chapter with a brief but important critique of Stephanie Kelton’s very recent (and exploding in popularity) book, The Deficit Myth. This forms an important segue, because Kelton’s conceptualization of money as "points" issued by the government, completely fails to take account of the relations of credit and debt, and their circulation in today’s money markets. The chapter offers a rather straightforward (but not for that reason any less important) introduction to the "balance sheet model" of understanding money, particularly as exemplarily illustrated in Perry Mehrling’s work. Starting with the basic understanding of the way that loans create money through the simultaneous creation of both an asset and a liability on the balance sheet of both the creditor and the debtor, I move on to map out how the $7 trillion dollar (daily) repo market works. This explanation allows me to address derivatives. Derivatives are doubtless a crucial aspect of capitalist society today and essential to the way money works, yet most works on the theory of money are completely silent on them. I explain how the radical credit theory of money can makes sense of derivatives – precisely as money. Finally, but quite importantly, this lets me address the issue of the "price" of money in money markets, the way in which credit/debt, which has no value, can be exchange for other forms of credit/debt, which similarly have no value. This leads me to a theory of financial exchange as the swapping of money-credit for money-credit – a complement to and extension of the theory of economic exchange first developed in chapter two. Chapter Six: Money Today I conclude the book not with theoretical speculation or historical prediction, but with a brief look at some of the most pressing money-questions facing us today. I address, in turn, "world money" (from the gold standard, to the US dollar as the international reserve currency), "cryptocurrency" (including bitcoin and blockchain technology itself), and conclude with a few remarks on the nature of money and capitalism.
Preface
Money Parables: From Coin to Edict to Crypto
For a very long time the story of money was straightforwardly told through coins. Digging up old coins as artifacts of previous civilizations seemed to reveal a thing called “money,” understood as bits of metal of certain weights. In the typical tale, the metal was “rare” and thus thought to have some intrinsic value, and in turn the coins – the money – had value because they contained a specified weight of the metal. Because money itself possessed value, and because it was generic and standardized and would not spoil, we could exchange it for the wide variety of other things we needed or wanted – things that were of value precisely because they satisfied those needs or wants directly (in a way money could never do).
But money, as this story goes, was very much like those other things (commodities) in that both money and commodities were thought to have fundamental value. In this narrative, shoes have intrinsic value (a value in their use, use-value) because they keep your feet warm and dry, or they protect you from rocks and glass when you go for a walk; money has intrinsic value because it contains valuable metal. We want the shoes so we can wear them, but we want the money so we can buy the shoes (or anything else we might prefer). In this tale, money is a commodity (just like any other) with direct and positive value. The story could be rendered more complex by the issuance of credit (a promise to pay money at some point in the future), but one need not worry much about those complications because at root money itself was essentially coins, and therefore relatively simple to understand in its nature. The moral of this tale: money has value because money is, and should be, a commodity with its own intrinsic value; money should therefore be “sound money” in that it should contain the value it says it does.
I cannot overstate this next point: though that story has been told throughout history (and repeated especially forcefully since at least the eighteenth century), it has never been true. Never. Even in those historical periods when coins seemed to preponderate, money was never a weighted quantity of metal (with intrinsic commodity value). Rather, the coin was a token or symbol, a claim ticket within a relation of credit and debt. It mattered not whether the ticket itself had any value. The money token could just be a piece of paper; the money symbol could be mere lines on a clay tablet, marks on a paper ledger, or digits on a computer spreadsheet.
There were particular societies, of course, where the object used as token of money – say a gold or silver coin – was itself a good that had both some intrinsic use-value and a market exchange-value. Gold can famously be used to fill dental cavities and has sometimes played small roles in industrial production, while most precious metals can serve as raw materials (production commodities) in the making of jewelry. Thus anyone wishing to buy gold or silver for those productive uses would have to accept the going market price. However, in those cases where a commodity served as the money token, its commodity value (as a metal) was always less than its money value (as a claim of denominated credit/debt). Within a properly functioning coinage system, money-gold always has a higher denomination (and thus seems to be “worth” more) than the market price of commodity-gold. For just this reason, the monetary system breaks down the moment that relation inverts, for if commodity-gold is worth more than money-gold, no one will continue to use gold coins as money; they will hoard them for their commodity exchange-value. This means that money can never be sound, because to be “sound” is no longer to be money. Hence we can refer to these coinage systems as having or using “commodity money” only in the very limited sense that their money tokens were composed of a commodity, but the nature of their money was not that of a commodity. Money is not and has never been a commodity in this sense – and money’s nature would not change if those societies substituted paper money or any other symbolic representation for the coin tokens.
Money as a commodity proves to be the oldest, most dominant, and most frequently told story about money. It forms the backbone of the treatment of money by modern economics, and this book will engage in great depth with that narrative, along with a strong series of criticisms of it. But for now we set this story aside in order to move to the more recent and quite dramatic turn, by which a new narrative of money has quickly started to take hold.
Over the past fifteen years, people have been abandoning this old yarn (about bits of metal) in droves, and though it still survives intact in the skeletal structure of neoclassical economics, many have been surprised by the speed with which some writers and thinkers have moved on to a radically different account. In the ongoing aftermath of the great financial crisis (GFC) of 2008, there have been many new course corrections in the tale of money, but all largely orbit around one particular rejection of the old narrative. The new account of money dispenses with the commodity story in the starkest manner, by proclaiming the following: money is not bits of metal with intrinsic value, because money is nothing more than fiction.
One could generate countless examples, both popular and academic, that defend this thesis, so we can pick almost at random. Take Jacob Goldstein’s 2020 book, Money: The True Story of a Made-Up Thing. The title says it all: money is fabricated, nothing more than a story we tell. But in case any readers miss the point, Goldstein titles his preface with the declaration, “Money is fiction.” At its core, this new narrative re-grounds the value of money by substituting social value for commodity value: money has value only if and insofar as everyone believes it does. A 2021 New York Times article presents the new common sense by quoting an ostensible expert on money, Neil Buchanan, as follows: “Monetary systems depend on ‘a leap of faith.’ People accept it because others accept it, making money one big ‘group delusion’” (Coy, 10 December 2021, quoting Buchanan 2013).
Here we have money as nothing more than a kind of shared faith – hence ephemeral and precarious. This new narrative resonates with so many readers because it rises to the surface amid the tumultuous wakes of both the GFC and the coronavirus pandemic; it captures the important sense that whatever money is or has been in the past, money today feels both mysterious and conspiratorial – manipulated by shadowy figures, important but intangible, beyond our control. It also resonates with broader ideas about a historical change in money, a shift from sound metallic money to so-called “fiat money” – a putative type of money that depends solely on the decree or edict of the government. As societies have abandoned faith in a variety of governmental institutions, they have in turn lost trust in money itself. At this same moment, they begin to tell a tale of money as itself nothing other than a made-up bedtime story. The moral of this second narrative: money has whatever value it is believed or decreed to have. Money is therefore no longer “sound” (or never was) because all money is mere fiat money.
This recent tale of money has roots in the past, and I freely admit that it better conveys certain elements of money’s nature; it captures more of the history of money practices than the old story. Moreover, it is a basic fact of markets that the prices of both commodities and financial assets can be moved by the collective beliefs of market actors (e.?g., meme stocks). Nevertheless, money is neither mass delusion nor simply shared faith, and no government or other issuing agency can establish value in money by fiat. Governments, of course, have played and continue to play an enormous role in monetary systems; as with so many elements of the life of a society, governments have enormous power to shape and impact money. Yet neither money’s origin nor its end lies with the government, or any other central authority. Chapter 4 engages in depth with state theories of money and explores the complex relation between money and state powers. For now we only need to underscore that money is not made up – it is very much real – and this means that we cannot change money (and money practices) either by abolishing it or making it up anew.
At this juncture we come face to face with bitcoin and the larger project of cryptocurrencies, whose original and very much explicit goal was precisely to create a new form of money. While crypto seems like (and in some sense is) a brand new story of money, we must first understand it as a momentous wrinkle in the post-2008 narrative. The invention of crypto would arguably have never occurred were it not for the undoing of the old tale (money is bits of metal, with real value) and its replacement by the new (money is fiction, with value decreed by the government). Our second money story serves as a condition of possibility for crypto’s rise: only in a context in which large swathes of people believe that money’s value is nothing other than an index of what people think money is worth, might we witness the results we have seen over the past few years with crypto – people paying increasingly large sums of real money (bank credits denominated in dollars,...
