Rethinking money and the state: a semiotic turn

Abstract

A novel conception of money and the State is offered, in the context of post-golden-age financial and political systems (roughly from 1980 to the present), and with regard to the sovereign-currency States, focusing particularly on the USA. The basic elements of the paper are: (1) a novel semiotic understanding of money as language rather than as a unit of measure, money understood to communicate goods-ownership to the public, and debt ownership to the corporation; (2) a discussion of financial unsustainability under the present system in which the banking oligopolies possess a newfound freedom to create money capital both more independently and on a significantly larger scale than under the previous Glass–Steagall regime; (3) a critique of the neo-liberal simulation (in the sense of Baudrillard) of government debt and dissimulation of the sovereign-currency State, able to create money at will; (4) a delineation of two fundamental policy objectives: to genuinely meet the State's obligation to assure the life and pursuit of happiness that all citizens are entitled to, and secondly, to decompress ever-expanding and ever-dangerous capital; (5) specific, highly original policy actions are put forward, aimed at meeting these policy objectives, notably lifting budgetary constraints on federal government spending and transforming the central bank into a repository of guaranteed household deposits.

Keywords:

• money
• debt-ownership
• entitlements

Notes

1. In the brilliant preface to his book The Cancer Stage of Capitalism John McMurtry immediately observes that contemporary economies are conceived of without universal life-matters taken into account.[T]he most basic and universal life-matters are already decided beneath the social rules and people's opinions – such as that all people need sufficient nutrition, clean water, sewage facilities, learning of society's symbol systems, home and love, and expert care when ill if their life-capacities are not to be reduced or destroyed. But this objective life-ground of value across individuals and cultures has no place in the global system. (2013, 1)

2. For a more detailed account of value reduction see Gleicher (forthcoming).

3. Reference to neo-liberal is to the political-economic approach that has dominated public discourse in the leading market economies since roughly 1980. By its own light its roots are in eighteenth-century liberalism, associated with Adam Smith. It is distinct, however, in its stance opposing the welfare capitalist States that arose in the twentieth century. Iconic neo-liberal figures are Ronald Reagan, Maggie Thatcher and Milton Friedman, leading neo-liberal institutions are the IMF and the European Union. Those neo-liberal thinkers who specifically advocate a return to the gold standard, notably the Austrian school, are very critical of the central bank, seeing it as an institution administering essentially a pyramid scheme by printing paper money. This influential quarter of neo-liberal thought believes that at some messianic moment an enormous debt will come due, in gold, and the public will be caught holding the bag.

4. Stigler's heterogeneity critique of classical political economy can be traced back to one of the founding fathers of Austrian economics, Carl Menger, in his Principles of Economics, although oddly enough Stigler makes no reference to Menger in this regard. At the outset of his discussion of prices, in the context of barter, Menger goes so far as to say that the basis of trade is contrary to Stigler. That is, marginal utilities realized by two parties in exchange are different and hence marginal utilities cannot be homogenized into value ([1871] 1976, 191–194). Menger finds this to be irreconcilable with commodity money, i.e. gold as a value of commodities, and ultimately – unlike Austrian thought in general – he asserts toward the beginning of his much later chapter, Money as Measure of Value:In my discussion of price theory … I have shown that equivalents of goods in the objective sense of the term cannot be observed anywhere in the economy of men (193), and that the entire theory that presents [gold] money as the ‘measure of the exchange value’ of goods disintegrates into nothingness, since the basis of the theory is a fiction, an error. ([1871] 1976, 273)

5. This brings out that Stigler does not address homogenous labor (or really, labor of any kind) in criticizing Smith. In any case, the neo-Ricardian development of Smith's thought treats labor as only relative value expressed through an arbitrary (numeraire) commodity, much like the numeraire commodity of neoclassical general equilibrium theory. Moreover, objective homogeneous labor does not escape the value reduction either, due to the more important fact that the commodity quantities of diamonds to water in exchange are homonymic. This is to say, they do not imply an equal quantity of labor, as revealed by the solutions to the transformation problem.

6. This refers to the dialogical notion of the individual as subjectivity inseparable from social experience.

7. The term goods is used throughout in a literal sense – something that is good, as opposed to bad – so that services are included.

8. In neither method of State money-creation just discussed above, it might be observed, is there anything actually require printing of bills.

9. It might be noted, even in the context of a gold-standard, it is necessary for the State to set the value of gold with respect to paper money, because gold, conceived of as intrinsic value, does not itself have a value. It is value.

10. Open time, as opposed to closed, is a concept developed independently by two major thinkers of the twentieth century, Walter Benjamin and Mikhail Bakhtin. It is also referred to by Benjamin as unfulfilled time. In Benjamin's words it is ‘infinite in every direction and unfulfilled at every moment’ ([1916] 2011, Ch. 38, 241). Closed time, by contrast, is the idea of experience, after the fact. It is revelation. In its messianic form, it is exemplified by the time in which the events of the Bible are placed. Referring to open time as the world of life (closed time being the world of culture) Bakhtin characterizes it asthe only world in which we create, cognize, contemplate, live our lives and die – the world in which the acts of our activity are objectified and the world in which these acts actually proceed and are actually accomplished once and only once. (Bakhtin [1920/24] 1993, 2)

11. Wray (2012, 48–50) takes a position similar to the one articulated here, but is led somehow to the surprising conclusion that it is the State's particular authority to command taxes in its own currency that explains how free money can acquire things of worth. But taxation is not the only, or even a necessary expression of the State's authority. The legitimacy of the State is what gives rise to contemporary money and, tautologically, it is the fact that the State can create money that legitimizes it as both commodity credit and money capital.

12. It is not clear whether or not the oligopoly is actually a collection of zombie banks, selling debt that only the State is willing to purchase, these very sales being then what enables the banks to repay depositors in open time.

13. See n.1. Even in the USA, bastion of neo-liberal thought, it is accepted that such an obligation exists. A medical provider cannot legally refuse emergency health care to an individual with a life-threatening malady who needs immediate attention, independent of capital; i.e. regardless of whether the care can be paid for other than the State.

14. Federal taxation of corporations as means of internalizing negative externalities would continue to have a purpose.

15. Wray (2012, 187) actually takes the opposite stance. In a chapter entitled Monetary and Fiscal Policy for Sovereign Currency: What Should Government Do – the very first section has the heading: Just because government can afford to spend does not mean [that] government ought to spend The two chief reasons he then gives for this warning are in fact diametrically opposed to the two objectives of State policy proffered in the present paper; that is, fulfilling the State's obligation to ensure the life and pursuit of happiness to which all citizens are entitled, and secondly, placing strong constraints on productive and, especially, financial capital. Concerning the former, Wray states ‘A strong social safety net might send the signal that individuals do not really need to work because they can always live well enough on government handouts’ (2012, 189). And with respect to the second objective he asserts: The more resources we remove from private use to allocate to public use, the greater the likelihood that we could have a bloated government sector and a private sector that is too small. We need to leave an adequate supply of resources for the private sector to achieve the private purpose, even as we allocate sufficient resources to achieve the public purpose. (2012, 190)

16. Referring to the current situation – the accelerated growth of money capital – as money-sequence cancer, McMurtry (2013) states the justification of reversing this:In [current] policy practice, the money-sequence cancer with no function, but multiplying itself is only subsidized further in invading social and ecological life-organization with evermore general life-insecurity and decline on all planes. The logic of [this] recovery is almost as unspeakable as the cancer system itself. (2013, 30)