Money and moneyness: thoughts on the nature and distributional power of the ‘backbone’ of capitalist political economy

ABSTRACT

This paper contends that political economy may profit from an understanding of money that is both able to account for its systemic importance as well as money’s specific role for the contemporary distribution of wealth. ‘Money-ness’ is a strategic factor in profit-making and capital accumulation. If we accord moneyness to all those instruments that make the repackaging of credit and other financial assets and liabilities and their capitalization possible, we arrive at an understanding of money that underscores the Marxian analysis of the structural importance of the money relation for capital accumulation that is up to speed with current financial innovations. As a social structure and process, moneymaking through capital permeates society. As a public-private deal between the state, rentiers, banks, and taxpayers that has existed since the foundation of the Bank of England in 1694, it binds these actors together in shifting relations of dependence. Under financial capitalism today, what counts as money and how far moneyness stretches into the realms of financial innovation has been a core object of struggle in the public-private deal of money creation.

KEYWORDS:

• Capitalism
• Bank of England
• derivatives
• inequality
• accumulation
• US dollar

Acknowledgements

I am grateful to Benjamin Braun, Samuel Knafo, Ingo Stützle, Timo Walter and the anonymous reviewers for their constructive engagement with earlier versions of this paper. Much of the research for the article was done at the Max Planck Institute for the Study of Societies. I thank the chief librarian Susanne Hilbring and her team for running this amazing library at the heart of Cologne.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Kai Koddenbrock is acting Professor of International Political Studies at the University of Witten-Herdecke, Germany. He is currently working on money theory, dependency and humanitarianism at the intersection of international political economy and international relations. He leads the international research network politicsofmoney.org.

Notes

1 Next to ‘positive’ money and ‘Vollgeld’ proponents, there exists a small constituency of scholars and activists working with the thoughts of the German economist Silvio Gesell on ‘free land’ and ‘free money.’ Gesell’s main argument was that the interest system must be reformed and replaced by a negative interest rate system in order to make capitalism human again by increasing the amounts of money used for consumption and making money hoarding unprofitable (Gesell 1916). See Altvater (2000) and Zeise (2010) for a Marxist critique of this position.

2 The distinctions between money, money capital, credit and fictitious capital are notoriously hard to draw. The ‘solution’ I propose here is a broad definition of money that allows for its general role to remain at the forefront not to be lost in terms like ‘near’ money, financial instruments, etc. Capital, then, is excluded from explicit treatment, because it is even more polysemous. Capital denotes the capitalists collectively, a social relation fusing together everything that moves under capitalism and an accounting entry from fixed to variable capital.

3 Moneyness is a term used for options pricing and has been debated between the Marxist political economists Bryan et al. (2009) and Milios et al. (2013), among others. Most recently Daniela Gabor and Ann Pettifor have joined the conversation see: https://soundcloud.com/iippe/moneyness-the-essence-of-money-and-its-recent-developments

4 Marxist IR, broadly speaking, has tended to mention money and capital in its historical materialist accounts without placing emphasis on it as a relevant explanatory relation for their interest in the rise of the state system or the uneven and combined development of world order (Anievas 2015, Anievas and Nisancıoglu 2015, Burnham 1991, Cox 1987, Gill 1993, Koddenbrock 2015, Tansel 2015, Teschke 2003, Rosenberg, 2013).

5 http://www.cfeps.org/pubs/wp/wp10.html.

6 See Arrighi (1990, p. 103) on Edward II’s default on Florentine debt in 1339, which was worth the annual Florentine production of cloth at the time.

7 A permanent loan means that the principal never has to be repaid but that creditors make a profit from the sum of annual interest paid on the loan.

8 See Gorton (2016, pp. 21–23) for an interesting treatment of the role of state charters for banking in the UK and the US.

9 The government also tried to raise more war financing through the selling of government securities, which were mainly bought by large joint-stock companies like the colonial East India Company, which effectively became an important owner of the ‘national debt.’

10 Cryptocurrencies and the pioneer Bitcoin have been an attempt at a private form of money that can permanently stay clear of the state sanction. As Mike Beggs puts it ‘The technical problem that Bitcoin solves is to simulate a physical coin electronically, without relying on centralized administration’ (Beggs 2018). However, just as most other money forms, at some point or the other, the state joins the fray and becomes and integral part of the infrastructure needed to maintain the trustworthiness of a previously private currency. Now, Bitcoin's value also depends on its prospects for state sanction and regulation and permissions to be used widely. In this sense, cryptocurrencies are just another new form of money that must eventually become a part of the public-private deal.