Tuesday, June 8, 2010


I am trying to write a thesis. I am trying to sort out my many ideas around money. I have never chosen simple ideas, I never see it as simple, perhaps that is a weakness in my thinking. But, as a political-economist I can not ignore the complex social and historical specificity of all institutional developments. I am exploring money, I want to understand money as something that has been constructed to serve a specific purpose. To do this I have to place it into a specific political history. Money, today's money, is built around a set of particular political-economic needs. I will continue to explore these ideas in the coming weeks and months while writing.

This was a small introduction that I wrote a few weeks ago. It is very loose and will most likely change radically in its final drafts but I think it gives a good launching pad into my work. My first chapter of my thesis is looking at the USA and the way in which the creation of the US constitution reworked the very ideas of democracy away from its original concept of direct towards what can barely be considered democratic - namely a form of representative democracy. Which is essentially built on the idea that our rights as individuals and communities is some how alienable - that we can give them to some one else who can then represent us in some sort of abstract way. This shift in thinking about democracy is not my idea, it is an idea that has been well developed by other academics. My point is to highlight this so that I can then illuminate the way in which money has been theorized and presented within this form of democracy and show how the democratization of money has been built around an effort to support what is known as a capitalist democracy. Ultimately this will allow me to ask what it actually means to democratize money - a claim that many advocates of community currencies make.

Here is the intro as written thus far:

Money is often viewed as a neutral veil behind which the "factors of production of the 'real' economy operate." (Ingham, Capitalism: 44). This classical economic theory assumes that money operates as a lubricant for exchange, enabling a standard measure of value to be utilized in the process of economic exchange. The assumption here is that there is no utility to the holding onto of money and that any value realized from this money is through consumption and investment, not through the hoarding of money. However, this is exactly what happens in capitalist economies, people hold onto money to deal with moments of insecurity, to have money for those times when they may become unemployed or have a medical emergency or the economy as a whole crashes. In an economy that is dependent on the supply of money to enable the very acts of exchange and investment the role that the supply (or lack thereof) plays in the economy is of vital importance and how that supply is managed or created has huge political-economic impacts. Keynes, along with Marx and Schumpeter all moved beyond this idea of money acting as the lubricant of essentially a barter exchange concept of the economy (Ingham, Capitalism: 44). These three theorists all argued that this concept "ignored the essential historical fact that capitalism was a 'monetary production economy' with the goal of realizing profits" (Ingham, Capitalism: 44). 

This understanding of the economy raises the importance of money and its creation to something far from neutral or acting as a veil, in fact it is the very thing that the economy is dependent on for its smooth operation. The management of this element is of critical importance and the mismanagement of it can have dire consequences. This is evidenced by the numerous financial crises that have wracked capitalist economies over the centuries. Therefore along with the efforts of Mary Mellor, this paper claims that the creation of money has played a more significant role in the creation of today's capitalist political-economy then has previously been acknowledged by most political and economic theorists.[1] What is even stranger is that the role of the creation of money in our "total money economies" is something that is often ignored by theorists of alternative non-capitalist economies despite the totalizing phenomenon that money plays in today's modern society (Mellor, Politics and Money: 47). Money is not neutral and it is not a veil and it does not just emerge but is a "fundamentally social" construct (Mellor, Politics and Money: 47). In fact money needs to be understood as having its own "'force of production' which,… has its own particular "'relations of production' with its own 'relations of production'" (Ingham, Money is a Social Relation).   

All forms of money are "social relations" (Ingham, Money is a social relation) and therefore need to be understood as constructed by society. One way to explore this is by looking at the history of money as something separate and important in its own right. Yet, at the same time we need to understand how and why this money developed in the way it developed. Societies do not create institutions and systems abstractly, rather they are responding to the material needs of society and ultimately they are trying to find solutions to the existing problems. These solutions are not just guided by the general good will of society, but are driven by particular powerful interests that have the ability to construct and impose their socio-political systems of governing the mode of production that enables the provisioning of societies material needs. Why did money emerge and develop to the state that it is in today? How was this done and by who' with what interests and goals in mind? We can only begin to answer this question by understanding what the context was that it emerged in. 
Due to the limitations of time and space I cannot explore the entire history of money. However, I can look at the rise of, what E.M. Wood calls, the "capitalist-democracy" (Democracy against Capitalism) and the way in which money was presented and reconfigured, through its own set of social relations, within the context of this capitalist-democracy. The assumption here is that money was conceptualized in ways that enabled the capitalist-democratic system and its associated class relations to persist and remain powerful. This had to be done in a way that dealt with at least three distinct interests – the owners of property/capital, the non-property owning voters, and the bankers/finance owners.

[1] Mary Mellor, "The Politics of Money and Credit…"

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