Wednesday, September 29, 2010

money - the most powerful social technology

paeconreview | In Issue 53 of the real-world economics review Richard Smith called for ‘a practical, workable post-capitalist ecological economy, an economy by the people, for the people, that is geared to production for need, not for profit’ (2010:42). He suggests economic theorists should ‘go back to the drawing board’ to re-frame how such an economy would operate. In my book The Future of Money I have explored whether the money system could be a possible mechanism for achieving a socially just, democratically administered, sufficiency economy (2010a). A sufficiency economy would be one oriented to meeting people’s material needs to the minimum necessary to enable a high quality of life for all. My case for advocating the money system is that as a socially constructed intangible economic form it is most immediately amenable to collective social action. As Geoffrey Ingham has argued ‘ the most powerful of the social technologies’ (2004: 202). A major proviso is that even radial reform of the money system will not eliminate the private ownership and control of tangible economic resources, a key element of the capitalist economy, but it could provide a stepping stone to radical social change.

Those arguing for an ecologically sustainable economy point to the destructive nature of the capitalist market (Scott Cato 2006). This is mainly in terms of externalities and the drive for growth (Scott Cato 2009). Value is attributed to those activities and resources that can immediately access and generate money. Resources not already in private ownership are treated as free goods, and market prices do not take account of long term damage to the environment. The capitalist financial system also drives growth as the search for profits drives competition and expansion together with the reliance on debt-based bank credit to fund the monetary circuit (Rossi 2007, Parguez & Seccareccia 2000). Ecofeminist political economy adds to the ecological critique by pointing out that much of women’s work and lives is excluded from the money-based economy (Mellor 2010b). The market economy and the public economy both frame their activities in money terms, externalising unpaid community and domestic activities. The real economy in ecological and feminist terms would embrace all aspects of the provisioning conditions for human existence to include unpaid work and environmental resources , damage and resilience.

So why see money as the key to developing a sufficiency economy? It is true that money has had a bad press. Love of it is the root of all evil. It commodifies and alienates human relationships. It is the mechanism of the extraction of profit and capital accumulation. At the same time it is arguably a symbol of social trust in that people honour it in their dealings, and it can be, potentially if not actually, an instrument of social policy. What is even more important is the evidence, particularly in the recent financial crisis, that the only mechanism that stands behind money systems is the state as representing the collective economic resilience of the population. While the state can create and circulate money ex nihilo, it still relies on social trust and acknowledgement of that money to enable it to circulate, its power to tax and the collective activities of the people in accepting that money as a reward for labour.