Another historical study of the concept of money and its implications, along with an account of a theological basis for the gold and silver fetish, that distinguishes the essentialist and instrumentalist approaches.
The reason why I have taken you into the exotic realm of Medieval economics is that it shows us how different metaphysical approaches to money can be, and it makes us aware that our Modern understanding of the nature and meaning of money is not a fixed and certain reality. We can now hopefully see that our astonishingly instrumental and abstract assumed metaphysics of money is one option amongst many possible ways of understanding the nature and meaning of money. Modern money is one way of thinking and acting concerning the relations between work, commerce and finance; it is one way of approaching the nature of finance and its (non) relation to wealth, morality, reality and power. Perhaps, even, the abstract and instrumental nature of our assumed metaphysics of money is deeply implicated in the horrifying pathologies of high finance?...
If we are to change this situation, we need to change the way we think about money, wealth and power. This is where the fundamental matters are that will determine our future.MMT proposes a price anchor that establishes the value of a currency to an hour of unskilled labor connects the nominal to the real in a way that involves human beings rather than a commodity like gold or silver. Chris Cook proposes an energy standard.
We are not, of course, going to banish extortion or immoral instrumentalism just by having better metaphysics. Criminals, extortionist and abusers of violent power were as common and powerful in the Middle Ages as they are today. Yet if we do not appreciate the relationship between the prevailing order of wealth and power and the metaphysical assumptions which we all share when we engage in the use of money and the practise of politics, then the vital collective sources of our norms and of how power is sustained will be invisible to us. The main game is, indeed, a struggle for our minds. Plato saw this with characteristic insight. As long as we believe that illusions are reality, we are controlled by those who manipulate the collective illusions that structure the operational norms of the world of finance and power as we currently know it.
How do we get money tied to the realities of real human life so that it becomes a fair function of the actual production and distribution of real wealth? How do we re-introduce the idea that finance should be tied in some concrete way to the real world in which actual producing and consuming people live? How can we get finance to serve human (that is political) ends rather than politics facilitating financial ends for high flyers in investment banking? These are the vital questions for us today in the post-2008 world.
Yanis Varoufakis
The Metaphysics of Money – Guest post by Paul Tyson
Dr Paul Tyson | Honorary Associate Professor of Theology, University of Nottingham
2 comments:
Re: "MMT proposes a price anchor that establishes the value of a currency to an hour of unskilled labor connects the nominal to the real."
Buffer stock policies, at best, stabilize the price of that one commodity. They do not necessarily stabilize the overall economy -- i.e., the gold standard buffer stock did not prevent inflation or deflation, it did not prevent booms and busts.
(Tho you could argue that an energy buffer stock, if such a thing was feasible, would go a long way toward stabilizing overall prices, since almost all economic activity uses significant energy).
MMT claims to believe in Abba Lerner's functional finance, which advocates stabilizing the overall economy and the value of the fiat currency by "rightsizing" the budget deficit. MMT needs to make up its mind what it believes in because the Functional Finance theory of price stability is not compatible with the "buffer stock" theory of price stability.
They work hand in a complementary way in MMT. FF is the chief instrument while the MMT JG buffer stock mops up the residual involuntarily unemployed.
The concept of price anchor is related to establishing the value of the currency in terms of prices that the issuer sets.
This is an alternative to the fix rate convertibility into a commodity like gold and also setting the price of credit as in monetary policy.
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