Thursday, December 27, 2018

C. George Caffentzis — Algebraic Money: Berkeley’s Philosophy of Mathematics and Money

Abstract

In the early 1730s George Berkeley began to explore the conceptual field between ideas and spirits that he previously claimed to be empty. In this field he found a rich set of concepts including “notions,” “principles,” “beliefs,” “opinions,” and even “prejudices.” Elsewhere I have referred to this phase in Berkeley’s thought as his “second conceptual revolution.”2 I believe that it was motivated by his increasing need to develop a language to discuss the social, moral and theological concerns vital to him and his circle.

This second conceptual revolution made possible two of his most important contributions to 18th century thought: The Analyst (1734) and The Querist (1735-37). Even though they were written almost simultaneously, these texts are rarely discussed together, since the former is categorized as a critique of the foundations of the calculus, while the latter is taken a tract advocating the development of a specie-less economy in Ireland.

Using new textual and contextual evidence, however, I will show with that these two texts have a common basis in Berkeley’s second conceptual revolution, in that the rejection of intrinsic values (either epistemic or monetary) and the revaluation of notions, principles, and prejudices are crucial to the critique of both Newtonian mathematics in The Analyst and Newtonian monetary theory and policy in The Querist.
Specifically, I will argue that Berkeley’s famous demonstration of the absurdities of Newton’s method of fluxions devalued geometric reasoning and gave a new pride of place to algebraic reasoning. On the basis of this revaluation in mathematics, Berkeley more confidently undermined the concept of intrinsic monetary value and suggested the development of a monetary system based on “tickets, tokens and counters” (what I call “algebraic money”).
The issues posed by the transition from a specie-based to a specie-less currency were clearly some of the most important and controversial in the Age of Enlightenment. Berkeley’s contributions to understanding the significance and feasibility of such a transition and its benefits for Ireland certainly add support the claim that he was “the
most engaging and useful man in Ireland in the eighteenth century.”
Academia
Algebraic Money: Berkeley’s Philosophy of Mathematics and Money
C. George Caffentzis


4 comments:

Andrew Anderson said...

But the concerns generated by his notional conception of money made Berkeley clarify to his readers the need for precautions against abuse that would be largely irrelevant when dealing with a specie-dominated money.
C. George Caffentzis — Algebraic Money: Berkeley’s Philosophy of Mathematics and Money"

Except needlessly expensive fiat is itself an abuse. And even if scarcity were to be enforced inexpensively, a money supply that does not keep up with population growth, at least, is a tool to enslave the young to the old and the population in general to free riders who need do nothing more than bury their "talent" in the ground (Matthew 25:14-30) and wait for others to make the effort and take the risks needed for economic progress.

As I have expressed it elsewhere, readers might have argued with some justice that “the Querist ’s enlightened liberation from the superstitious magic of Gold and Silver opened up so many possibilities for arbitrary, willful manipulation of the currency that it was best to stay with the old, chaotic, but relatively abuse-proof system.”9 ibid [bold added]

"Render to Caesar what is Caesar's" is what Jesus Christ commanded and that was 1500 years before what is now called "The Enlightenment." In other words, the superstitions regarding gold and silver are not to be found in the Bible.

Berkeley had to assure his readers that his National Bank would be designed to effectively police the notional character of money and a large part of The Querist is devoted exactly to describing mechanisms for the task. ibid [bold added]

I should like to see those recommendations.

Andrew Anderson said...

Here's a link to The Querist which I'm finding far more interesting, useful and relevant to fiat and banking than this article ABOUT The Querist.

Andrew Anderson said...

23. Qu. Whether money is to be considered as having an intrinsic value ... from http://www.gutenberg.org/files/4543/4543-h/4543-h.htm

Any inherently scarce substance, however useless and inexpensive (for lack of demand) otherwise, if required to back or make fiat, would then be valuable.

Then it's not intrinsic value nor even inherent scarcity that are important but that fiat be created ethically, i.e. for the general welfare only AND that the demand for fiat is not suppressed either so that citizens may use their Nation' fiat with the same convenience and personal safety as they currently have using bank deposits, which are mere liabilities for fiat, not fiat itself, AND that all other implicit and explicit privileges for banks be abolished too since those too lessen the demand for fiat in favor of demand for bank deposits.

Andrew Anderson said...

Berkeley had to assure his readers that his National Bank would be designed to effectively police the notional character of money and a large part of The Querist is devoted exactly to describing mechanisms for the task. ibid [bold added]

Having finished The Querist, I don't think George Berkley would disagree much with the following upon a little reflection:

Price deflation is to be devoutly avoided so as not to reward laziness and excessive risk aversion and not to unjustly favor the old over the young via a money supply that does not keep up with population growth, should that be the cause. Not only that but if money should not be exempt from the "use it or lose it"* rule that seems to apply everywhere else in human affairs, then at least some price inflation is preferable to price stability.

So at least some price inflation should be a policy goal that no one should object to provided the following requirements are met:
1) The new purchasing power is distributed justly to all citizens - hence no unjust Cantillon effects.
2) The price inflation rate is not so large as to create price changes so often as to constitute a nuisance, e.g. 2% a year seems acceptable.

Requirement 1) can only be met by the monetary sovereign, not government-privileged banks nor a combination of the monetary sovereign (or its Central Bank) and government-privileged banks since:

1) So-called credit worthiness favors the richer over the poorer - which violates equal protection under the law with government privileged banks.

2) Nor is bank credit a permanent solution to price deflation anyway since the non-bank private sector eventually can bear no more debt (hence the boom-bust cycle) while the "National Debt" of a monetary sovereign can endlessly expand - especially since, being risk-free, the debt of a monetary should yield no more than ZERO% MINUS overhead costs, i.e. negatively.

*Negative interest is another means to penalize excessive fiat savings but this should be reserved for excessive account balances and non-citizens since some savings are legitimate and should not be penalized.