The Fantasy Of Apolitical Money

moneyYanis Varoufakis on Bitcoin and the fruitless dream of a de-politicised currency:

The Crash of 2008 has infused our societies with enormous scepticism on the role of the authorities, both government and Central Banks. It is quite natural that many dream of a currency that politicians, bankers and central bankers cannot manipulate; a currency of the people by the people for the people. While it is true that local communities have, in the past, generated successful communitarian currencies (that enabled them to improve welfare in their midst, especially at a time of acute economic crises), there can be no de-politicised currency capable of ‘powering’ an advanced, industrial society.

Since the second industrial revolution made possible the emergence of large, networked oligopolistic companies (the Edisons and Fords of the 1900s, and the Googles or Apples of today), capitalism became dependent on large credit spurts for the purposes of financing these capital corporations’ needs. Such credit spurts required large boosts in the money supply. Even when capitalist economies operated under the Gold Standard, banks found ways of creating money by lending increasing quantities against the existing, stable, stock of gold. Authorities stood by, allowing the bubbles of the 1920s to inflate, leading to 1929 and to the disaster of the Great Depression.

To the extent that Bitcoin attempts to emulate the Gold Standard, if a large portion of economic activity is denominated in bitcoin, the dilemmas of the 1920s will return to plague the bitcoin economy. Finance will either have to find ways of introducing bitcoin denominated securities that will cause asset bubbles to form or the bitcoin political economy will nosedive into a deflationary spiral.

The reason that money is and can only be political is that the only way of steering a course between the Scylla and Charybdis of dangerous ponzi growth and stagnation is to exercise a degree of rational, collective control over the supply of money. And since this control is bound to be political, in the sense that different monetary policies will affect different groups of people differently, the only decent manner in which such control can be exercised is through a democratic, collective agency.

In brief, while apolitical money is a dangerous illusion, a Central Bank that is democratically controlled (as opposed to the indefensible notion of an ‘independent’ Central Bank) remains our best hope for a form of money that is for the people and by the people. Bitcoin, despite its many interesting features, can never be that.

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  • jasonpaulhayes
  • BuzzCoastin

    anyone who thinks they understand how money works
    should see Lori Santos work with money & monkeys
    and check dan kahneman’s Thinking fast & slow

    • echar

      From what I understand of Lori Santos’s study is that money is more about the emotional state, and status. And less about rational gain. I am unaware of the message of Dan Kahneman’s book.

      • BuzzCoastin

        Lori et al have shown that
        there is no way humans are superior to monkeys
        when it comes to finance
        khaneman, won a nobel in econ
        basically says wall sreet is bullshit

        • echar

          To call money monky business, is to do monkies a disservice? In reality money is good business for the haves?

          • BuzzCoastin

            khaneman says its good biz for the wall street old pars
            but it’s all based on bullshit & hype
            chapter 22ish in thinking fast & slow

          • echar

            Haves or the gots is more broad than wall street pars. I would consider reading that book, but it seems like it may be boring. I’ll keep it in mind.

          • BuzzCoastin

            the guy won a nobel prize
            for finding a major flaw in a 300yo econ theory
            one of his many perspicatious insights
            into the human thought process
            pretty boring stuff

          • echar

            I could have worded things better. Nobel prizes and perspicatious insights into the human process sounds pretty awesome. The economy on the other hand gets a little dry for me. I am open to check it out though. I’ll put it on my read list. Pardon my honesty and tactless tendency. It’s at my local library.

          • BuzzCoastin

            his book is primarily about human behavior
            econmomics is one of his primary focusses
            but it’s really about research on decision making

  • Rhoid Rager

    “capitalism became dependent on large credit spurts for the purposes of financing these capital corporations’ needs” Actually, capitalism became dependent on labour not realizing that such ‘large credit spurts’ were actually their own material wealth being methodically stripped away from them through usury, mass counterfeiting under fractional reserve banking, and taxes.

  • Sammy at Epricity

    So, basically, you can’t have apolitical money because you can’t make fractional reserve lending work with it. Yes, that’s kind of the point.