Politics of Money

The Politics of Money: Towards Sustainability and Economic Democracy. Frances Hutchinson, Mary Mellor and Wendy Olsen; London: Pluto, 2002, 248pp., £16.99.

URL = http://www.gaianeconomics.org/politics-of-money.htm

Recommended by Pat Conaty: "This is such an insightful book and so ahead of the crisis in 2008 and so absolutely relevant to the madness of the imposed austerity crisis."

Review

By Molly Scott Cato, Gaian economist [1]

‘Despite the centrality of money and money access in contemporary societies, very little attention is paid in economic thought to what money actually is, how it comes into existence and how it mediates the relationships between resources, products and people.’ (p. 10). Money represents the best existing proof of Marx’s theory of false consciousness: most people accept as natural and immutable a key part of our economic system that makes possible the exploitation of the planet and the majority of its inhabitants. The system of money creation is, for the most part, unquestioned and invisible to academic analysis.

The Politics of Money confronts head on the myth that There Is No Alternative to capitalism and its peculiar form of money creation, by pointing out the insecurity and recent arrival of the capitalist economic form:

The assumption of the naturalness and inevitability of capitalism masks its rather insecure history. It was not until the latter half of the nineteenth century that the model became secure in the UK . . . By the 1960s and 1970s the cracks were showing once more . . . The model is now under threat from anti-globalisation forces, the instability of stock market and currency values and the threat of global recession. (p. 24)

In support of their view that there are many alternatives, the authors present theories of the economy from Veblen, Marx and guild socialism to counter the myth of capitalist invincibility. Money is seen as lying at the heart of the unstable, unjust and economically destructive organisation of our economy. A reflective review of the monetary system is proposed as the first necessary step on the way to sustainability and democracy. Institutionalist critiques of capitalist finance, are explored, as well as the more recent critiques from feminists and green economists. The distortion of true value that is inherent in a capitalist money system is demonstrated as the root cause of the exploitation of women and of the planet.

The book is an explicit attack on capitalism, with money identified as ‘the headquarters of the capitalist system’. The technicalities of credit creation and banking can seem arcane and mystifying: this book provides a clear account that will prove ideologically rather than intellectually challenging. It also provides a challenge to more conventional socialists and to the labour movement, which is to some extent seen as part of the problem rather than part of the solution. Arguing for higher money wages is implicitly supporting the rational self-interest which lies at the heart of capitalism. The real challenge is to recreate the link between work and true value, by re-localising economies and by re-valuing mutuality and co-operation.

Capitalism has been able to dominate economically and intellectually for the past 150 years because of its successful elimination of alternatives. Capitalist economists have created a closed model of economic activity, which almost exclusively ignores the social and natural worlds. The theoretical model tautologically banishes history, locality and the wide variety of essential human activities classed as ‘non-economic’. On the physical level, enclosure of the land, removing the means of subsistence, has been followed by the enclosure of ideas and of species, via the spread of laws of ‘intellectual property’. This is not a historical process:

The process of absorbing the commons into the market system continue apace today. Forest peoples in particular are struggling for the retention of the commons of tropical rainforests from Sarawak to the Amazon. Across the globe indigenous peoples and peasant farmers are launching anti-globalisation campaigns. (p. 77).

The book moves beyond mere critique, to convey a vision of the future for money: a democratic and emancipatory vision. Value should be divorced from monetary value, and we should move towards ‘re-visioning cash purchases as social relations’, where basic needs can be met by a social wage or basic income. At the local level exchanges can be facilitated by local currencies. There are practical examples already in existence of a post-capitalist money system. These range from the highly successful producer banks that form part of the Mondragon group to local LETs schemes throughout Europe and the micro-credit schemes that have been so successful at encouraging grassroots development in the poorer countries of the world.

Many academics, and perhaps particularly academic economists, have been loath to engage in the study of money and the debate about monetary reform. The explanation lies partly in the deliberate obfuscation that surrounds the discussion of truly radical alternatives. Another explanation is that proposals for radical monetary reform have too often been ‘labelled’ on political or racial lines. Such labels are frequently used mischievously and emotively and do not stand up to responsible or intelligent scrutiny It is high time we moved beyond this wholly subjective and unhelpful insecurity and dealt with these ideas head on. We cannot hope to develop a just and sustainable economy unless we do." (http://www.gaianeconomics.org/politics-of-money.htm)