The Future of Money

Mary Mellor

Description

As the recent financial crisis has revealed, the state is central to the stability of the money system, while the chaotic privately-owned banks reap the benefits without shouldering the risks. This book argues that money is a public resource that has been hijacked by capitalism.



Mary Mellor explores the history of money and modern banking, showing how finance capital has captured bank-created money to enhance speculative ‘leveraged’ profits as well as destroying collective approaches to economic life. Meanwhile, most individuals, and the public economy, have been mired in debt. To correct this obvious injustice, Mellor proposes a public and democratic future for money. Ways are put forward for structuring the money and banking system to provision societies on an equitable, ecologically sustainable 'sufficiency' basis.



This fascinating study of money should be read by all economics students looking for an original analysis of the economy during the current crisis.
Acknowledgements

Introduction

1. What is Money

2. The Privatisation of Money

3. 'People’s Capitalism': Financialisation and Debt

4. Credit and Capitalism

5. The Financial Crisis of 2007-8

6. Lessons from the Crisis

7. Public Money and Sufficiency Provisioning

Appendix:Acronyms and Abbreviations

Bibliography

Index

Sujets

• Economic Policy
• Public Policy
• Banking
• POLITICAL SCIENCE
• Economie gestion
• Bank
• Political economy
• Politics
• Economics
• Business
• Banks

Informations

• Publié par: Pluto Press
• Date de parution: 09 avril 2010
• Nombre de lectures: 0
• EAN13: 9781783716685
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

The Future of Money
The Future of Money
From Financial Crisis to Public Resource
MARY MELLOR
First published 2010 by Pluto Press
345 Archway Road, London N6 5AA and
175 Fifth Avenue, New York, NY 10010
www.plutobooks.com
Distributed in the United States of America exclusively by Palgrave Macmillan, a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010
Copyright © Mary Mellor 2010
The right of Mary Mellor to be identified as the author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN   978 0 7453 2995 6   Hardback ISBN   978 0 7453 2994 9   Paperback ISBN   978 1 7837 1668 5   ePub ISBN   978 1 7837 1669 2   Mobi
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This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin.
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For Kate and Joe
CONTENTS
Acknowledgements
Introduction
1    
What is Money?
2
The Privatisation of Money
3
‘People’s Capitalism’: Financialisation and Debt
4
Credit and Capitalism
5
The Financial Crisis of 2007–08
6
Lessons from the Crisis
7
Public Money and Sufficiency Provisioning
Appendix: Acronyms and Abbreviations
Bibliography
Index
ACKNOWLEDGEMENTS
Many, many thanks to Molly Scott Cato, Paul Langley, Sue Bennet and Nigel Mellor for their careful reading of the text and very helpful comments and suggestions. Thanks also to Roger van Zwanenberg for helping frame the book and to two anonymous referees for very useful suggestions.
INTRODUCTION
The financial crisis of 2007–08 has revealed both the instability of the global financial system and the importance of the state as lender, borrower and investor of last resort. The world of deregulated privatised finance proved not to be a source of wealth for all, but a drain on the public economy, as states poured money into the private financial sector. It has also been a destroyer of personal economic security as savings were threatened, jobs lost and homes repossessed. The crisis in the financial sector, most notably in Britain and the United States, but also in Europe and many other parts of the world, contrasts with the bombastic optimism of the latter part of the twentieth century and the early part of the twenty-first century with its glory days of ‘Big Bang’ deregulation and the financial sector’s dominance over national politics. Far from celebrating the ‘rolling back’ of the ‘nanny’ state, the implosion of deregulated finance has directly contradicted the neoliberal case that the market and its money system is a self-regulating process that will only be distorted by state intervention.
The crisis raises many questions about the way the financial system operates under late capitalism, in particular the role of banks and other financial institutions. The financial system is about the flow of money in its many forms through human societies and this, in turn, raises questions about the nature of money itself. Is money just a mechanism that represents economic processes or is it a social mechanism in its own right? Where does money come from, how does it operate? Who controls money, and how? In this book the case will be made that money is a complex phenomenon whose economic functioning relies on social trust and public authority. The role of states in attempting to rescue the financial sector challenges the idea that money is a purely economic phenomenon. The crisis reveals money’s social and political base, but also its enormous power and lack of democratic control. It is therefore crucially important to understand how money operates within the capitalist market system and how the institutions that originate and direct its flow are owned and controlled. This book does not assume any prior knowledge of economics but will be of interest to those within the discipline who want to look beyond conventional economic analysis. For those seeking more radical approaches, it aims to broaden the debates about the crisis in the financial system in order to explore possible alternatives by looking at the wider social and political context of the financial crisis.
Capitalist market theory sees money as the representation and product of a ‘wealth-creating’ economic system. As such, its operation should be left as far as possible to market logic. The case for the ‘free’ market and the privatisation of the money system is that markets are the most efficient way to organise and distribute economic goods, including finance. Given the assumption that all wealth is created by the private sector, the public/social sector is seen as parasitic upon this money/wealth creation process. Money circulation through the financial system is seen as the outcome of private economic acts, not as a function of social relationships and public authority. The notion that money issue and circulation should reflect the demands of the market means that public expenditure must always be contingent on the activities of private economic actors. Expenditure on social or public needs must be secondary to privatised economic forces. The private sector will authorise how much can, or cannot, be afforded since public expenditure is seen as a drain upon the private sector.
The financial collapse has exposed the neoliberal ideology of market fundamentalism for the illusion it always was. In capitalist economies, the state is a capitalist state and has always stood behind the capitalist financial system as guardian of the money system, financial properties and contracts. Although public sector spending is decried, the state is expected to produce unlimited sums of money to stabilise the financial system when it experiences its regular crises. The exposure of the reliance of the private financial sector on the state has brought the financial system into full view and opens it up for analysis. The opportunity must be taken to challenge the private control of finance and ask whether such an important aspect of human society should be owned by, and serve, the interests of capitalism. If the conventional view of money and its systems is not challenged, public intervention in the financial sector during the current crisis will only be a stepping stone back to hidden state support of a more carefully regulated capitalist financial sector – until the next crisis.
The core argument of this book is that the money system needs to be reclaimed from the profit-driven market economy and socially administered for the benefit of society as a whole as a public resource. In order to make this case it is important to look in detail at the nature, history and functioning of money and its institutions. There are dilemmas in opening up a debate about the nature of money and its role in economic life. The ideology of the market presents the economy as a natural process administered by inspired entrepreneurs in which exchange through money is conducted on rational principles. To say that money is as much a social and political phenomenon as an economic one is not an easy case to make. Confidence in money has largely been based on illusions about the origins of money and how it is issued and circulated. Will people be able to live within a financial system that operates without those illusions?
Modern societies are heavily monetised so that nearly all human needs are met through monetary exchange, whether in direct purchases or through taxation and state expenditure. Many people also try to secure their future through money: in savings, pensions or other financial assets. It is therefore important that people feel that money is a tangible thing that has value and will hold that value. People must trust money and trust other people to hold to their money contracts if they are to feel secure. They must feel that their money is safe in the bank, that their pension will be paid or that the price of bread will be within their means. The case this book will make is that this economic security can only be achieved through public action and social solidarity, not through the market. In this context it is important to challenge the concept of the market itself. The capitalist market is not created to meet needs, it is created to make profit.
As radical economists, from Marxists to greens and feminists, have argued, the capitalist market system presents itself as a ‘natural’ system while distorting human societies and destroying ecological systems. Feminist and green economists, in particular, have argued that the money system draws artificial boundaries around economic valuation that excludes women’s unpaid work and ecological damage. A more comprehensive concept of the economy that describes the meeting of human need both inside and outside of the money system is provisioning. In order to live fulfilling lives people need a wide range of supportive relationships and secure access to sustenance. They need physical goods and services, but they also need many other things including care and friendship, time and space to develop their skills and personality. Some of these are provided by the money economy (public and private) but many are not. Many of these needs are denied through pressure of work and lack of resources, including money. Some are achieved only through great personal sacrifice. One of the aims of this book is to explore whether it is possible to have a money system th