Money in an Unequal Society

* Book: Money in an Unequal Society. By Keith Hart.

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Summary

Michel Bauwens, reading notes from 2005:

Hart says that there are 2 types of theories about money. One sees it as a mere commodity. The other, in 3 variants, sees it as a token of society:

   - 1) the state
   - 2) the nation
   - 3) the community

The latter is the most egalitarian in its promise. But first he wants to look at the history of the money form, and to the current change.

Money today has a pure subjective value, having lost any objective reference.

Money has continuously shifted from objective (tied to its metallic content, to the gold standard), and set by the market, and open to tampering (diminishing its gold content); to subjective, i.e. set and guaranteed by the state, and back again.

Recently, the power of the state over money has been undermined by the electronic revolution, and speculation now commands vastly more resources than any government. Buttoday, even the banks no longer have the deposits to guarantee the value of their loans. it is now exclusively a matter of trust.

But money is still essentially 'impersonal' and this is what Hart would like to change, based on a re-reading of the history of the theories of money. Against the metallist commodity and market-based theories stood the 'chartalist' school, arguing that the value of money is determined by law, i.e. the state (making it a 'top-down' approach); two variants arose from those arguing it reflected people and nation. But lastly, money could be seen as reflecting trust, i.e. as derivative of community! The three theories are called token theories because they argue that money represents something intangible.

There is no escaping that money's value has no objective basis, it is totally relative, a measure of our trust. Reviewing the origins of money myths in Smith and Marx, i.e. seeing it in barter, this is now highly unlikely. State and markets are intertwined, because property exchange cannot exist without security. Barter is now seen as a late development, existing where money is scarce or political authority weak. (barter avoids regulation and taxes). Many multinational companies use barter. Could barter be seen, rather than as primitive, instead as a growth point in a new era of economic freedom ?

In his study of ceremonial gift exchange, Malinowsky concluded that it existed in conditions of high social distance and low political order, while barter existed in case of low social distance and high political order. Barter required a strong society.

After reviewing the perpetual tension between states and markets, the very last chapter discusses possible scenarios. What he argues is that this time, the technology might be ripe for the re-emergence of multiple forms of money, multiple types of circuits of exchange, giving people and communities relative independence from the world market. We have the possibility to exit the age of money and enter the age of 'universal community founded on just reward for human creativity and the need to reconcile market and nature.

An important point he makes is the increasing possibilities to escape taxation, both from below and from above. Public financing may become increasingly voluntary, and there is a territorial evolution towards the local and the global, away from the national. Society has always been a necessary mix of the personal and the impersonal, with an emphasis towards the latter under bureaucratic capitalism. We may now move towards a new balance, with a lot more personalisation, made possible by cheap information. And this is the context to see money as emerging and not just from a state and market point of view, bu rather to see it from the perspective of people and community, where it becomes a memory of personal transactions.