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Economics as if People Really Mattered - Week Two
 

Economics as if People Really Mattered - Week Two

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What is Money? Discussion based around chapter one of Mary Mellor's The Future of money.

What is Money? Discussion based around chapter one of Mary Mellor's The Future of money.

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    Economics as if People Really Mattered - Week Two Economics as if People Really Mattered - Week Two Presentation Transcript

    • Econom cs As I f iPeopl e Real l yM t er ed atWeek Two – What i sMoney? Gal way One W l d Cent r e or Amnest y Cent r e, Gal way. 26 Febr uar y 2013
    • The purpose of capitalism is self-expansion – capital begets capital – and it does so by monetizing social value and human labour.This is a circuit of transformation.“Historical capitalism involved therefore the widespread commodification of processes – not merely exchange processes, butproduction processes, distribution processes, and investment processes – that had previously been conducted other than via a‘market’. And, in the course of seeking to accumulate more and more capital, capitalists have sought to commodify more and moreof these social processes in all spheres of economic life.” Immanuel Wallerstein, Historical Capitalism (London: Verso, 2011), 15.
    • MARY MELLOR. THE FUTURE OF MONEY. London: Pluto Books, 2010Chapter one: WHAT IS MONEY? 1.What is money?2.Money as a social phenomenon3.The state and money4.Money, society and the ‘real economy’5.Money from credit to debit6.Bank credit and fresh air money7.Bank credit and capitalism8.conclusion
    • Money:•Measure of value (- unit of account•Medium of exchange•Way of making deferred payments•Store of value
    • Money:•Measure of value (- unit of account•Medium of exchange•Way of making deferred payments•Store of value Alfred Mitchell Innes. ‘What is Money?’ Banking Law Monthly (May 1913) --- ‘The Credit Theory of Money.’ Banking Law Monthly (Jan 1914) http://dublinopinion.com/2012/07/08/mary-mellor-the-future-of-money- David Graeber. Debt: The First 5,000 Years. Brooklyn: Melville House, 2011
    • Far from being a precious commodity that had become readily accepted through trade as the barter theorists thought, moneyas coin has generally been accepted by fiat, that is, issued and guaranteed by an authority, such as a powerful leader, anoffice-holder or a religious organisation.
    • Far from being a precious commodity that had become readily accepted through trade as the barter theorists thought, moneyas coin has generally been accepted by fiat, that is, issued and guaranteed by an authority, such as a powerful leader, anoffice-holder or a religious organisation.Making coin out of a precious metal confuses the role of money as a measure of value with the value of the coin itself.
    • Far from being a precious commodity that had become readily accepted through trade as the barter theorists thought, moneyas coin has generally been accepted by fiat, that is, issued and guaranteed by an authority, such as a powerful leader, anoffice-holder or a religious organisation.Making coin out of a precious metal confuses the role of money as a measure of value with the value of the coin itself.Gold can change value both as a commodity and as a coin in terms of purchasing power. Therefore gold/silver as a commoditydoes not ‘have’ a value. It is valued, but at any point in time the exact value will vary and will need to be designated in someother form of commodity or money, such as silver or dollars.
    • Far from being a precious commodity that had become readily accepted through trade as the barter theorists thought, moneyas coin has generally been accepted by fiat, that is, issued and guaranteed by an authority, such as a powerful leader, anoffice-holder or a religious organisation.Making coin out of a precious metal confuses the role of money as a measure of value with the value of the coin itself.Gold can change value both as a commodity and as a coin in terms of purchasing power. Therefore gold/silver as a commoditydoes not ‘have’ a value. It is valued, but at any point in time the exact value will vary and will need to be designated in someother form of commodity or money, such as silver or dollars.
    • Far from being a precious commodity that had become readily accepted through trade as the barter theorists thought, moneyas coin has generally been accepted by fiat, that is, issued and guaranteed by an authority, such as a powerful leader, anoffice-holder or a religious organisation.Making coin out of a precious metal confuses the role of money as a measure of value with the value of the coin itself.Gold can change value both as a commodity and as a coin in terms of purchasing power. Therefore gold/silver as a commoditydoes not ‘have’ a value. It is valued, but at any point in time the exact value will vary and will need to be designated in someother form of commodity or money, such as silver or dollars. Money does not in itself embody a value, it measures relative values. (p,10)
    • Money is more helpfully seen not as a ‘thing’ but as a social form.
    • Money is more helpfully seen not as a ‘thing’ but as a social form.‘Sound money’ is a product of society, not of nature.
    • Money is more helpfully seen not as a ‘thing’ but as a social form.‘Sound money’ is a product of society, not of nature.When we say people trust in money we mean that they are trusting in theorganisations, society and authorities that create and circulate it, other people,traders, the banks and the state.
    • Money is more helpfully seen not as a ‘thing’ but as a social form.‘Sound money’ is a product of society, not of nature.When we say people trust in money we mean that they are trusting in theorganisations, society and authorities that create and circulate it, other people,traders, the banks and the state.Money, whatever its form, is a social construction, not a natural form.
    • Money is more helpfully seen not as a ‘thing’ but as a social form.‘Sound money’ is a product of society, not of nature.When we say people trust in money we mean that they are trusting in theorganisations, society and authorities that create and circulate it, other people,traders, the banks and the state.Money, whatever its form, is a social construction, not a natural form.It has not inherent value but it has vast social and political power. (p.11)
    • Money can only exist within a ‘monetary space’, that is, oneWhere whatever is used as the ‘money of account’ inIngham’s terms, is backed by an authority or code ofHonour of some form.
    • Money can only exist within a ‘monetary space’, that is, oneWhere whatever is used as the ‘money of account’ inIngham’s terms, is backed by an authority or code ofHonour of some form.Money that achieves value through authority is describedAs fiat money.Fiat money is issued by authorities who have the politicalOr social capacity to make demands upon others, as whenMonarchs issued coins.
    • Money can only exist within a ‘monetary space’, that is, oneWhere whatever is used as the ‘money of account’ inIngham’s terms, is backed by an authority or code ofHonour of some form.Money that achieves value through authority is describedAs fiat money.Fiat money is issued by authorities who have the politicalOr social capacity to make demands upon others, as whenMonarchs issued coins.However, the power to issue fiat coins or notes is notUnlimited, as their future value still has to be trusted byThe population.
    • Money can only exist within a ‘monetary space’, that is, oneWhere whatever is used as the ‘money of account’ inIngham’s terms, is backed by an authority or code ofHonour of some form.Money that achieves value through authority is describedAs fiat money.Fiat money is issued by authorities who have the politicalOr social capacity to make demands upon others, as whenMonarchs issued coins.However, the power to issue fiat coins or notes is notUnlimited, as their future value still has to be trusted byThe population.The demands on goods and services made by the issuerCannot be more than the productive capacity of thePopulation can stand.
    • Money can only exist within a ‘monetary space’, that is, oneWhere whatever is used as the ‘money of account’ inIngham’s terms, is backed by an authority or code ofHonour of some form.Money that achieves value through authority is describedAs fiat money.Fiat money is issued by authorities who have the politicalOr social capacity to make demands upon others, as whenMonarchs issued coins.However, the power to issue fiat coins or notes is notUnlimited, as their future value still has to be trusted byThe population.The demands on goods and services made by the issuerCannot be more than the productive capacity of thePopulation can stand.The money system therefore rests on a combination ofAuthority, social trust and economic capacity – public orPrivate. (p.16)
    • III. The state and moneyState theory of money – the link between the issue andCirculation of token money and state taxation.
    • III. The state and moneyState theory of money – the link between the issue andCirculation of token money and state taxation.#The state… demands taxes which have to be paid in theMoney it has already issued and spent. The money is thenReturned via taxes to be issued again and again. TheAuthority of the state rests ultimately on its ability toTax back, and therefore re-circulate, its money. (p.17)
    • Legal tender means that the state will accept a designated form of money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it is presented as payment for goods or debts.
    • Legal tender means that the state will accept a designated form of money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it is presented as payment for goods or debts.In the contemporary money system, state authorised money is seen as ‘high-powered money’.It is the money of final payment within the money system.
    • Legal tender means that the state will accept a designated form of money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it is presented as payment for goods or debts.In the contemporary money system, state authorised money is seen as ‘high-powered money’.It is the money of final payment within the money system.The basis of high-powered money is the capacity of the state to raise taxes and, behind that, the productive capacity of thenational economy. (p.18)
    • IV. Money, society and the ‘real economy
    • IV. Money, society and the ‘real economy- MONEY SYSTEMS AS REPRESENTED IN RENTS, TAXES AND WAGED LABOUR HAVE BEEN IMPOSED ONPEOPLE WHO HAVE BEEN FROM SUBSISTENCE COMMUNITIES AND WHO HAVE BEEN FORCED OFF THELAND.
    • IV. Money, society and the ‘real economy- MONEY SYSTEMS AS REPRESENTED IN RENTS, TAXES AND WAGED LABOUR HAVE BEEN IMPOSED ONPEOPLE WHO HAVE BEEN FROM SUBSISTENCE COMMUNITIES AND WHO HAVE BEEN FORCED OFF THELAND.- AS ECONOMIES BECAME MONETISED, PEASANT POPULATIONS WERE FORCED TO SELL THEIR LABOUR ASLANDS WERE ENCLOSED AND PRIVATISED, AND OFTEN MORTGAGED.
    • IV. Money, society and the ‘real economy- MONEY SYSTEMS AS REPRESENTED IN RENTS, TAXES AND WAGED LABOUR HAVE BEEN IMPOSED ONPEOPLE WHO HAVE BEEN FROM SUBSISTENCE COMMUNITIES AND WHO HAVE BEEN FORCED OFF THELAND.- AS ECONOMIES BECAME MONETISED, PEASANT POPULATIONS WERE FORCED TO SELL THEIR LABOUR ASLANDS WERE ENCLOSED AND PRIVATISED, AND OFTEN MORTGAGED.- FOR THOSE WITHOUT LAND, JOINING THE MONEY ECONOMY MEANT OBTAINING SUSTENANCE THROUGHWAGED LABOUR – THE CIRCULATION AND USE OF COIN FROM THE EARLY MIDDLE AGES ENABLED RICHLANDOWNERS TO EXTRACT MORE FLEXIBLE WEALTH FROM THEIR FEUDAL POPULATIONS. (P.19)
    • - RATHER THAN EXTRACTING PRODUCE OR LABOUR, THEY BEGAN TO DEMANDS MONEY FROM THEIRPEASANT POPULATIONS.
    • - RATHER THAN EXTRACTING PRODUCE OR LABOUR, THEY BEGAN TO DEMANDS MONEY FROM THEIRPEASANT POPULATIONS.- MONEY SYSTEMS ALSO ENABLED THE EMERGENCE OF FINANCE CAPITAL WHICH ENABLEDEXPLOITATION AND THE EXTRACTION OF PROFIT. (P.19)- MONEY CAN BE AN INSTRUMENT OF SPECULATION AND A TOOL OF EMPIRE. - WHILE CONVENTIONAL ECONOMICS AND MUCH OF Marxist theory sees money as being a reflection of the ‘realeconomy’ of production and exchange, social analyses of money see it as being a phenomenon that has its own politicaldynamics.- money cannot be neutral; it is the most powerful of the social technologies. (p.22)
    • The argument of this book is that as money is such a critical force in the circulation of goods and services and thereforeprovisioning, it is vital to question how money is issued and circulated, owned and controlled. From this perspective money ismore than just a reflection of value in the ‘real’ economy. (p.22)
    • The argument of this book is that as money is such a critical force in the circulation of goods and services and thereforeprovisioning, it is vital to question how money is issued and circulated, owned and controlled. From this perspective money ismore than just a reflection of value in the ‘real’ economy. (p.22)The so-called ‘real economy’ – (the economy of capitalist production and exchange) – is in reality an economy determined bycapitalism and by patriarchy. Outside its boundaries lie the natural world and the un-monetised labour and needs of women,children and the poor, as well as non-monetised subsistence economies.
    • The argument of this book is that as money is such a critical force in the circulation of goods and services and thereforeprovisioning, it is vital to question how money is issued and circulated, owned and controlled. From this perspective money ismore than just a reflection of value in the ‘real’ economy. (p.22)The so-called ‘real economy’ – (the economy of capitalist production and exchange) – is in reality an economy determined bycapitalism and by patriarchy. Outside its boundaries lie the natural world and the un-monetised labour and needs of women,children and the poor, as well as non-monetised subsistence economies.It is not a neutral ‘economic’ choice to give something a monetary value, it is in essence a social and political choice thatdominant groups and classes have imposed. (p.23)
    • With the dominance of bank-created ‘debt’ moneythe seigniorage benefit of money to the statedisappears. States are therefore forced into highertaxation or more borrowing from the privatefinancial system.
    • With the dominance of bank-created ‘debt’ moneythe seigniorage benefit of money to the statedisappears. States are therefore forced into highertaxation or more borrowing from the privatefinancial system.However seigniorage has not entirelydisappeared, it has changed location.
    • With the dominance of bank-created ‘debt’ moneythe seigniorage benefit of money to the statedisappears. States are therefore forced into highertaxation or more borrowing from the privatefinancial system.However seigniorage has not entirelydisappeared, it has changed location.Banks can benefit financially as they create newmoney and lend it. Also, those who can makemore money investing or speculating than it coststo borrow money are also exercising seignorage.
    • With the dominance of bank-created ‘debt’ moneythe seigniorage benefit of money to the statedisappears. States are therefore forced into highertaxation or more borrowing from the privatefinancial system.However seigniorage has not entirelydisappeared, it has changed location.Banks can benefit financially as they create newmoney and lend it. Also, those who can makemore money investing or speculating than it coststo borrow money are also exercising seigniorage.The shift to the issue of money through theprivately owned banking system has also removedfrom the public sector any direct control over thedirection of money use
    • With the dominance of bank-created ‘debt’ money the seigniorage benefit of money to the state disappears. States are therefore forced into higher taxation or more borrowing from the private financial system. However seigniorage has not entirely disappeared, it has changed location. Banks can benefit financially as they create new money and lend it. Also, those who can make more money investing or speculating than it costs to borrow money are also exercising seigniorage. The shift to the issue of money through the privately owned banking system has also removed from the public sector any direct control over the direction of money useThis means that those who take on debt are making vital choices about the direction of the economy and, as the financial crisis reveals, those choices canrebound on society as a whole. (pp.25-6)
    • vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bank can lend money they don’t have.
    • vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bank can lend money they don’t have.Money creation is effectively in private hands through commercial decisions in the banking system, while the state retainsresponsibility for managing and supporting the system, as has become clear through the financial crisis.
    • vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bank can lend money they don’t have.Money creation is effectively in private hands through commercial decisions in the banking system, while the state retainsresponsibility for managing and supporting the system, as has become clear through the financial crisis.While society collectively bears ultimate responsibility for the failures of the commercial money creation system, there is nodirect influence on the overall direction od how finance is invested or used.
    • vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bank can lend money they don’t have.Money creation is effectively in private hands through commercial decisions in the banking system, while the state retainsresponsibility for managing and supporting the system, as has become clear through the financial crisis.While society collectively bears ultimate responsibility for the failures of the commercial money creation system, there is nodirect influence on the overall direction od how finance is invested or used.Far from being a social resource, money is currently being mainly created and harnessed by the capitalist sysytem. (p.27)
    • VII. Bank credit and capitalismIngham: ‘the essence of capitalism lies in the elastic creation of money by means of readily transferable debt.’
    • VII. Bank credit and capitalismIngham: ‘the essence of capitalism lies in the elastic creation of money by means of readily transferable debt.’Far from money prior market activities as the barter theorists claimed, it is the prior issuing of bank credit that is essential to bringing profit-seekingactivities into being.
    • VII. Bank credit and capitalismIngham: ‘the essence of capitalism lies in the elastic creation of money by means of readily transferable debt.’Far from money prior market activities as the barter theorists claimed, it is the prior issuing of bank credit that is essential to bringing profit-seekingactivities into being.Ingham: ‘money is socially constructed as a reality in the process of conflict and struggle’
    • VII. Bank credit and capitalismIngham: ‘the essence of capitalism lies in the elastic creation of money by means of readily transferable debt.’Far from money prior market activities as the barter theorists claimed, it is the prior issuing of bank credit that is essential to bringing profit-seekingactivities into being.Ingham: ‘money is socially constructed as a reality in the process of conflict and struggle’This conflict is between those capitalists who hold money and lend it and those productive capitalists who need that finance. The state is also party tothat struggle.
    • VII. Bank credit and capitalismIngham: ‘the essence of capitalism lies in the elastic creation of money by means of readily transferable debt.’Far from money prior market activities as the barter theorists claimed, it is the prior issuing of bank credit that is essential to bringing profit-seekingactivities into being.Ingham: ‘money is socially constructed as a reality in the process of conflict and struggle’This conflict is between those capitalists who hold money and lend it and those productive capitalists who need that finance. The state is also party tothat struggle.The elastic creation of credit-money is based on a ‘hierarchy of debtors’ which is topped by the state’s total liability for the system in its ‘high-poweredmoney’. Without this structure of finance, capitalism cannot operate. In a crisis the state must step in. (p.28)