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Economics for Activists Week Two Rialto 19 June 2013

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What is money?

What is money?

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  • 1. Economics for ActivistsWeek Two – What isMoney?F2 Building, New Fatima, Rialto19 June 2013
  • 2. 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-referenced-articles-from-chapter-one/David Graeber. Debt: The First 5,000 Years. Brooklyn: MelvilleHouse, 2011
  • 3. Far from being a precious commodity that had become readily accepted through tradeas the barter theorists thought, money as coin has generally been accepted by fiat, thatis, issued and guaranteed by an authority, such as a powerful leader, an office-holderor a religious organisation.
  • 4. Far from being a precious commodity that had become readily accepted through tradeas the barter theorists thought, money as coin has generally been accepted by fiat, thatis, issued and guaranteed by an authority, such as a powerful leader, an office-holderor a religious organisation.Making coin out of a precious metal confuses the role of money as a measure of valuewith the value of the coin itself.
  • 5. Far from being a precious commodity that had become readily accepted through tradeas the barter theorists thought, money as coin has generally been accepted by fiat, thatis, issued and guaranteed by an authority, such as a powerful leader, an office-holderor a religious organisation.Making coin out of a precious metal confuses the role of money as a measure of valuewith the value of the coin itself.Gold can change value both as a commodity and as a coin in terms of purchasingpower. Therefore gold/silver as a commodity does not ‘have’ a value. It is valued, butat 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.
  • 6. Money is more helpfully seen not as a ‘thing’ but as a socialform.‘Sound money’ is a product of society, not of nature.
  • 7. Money is more helpfully seen not as a ‘thing’ but as a socialform.‘Sound money’ is a product of society, not of nature.When we say people trust in money we mean that they aretrusting in the organisations, society and authorities that createand circulate it, other people, traders, the banks and the state.
  • 8. Money is more helpfully seen not as a ‘thing’ but as a socialform.‘Sound money’ is a product of society, not of nature.When we say people trust in money we mean that they aretrusting in the organisations, society and authorities that createand circulate it, other people, traders, the banks and the state.Money, whatever its form, is a social construction, not a naturalform.
  • 9. Money is more helpfully seen not as a ‘thing’ but as a socialform.‘Sound money’ is a product of society, not of nature.When we say people trust in money we mean that they aretrusting in the organisations, society and authorities that createand circulate it, other people, traders, the banks and the state.Money, whatever its form, is a social construction, not a naturalform.It has not inherent value but it has vast social and politicalpower. (p.11)
  • 10. money rests upon a social and political base, acombination of social conventions, bankingsystems, public trust and state authority.
  • 11. [In monetary economics textbooks]money circulation through thefinancial system is seen as theoutcome of private economic acts,not as a function of socialrelationships and public authority. P.2
  • 12. Legal tender means that the state will accept a designated formof money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it ispresented as payment for goods or debts.
  • 13. Legal tender means that the state will accept a designated formof money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it ispresented as payment for goods or debts.In the contemporary money system, state authorised money isseen as ‘high-powered money’.
  • 14. Legal tender means that the state will accept a designated formof money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it ispresented as payment for goods or debts.In the contemporary money system, state authorised money isseen as ‘high-powered money’.It is the money of final payment within the money system.
  • 15. Legal tender means that the state will accept a designated formof money in payment of taxes and the state also demands thateveryone else has to honour that form of money when it ispresented as payment for goods or debts.In the contemporary money system, state authorised money isseen 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 toraise taxes and, behind that, the productive capacity of thenational economy. (p.18)
  • 16. IV. Money, society and the ‘real economy- MONEY SYSTEMS AS REPRESENTED IN RENTS, TAXES AND WAGEDLABOUR HAVE BEEN IMPOSED ON PEOPLE WHO HAVE BEEN FROMSUBSISTENCE COMMUNITIES AND WHO HAVE BEEN FORCED OFF THELAND.
  • 17. IV. Money, society and the ‘real economy- MONEY SYSTEMS AS REPRESENTED IN RENTS, TAXES AND WAGEDLABOUR HAVE BEEN IMPOSED ON PEOPLE WHO HAVE BEEN FROMSUBSISTENCE COMMUNITIES AND WHO HAVE BEEN FORCED OFF THELAND.- AS ECONOMIES BECAME MONETISED, PEASANT POPULATIONS WEREFORCED TO SELL THEIR LABOUR AS LANDS WERE ENCLOSED ANDPRIVATISED, AND OFTEN MORTGAGED.
  • 18. IV. Money, society and the ‘real economy- MONEY SYSTEMS AS REPRESENTED IN RENTS, TAXES AND WAGEDLABOUR HAVE BEEN IMPOSED ON PEOPLE WHO HAVE BEEN FROMSUBSISTENCE COMMUNITIES AND WHO HAVE BEEN FORCED OFF THELAND.- AS ECONOMIES BECAME MONETISED, PEASANT POPULATIONS WEREFORCED TO SELL THEIR LABOUR AS LANDS WERE ENCLOSED ANDPRIVATISED, AND OFTEN MORTGAGED.- FOR THOSE WITHOUT LAND, JOINING THE MONEY ECONOMYMEANT OBTAINING SUSTENANCE THROUGH WAGED LABOUR – THECIRCULATION AND USE OF COIN FROM THE EARLY MIDDLE AGESENABLED RICH LANDOWNERS TO EXTRACT MORE FLEXIBLE WEALTHFROM THEIR FEUDAL POPULATIONS. (P.19)
  • 19. - Rather than extracting produce or labour, they began to demandsmoney from their peasant populations.- Money systems also enabled the emergence of finance capital whichenabled exploitation and the extraction of profit. (P.19)
  • 20. - Rather than extracting produce or labour, they began to demandsmoney from their peasant populations.- Money systems also enabled the emergence of finance capital whichenabled exploitation and the extraction of profit. (P.19)- Money can be an instrument of speculation and a tool of empire.
  • 21. - Rather than extracting produce or labour, they began to demandsmoney from their peasant populations.- Money systems also enabled the emergence of finance capital whichenabled exploitation and the extraction of profit. (P.19)- Money can be an instrument of speculation and a tool of empire.- Which conventional economics and much of marxist theory seesmoney as being a reflection of the ‘real economy’ of production andexchange, social analyses of money see it as being a phenomenon thathas its own political dynamics.
  • 22. - Rather than extracting produce or labour, they began to demandsmoney from their peasant populations.- Money systems also enabled the emergence of finance capital whichenabled exploitation and the extraction of profit. (P.19)- Money can be an instrument of speculation and a tool of empire.- Which conventional economics and much of marxist theory seesmoney as being a reflection of the ‘real economy’ of production andexchange, social analyses of money see it as being a phenomenon thathas its own political dynamics.- Money cannot be neutral; it is the most powerful of the socialtechnologies. (P.22)
  • 23. The argument of this book is that as money is such a criticalforce in the circulation of goods and services and thereforeprovisioning, it is vital to question how money is issued andcirculated, owned and controlled. From this perspective moneyis more than just a reflection of value in the ‘real’ economy.(p.22)
  • 24. The argument of this book is that as money is such a criticalforce in the circulation of goods and services and thereforeprovisioning, it is vital to question how money is issued andcirculated, owned and controlled. From this perspective moneyis more than just a reflection of value in the ‘real’ economy.(p.22)The so-called ‘real economy’ – (the economy of capitalistproduction and exchange) – is in reality an economy determinedby capitalism and by patriarchy. Outside its boundaries lie thenatural world and the un-monetised labour and needs of women,children and the poor, as well as non-monetised subsistenceeconomies.
  • 25. vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bankcan lend money they don’t have.
  • 26. vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bankcan lend money they don’t have.Money creation is effectively in private hands through commercial decisions in thebanking system, while the state retains responsibility for managing and supportingthe system, as has become clear through the financial crisis.
  • 27. vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bankcan lend money they don’t have.Money creation is effectively in private hands through commercial decisions in thebanking system, while the state retains responsibility for managing and supportingthe system, as has become clear through the financial crisis.While society collectively bears ultimate responsibility for the failures of thecommercial money creation system, there is no direct influence on the overalldirection od how finance is invested or used.
  • 28. vi. Bank credit and fresh air moneyThe most important aspect of the shift to money issue through bank debt is that bankcan lend money they don’t have.Money creation is effectively in private hands through commercial decisions in thebanking system, while the state retains responsibility for managing and supportingthe system, as has become clear through the financial crisis.While society collectively bears ultimate responsibility for the failures of thecommercial money creation system, there is no direct influence on the overalldirection od how finance is invested or used.Far from being a social resource, money is currently being mainly created andharnessed by the capitalist sysytem. (p.27)