MARTIJN KONINGS: Hi, everyone.
Welcome to this panel on "The
Public and Its Money Problems."
Let me start off by
introducing the speakers.
To my right here
is Perry Mehrling,
teaching at Boston
University, then
Eli Cook from the
University of Haifa, then
Quinn Slobodian, who teaches
at Wellesley College,
and Antara Haldar, who teaches
at Cambridge in England
and is visiting here at Harvard.
I am Martijn
Konings, and I teach
at the University of Sydney.
I'll both be contributing to
the panel and chairing it.
We'll all speak for
about 15 minutes.
And I'll start off.
PERRY MEHRLING: OK,
so can you hear?
Can you all hear?
Yeah, it's good.
AUDIENCE: A little closer.
AUDIENCE: Be careful
of that water.
MARTIJN KONINGS: OK,
sure, yeah, no worries.
PERRY MEHRLING: Great.
MARTIJN KONINGS: So
the title of the panel
is a variation on
John Dewey's 1927
book on The Public
and Its Problems,
which he wrote in
response to the way
Walter Lippmann had disparaged
the critical self-organizing
capacities of the
American public
through books like
The Phantom Public.
So although Dewey's book
did not deal with money,
it was written against the
background of the growing
financial volatility
that progressives
viewed as one of
the key problems
of modern economic organization.
Today, we could say we face
somewhat similar circumstances,
growing political
turmoil that is connected
to the financial
logic of capitalism
in ways that are both
unclear and undeniable.
Intellectually, it
seems more and more
difficult to maintain
the neutrality postulate
as key a point of reference.
Thinking about
money as something
that is supposed to
facilitate market efficiency
and that needs to be
managed by technocrats
just doesn't get us very far.
So as it is less
and less tenable
for progressive analyses
to evade questions
of money and
finance, the question
is increasingly,
what forms should
such politicization can--
should it take?
And among the more
prominent perspectives
to have emerged in recent
years is a neo-chartalism
that emphasizes the
role of public authority
in the production of money
and is interested in ways
to institutionalize that role in
more democratic and progressive
ways.
And I think it's
important to appreciate
that this theoretical
position reflects a wider
movement of thought
that includes currents
of radical sentiment of the,
let's say, the Bernie Sanders
flank of the
Democratic Party, also
the notion of a public
jobs guarantee, which
is being debated right
now in a parallel session.
So most of the
contributors on this panel
are sympathetic to the
general idea of chartalism
but remain at some distance
from its stronger implication.
So the panel really
follows the chartalist lead
in fore-grounding the
question of the relationship
between money and the
public while exploring
this connection through a
number of different lenses.
The central idea
of chartalism is
that money is
essentially a product
of public
institutional processes
and that to think of it as a
thing that can be privately
owned is to fetishize it.
Money consists of promises and
conventions made by people.
And as such, it can
be repurposed to serve
people rather than banks.
If money has an anchor,
it's political authority,
the state's power
to tax its citizens.
Now, of course,
chartalists would readily
concede that such fetishization
or reification involves more
than an intellectual mistake.
There are all kinds of
social and political
and ideological reasons
for why we might be
mistaking the nature of money.
But the argument is nonetheless
that the most problematic
policies of the
current neoliberal era
are premised on the
misunderstanding
of the basic ontological
structure of money.
So for instance, the
obsession with deficits
is seen to be bound
up with the inability
to realize that money is
an accounting convention
and with the mistaken
idea that there is a money
anchor somewhere out
there, for instance,
a metallic substance,
that would kind of tether
the logic of credit and debt.
I think it's useful to see that
this chartalist case involves
two quite separate claims--
first, that money is a symbol
or a convention, and secondly,
that it is a public institution.
Of course, any
symbol or convention
has some publicness in the
sense that an understanding
of its meaning needs to
be shared among at least
some different actors.
But this is quite
different from saying
that it was deliberately created
by a political community.
So there is something
of a leap here.
The first point
about conventionality
does not entail the second point
about the public institution.
And in fact, one of the
more prominent developments
of the contemporary era involves
the globalization trends
that mean precisely
a growing disconnect
between those two dimensions.
Then again, in some
important ways,
has reinforced rather
than simply undermined
the connection between
money and sovereignty.
So the ability of the US state
to incur debts and deficits
and fund deficits to
the extent that it has
has, in critical ways, been
dependent on the global role
of the dollar, which has
been built on globalization
processes that at the
time of their occurrence
were often seen as very highly
problematic from the standpoint
of national sovereignty.
It's also worth noting
that a tension runs
through the chartalist critique
of orthodox conceptions
of money.
On the one hand, it argues that
we should not think about money
as purely a market phenomenon.
On the other hand, it rejects
the idea of money as exogenous.
So in terms of debates about
endogeneity and exogeneity,
it's not entirely
clear where it sits.
It emphasizes the historical
origins of money in banking
and also recognizes
that the formation
of national currencies occurred
as part of a process whereby
central banking
emerged or were created
to manage the instabilities
that emanated from this process
and also the way this
was linked to the growth
of fiscal capacities.
But then it also thinks of money
as purely a public commitment
in a way that kind of
brackets all these processes.
So it sees the
publicness of money
as more or less transcending or
superseding the private logics
through which it emerged.
The key point that I think
isn't sufficiently appreciated
here is that money is
essentially hybrid,
simultaneously
public and private,
and that it is probably
more important to analyze
the sometimes paradoxical
logics at work
there than to try to decide the
issue in favor of either side,
public or private.
So one way of putting it
is that chartalism bypasses
the processes whereby things
become public, whereby things
become institutional facts.
Money is a hierarchical
structure of promises.
And what sometimes
appears as kind
of arbitrary self-referential
power to issue money
is actually built on a very
complex infrastructure that
generates certain standards.
And that is the truth
in Minsky's point, which
we've heard a few times
already during this conference,
and Minsky's point is that
it's easy to issue a promise
and that the hard part is to
get it to circulate and to be
accepted, for it to
become used as a measure
rather than something
that needs to be measured.
And I think that taking
that issuing power back
democratically
requires an engagement
with the pragmatics of these
processes, the logistics
of investment and payment.
And I feel there's a certain
politics of measurement
and valuation here,
a politics that
has to do with what
counts as what,
that isn't being
sufficiently explored.
So for instance, when we
tried to conceptualize
the way in which the value of
money as a measure is changing,
why do we still not include
the costs of housing,
which is becoming more
and more of an issue
for an entire
generation, and I feel
will become a real faultline
for political conflict
over the next couple of decades?
This is an issue of how
measures and conventions
work that is really
ripe for contestation
and politicization.
So it's not enough to save
that money is a convention.
We need to refocus on
how conventions work,
how investments and promises
interact and evolve over time.
A key resource,
I feel, will have
to be a rereading of the
legacy of Hyman Minsky.
And that is something I
develop in my recent book
Capital and Time, and it's
indebted to Perry's Mehrling's
reading of Minsky and
his place in the history
of financial and
economic thought.
And this version of
Minsky isn't primarily
a critic of overindebtedness
or of speculation.
He's an analyst of how
balance sheets interlock
and the kind of financial
flows and dynamics
that this gives rise to.
A key here is the
role of liquidity,
which Minsky realized
very well wasn't
some kind of pathological
fetish, which
is how Keynes often saw it.
It's that it's a
means of survival.
It conditions one's ability to
hold assets and one's ability
to stay in the game.
In order to become an economic
unit with a flexible survival
constraint, people need
to be willing to keep
their funds invested in
you, to keep you liquid.
Some states do have a uniquely
flexible survival constraint.
And this is in part related to
their capacity for taxation,
but it's not a universal
feature and a fact
that is at the heart of
several decades of IMF policy.
So we might see chartalism as an
attempt at making money public.
But it remains a somewhat
self-referential one,
namely one that consists
primarily in declaring
that money is political.
Such reminders about money's
conventional and constructed
nature can only ever be a
starting point, I think.
And this is something that John
Dewey understood very well.
There is no ready-made public,
no ready-made publicness.
The public only lives in
them through its issues.
It constitutes
itself as a public
through engaging specific
problems that bug it.
And for that reason,
reengaging with
early progressive
pragmatist ways of thinking
seems particularly appropriate.
Now, of course,
people are already
doing that to some extent.
But what seems to escape
these efforts time
and again is that a key
weakness of early progressivism
has always been its neglect of
questions of money and finance,
which was reflected
in the way pragmatism
and progressivism
in political thought
became divorced from
economic institutionalism
and economic theory
and the way this then
resulted in the
version of Keynesianism
that abstracted entirely from
the mechanisms through which
money is produced.
And the way in which
progressivism so often
declined to engage the
mechanisms of credit
and finance has no doubt been
one main reason why they're
so often given in
to managerialism
and has been unable to actualize
the spirit of pragmatism
as a living philosophy
for democracy, which
Dewey thought it could be.
So the politics-economics
disconnect
prevented a more
sustained engagement
with the conditions under which
a public or perhaps plural
publics might be
able to flourish.
So while Dewey's
critique of Lippman
was convincing in
philosophical terms,
from a present
day point of view,
it might be tempting
to think that Lippman's
managerial progressivism
was more in touch
with the pulse and the
direction of history.
And it is, of course, this
particular technocratic course
that the progressive project
took that would eventually
provide such fertile
ground for the emergence
of a neoliberal
politics of money.
And neoliberalism
should really be
seen as a specific politics
of finance that is not simply
the result of a misunderstanding
of the nature of money.
In my own work, I've written
about the ways monetarism
was never just like an
obscure technical philosophy,
but it really reflects
an imaginary of money
that had a great deal
of popular traction.
The idea of quantity targeting
had considerable support,
which is precisely
why it was such
a convenient avenue for
imposing restrictive policies.
And I think this
speaks to the fact
that the idea of a [INAUDIBLE]
or of an objective or even
a natural metallic anchor
for the issue of currency
tends to be seen as a key
way to prevent or counteract
the corruption of
the market, a way
to restore the
neutrality of the market.
This means that the idea
of market neutrality
has significant
mobilizing capacity.
It's not a simple intellectual
mistake or a naive idea.
It speaks to a distinctly
republican, lower case
r, distinctly republican
image of the markets.
The market is a bulwark
against concentrations
of power and wealth.
And it is, of course, precisely
these republican credentials
of capitalism and
liberalism that chartalism
aims to recover.
But I think we should be more
keenly aware that neoliberalism
already operates on this
terrain, often to great effect.
And we should be aware that
re-appropriating that sort
of republican legacy
is not straightforward.
When it comes to the
intellectual contribution
to that kind of
project we can make,
I think we could do a
lot worse than returning
to the insights of early
progressivism and pragmatism
but this time paying
very close attention
to the nuts and bolts
of money and finance.
Thank you.
PERRY MEHRLING: So I'm next?
MARTIJN KONINGS: Yeah.
And we're just
going down the line.
[SIDE CONVERSATION]
PERRY MEHRLING: Maybe I
should move this here.
So thank you, Martijn,
for organizing this.
I didn't do anything
except write this.
And you'll see some parallels,
but they're completely
invisible hand parallels.
We have not coordinated.
So I have two mean analytical
points that I want to bring.
But let me just, by way of
introduction, start with a few
simpler points, which
is first to insist
that as a matter of just
history that money has always
been parallel, that there
have been state origins,
and there have been
private origins.
These are just three books
that have influenced me.
And we could conceivably
think of the state's
getting its power to issue
money through coercion--
this is taking from
Charles Tilly--
and that the market and
merchants through their profit
making, or if we want to
be more political about it,
their exploitation.
But in both cases, here's
the economic point.
The ability to issue
money comes from something
about your action in society
that causes a regular cash
flow in your
direction, which means
that your IOUs come
back to you, which
means that they are money-like.
OK, so this is the point,
that there has always
been multiple sources.
And sometimes that's
the fascinating thing
about history.
We heard yesterday in
this one on empire,
multiple money circulating
at the same time
and there's an exchange
rate between them,
and they're distinct.
What makes this hybridity
difficult to see today
is that usually these
are not distinct,
that they trade at
par, and you mistake
what is private money,
what is public money, which
one is fundamental,
which one is derivative.
And so you have a
lot of arguments
that actually can be
resolved by just saying,
it is inherently hybrid.
OK, and let's understand
that hybridity.
It has multiple sources and
multiple reinforcing sources
of power.
This is now another,
which may be
more controversial
for this group,
is to insist that
this hybridity, there
is another nature of this
that's very important today,
which is the state
money is national money
and that the private
money is global money.
And that is what gives
the private money a lot
more clout today than it
had in previous times.
Here are just two
quotes that I pull out
of the work I'm doing right
now from the last time
the international
system collapsed.
OK, here's John H. Williams
in the failed 1933 London
Conference, trying to
put the International
Conference together,
in which he's
criticizing the British mainly.
"Monetary nationalism is the
worst kind of nationalism."
And to some extent,
we can talk about it
in discussion maybe
chartalism seems
to be monetary nationalism.
OK, and so that is one side.
But there is a global
feature to this as well.
And 10 years later, we have
Charlie Kindelberger suggesting
an International New Deal.
In order to get
capitalism going again,
we need to develop
basically the Global South,
and the private capital flows
are not going to do that.
We need public capital
flows for that.
And I think that
global imaginary
is on the table today
in things like climate
change and migration control.
And so limiting ourselves to
the power of the nation state
is problematic.
Here's why we're here.
The crisis of legitimacy
of the monetary system
is a crisis of legitimacy
of the central bank.
It was mentioned
earlier today this book
by Paul Tucker, Unelected
Power, himself a central banker
at the Bank of England.
But I think that
the scene he's just
expressing in central
banker's language
the same thing that we
get from the MMT movement,
from Positive Money,
from Vollgeld,
that there's a number of
manifestations of this crisis
of central bank legitimacy.
And here-- I am not even
looking at my notes.
Maybe I'll just remind myself.
OK, we will come back to this.
Here is now the
analytical points.
What's the fuss about?
OK, the fuss, I think, is
about the alchemical quality
of banking.
OK, and here, I would
just remind you.
I thanked you, Bob,
this morning for talking
about the nature of
the essential banking
transaction, which
is a swap of values
in which a
non-transferable IOU is
swapped for a transferable IOU.
And that's what I'm showing
here, that the transferable IOU
is the deposit of the bank.
The non-transferable
one is the mortgage that
is issued to the household.
Each of us say to each other,
I owe you a million dollars.
I'm sorry.
I'm from Manhattan.
And accept that
the bank's promise
lets me buy a house
with it, a very, very
small house in Manhattan.
Anyone can issue an IOU.
This is what Minsky
was trying to say.
If he had used
balance sheets, it
could have been a
little more helpful.
But this is what
he's trying to say.
The promise to get it accepted,
that's what banking is doing.
It's accepting non-bank IOUs.
And here's a thing that I
think we should underline,
because we keep beating this
dead horse of the barter thing.
OK, there's no barter here.
OK, this is creation
of something
from nothing, access
to social resources
without providing
any social resources.
That's what it is.
There's no previous saving.
There's no previous earning.
It is access.
And that is alchemical, OK?
And that is contested terrain.
Everyone wants this.
OK, in particular, the state
wants it and in times of war
grabs it and takes it
entirely onto its own control.
And that's what I'm
showing you here,
the state issuing a T-bill
to the private banking system
and getting money
for using it to buy
war goods to beat the war.
This, in fact, is mainly how
the Civil War was financed.
OK, the greenbacks
came in at the end
when the banking
system said, you've
screwed us in too many times.
We're not going to
do this anymore.
OK, that's when the state
issued the greenbacks.
But most wars are financed
through issuing bonds.
If you can't issue
bonds, borrowing
from banks in this
particular way
where you're expanding the
balance sheet on both sides
and then maybe contracting
back at the end of the war.
At the end of the war, the
private sector takes over.
And then so I'm just showing.
These are ideal types here
where the private sector
is using the banking
system basically
for economic development,
for capital development,
for investment, and so forth.
So the private
sector wants this.
And the state sector wants this.
This is a hybrid system.
And so I'm showing you
two pieces of this hybrid.
Of course, it's also true
that within the state sector,
all little bits of
the state sector
want this, and all little
bits of the private sector.
The households want this.
The businesses want this.
Everyone wants access to
this alchemical quality.
And so how does this
all get resolved?
And who gets access?
It has consequences.
This is the third bullet point,
that spending creates income,
creates wealth, creates
development, or it doesn't.
So there are social
consequences of who gets it.
It's not just
about distribution.
OK, it is about
distribution, but it's
also about macroeconomics.
It's about it's about growth.
So here's the second
analytical point.
Sometimes this talk
about the ability
to just create
something from nothing
makes it seem as if
this alchemy is actually
turning lead into gold,
that it's a free lunch, OK?
And well, let's unpack that.
OK, in some ways, it
could be a free lunch
but in some ways not.
What is the issue here?
The issue is whether
this new money that
is issued in order to enable
me to buy my little apartment
stays in circulation or not.
OK, that is to say,
when I spend it,
what does the person
who gets it do with it?
And does it go out
of circulation, which
is what I call credit funding?
And I'm showing one
thing that could happen
is that that deposit, he
uses that deposit to buy
a mortgage-backed security.
In which case, the bank that
expanded its balance sheet just
contracts its balance
sheet back down again.
And we're right back where
we started with a greater
amount of credit in
the system but no more
money in the system.
Or maybe society
wants this money.
Maybe something
about this spending
happened to create income,
and therefore, greater demand
for money.
And so there's a
permanent increase
in the amount of money.
So there's another
contestation here.
Whose borrowing is
funded with money issue?
And who has to
bid for the funds?
Who has to pay an
interest in order to get--
whose borrowing
is funded by issue
of money which therefore might
conceivably be lower rate?
And whose is not?
Of course, in wartime, the
government controls all of this
and controls all the interest
rates but in peacetime not so.
It's another place where
there's contested terrain, where
there's politics.
Just to be clear, when
I say contested terrain,
that's what I mean.
This is about private versus
public, war versus peace.
And so now we can understand
this crisis of legitimacy
a little bit more.
What I'm showing in the top
line in this balance sheet
is the shadow banking system, a
structured investment vehicle.
What is shadow banking?
I define it as
money market funding
of capital market lending.
And you can see that in the
top of the balance sheet.
The money market funding
is over in the right here.
The deposits of the
money market mutual fund
are funding, through
asset-backed commercial paper,
the holding of a
mortgage-backed security.
OK, this is how
shadow banking works.
There are lots of varieties
of this, but this is the idea.
All this stuff came to
an end when the sieves
were unable to
roll their funding,
this asset-backed
commercial paper.
And eventually, what happened
is that all of this stuff
wound up on the balance
sheet of the Fed,
which I'm showing you there,
the central bank, which
is doing money market funding
of capital market lending.
It's issuing reserves
to finance its holding
of mortgage-backed securities.
OK, there are three
dimensions of this dealer
of last resort aspect.
One is, in the process,
it's solving the liquidity
problem of the money
market mutual fund, which
there may be run on it.
And there were runs
on some of these.
It's solving the liquidity
problem of the sieve.
It's solving the problem of
the funding of these things.
It's ultimately buying these.
So there's three levels
in the market system
at which the central
bank is intervening.
And in doing so, it
sort of saved the bacon
of the financial system, OK?
It put a floor on the
financial equilibrium.
But it created a big
political disequilibrium.
As I say, this is
contested terrain.
And this little
piece of action here
is the most contested
terrain that there is.
And this action was taken
without asking anybody.
OK, not exactly
right, the Fed was
extremely reluctant to do this.
I think this is
important to say.
They knew there was
hell to pay here.
And they said, we are able
to do anything we want
under exigent circumstances.
So they waited until they
could say, you know what?
Exigent circumstance, OK, we
will pull out our trump card,
and then we will do it.
As a consequence, they
had to do more than
if they had acted earlier.
OK, so this is another political
problem, that we're in this fix
partly because we don't
trust the central banks.
And so we say, you
can't act until there's
exigent circumstances.
As a consequence, they don't
act until it's too late.
And now we don't
trust them at all.
So here, this is the
second to last slide.
The political economy of
hybridity-- the central banks
are at the heart of all of this.
We've heard a couple of
calls for democratizing
the central bank.
I think it's right to view
the central bank as the very
central locus of this problem.
OK, but that requires
understanding exactly what
is the central bank.
I say the monetary
system is hybrid.
I want to insist here that
the central bank is hybrid.
Central banks are government
banks, certainly in wartime.
OK, and they're bankers'
banks, certainly in peacetime.
But in general, they're both.
They're hybrid institutions.
They are the issuer of the
ultimate means of payment,
at least domestically.
And as such, they are
the ultimate arbiter
of this key contested terrain.
Who gets access to the
alchemy of banking?
Ordinary banks do the
alchemy of banking.
Let's be clear.
This isn't something
only central banks do.
But the central bank alchemy
is that of another order
entirely above that.
They can legitimize.
They can bless all the alchemy
that the banks below them do.
That's what it means to
be a bankers' bank or not.
They can bless these
alchemy of a government
that's trying to do--
or not.
OK, or not-- that is
enormous political decision
and which is why
central banks want
to hide behind technical rules.
We don't do this.
We control interest rates.
We do inflation targeting.
OK, and that's the veil
that allows this process
to work without shooting.
In a crisis, this veil
gets ripped apart.
That's what we just saw.
They're not hiding behind it.
You put that on your
own balance sheet.
This isn't about--
we're removed.
We're just controlling
the interest rate.
Everyone is paying
the same interest,
or there's a credit
spread or whatever.
You chose these assets.
You bought these assets.
You put them on
your balance sheet.
It became very, very visible.
So here's my lesson.
The central problem in
a hybrid monetary system
is managing that hybridity.
It is that it is a
hybrid system, But.
It's inconstant that it's
not as if there's agreement,
like this is my side,
and this is your side.
Everyone is saying,
here's what I want--
elasticity of credit for me,
discipline of money for you,
OK?
And everyone is saying that.
Everyone is saying that.
Private sector is saying
that to the government.
Everyone is saying that.
How does that thing
get arbitrated?
What are the mechanisms of this?
That's a lot of what the
financial system is about is
about arbitrating that.
And the ultimate arbiter
is the central bank.
And that's why it's
such a fraught problem.
Today, though-- and this is
the last point I'll make--
we need to appreciate that
this is a global system.
That same hybridity,
that same arbitration,
that same elasticity
and discipline,
that same contested
terrain is global.
OK, and the public problems
we face are global.
That global system
is what needs to be
harnessed for the public
problems of today.
What is the demos?
Democratic medium, it's an
international demos, not
a national demos.
And that makes our
problem a lot harder.
Thank you.
[APPLAUSE]
[SIDE CONVERSATION]
ELI COOK: So it's truly an honor
to be here amongst colleagues
and also many of my teachers.
And I'm going to begin
in the most shameless way
possible with a slide of my
own book, but I have a reason.
Oh, boy, two computers
here is tricky.
There we go.
So after my book
came out last year,
I was interviewed
by TheMarker, which
is the Israeli equivalent of
the Financial Times or the Wall
Street Journal.
Tracing the origins
of our GDP-run world,
my book examines
how Americans came
to measure human welfare
and social success in units
of money.
In the book, I argue that
this pricing of progress
emerged out of the
rise of capitalism,
and more specifically,
the imagining
of everyday life as a series
of capitalized investments.
It was this capitalizing
investmentality, I contended,
which eventually led
Americans to calculate
the overall value of their
society in accordance
to how much annual
income it could generate.
During the interview,
I tried to explain
to the kind yet
bewildered journalist
the possible downside
of such a world view.
One of the basic problems
in a capitalist society,
I noted at one point,
was that resources
are allocated in order to
maximize monetary gains,
even though such allocation
decisions often do not
reflect the best
investments for maximizing
the actual well-being
and welfare of people.
The day after the
interview was published,
I received a
surprise phone call.
It was from Israel Eliahu,
CEO of Migdal Capital Markets.
Eliahu was one of those
powerful people in Israel.
Migdal is the largest insurance
and financial conglomerate
in the country, and Eliahu
oversees the allocation
of $8 billion, mostly from
middle class Israeli pensions
including my own.
[LAUGHTER]
Yeah, I had to play nice.
Eliahu had read the
interview and wanted to meet.
He asked me to
come to his office.
So a few days later, I took the
elevator up to the top floor
of-- you guessed it--
Eliahu Tower, where I met
a 40-something year old man
with white teeth and
a strong handshake.
I had no idea what
I was doing there.
But then Eliahu began to
talk, quite frankly, in fact.
You're right, he said.
A lot of our capital is
in Warsaw shopping malls
and other Eastern European
real estate assets.
While they earn the best
return, such investments
do very little to
improve Israeli lives.
I'd like to bring some
of that money home
to put it to work creating,
quote-- this is his words--
"real value."
But I can't.
The returns would be lower.
I'd be reneging on
my fiduciary duty.
And my investors would
leave for competitors.
Yes, I nodded.
This is how capitalism
usually works.
But then Eliahu smiled.
He went on to tell me
a very elaborate plan
he had begun to put into
motion with the help
of some rich and
powerful friends
in the public and
private sector.
The Israeli government would
set certain quantifiable social
goals such as
cutting traffic jams,
decreasing Arab unemployment,
or reducing stress levels.
They would then link
these benchmarks
to monetary payments.
For every tenth of a percentage
point a for-profit company
reduced Arab unemployment
or Tel Aviv traffic,
the government would pay said
company a hefty sum of money.
Eliahu ended by noting that
if the government did this,
he could shift a
good deal of capital
to these local for-profit
companies, thus
not only earning a healthy
return for investors
but also making Israel
a better place to live.
When I asked him how the
government would determine
these social benchmarks,
he mumbled something
about professional economists,
and quote, "people like you."
[LAUGHTER]
I don't think he knew who I was.
[LAUGHTER]
Nothing ever came
of this meeting.
In my eyes, behind Eliahu's
seemingly benevolent concerns
lay convenient, and
as Quinn can tell us,
almost textbook
neoliberal strategy
in which a technocratic
government would foster
a profit-friendly environment
for capital investors,
thus essentially
funneling public spending
into private pockets.
But as I prepared for this
panel and I was challenged--
and thank you, Martijn,
for organizing this--
to think critically
about Modern Monetary
Theory and the
democratizing of money,
I kept recalling this meeting.
It kept coming back to me.
For despite his clear financial
interest and utter disregard
for democratic processes,
Eliahu was doing something
that I do not think has received
enough attention from the MMT
crowd.
He was questioning the very
link between value and money
and then imagining a
state apparatus that
could better align the two.
Eliahu, of course,
is not alone today
in distinguishing money values
from, quote, "real values."
Many of us humans
of late capitalism
have a nagging sensation
that market prices do not
do a very good job reflecting
value or our values.
Health care is too expensive.
Coal is too cheap.
Nurses are too poor.
Hedge fund managers
are too rich.
And to be clear, this is not
just a private sector problem.
Here is a map of
the highest paid
public officials in every
state in the United States.
It's football and
basketball coaches.
I am an historian of
American capitalism.
I am not an expert
on money or MMT.
Yet from my novice
viewpoint, it appears to me
that until now, mainstream
MMT has had relatively little
to say about how we
could democratize
not only the
creation of currency
but the very valuation
mechanisms through which this
made money, once
injected into society,
is allocated, divided,
spent, and distributed.
This is a shame, because
I think MMT supplies us
with exciting new
opportunities to rethink
the very essence of value and
its relationship to money.
Through a very brief
history of economic theories
of value these past
150 years or so,
I'll try and quickly develop
a historical perspective
to frame MMT as a potential
path down a new more
egalitarian and democratic
form of economic valuation,
one in which prices
are determined
not only by objective labor or
subjective desire but rather
the one person, one
vote will of the people.
For most of human
history, people
did not think that prices were
a particularly useful measure
of social value.
William Petty, father
of political arithmetic,
was echoing what
much of mankind had
assumed for millennia when he
noted in the mid-17th century
that market prices were,
quote, "often accidental,
casual, extrinsic,"
and quote, "according
to the bargains which a few
men make one with another
through ignorance, haste,
false suggestion, or else
in their passion or drink."
Yet it was the same
Petty who would then
go on to initiate an
intellectual shift that
would challenge humanity's
skeptical approach to money's
evaluative powers.
Desperate to employ his
political arithmetic in order
to empirically measure the
economy through, quote,
"number, weight, and
measure," Petty tried
to invent other units of value.
But it was too cumbersome.
Prices, on the other hand, were
popping up nearly everywhere
by this early modern era.
If only Petty could use money as
his measure of objective value,
he could really begin
to advance his Baconian
agenda into the economic realm.
At last, the temptation
got the best of him.
In a groundbreaking
article in 1662,
Petty told one of the
first modern stories--
today, it would probably
be called a model--
linking money to value.
In describing how
bushels of English wheat
could be equated to coins
of South American silver
through the labor time and cost
it took to respectively grow
and mine each, Petty
created the labor theory
of value, which would
remain at the cornerstone
of Western economic thought
until the late-19th century.
The labor theory of value
has had its benefits.
Ironically, because
it was invented
in an era when laborers
were not democratic citizens
or seen as a major
political threat,
most classical economists
from Petty to Smith to Ricardo
were refreshingly
honest about the belief
that labor created value.
Yet not all of that value flowed
to the laborers themselves,
but rather much of it
ended up in the hands
of those who owned the
means of production,
be they capitalists,
entrepreneurs, or [INAUDIBLE]..
By claiming that
the value of goods
was based on the objective
labor that went into them
and that profits and rents
flowed from this labor
fund in accordance to
institutional arrangements
and property rights, the
labor theory of value
could, by the mid-19th
century, be easily co-opted
by the rising mass of
proletariat workers
and reframed in
poignant class terms
as damning evidence of
capitalist exploitation.
But while the labor theory was
useful in politicizing value,
it usually did not lead to
a democratizing of value.
At its core, it was
not the principle
that value should be
collectively determined
by egalitarian institutions
and democratic processes
but rather that
it was objectively
set by the physical
or mental labor
activities of individuals.
This individualization
of value--
and we must remember that
the labor theory of value
was born as a liberal
invention, not a socialist one--
was often used to
legitimize private property,
European colonialism, and
the general status quo.
Even today, at the very core of
neoclassical labor economics,
lies essentially a labor theory
of value reframed as the law
of marginal productivity.
According to this law,
each worker's wages
is determined by
their productivity.
As such, everybody
earns what they deserve.
Everybody's net worth is
also their self-worth.
Socialists, of course,
tried to get over
the individualized nature
of this labor theory.
They recognized that commodities
were social creations,
and it was almost impossible to
segregate one's congealed labor
efforts from another.
But while Marx and
his followers would
attempt to solve these
liberal contradictions
with complex, abstract notions
of average socially necessary
labor time, my sense is that
the labor theory of value
often works best as
a political tool,
and hence its long
lasting popularity
in non-socialist
America, by telling
workers that economic justice
meant that they would receive,
a full return of their
own individual efforts.
Finally, as the rise of Soviet
Russia and Chinese communism
makes all too plain,
the objective,
intrinsic, and positivist nature
of the labor theory of value
made it most compatible
with top-down forms
of high modernist, bureaucratic
control, and totalitarian
governance, which
did not believe
that valuation processes should
be determined democratically.
For an assortment
of reasons, which
include everything
from the Paris Commune
to the rise of consumer culture,
by the late-19th century,
most liberal economists
abandoned the objective labor
theory of value for a subjective
theory of marginal utility.
These neoclassical
economists began
to tell a new story in order
to link value and price.
Here is Stanley
Jevons, one of the--
oh, I forgot to show
you William Petty.
Here is William Petty.
Here is Stanley Jevons, one
of the fathers of the 1870s
marginal revolution and
quite a wonderful storyteller
in his own right.
Quote, "we can no more
know nor measure gravity
in its own nature than
we can measure a feeling.
But just as we measure
gravity by its effects
in the motion of
a pendulum, so we
may estimate the equality
or inequality of feelings
by the decisions
of the human mind.
The will is our pendulum,
and its oscillations
are minutely registered in the
price lists of the markets."
I would argue that Jevons' story
remains the dominant narrative
of our times.
Inherent in this story
is the powerful notion
that prices, thanks to
the wonders of the market,
simply reflect all the wants
and desires of humanity.
As Gregory Mankiw
argued-- the second time
he's mentioned today.
As Gregory Mankiw argued
only a few years ago
in his article, quote,
"Defending the 1%,"
"if some people are
rich, it is mostly
because they provided
others with the things
that they desired."
Mankiw and others can make such
arguments because economists
since Jevons usually refuse to
unpack, let alone even measure,
the very unit of
utility they created.
Subjective desire in their hands
remains an exogenous black box,
and the historical conditions,
coercive practices,
power asymmetries, or
cultural institutions
which shape consumer choice
are marginalized completely.
All one needs to
do, as Jevons taught
us, is glean human will
from, quote, "the price
lists of the market."
Unlike the labor
theory of value,
which at least politicized
the distribution of money,
the utility theory depoliticized
valuation almost completely
by shifting the realm
of free will and choice
away from political
democracy and voting
and towards market
consumption and exchange.
Nowhere is this shift more
telling than in the emergence
of the term dollar votes,
which, while less popular now
than it was, was often used
by 20th century economists--
Samuelson uses it a
lot in his textbook.
He actually critiques
it, following the rise
of neoclassical economics.
According to this worldview,
since the market reflects
the voluntary wants and
desires of everyone,
there really is no need for
a robust one person, one vote
democracy, as it
would probably only
get in the way of the far
more efficient valuation
abilities of the free market.
There are, of course, many, many
problems with such a worldview.
But perhaps the most
galling is the fact
that, quote, "voting
with your wallet"
assumes an egalitarian system,
when in fact, the market is
anything but.
Warren Buffett would
get 84.8 billion votes.
The median African-American
family in Boston
would get eight.
So what was the point
of this World War tour
of 350 years of value theory?
It was to take a step back and
offer a bird's eye perspective
that shows how we human beings
have never really come up
with a monetary approach
which places egalitarian one
person, one vote democracy and
not objective labor or market
selectivity at the center of
our evaluation techniques.
By reminding us the money
is always political, legal,
and social, MMT can serve
as a jumping off point
towards a democratic
theory of value.
But to do this, we must
not limit our analysis
to the making of money or
controlling its supply.
A democracy theory
of value, of course,
is entirely unprecedented.
Every time Congress votes
for another corn subsidy
or regressive tax cut or
Big Pharma monopoly power,
it's altering market
valuation mechanisms
through political, if not
ideally democratic, means.
The goal of this talk has
been to use the longue durée
to reframe our very conception
of value so it does not merely
passively reflect the sweat
of our individual brow
or the dollar votes in our
wallet but rather serve
as a living, breathing, and
ever-changing political animal
that we must invent,
debate, and eventually vote
over again and again and again.
Since supply and demand that
set prices is always political,
let's also make it democratic.
In our current digital world
where nearly every citizen has
a smartphone in his pocket,
I don't think local, state,
or even federal apps for
ranking preferences or answering
monthly referendums
is necessarily
a bureaucratic impossibility
as it once often was.
And finally, I'll
end by just saying
that the other goal
of this talk has
been to suggest that we
need to go further than just
money as a democratic medium.
In a capitalist society, as
Israel Eliahu understood all
too well, money does not only
serve as a medium, a means
to an end.
It often is transformed
into capital, at which point
money and its
accumulation become
the ultimate goal of capitalist
society, an end in itself.
By democratizing not
only the making of money
but its relationship to our
human needs, collective goals,
and social values, perhaps we
can democratize not only money
but capital and capitalism.
Thank you.
[APPLAUSE]
[SIDE CONVERSATION]
QUINN SLOBODIAN:
Thanks, everybody,
for coming and to
Martijn for organizing
this very interesting
panel and to Christine
for this extraordinary
conference.
I'm going to be talking today
about a particularly acute case
of central bank illegitimacy
in the eyes of what
Stefan Eich sort of gestured
to today in the opening
panel, which is the emergence
of these sort of parties
of the crisis, parties that
have capitalized on the way
that the 2008 financial
crisis was resolved.
In this case, it's
the Alternative
for Germany Party, or the AfD.
Being neither a sociologist
nor a theorist of money,
I'll respond to the
theme of our panel
as a contemporary historian,
introducing some material
from my current research
on the exit fantasies
and capitalist futures of
the trans-Atlantic far right.
While the proposal of the
conference and the chartalism
and neo-chartalism
discussed in it concentrates
on the idea of money
as a state creation,
I'll be looking at
the staunch opponents
of this idea in
adherence to metallism,
people who see
themselves quite self
consciously in the
tradition of Carl Menger
and Ludwig von Mises against
Georg Friedrich Knapp.
Christine Desan has
written that making money
is a governance project.
And I want to ask.
What does it look like when
unmaking money is a governance
project?
And what effect does
it have on democracy?
The case I'll introduce today
as the Alternative for Germany
Party, better known as the
AfD, which currently holds just
under 13% of the seats
in the German Bundestag
is currently polling
at around 15%,
dead even with the
Social Democratic Party,
or the SPD, which
until recently was
one of the two mass
parties of Volksparteien
alongside the
Christian Democrats.
Given the response of the
party to recent episodes
of vigilante violence
against people of color,
the media focus on the AfD's
Islamophobic and anti-migrant
rhetoric is understandable.
Yet it is worth remembering
that the original alternative
to which they were referring
was not an alternative
to non-white migration,
as it effectively
has become come to function
now, but an alternative
to the euro as the
German national currency.
As many will know,
the AfD was founded
in 2013, led by economics
professors in protest
against what they
saw as Merkel's
mishandling of the euro crisis.
The conventional way of
understanding the party
nowadays, understanding the
superficially curious hybrid
of monetary and cultural
issues that defines the AfD
is to talk of a, quote, "right,"
and a, quote, "liberal wing"
of the AfD.
It is mocked in this
float at Cologne Carnival
earlier this year.
Many critics argued that
liberal wing has withered away
to be dwarfed by the
brown neo-fascist wing,
especially as some of the
founding economic-minded
members of the party have left
and started a splinter party.
What I'll argue today, though,
is that this bifurcation
is a false one.
There is, in fact, a
coherent philosophy
within the AfD that unites
moral and monetary issues.
It revolves around an appeal not
to the deutschmark but to gold.
In the writings of
key AfD thinkers,
gold offers not just a more
reliable store of value
but the very filament of
cultural and social order.
As longtime member of
the AfD's federal board
and professional opera
singer, Dirk Driesang,
put it in 2014, quote, "the
fatal effects of fundamentally
fake money, falschgeld--"
which is an important category
for them, "on our
society and politics,
our family and our
values, are destructive,
and they undermine
the fundamentals
of our civilization as well
as our Western culture,"
end quote.
The AfD, I contend, has cannily
tapped into not only rising
anti-immigrant sentiment but
the decline in German confidence
in paper assets in an era
of financial crisis and zero
interest rates.
The German response
in a flight to gold
is best expressed in
the extraordinary fact
that, since 2008, private German
gold holdings went from quote,
"barely registering
on anyone's radar,"
in the words of one
Forbes reporter to being
the largest in the
world, surpassing
the longtime champion of India.
Riding this golden wave
has allowed the AfD
to mainstream a right-wing
libertarian philosophy
cultivated in the fringy world
of LewRockwell.com, the Ludwig
von Mises Institute,
and gold bug
online forums, a
world, as we'll see,
that at least two
key AfD members
emerged directly out of.
By focusing on gold as an
anti-democratic medium,
we can understand how
the AfD is carrying out
a project more subtle and
actually perhaps more radical
than a simple entrenchment
of national borders coupled
with a defiant
nativist pro-natalism.
The destination at least
of some of their thinkers
is not a return to the
pre-Maastricht deutschmark
patriotism but to go
through the deutschmark
back to a foundation
in gold itself.
To hazard a neologism from
the Greek prefix for gold,
we could call what some AfD
promote an oro-patriotism
a national feeling
whose referent is not
this or that territory,
ethnos, or language,
but whichever monetary
system backs its currency
with the precious
metal that they
perceive to be the natural
currency of modern humanity.
It's a peripatetic patriotism,
alighting where it is safe
and fleeing when
it is in danger.
The central act
of oro-patriotism
is the sale of paper
assets for gold,
an act that Bundestag delegate
for the AfD and current chair
of its budget committee, Peter
Boehringer, calls, quote,
"the sit-down strike and
Gandhian hunger strike
of our generation."
It is only through
such acts, Boehringer
argues, that the AfD
and its followers
can defend what he
calls the, quote,
"paper money totalitarians
of modern central banks."
In other words,
the true opponents
of the AfD's most imaginative,
and in a way, their most
vanguard ideologues is
not the itinerant migrant
or the refugee who they see
as only a symptom of a larger
problem, in fact, a
manufactured crisis
by big finance and George
Soros and people like that.
These are the things
they argue themselves.
Rather their enemy is
captured best in this image
that Peter Boehringer--
again, AfD Bundestag member,
chair of the Bundestag
Budget Committee--
posted to his own blog
showing Karl Marx superimposed
over the city of Frankfurt--
of course, the seat
of the European Central Bank.
To the AfD oro-patriots,
fractional reserve banking
and fiat money is a
structure built on sand,
designed to accelerate the
purchase of political goodwill
and thus political power.
Falschgeld, or fake
money, is cloaked
in a fake morality of social
justice, multiculturalism,
diversity, and gender ideology.
This is all part
of a regime of what
they call monetary socialism,
or geldsozialismus,
that began with the
breakdown of Bretton Woods--
Nixon is actually the real
villain here in 1971--
and rose ascendant
in the European Union
after the fall of
the Soviet bloc.
The belief in metal
morality is also a belief
in the metal view of history.
Among the followers
of Mises, the idea
that, quote, "the
purchasing power of money
can be traced back through time
to its origins and the value
attached to the commodity
and its premonetary uses
is known as his regression
theorem," quote, unquote.
For right wing gold
bugs like Boehringer,
it becomes a regression
program, a mandate
to walk back institutions
to a pre-state stage.
In other words, there
is an acceptance
that fiat money is
a democratic medium,
and it is for that very
reason that it must be undone.
The first act of this
story comes in late 2014
after the AfD won seven
of Germany's 96 seats
in the European Parliament.
To collect party financing
from the German state,
the law required that the AfD
first earn its own revenue
in matching funds.
This was traditionally
done through party member
contributions, but the
AfD discovered a loophole.
The revenue did not have to come
from donations or party dues.
It could also just
come through sales.
So they opened an
online gold shop.
AUDIENCE: Wow.
QUINN SLOBODIAN: Under
the slogan roughly
translating as "the AfD is
worth its weight in gold,"
the shops sold bars
and coins including
the Deutschemark, which was
reportedly the best seller.
But also four of eight
of their offerings
was the South
African Krugerrand.
The gold was sold at a slightly
inflated price, meaning
that the party
profited from that,
but also, more
importantly, the revenue
allowed them to collect
matching funds and financing
from the federal state.
Demand for gold was
actually much greater
than they expected.
And party leaders
reported having
to suspend political activity
altogether for some time
just to operate the gold shop.
[LAUGHTER]
The speaker for the AfD
probably told a reporter, quote,
"we are the only
party headquarters
which is also a profit center."
The material effect
of the sales was also
significant for a party
with a small donor base.
They ended up making 2
million euros in 2014 and 2015
before the law was changed.
Yet even more interesting, I
would say, is the symbolism.
Libertarians selling
gold is an old grift
that I can talk
about more and Q&A.
But suffice to say
that it thrives
by selling suspicion
of the state
and of the stability of the
democratic state in particular.
The AfD openly use the rhetoric
of suspicion in their pitch,
even as their leaders
predicted the imminent collapse
of the euro on the
campaign trail.
After noting the
zero interest rates,
the AfD gold shop's own
website noted that, quote,
"gold is fundamentally a product
that many citizens perceive
as a form of investment
that is crisis-proof
and future-oriented."
They were quite direct.
Quote, "participation
in the gold trade
offers us the opportunity to
provide a service to citizens,
to point out the undesirable
developments of the euro,
to attract media attention,
and to increase our revenue
through a very
specific AfD service
rather than
attracting stakeholder
funds like other parties."
Amazingly, the
party financing law
designed to encourage buy in
to the competition of parties
within the democratic process
was now enabling citizens
to purchase exit from the
democratic state-managed
monetary system itself.
Party sympathy was
not being expressed
through the donation of
value but the promise
of a future value.
Party identification was
transmitted quite literally
into a speculation
in precious metals.
Gold bars autographed
by the party's leaders
were sold at the party
congress in 2015.
The AfD gold shop
suggested somewhat
obliquely that the
purchase of gold
could work to
discipline the state,
but this was much more
open in the writings
of Boehringer, the AfD delegate
I mentioned a moment ago.
Born in Munich in
1969, Boehringer
holds degrees in both
business and communications.
I have some more details
about his life, which
I won't have time to share.
But suffice to say, he's a
classic gold bug, invades
against the US Fed, a.k.a. "the
creature from Jekyll Island,"
and warns that, quote,
"the unbacked paper money
system is, in a literal sense,
the tinder that will set
the world on fire," end quote.
Where he showed the flair
for public relations
and I would say a set for the
zeitgeist was in a campaign
he launched in April 2015 called
Repatriate Our Gold, [GERMAN]..
For reasons I don't have
time to explain here,
most of Germany's-- which
probably many of you know,
most of Germany's gold
reserves since 1945 were held
in the Fed's vaults
on Wall Street.
And there was actually
no sign of this changing
until Boehringer's
campaign, which ended up
putting a lot of pressure on
the Bundesbank, which indeed
brought back a good portion of
the gold in the last few years.
Copycat gold
repatriation campaigns
have kicked off since in
Switzerland, Austria, Holland,
and in France, where it has led,
quite tellingly, by Marine Le
Pen.
So there was an attempt
to sort of create
a public display of
the gold about which I
had some words
here, but it looks
like I don't have enough time.
What I wanted to
say was that what
Boehringer's oro-patriotism
presents to us
is that, although
the AfD rejects
the slogan of open
borders, they offer,
by definition, an ideology
of open borders for gold.
The nation as they see it
nests within a golden globe
where precious
metals flow freely.
Far from rejecting
globalization,
their vision deepens
it, subjecting
the actions of the state
to the continual audit
of asset holders with
the ability to move.
The so-called populism, in
other words, of the German
far right is also a
monetary extremism reliant
on exits from the
democratic control of money
and appealing to a
neo-naturalism that
places culture, morality, and
currency within a single frame.
When asked in 2013 how he
envisioned Germany in 10 years,
Boehringer said,
quote, "a country
economically and
culturally degraded
by euro debts and decades of
brainwashing and a fake money
system but which will
still have a chance
after systemic change."
In other articles, he
encourages physical fitness
and the storing of fresh
water and non-perishable goods
as a way to prepare for the
coming collapse, all the while
acting as a precious
metals consultant, which
he continues to do as a
member of the Bundestag.
So the costs and casualties
of this systemic change,
should they manage to
tap into deep reservoirs
and currents of economic anxiety
in Germany, remain to be seen.
I'll leave it with that.
Thanks.
[APPLAUSE]
[SIDE CONVERSATION]
ANTARA HALDAR: OK,
good afternoon.
I'd like to begin by thanking
Martijn for putting this very
imaginative panel together
and thanking Christine
for this incredible conference.
It's really been
an embarrassment
of intellectual riches.
I don't actually specialize
in either the study
of money or chartalism.
But I do look very closely
at the informal economy.
So I will be reacting to
the premise of this panel,
coming at it from a completely
different perspective.
And with a wildly beating heart
given the keynote that we just
heard, I am going
to try and make
a defense for the local and
re-injecting micro-foundations
into the paradigm of modern
monetary theory and chartalism.
OK, so I'm going to
start with a provocation.
On the 9th of November 2016, I
know that this nation woke up
to a major political event.
But all the way over
on the other side
of the world in India, Indians
woke up to the realization
that their 500 and 1,000 rupee
notes were now no longer legal
tender.
This was over 90% of the cash
in circulation in the country.
And interestingly, the move
was led by the executive
with the central bank
following suit rather than
the normal sequence of events
that one would imagine.
Now, this interesting case for
all of us at this conference
and at this panel in
particular, because it
posits a kind of relationship
between this triangulation
that we're interested
in, which is the state,
the market, and
the public, right?
And I could talk more about how
democratization was actually
a version of the
Modi government's
amplification of
the Gujarat model,
which was deeply
anti-democratic.
And it was really a
reallocation, in one sense,
in favor of market at
the cost of the public.
There were actually
100 casualties
as a result of the
move, to say nothing
of the weeks and
months of suffering
that were inflicted
on normal people.
But I want to emphasize
something else, which
is that one of the key
motivations of this move
was to try and snuff out or
extinguish or at least reduce
as much as possible the quantum
of the informal economy.
So the argument
here is that it's
a sort of parking
place for black money
and encourages corruption.
But this intuition that the
informal economy is the enemy
is widely shared.
And this is the intuition that
I would like to interrogate.
So several panels yesterday,
particularly the one
on financialization
and inequality,
talked about how one of the
problems with the paradigm
of financialization was that
in America, for instance,
it accounted for 25% of profits
but employed only 4% of labor.
And the informal sector is the
exact counterpoint to this.
Half of the world's
population is employed
in the informal sector.
And in the aggregate
globally, the informal sector
accounts-- it is estimated
to be worth something
in the range of $10 trillion.
This places it third
to the US and China
and significantly
ahead of the net GDP
of countries like India.
So why is it that despite
vast amounts of research
on the resourcefulness
and the enterprise
and the innovation of what
is referred to as the Jugaad
economy, or
extensive chronicling
by the Peruvian economist
Hernando de Soto, who ends up
pivoting on informality
that the informal economy,
is actually a living,
breathing testament
to the resilience of the human
spirit in an economic context?
Why is it that we vilify it?
All the way from
Max Weber to sort
of doing business indicators,
the mysticism and magic--
it's like a series of montages
from Scorsese and Tarantino
films, this seedy,
murky area where--
and there is a lot of
seedy and murky things
that go on in that
realm, but a lot of it
is just robust
counterfeiting of software
and pirating of DVDs
and so on and so forth.
But the intuition that I
really wanted to unpack here
is that what makes it?
What throws this bright line
around the formal and informal?
It's actually my core
discipline, which is law.
There is nothing natural
or organic about it.
The same thing that fed
and fed the monster that
is the financial sector
and fattened it up
to its obese
proportions is exactly
the thing that is keeping
the informal sector marginal.
And this brings
me to chartalism.
So I'm going to
mix metaphors here.
And I think almost everyone
who's referred to Chris' work
has talked about her
incredibly evocative use
of the imagery of money as the
blood in the economic system.
My understanding of
chartalism or a new chartalism
on modern monetary
theory is that it's
saying that if you
need to inject a blood
transfusion into the system
to prevent it from dying,
then that is entirely justified.
My point is that if that
blood transfusion goes only
to some organs, if it goes
entirely to the brain,
you might be able to
keep the organism alive.
But it's not going to be as
robust and holistic a kind
of thriving as it might be.
I particularly welcomed
the premise of this panel
and the foregrounding
of the public,
because there's so
little discourse
on the public in these
sort of highfalutin
conversations of the monetary.
But for me, when
I'm in the field,
the public is alive and kicking.
It's inhabiting.
The informal sector bears
testimony again to the living,
breathing civic participation
and the resilience
of the public.
And I think that
they deserve to be
sort of re-injected
into the conversation.
Again, with tremendous
trepidation,
I would confess
to the fact that I
have spent a significant part
of my academic career studying
microfinance.
And despite its
many, many ills, I
would argue that in one sense,
institutionally speaking,
it has been a kind of
template for democratizing
finance of a kind and of an
order of magnitude that we
don't have very many other
templates or prototypes for.
So I assume everyone
in the room,
from the very emphatic
responses to the keynote
about the evils of
microfinance, know the basics.
But just to sort of recap
in a very cursory fashion,
it involves giving very small
loans to women, originally
in rural Bangladesh and then
across the developing world
and even in the developed
world, that they then
are organized into these groups
and these centers to repay.
And microfinance boasts that
repayment rates were higher
than 90%, 95%.
And at the peak
of the experiment,
it boasted a borrower base
of a billion globally.
OK, so what is my point here?
My point here is
that I am not saying
that the informal economy
is a justification
for the state stepping back.
The point that
I'm trying to make
is that the informal economy
should be legitimated
as a source of
epistemic knowledge
that we can fold into
our conversations
about formal finance
that can actually
help us think through how we
might democratize finance.
To disregard large tracts
of the global economy
that are existent and
that we render invisible
with our [INAUDIBLE] friends,
as the critical legal theories
Boaventura de Sousa Santos
has very convincingly
argued, is a kind
of epistemic racism.
So the point here is
that if chartalism
argues that law is actually an
amalgam of conventions, what
follows from this is that these
conventions need to be embedded
in local networks of trust.
Which, in an institutional
way, microfinance
was very effective in creating.
But I think microfinance
is only the first step.
There was an
extremely interesting
and I think insufficiently
attended panel yesterday
on complementary currencies.
And we've been hearing
throughout the duration
of this conference about
how, in historical vein,
a plurality of currencies
was actually the norm.
And I think microfinance
could point the way
to creating a federalized
institutional structure that
could be a segue to creating
a kind of financial federalism
that can actually
provide for a resilience
to the local economies that
currently doesn't exist.
So initiatives like
complementary currencies--
and we have Susan Witt here,
who founded BerkShares.
And the notes
actually have images
of local heroes like Herman
Melville and Norman Rockwell.
This was imitated by the
Brixton pound which has pictures
of David Bowie on it actually.
And what this does is that
it's not only financially
salient, but speaking
to Quinn's point
and what was fueling
these very heretical kind
of populist moves that
he's been describing,
it provides a narrative
of cohesion as well
to these local communities.
And this is not just a
phenomenon of the dual economy
and tracts of the
developing world.
It speaks equally to rural parts
of Midwestern America, the Rust
Belt, and to the nations
that, in a remarkable display
of self-esteem, started to label
themselves the PIGS nations,
in the European context.
And equally, as books like
Jeremiah [INAUDIBLE] Vanishing
New York attests
to, this is not even
just a rural-urban phenomenon.
Even within urban contexts, as
with Amazon arriving in Queens,
we need to develop
institutional mechanisms that
will legitimate the
broader systems and that
interface in interesting
ways with the global system
but are embedded and
have roots and legs
in the sort of micro-economy.
So to end, I share
the preoccupation
of the chartalists and
the neo-chartalists
of this grotesque phenomenon
of the kind of economy
that we live in when
Monopoly money is real,
and human beings have been
reduced to pawns or chess men
in that game.
And I laud the contributions
of my co-panelists
who have stressed
how complex, tiered,
and hybrid the
nature of money is.
Perry's talked very
eloquently about how
it's both public and private.
I would argue that
it needs to be
both local and global as well.
So Dewey's concern
with putting the public
at the center of the discourse
I think is absolutely right.
But I think a
plurality of publics
can be our friend rather
than our enemy going forward,
if we're truly committed to the
idea of democratizing money.
Thank you.
[APPLAUSE]
MARTIJN KONINGS: OK,
questions, comments?
So you first.
AUDIENCE: Thanks.
So thanks, folks,
[INAUDIBLE] very diverse
observations on
[INAUDIBLE] very.
So I liked the way
that you formulated
the poor political economy
questions [INAUDIBLE]..
And then it's who gets
access to the [INAUDIBLE]..
So while I agree that money
is always public and private,
we have a choice to make
with respect to the bounds
of this access [INAUDIBLE].
In other words, who do
you give the backstop to
for accepting one
bank [INAUDIBLE]??
Because accepting
one bank [INAUDIBLE]
is a risky business.
So if we don't give
the backstop to anyone,
there aren't that many
[INAUDIBLE] to do it.
But the more people we give
the backstop to, or [INAUDIBLE]
appears, to the [INAUDIBLE] both
the more growth we might get.
That's the positive
that we hope for,
but also the more
bubbles we might get.
[INAUDIBLE] So I wonder whether
there is anything in principle
that we can say about where
to find the optimum about how
broadly we cast the
net [INAUDIBLE] access
to this backstop.
MARTIJN KONINGS: OK, let's
just take a few questions
at the same time.
AUDIENCE: Well, thanks
so much-- great panel.
Yeah, I wanted to just
build on the last question
and reflecting on the fact that
[INAUDIBLE].. in the space right
now, as in where we're
drawing that line.
And indeed, credit
systems are hybrid.
But the degree of hybridity
or the nature of hybridity
is, in a sense, up for grabs.
And that changes the whole
world of space and time.
In India, we have 70% of
the banks are nationalized.
And even though
30% is [INAUDIBLE],,
there's balance between
elements of hybrid shifts.
And it's embedded
in a kind of broader
political sentiment [INAUDIBLE]
One way in which it
shifts, during war time,
that's obviously, in a
sense, a limiting case.
What's more often the
case is a class war.
And there has been a class war,
especially in this country.
And there has been a
trench warfare played out
in the terms of [INAUDIBLE]
of kind of a [INAUDIBLE]
credit systems.
And that's shifted this
line in the kind of sector
in rejection of the private.
And we need to-- part of the
question as economists I think
is precisely where we
want to draw that line.
And I think [INAUDIBLE] a
very fine accomplishment
is precisely in that space.
Where do you draw the
line between the money
interest and the public
interest again, right?
And this comes back to
something that [INAUDIBLE]..
How does something
become [INAUDIBLE]??
What is that process by which
that draw of that line happens?
And of course, its
acceptance as far
as [INAUDIBLE] and
[INAUDIBLE] the Fed
accepted certain
[INAUDIBLE] liabilities.
But acceptance isn't
[INAUDIBLE],, not just economic.
And in a sense, is
it the case that,
if central banking-- and
I think that's a nice way
of framing it.
And here's my question.
If central banking is about
managing the contradiction
[INAUDIBLE],, if we change
the nature of that hybridity,
does it make those
contradictions easier
to manage?
Do we draw down some
of the sharpness
of those contradictions
to make it very concrete?
If the system is more
private, acceptance
of those private [INAUDIBLE]
by the public [INAUDIBLE]
becomes more contested.
And that is, in a sense,
what is constraining
the Fed to act
late, and therefore,
act more costly [INAUDIBLE].
So if the line is drawn
in a different place,
the Fed can act earlier,
and therefore, I think,
in a less costly [INAUDIBLE].
MARTIJN KONINGS: OK, let's take
two more questions-- one at
the back there.
AUDIENCE: [INAUDIBLE]
the emphasis
on hybridities [INAUDIBLE]
the essential nature of money.
But then I would ask.
Why do we even need a line?
So if money is
essentially public,
why is there so much division
between public and private?
And is that really where
the problem starts?
MARTIJN KONINGS: [INAUDIBLE]
AUDIENCE: So I just wanted
to do some ground clearing
and see if we have
common space here.
Three points to make-- the
first is that since Seneca
and Aristotle, many individuals
have recognized that public
authority, most effectively,
has the most power
to define the
[INAUDIBLE] in which
private credit is generally--
AUDIENCE: Christine, I'm sorry.
Could you stand up please?
AUDIENCE: Yeah.
So I'm just trying to find
common space or a clearing
ground.
So what I said was basically
since Seneca and Aristotle,
many commentators have
said the most effective--
the agent most capable to
create [INAUDIBLE] accounts
is public authority.
And private credit is
written in that [INAUDIBLE]..
So this does not reduce to MMT.
That is, attacking the position
that public authority creates
money by attacking
MMT strikes me
as a kind of
rhetorical [INAUDIBLE],,
so just to clear the ground.
And MMT is a particular
post-Keynesian project.
I respect it very highly.
It's not my project.
But it's a very
respectable project.
And they want to
use the fiscal base,
our recognition of
the fiscal base,
as a way to open
up policy space.
That seems fine [INAUDIBLE].
So I'm wondering
if we can basically
hear the vocabulary,
not [INAUDIBLE]
everything in particular
post-Keynesian.
The second point is really
a question about hybridity.
And this is to
Martijn and Perry.
When you speak about hybridity
as a base banked logic,
that makes sense to me.
That's what I wrote a
book about, which really
saying that one way
to define capitalism,
the way that I
define capitalism,
is a move towards a central
banking commercial bank
hybridity.
Other worlds haven't had
that kind of hybridity.
So it seems to me that
what we want to do
is look at different money
designs and different aspects.
They're not all reduce
to the same one.
I happen to think that
transformation is huge--
world-changing [INAUDIBLE].
But England, minting
and free minting,
was not our system in
18th century America,
no banks, no private banks.
So my third point, and
so this is really--
do we agree on
these three points?
I suspect that we do, but
we should get it clear.
Third point is, in these other
worlds, in the English world
that I studied-- and
18th century America I've
also studied.
And possibly in every political
community that's monetized,
there is a large private
demand for money.
That's not the same
thing as private money.
But there's a large
private demand for money
so that in each of
these worlds, you
see ways that base money
often, as far as I know,
produced for public
activity, whether it's
war or building roads, it
doesn't disappear in peacetime.
It's 3% of GDP, as someone said.
This kind of activity that
[INAUDIBLE] base money
doesn't generate enough
[INAUDIBLE] monetary payments--
let's put it that way--
literally to irrigate
the private exchange that
could occur in this thing
that we [INAUDIBLE]..
That private demand,
if that's the hybridity
that we're talking
about, we can [INAUDIBLE]
place that I've
looked at [INAUDIBLE]..
It's not that the banking system
is particular is necessary.
It's that we see
societies create
something that aligns
for private activity time
and again.
And they do so in
many different ways.
So the question is, do
we agree on these things?
And can we move
forward respecting
people's different
political positions
but agreeing on
some common terms.
MARTIJN KONINGS: Let's
start from that end
and then work this way.
ANTARA HALDAR: It might make
more sense to start with Perry,
given the research
questions were directed.
QUINN SLOBODIAN: Well, I
did mention MMT in mine
so obviously I'm off the hook.
[INTERPOSING VOICES]
PERRY MEHRLING: Well, I
don't know that I was--
I'm not sure.
I didn't particularly
mean to be attacking MMT.
I see MMT as Tucker.
These are symptoms of
the moment we're in,
that we're anxious about
our monetary system,
about who's running it.
And what I observed in that
slide where MMT was mentioned--
I think the only slide in
which MMT was mentioned--
is that a lot of these
anxieties are showing
up as a demand
for a repossessing
the sovereign right of money
or something like that.
Let's get rid of private money.
That's the answer is
no more hybridity, only
sovereign money.
And I think that's a mistake.
And it's a political
mistake I think also,
as well as just
a category error.
Let me take--
I'm better at these
specific questions, I guess.
I think the first question
and the second one,
how exactly what-- that's fair.
If this is contested
terrain and we
have to manage
hybridity, first of all,
I want to say it
is being managed.
OK, when you look
at the collateral
rules of the central
bank, this is about which
of the existing financial
assets out there have
privileged access to the
discount window, for example.
So that is a way of managing it.
And there's a lot of pushing
and pulling about that.
I want my debts
to be there, or I
want to have a facility
in the private sector
where I can swap my debt for
something that I can pledge.
And so there's a
lot of activity that
is about creating
collateral that
is acceptable at the central
bank when you look behind.
And some of that is legal
work and creating businesses.
And it's very
interesting in the crisis
to see in the different
countries what happened
to their central banks.
OK, look at what happened to--
what are the assets that
showed up on the central bank's
balance sheet?
They're mortgage-backed
securities
in the United States.
What about Europe?
OK, sovereign
bonds, in Europe, we
justified the QE Project as
part of the European project.
It was OK to take all
these sovereign bonds,
because that was a way of
keeping Europe together.
OK, so the politics of it played
out in a very different way.
It's OK to put
mortgage-backed securities
in the balance sheet in the US.
Why?
Because we believe
in homeownership.
This is American apple pie.
I don't know that you
could have gotten away
with that in Europe,
and I don't think
you could have gotten
away in the United States
with putting a bunch
of municipal bonds
on the balance sheet
of the central bank.
So it's going to be different.
It's going to
reflect the politics
of the particular location.
I'm just drawing attention to
it and saying QE is not QE.
It looks precisely at
what exactly is happening
and why that is legitimate,
or at least more legitimate
than something else, that
it has to be legitimated
in order for this to happen.
And so it's particular assets.
And there's asset swaps that
are happening behind the scenes
to make sure that the ones
that are in the balance
sheet of the central
banks are the ones that
are politically acceptable.
Now, it still remains
the question of--
so I'm saying it is being done.
But the first question
takes my point
that it is just not
logically possible
to give everyone access
to the alchemy of banking,
that there are debts,
but the debts are repaid.
And if they're not all repaid,
the whole thing just collapses.
So there is a management.
There's elasticity, and
there's discipline both.
And the question is,
who gets elasticity,
and who gets discipline?
Or when are we leaning
towards elasticity,
and when are we leaning
toward discipline?
That's what I mean
by managing as well.
And that involves allocation
of credit quantities
but also of who gets it.
I would draw attention
here to something that I
didn't-- it's on the slides, but
I didn't really talk about it,
which is one of the ways
that asset pricing, prices,
the way that it gets
decided who gets there--
portfolio equilibrium
is achieved
after you have this
disequilibrium of the expansion
of balance sheets-- is
by changing asset prices
so that certain assets
become attractive to buy
and other ones are not.
And so that is not only an
early warning system, watching
the movement of asset
prices, but It's
also the place where
the central bank
can intervene as a manager.
OK, and so there's a whole
other talk here about that.
I showed you the slide that
showed that in the crisis,
the central bank intervened in
the payment system, the funding
system, and also capital markets
as a dealer of last resort,
putting its own balance
sheet on the line.
OK, in normal times, it's the
dealer of last resort too,
but it's not putting
it on its balance sheet
because these are options.
And they're outside options.
And most of this is
done by private banks
and private dealers.
So in my other work,
I'm really emphasizing.
We have to think of
the market-making
role of the central
bank as backstopping
the market-making role of
other agents and watch those.
Those are the ones who are
doing this allocation, who
are deciding.
And by tightening the bounds
or moving them around,
you can manipulate
what's happening,
even if you're doing no
trading if people know that--
it's a more general
version of what
I said about collateral
acceptability,
that you're creating
potential trading
options in the future which
move things around today
without actually
doing any trading.
These are allocative decisions.
But as I say, the allocative
decisions are being made now.
There are mortgages
on the balance
sheet of the central bank
of the United States.
And there are sovereign bonds
on the balance sheet of the ECB.
I should stop there.
MARTIJN KONINGS:
OK, [INAUDIBLE]??
QUINN SLOBODIAN: Do you want to
just [INAUDIBLE] for a second?
MARTIJN KONINGS: Yeah,
I just have a few--
ELI COOK: I'm sorry.
Use the microphone.
MARTIJN KONINGS: Oh, sorry.
So two of those questions,
especially-- so going back
to Seneca and Aristotle
said that public authority
institutes a certain
measure, and that's
kind of where private
commerce takes off.
I think that's a
reasonable model of how--
it's a reasonable model.
I just don't think it applies
very well in the world
that we have.
I just think that--
Yeah, more so, I
think hybridity is not
some sort of universal
feature up all kinds of monies
that have ever existed.
I think it is a
feature of the money
that we have in our current era.
So in the past, it
might still have
been possible to think of
different forms of money
as either primarily
arising out of commerce
or as having been
authorized by a sovereign
or an authority external
to that process.
In this era, that
is not really--
those options have sort
of folded into each other.
And any significant currency
is hybrid in that sense.
So that brings me to like,
OK, if we agree on that, which
I think we do, then my concern
is with MMT's or chartalism's
willingness to then take a
big jump and say that money
is a public commitment, because
it's not as if all of these
processes whereby, all
these hybrid processes
whereby money was made,
it's not like debt history.
This is constantly still there.
It needs to be
continuously activated,
which is also why
these are points
of intervention for
doing more interesting
and progressive things.
So that is my main concern.
I'm not sure if that
clarifies that in any way.
But I do completely
agree, for instance,
that yeah, like
the fiscal base, I
do agree that that
is something that
needs to be put to way more
imaginative and creative use.
I just don't think we
can sustain the idea
that just because the
state has a formal ability
to tax its citizens
that that automatically
translates into substantial
validity of the currency
it issues.
ELI COOK: I'll just say
one thing very quickly.
I think what came up in
now what Perry was saying
and what came up
in Antara's and was
pretty much the
core of my talk is
these questions of allocation.
We've been talking a lot
about how money is created.
But the next question is,
OK, now who gets what?
And especially if there's this
magic alchemy that's limited,
the question of allocation
becomes even more crucial.
And I think we
know how capitalism
solves problems of allocation.
That's kind of what I was
gesturing to in my talk.
We know what private
banks do to allocate.
They bring someone in, and they
look for the maximizing return.
And I think what
I was trying to do
and I think what you mentioned
in your talk about the blood
in the body is I think we have
real questions to ask ourselves
about providing alternative ways
of deciding about allocating.
[APPLAUSE]
[SIDE CONVERSATION]
MARTIJN KONINGS: OK, then
we could take some more
questions, if that's OK.
Yeah, right there.
AUDIENCE: Just a
quick observation
that might bring
something that Perry
was talking about
together with something
that Antara was talking about.
So [INAUDIBLE] maybe
one way [INAUDIBLE]
just a level of
sovereignty of encouraging
a more local monetary autonomy
or local credit autonomy
or [INAUDIBLE] it
might be to have
the central line [INAUDIBLE]
in question simply given
expression to a
preferential option
to the purchase of
bond instruments
that are perhaps issued
by local authorities?
My understanding is this part
of what the European Investment
Bank [INAUDIBLE].
And I think there are some
models for public investment
banks.
[INAUDIBLE] in effect
with shared local risk
with [INAUDIBLE] by having a
public authority at the highest
level of generality
standing ready to purchase
the instruments that are
issued by [INAUDIBLE] balance.
MARTIJN KONINGS:
Another question?
AUDIENCE: My question is, is
it premature or extraneous
to this discussion to
bring in taxation and debt?
Because it seems
like it's really
hard to have a discussion
about this money creation
and allocation without
bringing in-- it's
sort of a three-legged
stool or a triangle.
The debt and the
taxation and the money
are all three sides
of the same thing,
which is what the AfD is trying
to pull out of that contract.
But I just wondered whether
it's kind of a handicap
not to be able to talk
about those things
or if it requires
too much more time
or whether that's
not really in here.
I'm not sure.
MARTIJN KONINGS: OK, yeah?
AUDIENCE: I have a
mini comment for Eli
and a question for Quinn.
So my mini comment
is just about what
you said about hedge
fund banker, hedge fund
people, making too much and
nurses making too little.
So if you think about salary
as a way to incentivize someone
to do something and reputation
as another incentive,
wouldn't you expect an
inverse relationship
between how much we
respect a profession
and how much somebody
makes, all else being equal?
And my question for
Quinn is, do you
notice any similarities and/or
differences between what you're
talking about in Germany and the
alternative crypto-currencies
amid Bitcoin happening in the
United States and other places?
Are they rooted in a
similar kind of distrust?
MARTIJN KONINGS: OK,
last question, yeah?
AUDIENCE: Sure.
It feels like we're
sort of skating around
in this conversation following
[INAUDIBLE] comments is
a question about
legitimacy [INAUDIBLE]..
So what is legitimacy
doing in all these stories?
Why should anyone
as an individual
accept whatever end
of the hybridity
you're getting other
than instruction
of a political legitimacy?
Why should I pay my
taxes other than either I
believe that the money
I gave in is somehow
politically legitimate or
someone has a gun to my head?
And if that's not
how it works, then I
can place that at the
center of money creation.
Then the question
might be, why are we
talking about legitimacy of
money, when we could just
talk about the legitimacy
of [INAUDIBLE] government
or fiscal policy or state
planning for investment?
What does money [INAUDIBLE].
Is money just a vector, a holder
of legitimacy, and that's it?
And that's [INAUDIBLE].
MARTIJN KONINGS: OK,
who wants to start?
PERRY MEHRLING: I
think maybe I'll
just make one final
general comment,
because otherwise it goes on too
long, something to take home.
I think we're living
in a Bagehot moment.
Bagehot, in 1873, rose to
consciousness for everyone
that the central bank was acting
as a lender of last resort,
that it did this every
time there was a crisis,
even though it always
said it wasn't doing this.
But it was.
That was the beginning
of management,
explicit management.
But it was only
crisis management.
But once you had a
central bank that
was committed to
crisis management,
it then became committed to
preventing crises or something
and then ultimately to some
kind of monetary stabilization.
And so we were walking
that path since 1873.
I think that this
crisis showed us
that our understanding of
how to manage the system
is a lot more primitive
than we thought.
So we know how to
put a floor under it.
That's what we did.
OK, what is next?
Preventing crises.
What is next?
Monetary stabilization.
I don't think we know
how to do these things.
We heard some talk about
monetary transmission mechanism
today.
Well, we don't really know.
We're finding it out.
That's where we're at.
I think it's important
to appreciate
that in terms of our
level of knowledge
and technical expertise,
we're working it out.
And that's not going to
happen in six months.
It's a 100 year project.
QUINN SLOBODIAN: So yeah, on the
crypto question, good question.
I mean, it's certainly true
that in the online world,
the kind of gold bugs
and the crypto people
intermingle and have their
internecine disputes.
Where I got into this question
was having just finished a book
that [INAUDIBLE]
mentioned just now
about the history of
neoliberal globalism.
It ends with the WTO.
The question was,
what disputes really
split the neoliberal
intellectual movement
after the '90s?
And I found out that
the management of money
was one of them.
And so you basically
have-- the crypto ended up
not playing such a role.
On the one side,
you had the kind
of hard metal, the gold
people, and then you
had the kind of monetary
constitutionalists
who really sincerely believe
that if the central banks
worked according to
the rule and discretion
was as minimal as possible
that it could work.
And the ECB, they didn't
like from the beginning
because they felt
like it actually
wasn't rule-bound enough.
So the crypto thing ends up,
for even the gold bug people,
it ends up being kind
of a red herring.
Because for the same reason that
the AfD did an active campaign
against the removal
of the 500 euro bill,
they worry that this
technology will just
be sort of taken over by the
paper money totalitarians
in a new way.
The movement entirely
into a digital space
doesn't solve the problem
that as Perry pointed
is as the fetish of the
real on which they'd
like to imagine that
the monetary order can
be sort of re-founded.
ANTARA HALDAR: Yes, so just a
few quick concluding comments,
I think there are many strains
to this conversation where
it was struggling to pull
the strands together.
But using Eli's comments
about the allocation issue,
I think that is the theme
that binds it together.
And it speaks to the
legitimacy issue as well.
So quick [INAUDIBLE],, going
back to my positing of the state
market in public, I
think given the logic
of capitalism, unless explicit
means are created of achieving
the allocative and distributive
outcomes that we're interested
in and effective
institutions are put
in place to do that,
it's always going to go
to the top of the pyramid.
As a lawyer who studied
development reform
and legal reform
in the developing
world for the last
70 or 100 years,
the track record tells me
that aggregating to the law
is a very dangerous thing to do.
So the public, in that sense,
is really where we need to look,
which is why I welcomed the
premise of this panel so much.
But we need to make
the political decision
to give the public some
sort of power directly.
The very act-- this is
a very reductive take
for this audience--
but the very act
of having national currencies
is in and of itself
a political act.
Within the paradigm of
neo-classical logic,
the radius of trust
and ease of exchange
would be facilitated maximally
by a global currency.
The fact that that has been
institutionally impossible
points to certain limits in
terms of the traction and trust
that these institutions
need to have to be workable.
And that brings me to
my final comment, which
is a link with Perry's work.
So I think we have
this intermediate state
or stage of the nation
state and the central bank
and monetary policy in
that case where we have
some idea of what's going on.
But at the aggregate
level of the global
or the kinds of
issues that Perry
was pointing to
about climate change
and needing to create monetary
and institutional arrangements
around that, we're a bit lost.
And then again at the
level of the local,
it kind of boomerangs back into
these national institutional
structures not having
the kind of foundations
that they need to have
sufficient resilience.
And it always strikes
me as interesting
how there is this similarity
between the global
and the local at a
structural level.
MARTIJN KONINGS: OK, we're 20
minutes over, so [INAUDIBLE]..
[LAUGHTER]
Thank you very much.
PERRY MEHRLING: I
think we're done.
[APPLAUSE]
