Friday, March 29, 2013

A Ramble on Ingham's Nature of Money

You can read my review of this very fine book here.

Pac-a-mac? Sturdy boots? Flask? Let's go.

First thing, Geoffrey makes no distinction between Money and currency. This is old ground for us. But I wonder why Geoffrey ignored it. It's probably because he thinks they're the same thing. Most people do. But if so, YOU MUST SAY SO ! I actually think that his failure to make a distinction, or to say clearly that there is no distinction, is at the heart of the problem with this book. I'll come back to this.

What Geoffrey does brilliantly is to make the point about the chronology of Value-Money-Price. This is one of the most important critiques of dominant understandings of Money and economy (which see the chronology as Value-Price-Money). It's the central idea on which most alternative views of economy are built (at least the broadly collectivist ones). And it's true. Money MUST come before Price. (Here's the actual quote from Ingham; it's something he mentions repeatedly).

The problem is that Geoffrey's (and Knapp's) explanation for how the unit of account function of Money came into being, is a muddle. It's no wonder Austrians and Neo-classicist alike give State Theories of Money a proper kicking. State theory identifies a huge crack in current (and historical) understandings of Money. But then just paper over it. I can't even remember the muddled arguments. Something about states collecting taxes, wergeld, and value vs valueableness. Just stuff and nonsense to me, I'm afraid.

What they miss - and Geoffrey comes close with his framing of the word 'moneyness' (JP Koning has arrived at this conception separately) - is that the aspect of enumeration, the dynamic that creates the money of account function is within Money itself. And expressed through currency. (Don't forget, currency IS any object). The only thing logically anterior and historically prior (to use Geoffrey's phrase) to Money is VALUE.

You can pay a high price for ignoring something as mundane as the distinction between Money and currency. You see by separating out 'moneyness' from Money, Geoffrey takes a step in the right direction. He's identifying a feature of Money; specifically its ability to enumerate. But because he hasn't clarified his thought on Money Vs Currency he takes two steps back. He gets drawn into an explanation of how 'moneyness' is established in currency (the story he tells is by the State). He's answering the wrong question.

The real question is how Money enumerates Value. The answer of course, is 'though currency'. Thinking about currency 'containing' moneyness in whatever degree is an ontological error. Money cannot be quantified. Money is the quantifier.

It would be easy to say that #bitcoin puts a hole in the arguments of State Theorists. But I think Geoffrey might respond that #bitcoin is an asset class denominated - for the most part - in dollars. In other words, without dollars (or pounds, renminbi, yen etc) #bitcoin would not be able to express its value. Given the way most folks tend to think about money (and don't distinguish between money and currency) this is a reasonable argument. I don't think its true. But it is reasonable.

In my view - which sees currency as an arbitrary term, and that all objects are currency - I see #bitcoin as something which performs a particular set of functions very well. Some not as well as the dollar, but some better. Its enumerative capacity is born from its relationship with Money, not the dollar. Of course we compare the two. But that's just us. It in no way proves that one relies on the other for its existence.

We could ramble on to Geoffrey's critique of theories of value (which is good, imo) but we've been there before. I picked up a secondhand copy of Zen and the Art of Motorcycle Maintenance yesterday. As a give-away book. I have it in hardback, softback and on my kindle already. Email/DM me and I'll send it to you.

Well, that was a quick one. I think the landscape is becoming more familiar. You know how journeys seem to go faster when you know the route.

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