A Few Notes on L Randall Wray's New Paper

I came across L Randall Wray's new paper "Introduction to an Alternative History of Money" on Lord Keynes' blog.

Whether or not I agree with, or find some enlightenment, in my reading I am always very happy to see writing on the origin of money appear. Unsurprisingly Wray knocks a few more bricks out of the ruin that is the 'barter myth'. Thankfully though he doesn't just waste energy grinding that particular origin story into dust, but bravely attempts to build a new heaven, with new bricks. Unfortunately, I think that the new heaven he builds will not lead to a new earth.

Here's why.

1. The paper fails to place money within psychological context. He talks about 'existential uncertainty' but this is not really a meaty enough ingredient with which to create a truly palatable story about the nature of money.

2. Leading on from above, he fails to get to grips with the significance of 'property'. He describes it as a pre-requisite to the development as money as a unit of account, but doesn't really get into how or why the idea of property entered human conciousness at an individual or group level.

3. His assertion that money is endogenous may serve the purpose of exposing the silliness of seeing money as exclusively exogenous and neutral thus emphasising the need to discuss current economic modelling. However, it doesn't really explain the nature of money. In each of our relationships with money we experience it as exogenous and endogenous - as personal and impersonal. Creating a story that leads to the conclusion that money is wholly endogenous means it is likely that your story is wrong.

Wray claims that with the paper he seeks 'to offer a vision of the nature of money, banks and the monetary system' [his emphasis]. This is a noble and worthy thing. I think at the moment though his vision is too bounded by past economic stories and economics itself. Invariably the best books I've read about money have been either general histories, or cross-disciplinary. I understand that for academics a cross-disciplinary approach is just asking for trouble. And Wray should be commended for giving anthropological explanations and evidence good weight in his story. It is however, not enough. Money touches all things. Its nature will need a broad understanding.

Finally, - and this is no way directed at Wray himself and there is no evidence of this in the paper - the creation of a new heaven, and in its image a new earth, is troublesome for me. Not because of the striving to a new understanding of money, but because of the political exigency it can engender. I am wary. The stakes in understanding money are the highest and most immediate imaginable. If a theory of money's origins became accepted as scientific fact - or just generally accepted as true - that would have huge policy implications.

I have the feeling that there is a morality underlying (what I'll describe here as) the MMT project* - a feeling that social justice is being negated in economic policy as a direct result of misunderstandings about the nature of money. And that if the nature of money can be understood economic policy could be better effected to eliminate poverty. Which makes it all the more important to *really* understand money. And to answer that question 'What is Money?'.  To answer it honestly we need to be vigilant to the danger of political exigency creating a new earth based on an illusion of what we want heaven to be.


*there is also of course the same morality underlying the libertarian project.


(New Heaven, New Earth is an anthropological text by Kenelm Burridge which suggest that money is the most frequent axis for millenarian movements)