The Currency of Politics by Stefan Eich

Author:Stefan Eich
Language: eng
Format: epub, pdf
Publisher: Princeton University Press
Published: 2022-03-11T00:00:00+00:00

Conclusion

More than anyone else during the interwar years, Keynes insisted with great verve and eloquence on the need to bring money under deliberate and legitimate control. The naturalistic illusion of gold had for too long disguised the systemic manner in which the monetary standard distributed economic burdens of adjustment unfairly, both domestically and internationally, while at the same time preventing governments from adequately responding to crises. Removing money from this quasi-theological realm meant subjecting it to standards of rationalization, justification, and expertise that would radically extend the realm of economic policy in pursuit of social justice to include monetary matters. This was the argument Keynes first set out in his Tract on Monetary Reform (1923). While initially disregarded as Britain returned to gold in 1925, its main principles have since come to be widely accepted as the basis for central banking all around the world. In calling for a reconceptualization of the state’s economic responsibilities in the monetary realm, Keynes echoed Fichte’s earlier argument and language. It was necessary, Keynes explained, to effect a “transition from economic anarchy to a regime which deliberately aims at controlling and directing economic forces in the interests of social justice and social stability.”221 It was furthermore no accident that the opening stage of this political struggle would revolve around a new political understanding of monetary policy.222

In the two-volume Treatise on Money (1930) Keynes radicalized this account of monetary policy by fundamentally rethinking the nature of money itself, now stressing both the chartalist dimension of modern money as well as the importance of bank credit as part of the monetary system. As Keynes recognized, this posed immediate questions of both domestic and international governance, including the peculiar political status of the central bank, its relationship to its member banks, and the relationships among different central banks. Just as the domestic provision of bank credit required centralized coordination in the form of a central bank, so a kind of international central bank—a bank of banks—would be necessary to manage money internationally. In 1936 the General Theory further deepened the repercussions of this revisionist understanding of money by extending it to the rest of the productive realm, in the process inverting the existing theory of production as a special case to be actively brought about rather than to be taken for granted. Monetary policy and an appreciation for the constitutional quality of the monetary system did not disappear from these considerations, but they were now tied to a supplementary role for fiscal policy as well as a comprehensive call for the socialization of the level of investment with the ultimate goal of reducing the return on rentier capital to zero.

Despite his critique of the gold standard and his pathbreaking articulation of national macroeconomic policy during the 1930s, Keynes nonetheless shared a keen sense of economic internationalism as well as an appreciation of the liberal desirability of economic depoliticization. Even where he sought to recover the lost need to manage money by placing it anew on a constitutional

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