Money, Power, and Monetary Regimes

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in March 2016The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals.Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. 1 ABSTRACT Money, in this paper, is defined as a power relationship of a specific kind, a stratified social debt relationship, measured in a unit of account determined by some authority. A brief historical examination reveals its evolving nature in the process of social provisioning. Money not only predates markets and real exchange as understood in mainstream economics but also emerges as a social mechanism of distribution, usually by some authority of power (be it an ancient religious authority, a king, a colonial power, a modern nation state, or a monetary union). Money, it can be said, is a "creature of the state" that has played a key role in the transfer of real resources between parties and the distribution of economic surplus.In modern capitalist economies, the currency is also a simple public monopoly. As long as money has existed, someone has tried to tamper with its value. A history of counterfeiting, as well as that of independence from colonial and economic rule, is another way of telling the history of "money as a creature of the state." This historical understanding of the origins and nature of money illuminates the economic possibilities under different institutional monetary arrangements in the modern world. We consider the so-called modern "sovereign" and "nonsovereign" monetary regimes (including freely floating currencies, currency pegs, currency boards, dollarized nations, and monetary unions) to examine the available policy space in each case for pursuing domestic policy objectives.

Monetary sovereignty and the ‘Invisible Leviathan’: the politics of Marx’s theory of money

“…Modern political authorities 'make money' by stipulating what will be accepted as fulfilment of tax obligations. It is the sovereign's prerogative to name which things -whether metals or immaterial credits -meet this criterion, and thus MMT adopts a Keynesian interpretation of money as a nominal unit of account defined by the state (Tcherneva, 2016). Money, however, is more than the state-issued currency.…”

Assessing Modern Monetary Theory’s Peculiar Ontology of Money

“…The exact conditions that allow for a nation to have full currency sovereignty differ across the MMT literature, but the most frequent combination of criteria is from Sardoni and Wray (2007), where currency sovereignty is defined as having a domestically issued noncontrovertible currency with a floating exchange rate—though they include the addendum “although there are other aspects to sovereignty that we do not consider here” (13). These other aspects contribute to the different possible degrees of currency sovereignty, with Tcherneva (2016) explaining that the maximum policy space results from a nation having a fully 6 sovereign currency.…”

Dollar Liquidity, Financial Vulnerability and Monetary Sovereignty

“…If the governments of these economies are to avoid incurring foreign-denominated liabilities, they must avoid intervening to prevent currency depreciation because any sort of currency peg is a commitment to supply foreign exchange. Thus, many authors include a freely floating exchange rate as a fifth necessary condition for monetary sovereignty (Kaboub, 2007;Sylla, 2020;Tcherneva, 2016;Wray, 2012).…”