The social relations of money as universal equivalent: a response to Ingham

In a recent debate in Economy and Society, Ingham criticized Marxist theory of money on the grounds that it relates money to commodities through the labour theory of value, while ignoring credit money. Ingham suggested instead that money is constituted by social relations characteristic of credit, namely relations of ‘promise to pay’. Drawing on Marx, this article shows that, pace Ingham, it is necessary theoretically to relate money to commodities. Money is indeed constituted by social relations, but these are commercial relations among ‘foreign’ commodity owners, not credit relations. The social relations of money are successfully captured by Marx's concept of the universal equivalent, when that is interpreted as monopoly over the ability to buy. In this light, both commodity and credit money are forms of the universal equivalent, but qualitatively different from each other.     

Collateral times

Abstract

Today’s financial system essentially relies on the pledge of collateral. A closer look at this uniquely cross-disciplinary instrument not only reveals a remarkable absence in the modern disciplines but also a close relationship with money. This connection is brought into theoretical perspective by analysing the role of pledge in three historical configurations. In ancient Greece, symbola and horoi stones emerge as two distinct devices to secure contract that become entwined in seventeenth–eighteenth century pledge-theories of money as witness and object of exchange. Together these throw new light on the contemporary form of shadow money as a distinct marriage of security and safety.     

From gold to futurity: a semiotic overview on trust,legal tender and fiat money

ABSTRACT

In the first part of the paper, I am summarizing the most relevant findings of the semiotic study of the money sign. It starts with a tripartition of the major types, namely commodity money, representative money, and fiat money. I then use this approach in order to position the most important contributions of other authors from semiotics and surrounding disciplines. In the second part, I develop a semiotic reading of the notion of legal tender where the latter is seen as a semiotic mechanism that provides particular conditions for the formation of the value of money. I combine a historical review with stress on important theoretic reflections during the development and implementation of pure legal tender money. The last part is dedicated to a proposal for a semiotic model of the fiat money sign. The model is developed and implemented as a reflection on some critical readings of the world financial crisis from 2008 to 2009, where the “semiotization of money” was used for explication. My model is based on one of the most insightful definitions of money, which sees them as “trust inscribed”.     

Further reflections on the ontology of money: responses to Lapavitsas and Dodd

Abstract

The debate on the nature of money, its origins and conditions of existence has been recently taken further in separate articles in Economy and Society by Lapavitsas and Dodd. Both criticize Ingham's elaboration of Keynes's contention that the money of account is the primary concept in a theory of money. Lapavitisas reiterates and extends his Marxist analysis of money's origins as a universal equivalent in commodity exchange. This fails to explain the existence of a money of account, without which genuinely market exchange cannot take place. Dodd's claim to furnish a much-needed analytical refinement in the analysis of money, used to criticize Ingham's position, is shown to be based on a re-statement of an established and widely accepted distinction in monetary theory.     

Information and trust as social aspects of credit

Abstract

According to mainstream economic theory the contractual relationship between borrower and lender is characterized by asymmetry of information regarding the project to be financed. It is assumed that trust among credit participants is constructed individually as they collect and assess requisite information. In contrast, this paper argues that trust and information among credit participants have compelling social constituents that depend on economic function and social context. More specifically, the paper shows that financial institutions transform trust into a social and objective relationship. The capitalist credit system comprises a set of institutions that construct trust socially by using increasingly general information. Nonetheless, the foundation of credit-related trust is the ability to repay money. Hence the moral content of credit is thin, giving rise to fraud and deception.     

Towards a neo-Polanyian approach to money: integrating the concept of debt

Abstract

This paper aims to reconsider Polanyi's approach to money. His best-known writing on money uses is deeply original and presents strong insights that dissociate money from the concept of the market. Polanyi also developed an interesting non-dichotomous understanding of money in his The great transformation. However, taken together, these two contributions lead to some unresolved questions: his critique of the orthodox approach to money is ambivalent; his argument to separate payment from account is weak; and, most important, he ultimately makes an incomplete break with the classical real/monetary dichotomy. This paper proposes a distinction between money as a set of instruments and practices and money as a concept, through the integration of John Commons's concept of debt into Polanyi's framework. This reformulation allows us to resolve Polanyi's unresolved questions while preserving his major contributions, and leads to a more complex understanding of money.     

Can society be commodities all the way down? Post-Polanyian reflections on capitalist crisis

Abstract

In his classic 1944 book, The great transformation, Karl Polanyi traced the roots of capitalist crisis to efforts to create ‘self-regulating markets’ in land, labour and money. The effect was to turn those three fundamental bases of social life into ‘fictitious commodities’. The inevitable result, Polanyi claimed, was to despoil nature, rupture communities and destroy livelihoods. This diagnosis has strong echoes in the twenty-first century: witness the burgeoning markets in carbon emissions and biotechnology; in child-care, schooling and the care of the old; and in financial derivatives. In this situation, Polanyi's idea of fictitious commodification affords a promising basis for an integrated structural analysis that connects three dimensions of the present crisis: the ecological, the social and the financial. This paper explores the strengths and weaknesses of Polanyi's idea.     

‘Whatever it takes’: Polanyian perspectives on the eurozone crisis and the gold standard

Abstract

The parallels between the monetary politics of the gold standard and that of the eurozone crisis are striking and have informed contemporary debate about the future of European integration. The eurozone crisis has been widely interpreted as the result of a mismatch between international monetary integration and a concomitant lack of fiscal integration, or more broadly as the result of a European Union which is economically integrated, yet politically fragmented. The prospect of a 1930s-style descent into division and nationalism has formed the backdrop against which moves towards extensive integration at the supranational level have been made. Polanyi diagnosed the political effects of monetary integration through his analysis of the gold standard system in The great transformation, making it important that we unpack his analysis and consider carefully how a Polanyian perspective might apply to the eurozone today. I argue that Polanyi encourages us to look beyond ‘monetary vs. fiscal’ and ‘economic vs. political’ characterizations of European integration, and instead to examine how such oppositions are formed in the first place and how they constrain political debate, particularly in terms of how ‘sound money’ is established as the highest policy concern. Through a re-reading of Polanyi's distinction between ‘all-purpose’ and ‘special-purpose’ money, I highlight how, despite the huge efforts undertaken to preserve the identity of the euro as an all-purpose currency, the eurozone crisis has rendered visible a series of latent conflicts between the different functions of money. This analysis moves us away from the ‘monetary vs. fiscal’ integration view of the eurozone crisis and towards a more open study of how the various possible purposes of money are being articulated and challenged, offering some limited hope for alternatives to the current eurozone policy agenda.     

Monetized time-space: derivatives – money's 'new imaginary'?

This paper examines some of the ways in which the everyday is becoming connected into the world of finance, a process facilitated through so-called derivatives.The increasing use of derivatives is traced to the collapse of the Bretton Woods agreement and the ways in which innovative developments in financial engineering were used to overcome the uncertainties of interest rate, currency and price risks that grew apace from the early 1970s. We argue that these risks are not ‘more of the same’.They are qualitatively different and run deeper through the highly integrated financial markets of today. And, as later parts of the paper argue taking their cue from the works of Paul Virilio and Georg Simmel, notably the latter’s Philosophy of Money , the manner in which these risks interact and the speed of their interaction suggest the emergence of new forms of money, a new monetization of time-space. The paper then moves on to consider how the calculative practices that lie at the heart of derivatives involve a process of socialization of the understanding of the risks that new money forms are made to negotiate successfully. The ‘idea of money’ – of what it is now supposed to be capable of doing with and across time-space – thus stems from a ‘new money imaginary’. The paper concludes by reemphasizing the reasons why, when understood through areading of Virilio and Simmel, derivatives should be viewed as representing new forms of money.     

Bugs,predations or manipulations? Incompatible epistemic regimes of high-frequency trading

Abstract

Calls for greater transparency as well as corporate and individual accountability have emerged in response to the recent turbulence in financial markets. In the field of high-frequency trading (HFT), suggested solutions have involved a call for increased market information, for example, or better access to the inner workings of algorithmic trading systems. Through a combination of fieldwork conducted in HFT firms and discourse analysis, I show that the problem may not always stem from a lack of information. Instead, my comparative analysis of different market actors (regulators, market analysts and traders) shows that the diverse and complex ways in which they access and construct knowledge out of information in fact lead to what I call different epistemic regimes. An understanding of how epistemic regimes work will enable us to explain not only why the same market event can be viewed as very different things – as market manipulation, predation or error – but also why it is so difficult to arrive at a unified theory or view of HFT. The comparative perspective introduced by the idea of epistemic regimes might also serve as a starting point for the development of a cultural approach to the study of financial markets.     

Intellectual property,indigenous knowledge,and biodiversity

ABSTRACT

This is Part 1 of an article arguing for an extended application of Karl Marx’s insight that the apparent reciprocity of free market exchange is to be understood as an ideology that obscures material processes of exploitation and accumulation. Rather than to confine this insight to the worker’s sale of his or her labor-power for wages, and basing it on the conviction that labor-power is uniquely capable of generating more value than its price, the article argues that capital accumulation also relies on asymmetric transfers of several other biophysical resources such as embodied non-human energy, land, and materials. It proposes that the very notions of “price” and “value” serve to obscure the material history and substance of traded commodities. Such a shift of perspective extends Marx’s foundational critique of mainstream economics by focusing on the unacknowledged role of ecologically unequal exchange, but requires a critical rethinking of the concept of “use-value.” It also suggests a fundamental reconceptualization of the ontology of technological progress, frequently celebrated in Marxist theory. Part 1 of the article introduces the argument on unequal exchange, the ideological function of money, some concerns of ecological Marxism, and the conundrum posed by three contradictory understandings of “use-value.”     

The legitimacy of occupation authority: beyond just war theory

ABSTRACT

So far, most of the philosophical literature on occupations has tried to assess the legitimacy of military rule in the aftermath of armed conflicts by exclusively employing the theoretical resources of just war theory. In this paper, I argue that this approach is mistaken. Occupations occur during or in the aftermath of wars but they are fundamentally a specific type of rule over persons. Thus, theories of political legitimacy should be at least as relevant as just war theory for the moral evaluation of occupations. This paper, therefore, draws on both traditions and argues that just war theory plays a limited role in identifying the purposes and appropriate agents of occupation authority, but that theories of legitimacy are necessary for explaining why and under which conditions foreign actors have the right to rule in the aftermath of armed conflicts.     

Schumpeter's economic theory and the dynamic accounting view of the firm: neglected pages from the Theory of Economic Development

Abstract

The first English translation of some of Schumpeter's (1926) pages of the Theory of Economic Development is presented. These neglected pages are remarkable because they significantly add to Schumpeter's masterpiece on a number of issues concerned with accounting, law and economics of the firm. They show that Schumpeter considered understanding the firm, together with innovation, as important scientific problems. Schumpeter doubts the explanatory value of proprietary entrepreneurship and provides an early justification of the dynamic entity view of business activity generated by the firm as a becoming concern. He discusses its implications for understanding issues of economic organization and corporate governance, and suggests some theoretical insights concerning business capital and money under conditions of real dynamics and complexity. The doors opened by Schumpeter indicate that money and accounting are fundamentally coupled as complementary institutions in framing and shaping the economic and monetary process of the firm as an enterprise entity.     

The material production of virtuality: innovation,cultural geography and facticity in derivatives markets

Abstract

In the existing literature, the ‘virtual’ nature of financial derivatives is often commented upon, but how these products are brought into being has seldom been examined in any depth. This article analyses the development since 1970 of organized financial-derivatives trading in the US and UK (in particular, of derivatives exchanges and of the British financial spread-betting industry), with the goal of examining the ‘material production of virtuality’. The article explores the similarities and differences between technological innovation and innovation in derivatives; discusses the role of the ‘internal’ cultures of financial markets and of the wider culture (in particular, the legal traces of hostility to gambling); and analyses the requirement of ‘facticity’ for the measure underlying a cash-settled derivative, focusing in particular on the most important such measure, British Bankers’ Association LIBOR (London interbank offered rate).     

The theory of value and the value of theory — a reply to Cutler et al.

Abstract

Serving as a pledge against a future promise, collateral has traditionally been understood as a ‘back office’ technicality that reduces the risk of default. Yet in the wake of the 2008 financial crisis and the erosion of faith among market participants in the credit quality of large banks, collateral is playing an increasingly important epistemic role within finance, as an anchor that underpins the valuation of a growing number of financial instruments. This paper explores the increasing importance of collateral to the modelling practices used by ‘quants’ to value ‘over-the-counter’ interest rate derivatives since the 2008 financial crisis, and how the inclusion of collateral expertise into quants’ own modelling practices has affected these markets. This historical episode suggests that while the inclusion of collateral expertise into banks’ front office modelling practices has made banks’ pricing models less abstract and more aligned to the traditionally overlooked legal practices that underpin derivatives trading, it has also led to an explosion of complexity in the valuation of these instruments that now threatens the future existence of these markets.     

Feeding finance: a critical account of the shifting relationships between finance,food and farming

Abstract

Whether in the form of commodity index funds, farmland investment funds or commodities trading by agri-food companies, there is evidence of an increasingly close relationship between finance, food and agriculture. While these developments have received some critical attention of late, existing accounts of the ‘financialization of food’ are limited to the extent that they view finance as an external force with emphasis placed on the unnaturalness of its relationship with agriculture and its distortive effects on agricultural markets. Recognizing that finance and agriculture have a long history, this paper offers a more nuanced account of the place of financialization in the agricultural sector. Specifically, it examines how agriculture's emergence as an investment opportunity has reconfigured the terrain of agricultural interests and logics while creating new knowledge demands and agricultural visibilities. These dynamics are explored through a case study of the role of finance and processes of financialization in the recent demise of the Canadian Wheat Board as a state marketing agency. Through this discussion, the paper offers valuable insights into not only the reworking of agriculture as a particular type of financial space, but also the nature and limits of financialization itself as a way of engaging with the world beyond urban financial centres.     

电子货币是货币发展规律作用的必然结果

电子货币作为一种新的派生形式,是货币发展规律作用的必然结果。电子货币不仅具有一般货币的共性,而且具有明显的时代特征。因此,电子货币的出现,并没有否定马克思的货币理论,相反却再次证明了马克思货币理论的科学性。     

Paul Hirst’s encounters with Economy and Society

Abstract

This article examines the construction of the homo economicus in Argentina in the context of the last military dictatorship (1976–83). While the worldviews of the military and neo-liberal economists of the time were very different, their common concern for distortions in economic and political life made them translatable. These economists provided a new economic identity that would be in tune with monetarist theory, replace ‘distorting’ collective identities and allow individuals to be governed from a distance. I argue that the homo economicus was performed through two sets of tools: consumer campaigns and the financial press. However, individuals did not always behave as expected. The contradictions of neo-liberalism, between its liberalism and its quest to create self-regulating spheres through active government intervention, led to the financial crisis of 1980. Economists later blamed the crash on the irresponsibility of market actors and expressed doubt regarding the self-regulating model they had promoted. In the conclusion, the legacy of the attempt to perform the homo economicus is assessed.     

On Marx's theory of agricultural rent: A reply to Ben Fine

This article criticizes both the 'Marxist' and 'sociological' conceptualizations of money to be found in the recent debate between Fine, Lapavitsas and Zelizer in Economy and Society . They neglect important contributions to the theory of money, especially the 'credit' and 'state' theories of money in the social sciences. These emphasize, as did Keynes, the central theoretical importance of money of account . These approaches were banished from orthodox economics and lost to sociology in the post- Methodenstreit division of intellectual labour in the social sciences. Marxist economics has never properly addressed this monetary analysis. Although neglected, it is not obscure and informs the more widely known post-Keynesian theory of money. This article argues that these heterodox theories of money are essentially sociological in that they involve the conceptualization of money as abstract value constituted by the social relation of the 'promise to pay'.     

Indebted life and money culture: payday lending in the United Kingdom

Critical social scientific research holds that credit–debt is a principal economic and governing relation in contemporary economy and society, but largely neglects money’s role in indebted life. Drawing on qualitative research in the payday loan market in the United Kingdom, the paper shows that borrowers typically relate to loans in monetary rather than financial terms and incorporate them into practices of payment, spending and online banking. To analyse how indebted life is variously experienced and enacted through money, the concept of money culture is developed to refer to money’s culture, money’s meanings and money’s affects. Borrowers enter into and negotiate payday loans through a digitally mediated money culture that both mobilizes and runs counter to money’s powerful fictions as circulating universal equivalent and calculative means of account.