Photo by Alicia Llop
Artillery Row Books

Monetarily woke

A new book by Stefan Eich debunks the political neutrality of money

These days, whenever a rising academic in the humanities sets out to deconstruct a seemingly unpolitical object by highlighting the oft-ignored features of conflict and domination that object is shot through with, I feel tempted to react the way the German playwright Hanns Johst did when hearing the word “culture” — by “reaching for my gun” (the quote has been variously misattributed to Nazi officials but is in fact a line from Johst’s 1930 play Schlageter). 

The Currency of Politics: The Political Theory of Money from Aristotle to Keynes, Stefan Eich (Princeton University Press, $35)

Low-hanging fruit to these feats of woke deconstruction are norms and institutions most people employ in a utilitarian way — say, to communicate or exchange — but that may unthinkingly convey their users’ underlying biases. You thought speech evolved under the sole imperative of describing the outer world? Wait to be called out when you get somebody’s pronouns wrong or use a plural noun in default masculine in romance languages. You view law as an impartial set of rules perfected over centuries to best govern political and economic life? Critical legal scholars insist it necessarily conveys and codifies society’s underlying inequities of power and prestige.

Not unlike speech and law, money is a textbook definition of a public good (my use of it neither excludes you from using it simultaneously, nor does it significantly reduce the amount of it available for others to use). Yet it differs from other mediums of exchange in the extent to which it has been almost entirely stripped clean — pending a woke re-appraisal of this sort — of its political attributes. Habermas would say it has become “de-linguistified”. But for the national insignia inscribed in banknotes and coins — the Founders in the US, urban landmarks dotted by the EU’s stars in Europe — we go about using money as self-centred consumers rather than self-governing citizens, numbingly unaware of the sovereign nature of our currencies. With the dollar as the world’s reserve currency and intra-West capital controls only applied at very high sums, money flows freely and with little friction across political boundaries, feeding the impression of a virtually borderless global economy. To de-politicise money further, our interest rates are set — and our physical money is minted — by central banks insulated from the legislative process.

With the woke reassessment of everything in its political light fully underway in the humanities, the moment seems ripe for such a re-appraisal of money, too. When I began reading Stefan Eich’s The Currency of Politics (2022), I braced for yet another petulant and finger-wagging reprimand, an attempt to red-pill me into realising money’s inherently racist and exploitative nature. Yet I thumbed through the exquisitely written tome awaiting a dreaded moment of awakening that — thankfully — didn’t come. A professor at Georgetown (one of America’s best government departments), Eich’s interests are scholarly, not practical. As an academic political theorist, he wouldn’t write in an advising capacity to a central bank even if he were on the market for such a role. He merely seeks to “articulate” and better “appreciate” money’s political nature, thus “enriching” our “imagination” and our “vocabulary”. Come the epilogue, the only roadmap drawn is towards a vaguely worded imperative to “democratize” the Bretton Woods system of monetary management. The injunction to conform with woke pieties never manifested.

Minting and circulating currency was an inherently political act

Eich undertakes this reappraisal through a meticulous exegesis of five authors. Since coinage predates writing by several centuries, he is forced to begin with an author — Aristotle — who reflected on an institution already well-established, but in some ways still in its infancy. “The birth of politics,” Eich asserts, “had a profound monetary dimension. He is referring to the Greek city-states well before the classical period, each of which minted its own coins as it revered its rulers and worshipped its patron deity. “Currency, alongside rhetoric and law, preserved the abstract reciprocity on which the polis depended. Like investing in fortifications or celebrating a sacrifice to honour a god, minting and circulating currency was an inherently political act — no more democratic than other political decisions in Athenian democracy, but no less either. “For Aristotle, and for the Athenians in particular, currency was not only a means of commercial exchange but also a political institution of reciprocity and justice”, something Eich makes palpable through the etymology of nomisma, derived from nomos (law or ordinance).

Fast forward to the late 17th century, when sterling got in a bind. In 1662, England began producing machine-struck coins, yet most of the hand-struck ones that remained in use lost weight to widespread clipping on the edges — vitiating them as tender abroad — whilst others were forged to match the new clip-proof ones. Additionally, merchants melted coins into bullion to be sold at a mark-up abroad. In 1696, with forged coins constituting 10 per cent of the nation’s currency, new branch mints were established up and down England, going on to produce the equivalent of today’s £700 million in four years. “Coinage, writes Eich, “was still a sovereign prerogative, but its administration was now severely curtailed by overseas trade and colonial administration. In his Second Treatise (1689), a John Locke preoccupied with restoring trust reflected that “only if linked to a metallic substance, whose weight and firmness could be empirically verified, could the fragile mode of money serve as the stable bond of society across time”. Where others saw in money a fragile conventionality, Locke saw the potential to kindle a bond of trust with “intrinsic value”.

The gold standard underwrote the trust Locke wished to enhance, but it got in a bind of its own in 1797, opening up, in Eich’s terms, a “Pandora’s box of modern monetary politics”. In late February that year, the French invasion at Fishguard brought fears of an England-wide bank run to a fever pitch. Due to the overprinting of banknotes, the Bank of England (BoE) was distributing its gold to record numbers of people trading their notes for it. Because of the gold standard that underwrote those trades, the value of each banknote was fast diminishing. With the total face value of the circulating notes almost exactly twice the value of the Bank’s gold reserves, Parliament decreed the suspension of these payments, which it annually renewed every year until 1821, when convertibility was restored. During this so-called Restriction Period, it was the German idealist philosopher Johann Gottlieb Fichte who, in Eich’s terms, “offered the most radical and prescient account of the possibilities of fiat money” — money not backed up by gold — “as the completion of the social contract” and the “engine of historical progress”.

The advent of industrial capitalism failed to usher in a reckoning with money’s political nature. Eich accepts the characterisation of Marx — who made money his focus in the 1850s — as a “commodity theorist” of money, someone who accepted “the Victorian gold-standard presumptions as the background for his account of capital”. Informed by the labour theory of value, Marx viewed money’s worth as the amount of labour that went into earning it. By contrast with French utopian contemporaries like Proudhon, Marx did not believe that exploitation was rooted in the monetary system — instead, he believed it preceded it, thereby making money a “social relation of production”. Their views on credit were similarly at odds. Whereas Proudhon believed that credit money (the creation of value through the establishment of future claims, obligations or debts) would usher in the “sublation of alienation”, Marx believed it would prove “the next logical step in the development of capitalist money’s ability to exploit”. Capitalism’s tendency to undergo crisis by extracting cumulative surplus, Marx believed, was beyond repair.

For the rest of his life, Keynes chased a Holy Grail

Eich then leaps to the 1930s. When the BoE suspended the gold standard under the strain of speculative attacks, Keynes wrote, “We have regained our freedom. The legendary economist rejoiced, Eich argues, because he believed the Great Depression’s wake was the ideal context to “develop a new template for international coordination allowing for substantial domestic autonomy”. As Keynes awoke from that cataclysm, he navigated, in Eich’s telling, between Locke’s vision grounding the value of money in the pre-political consent of all mankind and Fichte’s view of it as an outgrowth of the modern state’s sovereignty. For Keynes, the management of money was, though technocratically removed from popular politics, “a public task tied to social justice”. It should be debated publicly, with inflation a downside preferred to deflation. For the rest of his life, Keynes chased a Holy Grail — a system to “reconcile the domestic benefits of monetary autonomy with the international coordination achieved by fixed but adjustable exchange rates”, something that required a global reserve currency managed at a supranational level.

Eich’s historical overview ends, and his parting reflections begin, with the “silent revolutions” of the 1970s. At this time inflation, in Friedrich Hayek’s view, “threatened Western civilization at its very foundation”, an idea Keynes’ ordo-liberal rival blamed on “the epistemological hubris of Keynesian national welfarism”. The neoliberal revolution that ensued across the (primarily English-speaking) West was unleashed to evade the dilemma of legitimation, but it ended up “tying economic policy to a different master”, Eich tells us. As money became untethered from either gold or silver, states were urged to repress inflation by controlling their own currencies. Policymakers sought to deflect the blame for the distributive outcomes of their decisions, and money became more politically salient — yet more de-politicised in popular and scholarly discourse — than perhaps ever before. In the pivotal year of 1980, leaders of various developing countries led by the Prime Ministers of Jamaica and Tanzania met in Arusha, Tanzania, to challenge the International Monetary Fund’s (IMF) claims to neutral legitimacy.

To Eich, the neoliberal age has proven the “de-politicization of money” to be an “illusion resulting from a sleight of hand”. Whether for editorial reasons or a fear to be disproven by events, it is unfortunate that the book’s timeframe doesn’t reach further into the present. After all, the rise of cryptocurrency presents a once-in-a-lifetime test to the book’s core tenet, namely, that money remains political even after the attempt by the powerful to make those attributes vanish. Sohrab Ahmari, for example, recently wrote that “crypto-ism is but one expression of the age-old yearning to overcome the concrete limits and inconvenient bonds of obligation”. By decentralizing money creation and untethering it from the coercive jaws of the nation-state, crypto-enthusiasts hoped to create new political communities one could join by choice. Far less keen, Eich seems to think bitcoin won’t eradicate the politics of money but merely shift its locus. In a book chapter he wrote in 2019, he views crypto as “part of a struggle over the political status of money in an age of financialization”. Staying woke requires keeping our eyes on that struggle.

Enjoying The Critic online? It's even better in print

Try five issues of Britain’s newest magazine for £10

Critic magazine cover