A contribution to an exchange on Money for the People
Mary Mellor is absolutely right that we need to understand that money is both a social construct and an active force, which means that it can be redesigned so as to promote quite different social and ecological processes than those generated by the current money system. She is justified in proposing that the creation of money should be democratically controlled through the state, and that this would make it possible not only to liberate us from the exigencies of debt and the compulsion to achieve economic growth, but also, for instance, to provide all the inhabitants of a nation with a basic income. Beyond the conceptual constraints of conventional economics, this perspective allows us to see that the rules of the economic game are as arbitrary and potentially mutable as the rules of any other game designed by humans.
Nevertheless, I would like to complement Mellor’s crucial insights and proposals in a few ways. First, her assertion that it is not “money itself” that fuels exploitation and environmental destruction needs to be modified. As long as we are referring to what in economic anthropology is called “general-purpose money” (money that can be used to purchase virtually anything), money itself does indeed fuel exploitation and environmental destruction. If there are no constraints on what we can buy with our money, we shall naturally be looking for the best deals, which usually means the lowest-paid labor and the lowest-priced resources. The globalized capitalist market is thus an expression of the inherent logic of general-purpose money. This logic is the same regardless of whether such money is created by banks or states, and even regardless of the existence of interest. I continue to be baffled by how we tend to be prepared to modify every conceivable aspect of how money is used, but not the idea of money itself.
Mellor writes that “some form of money has been around in almost all human societies.” Yes, but not the particular form of money that developed in colonial Europe. The destructive implications of general-purpose money were evident to critics of market economies from Marx to Polanyi.1 The logic of such money is distinctly different from the “special-purpose money” that was identified, for example, among the Tiv people of Nigeria. Precolonial Tiv, like most traditional cultures, recognized more than one sphere of value.2 Whatever kind of money that existed, it could not readily buy everything. When Mellor writes that it is difficult to envisage societies without “some mechanism to facilitate comparisons of value,” she does not reckon with the possibility of recognizing such cultural limitations of commensurability.
Mellor’s point that money is a social construct means that it is potentially possible to democratically design a money system that recognizes limits to commensurability. To take a couple of drastic examples, it would be possible to decide that rainforests are not exchangeable on the same market as Coca-Cola, or that food in the Global South is not purchased with the same kind of money as is used for financial speculation on Wall Street. A system of separate currencies for basic needs versus global markets would insulate values pertaining to sustainability and survival from the abstract capital flows of the world system. It could thus serve to check exploitation and environmental destruction.
Second, I find it problematic to speak, as Mellor does, of things with “use value,” “social value,” or “little or no value.” Value is always in the eye of the beholder. We need to clearly distinguish between the biophysical properties of a given item, on the one hand, and its value for specific humans, on the other. There is no universal standard for judging whether a particular item has “use value,” “social value,” or no value at all. Value is a thoroughly cultural phenomenon. This means that we need to think about economy and ecology as analytically separate, even though we know that they interact in practice. In doing so, for example, we can see that we tend to value things higher the less of the original energy that is left in a set of resources transformed in production.3
Mellor is definitely on the right track. The planet will not be saved by trying to get the colonial outlook of mainstream economics to somehow accommodate the Second Law of Thermodynamics.4 Nor will it be saved by a socialist revolution that collectivizes ownership but continues to think in terms of money and exchange value. Money is not just a reflection of the relations of production, but an artifact that operates as an active force in organizing such relations. To change the logic of the global economic game, we must change money itself.
My third point, then, is that the basic income to which all of us should have a right should not be paid in general-purpose money, because that would simply keep us buying the products of the lowest-paid labor and the most degraded landscapes.5 It should be paid in a special-purpose, complementary currency that can only be used to buy products and services produced within a specified radius of the point of purchase. This is not “local money” in the sense of geographically restricted currencies, but one single, national currency—issued by the state—that is only for local use. There is no space here for listing the many social and ecological benefits of such a reform, but it would be quite in line with Mellor’s general understanding of money as our main—perhaps only—chance of achieving sustainability, justice, and resilience.6
1. In his book The Great Transformation (Boston: Beacon Press, 1944), Karl Polanyi argued that the idea of the self-regulating market, unless checked by society, would logically lead to increasing exploitation, environmental degradation, and economic instability. Decades of neoliberalism have proven him right.
2. The economic anthropologist Paul Bohannan in the 1950s showed that the Tiv economy was organized around three separate “spheres of exchange,” and that some conversions between separate spheres of value were morally discouraged; see Paul Bohannan, “Some Principles of Exchange and Investment among the Tiv,” American Anthropologist (February 1955): 60–70.
3. This was pointed out by Nicholas Georgescu-Roegen in his 1971 book The Entropy Law and the Economic Process (Cambridge, MA: Harvard University Press).
4. The Second Law of Thermodynamics, also called the Entropy Law, states that the energy and matter of an isolated system will become more disordered and inaccessible over time. As Georgescu-Roegen (The Entropy Law) showed, this implies that an economic production process will simultaneously increase economic value and physical disorder; see reference in note 3.
5. In choosing the least expensive products, consumers inadvertently encourage production processes that not only employ the lowest-paid labor, but that also show the least concern for the environment, which often means the most lax environmental legislation.
6. I have elaborated this proposal in the following article: “How to Turn an Ocean Liner,” Journal of Political Ecology 24 (2017): 623.
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