THEORIZING THE CONTEMPORARY - DORIA & FANTACCI
Luigi Doria, Centre Maurice Halbwachs (CNRS – EHESS – ENS), Paris
Luca Fantacci, Bocconi University, Milan
Much has been written recently about the relationship between money and community. The debate has been fuelled by the (re)emergence of local currencies and alternative financial instruments and has focused on the socio-spatial embeddedness of money and on its social meaning and uses.
This important debate involves a risk: the opposition between the virtually unlimited possibilities of new monetary forms and a supposed abstract rigidity of official money tends to overshadow the question concerning the nature of money and the very relationship between money and community.
While one presumes to know enough about modern money and its social implications, when it comes to new, alternative currencies, one gladly accepts to leave the (social) meaning of money undetermined and open to inventiveness.
This follows from the tendency to understand money and community in terms of the impact of one on the other, e.g. by considering the erosion of the community by official money or the social re-embedding of money within new monetary experiments or again monetary diversification as a desirable goal to be accomplished through the evolution of social forms and institutions.
We believe instead that the question concerning money and community must be addressed by considering their very co-belongingness; i.e. by asking, at the same time, about the nature of money—what money ought to do—and about the economic communality which corresponds with money proper.
Only thus is it possible to consider if and when new forms of money are needed, avoiding the risk that new currencies merely replicate the structural flaws of official money.
The issue is together economic and anthropological. Knowingly or unknowingly, monetary institutions always embody a representation of man in society. The functions that are given to a certain form of money correspond to a certain conception of what exchange, debt and credit mean for a society.
Modern money is characterized by being not only unit of account and means of payment but also a store of value. This money can be not only spent to acquire goods but also kept as a form of wealth in itself. In times of uncertainty, it may even become the most desirable form of wealth, acting as a risk free asset, as a safe harbor against any contingency, expected and unexpected.
This character of modern money is what Keynes, in the General Theory, describes as “the fetish of liquidity”, the idea according to which it is a positive virtue to hold one’s wealth in the form of money or assets readily convertible into money. Keynes calls it a “fetish” because, from a strictly macroeconomic perspective, “there is no such thing as liquidity for the community as a whole”. In fact, from the viewpoint of the entire economy, money is not wealth, and investments cannot be readily converted from one form to another. Hence, modern financial systems suffer from an intrinsic contradiction between what is possible for individuals and what is true for the community. This contradiction makes financial systems liable to recurrent crises, whenever individuals decide to hoard money and to refrain from spending and investing, thereby withdrawing from the fundamental uncertainty that characterizes the future and the relationship to others.
To overcome the “fetish of liquidity”, Keynes advocates a monetary reform, based on a radically different conception of money, understood as a mere intermediary, which passes from hand to hand, is received and dispensed, and disappears, when its work is done, from the sum of a nation’s wealth.
To describe his proposal for a new postwar economic order, Keynes chooses a term that well expresses what money ought to do: “to clear”, to disappear in favor of the circulation of actual goods. “Clearing” is a gerund, and we should hear the motility of the verbal form: the “clearing” of all accounts must be anticipated from the beginning as the ideal of the system in order for the latter to converge towards this goal by appropriate adjustments.
In the Clearing Union, money is a pure unit of account and means of payment, bancor, used to denominate and settle debts between member states. Bancor balances are created to finance temporary trade deficits, only to be destroyed by trade flows in the opposite direction. Bancor is not a store of value: positive (just as negative) balances are subject to charges, to discourage hoarding and facilitate the return towards equilibrium. Such charges are a form of demurrage, intended to make money circulate and eventually disappear.
Money designed to disappear raises the question of the very nature of the economic communality and the shape of a community in which such money can disappear in circulation.
A community can establish a clearing system only if it thinks anew the economic relationships that interweave its members, if its members accept not to withdraw from the circle of “economic communication” by seeking refuge in money, and if they question the idea that debtor-creditor relationships can be secured by an indefinite commodification and procrastination of debts.
What does all this mean for the debate on the crisis of European money and debt? Until now, the debate has concentrated on bargaining the conditions by which surplus countries guarantee debts of deficit countries against the pressure of global financial markets and the monetary thinking they embody. Is this the only way to interpret European communality and the economic responsibility it implies? Or can we rethink and reform the European monetary union in view of a European clearing system, which would allow all debtors and creditors to share the common burden of basic uncertainty towards the future?
The concept of clearing is also relevant for the issue of local currencies. To think creatively about complementary currencies means to ask how money can do what it ought to within an economic community that redefines itself in the very act of establishing its own currency. It means to think the local and the political in the light of an “economic communication” that is neither old nor new, but yet and ever possible.
It is mainly in this perspective that we should consider the monetary experiments that refer to the concept of clearing (Wir, Nantes). It is also in this perspective that human and social sciences may renew the questioning on money and community.