Give and Take, Part Two: Demonetization and the Pedigrees of Money

From the Series: Demonetization: Critical Responses to India’s Cash(/less) Experiment

Photo by Kamalakannan PM.

Questions about money go back to the very beginning of the modern Indian state. Demonetization brought them again to the surface. In an interview with The Indian Express, Prakash Ambedkar claimed that his grandfather, B. R. Ambedkar, advocated demonetization at regular intervals to prevent hoarding and inflation. The elder Ambedkar, a founding figure in crafting India’s Constitution, was in fact advocating for a gold standard. In The Problem of the Rupee, Ambedkar drew on John Maynard Keynes’s analysis of the unstable Indian money situation, explored in the latter’s Indian Currency and Finance (1913), which was based on lectures given after a two-year stint at the India Office in London. Keynes wanted to replace trust in gold with trust in the banking system, through a gold exchange standard under the organizing framework of a national central bank. Having a central bank would obviate the need for gold to circulate except to settle international payments, while permitting the regulation, to better match demand, of the potentially infinite extension of credit and production of bank money.

Ambedkar came to very different conclusions. He argued that India’s currency problems originated in its colonial subordination, including its trade surplus with Britain and the taxes and so-called home charges it was required to pay to the colonial power and shareholders of the East India Company—payments made, in effect, for the dubious privilege of being a British colony. Ambedkar criticized the discretionary management of the rupee by colonial officers who would never themselves experience the effects of their decisions, especially the sacrifice of internal monetary stability for the sake of maintaining its external rate of exchange with gold. In calling for a true gold standard, Ambedkar sought to guarantee the value of money outside such politics. He rejected as a particular form of anti-Indian ethnocentrism arguments that such a currency would lead to hoarding. There is no reason, he insisted, to expect the Indian people to hoard any more than the people of any other country; if there is hoarding, Ambedkar 1923 (260–61) wrote, it is “not the fault of the people but of the currency system.”

Like Keynes, Ambedkar grasped the political implications of monetary policy, but he differed on the nature of money itself. Keynes, he wrote,

seems to hold that a currency and a standard of value are two different things. Surely there he is wrong. Because a society needs a medium of exchange, a standard of value, and a store of value to sustain its economic life, it is positively erroneous to argue that these three functions can be performed by different instrumentalities. (Ambedkar 1923, 257)

Ambedkar is correct: Keynes did separate the nature of money from its various functions as currency. Money is, for Keynes, money-of-account. His Treatise on Money (Keynes 1930) opens by demonstrating how, beginning from the unit of account, other moneys can come hierarchically into being. Money-of-account is the “description or title,” while “money is the thing which answers to the description” (Keynes 1930, 4), just as the title of king differs from the person who answers to it: the analogy Keynes himself uses. It is the state that “claims the right to declare what thing corresponds to the name” of money, as well as the right “to vary its declaration from time to time—when, that is to say, it claims the right to re-edit the dictionary” (Keynes 1930, 5).

Yet, according to Keynes (1930, 5), the money-of-account must also be “continuous.” When the state rewrites the dictionary with new units, the new entries must “bear a definite relation to the old.” Even if the state does not draw this relation, “the market”—that is, people themselves—will find “a parity between the two.” In light of the bids for remonetization described by Geeta Patel and Kath Weston, Keynes seems to echo anthropological accounts of kinship in the distinction he makes between a status or role and the person occupying it, a distinction that extends to his depiction of a kind of monetary genealogy.

In fact, Keynes (1930, 5) makes the kinship metaphor explicit: “There can be no real breach in the continuity of descent in the pedigree of the money-of-account, except by a catastrophe in which all existing contracts are simultaneously wiped out” (one that, say, results in a debt jubilee, or perhaps ends the state itself). The first pages of the Treatise on Money are filled with what look like kinship diagrams—family trees and lines of descent showing the pedigree of moneys born from the state’s money-of-account.

Money is, in this sense, not just a creature of the state but a gift of the state. A Maussian gift, for it does not arrive free from obligation, dependency, power. What happens when that gift is withdrawn or canceled? For Ambedkar, the withdrawal of this particular gift and the return of the gold standard would have also, he hoped, made possible a disentanglement of money from the racialized politics of colonial India and the United Kingdom. Yet what we see in the reactions to demonetization documented in this Hot Spots series is the relational work of remonetization, the reconstitution of the state’s money-of-account in everyday practice: through formal and informal intermediaries, social and institutional infrastructures—and indeed, bloodlines, kinship, and the household. People prove Keynes’s point: money is relational. But in doing so they establish and reestablish the state’s money-of-account atop the hierarchy of money, in its position as the apical ancestor of all other moneys animated by these human economies. They thus establish and reestablish the state’s authority and, with it, as Ambedkar knew very well, the capacity for both sovereign magic and sovereign neglect.


Thanks are due to Nima Yolmo for research assistance.


Ambedkar, B. R. 1923. The Problem of the Rupee: Its Origin and Its Solution. London: P.S. King.

Keynes, John Maynard. 1913. Indian Currency and Finance. London: Macmillan.

_____. 1930. A Treatise on Money. London: Macmillan.