After all these years of privatizing any and all possible public assets, the pendulum has the momentum to swing back the other way, but it has to do it as an effective step into the future and not just trying to reverse what has already happened. I think that as money has evolved from its origins as an accounting of private property to a public medium of exchange, this point should be introduced into the public conversation.
Money is a medium of exchange, store of value and accounting device. The first two work at cross purposes because as a medium of exchange, money functions as a public utility, while as a store of value, it is a form of private property. By and large it is as private property that most people think of it, due to its historical origin as an accounting of assets, yet the reality is that modern monetary systems are fundamentally a medium of exchange and only as a function of that are they a store of value, as they have no real backing other than faith in the issuing institution and must be invested for the system to function and maintain value. If this understanding of money as a form of public utility, or commons, were to be broadly considered, it would have definite repercussions in the context of the current crisis.
The monetary system, with its broad connectivity, is similar to a road system. You own your car, house, business, etc., but not the roads connecting them. Money is in many ways identical to the road system. Money is not private property, since you cannot print what you want, as the government retains copyrights, but effectively loans this out to the private banking system. Its value is based entirely on public faith in the institution issuing it, so the taxpayer is ultimately responsible for guaranteeing its value. The result being private gains and public responsibility.
The concept of abstract wealth as a store of value has reached the point of being socially and environmentally destructive. Given the human tendency toward intellectual reductionism, that ability to distill out abstract wealth from ones social interactions and environmental situation is profoundly corrosive to both society and the environment. It is similar to processed sugars, and other forms of distilled ingredients which then must be diluted to be palatable.
Consider how society would function if money were to be considered entirely as a public medium of exchange, similar to a road system. For one thing, in most circumstances, it simply wouldn’t be a factor, as outside of the financial system, most money is in circulation and wealth is stored as tangible assets. Even in situations where one might be selling and buying a house, or a business, it functions as a medium of exchange. Similar to a road, where large vehicles need more space and pay more taxes, while smaller vehicles naturally give them more room.
Now consider the situation of storing value. The overwhelming problem with capitalism isn’t that there are poor people in the world without recourse to income, as poverty has always been a problem. No, the problem with Capitalism it that by focusing on money as a store of value, it has created a large surplus of capital. Since the demand for money is so large, as everyone thinks they must have enough to personally insure their own security and health, as well as viewing it as proof of success to accumulate as much as possible, a savings glut, as Bernanke put it, has been produced that cannot be effectively invested. This encouraged ever more lax lending standards as a way to absorb savings and sustain further growth of the money supply. Now that bubble is bursting and this evaporating wealth is panicking and driving up commodity prices, I think the very basic question of whether we should even have a system of stored abstract wealth needs to be re-examined. If people cannot suck value out of their social connections and environment to store in a bank as a form of ego gratification and social status, they would have to resort to putting their efforts and desires to increase status and build security directly back into restoring and strengthening their social and environmental health.
So I don’t think there needs to be currency for storing wealth, but only currency as a public utility for exchange. Not only are the enormous pools of personal wealth that it enables an excess the planet can no longer afford, but more importantly they provide an destructive role model for everyone else.
This isn’t socializing wealth, but understanding what money is in the first place. The effort to privatize Social Security is a good example of the disconnect between assumption and reality, since there is simply no place to invest this amount of additional personal savings and would only be a boon to the brokers given the responsibility for handling it. We invest in our old age by investing in our parents old age, so that our children might continue the practice. It is a clear example of investing in the larger community as a viable form of savings. It should also be noted that since the Federal Reserve controls the money supply by buying and selling government debt, the Treasury issuing large amounts of additional debt logically serves to support the value of the currency as well and this transfers value from taxpayers to bondholders, but that is a much larger topic.
Obviously we would have personal savings accounts, but what sets the amount of viable savings isn’t the cumulative desire for wealth, but what can be productively invested. So there has to be some regulatory method for distributing the potential to invest as broadly as possible. The logical method is to reinstate higher tax rates, but there might be a whole range of ways to encourage those able to accumulate large amounts of wealth productively to be able to invest in ways that benefit aspects of society and or the environment in ways they chose, much like Bill Gates and Warren Buffett are currently doing. Wealth is a convective cycle of rising assets and precipitating benefits. Stopping this process only creates large storm clouds of marginally productive wealth hanging over a parched economy, much like we have now.
Currency did originate as a store of wealth, because it started as a accounting of specific assets, but political power also started as a projection of individual influence and evolved into a very complex corporatization of personal power called monarchism before the inherent instability and corruption drove society to devise methods for making political power a public trust. It has come time to make economic power a public trust as well. Money lubricates the economy, rather than fuels it. Ideas, labor and resources are the real economic fuel.
An effective financial system must express the dichotomy of bottom up process and top down structure that is the basis of nature, from ecosystems and the organisms which inhabit them to the political model of the democratic process constantly revitalizing the republican state. How to do this is to make the currency a national function to provide broad stability and accountability, based on the Treasury, or make the Fed a unit within it, while the banking system would be a function of local and regional government, with the necessary profit, generated by interest rates required to make investment decisions be based on viability, a form of public income to support the healthy social infrastructure necessary for a healthy economy.
Since money would be considered a form of public utility, the desire to accumulate large quantities would be curtailed, since it would be viewed as infringing on the health of the society in which one exists and this wouldn’t have the desired effect of raising ones social status, or even ones economic position, as it couldn’t be used to generate the increasing returns which wealth currently aspires. If hoarding currency lost its civic standing, inflation wouldn’t be necessary to maintain circulation of currency, so accounting values would be more stable. So rather then trying to re-regulate the entire economy and society, just start with nationalizing a banking system that will have to be bailed out anyway. Government might be slower than the private sector, but that might be more healthy, since its perspective is longer term.