Anyone who watches the political programmes at Sunday lunchtime will he familiar with the question "Where’s the money going to come from?" On 1 May, for instance,
Brian Walden pressed Labour MP Ann Taylor on this question as a rejoinder to her suggestion of increased nursery provision. And Robin Cook, who insisted on the European Social Chapter (
On The Record, 29 May), was similarly rebuked by the money question. Labour MPs of course have no real response they can hold against this shibboleth of received wisdom; they believe in the basic precepts which necessitate the asking of the question.
It seems obvious to socialists that an analysis of the nature of money is required here. It can't be simply assumed that money is a type of innocuous representation of actual wealth. On the contrary it must be asked if its overall arithmetical form imposes certain ideological categories and casts its own ethical (or unethical) shadow over our existence.
Nowadays the analysis of money has disappeared, in Orwellian fashion, from economic discourse. But critiques of money extend back over 2000 years. One of the best discussions of money, and one that greatly influenced Marx, is still that of the Ancient Greek philosopher Aristotle.
Aristotle
Aristotle attributed two natures to money, that of a means and that of an end. This distinction reflects an ethical critique of the effects of money and how it is used. Some uses of money were acceptable and even laudable, argued Aristotle, as when money is used simply as a convenient means of getting useful things. But other uses, he said, were unacceptable or perverted, as where the exchange of goods was simply a mask for the accumulation of money or spurious wealth. So trading directed towards the use of goods with money merely as a common medium of transaction was seen as good, and trading directed at the exchange of commodities for profit, with commodities used merely as a means of securing this profit, was seen as bad. The distinction corresponds closely, but problematically as we shall see, to the one between use value and exchange value.
Aristotle used the example of the Delphian knife to illustrate the perverting effect of money. The Delphian knife was a tool that was made to be exchanged for money rather than to be used to perform a task. It could be used as a knife, a file, and a hammer, but in none of these functions was it very adequate, its only advantage was that it was cheaper in money than the three separate tools together. Hence a compromise is made between the tool-like properties of the knife and its exchange properties, and insofar as it was made to serve the latter function, it is not really a tool, except, as it were, a tool for making money rather than things.
Even philosophy itself is compromised by its association with exchange value. According to Aristotle, the Sophists let themselves be tainted by the profit motive, for the Sophist "is one who makes money from an apparent but unreal wisdom". The medical profession too becomes confused when its ends are mixed between money-getting and health. Contemporary examples inevitably spring to mind: "health" businesses selling liposculpture, far from providing perfect information on the effects of the operation, as the market sophistry maintains, on the contrary deliberately deceive patients about the risks involved, in order to secure the sale. And it could be argued that in every consumer product, a compromise must be made when the purposes involved in its creation are divided between exchange and use value; between the requirements of the seller and those of the customer.
Aristotle’s distinctions of exchange and use, means and ends, ethics and purely economic factors apply to the modern orthodoxy. The relatively trivial question "Where’s the money going to come from?" becomes the penetrating question "What is money?" The latter question challenges the received categories of exchange relations and demands an investigation into the barbaric practices out of which exchange arose. It is a question that asks is money realistic — or atavistic?
It is clear that ideas as much as facts are central to the workings of money. For example, the principle that whatever projects are envisaged must come out of existing funds. Fiscal spending, so it is said, represents a real practical limit which it is impossible to surpass. Behind this is the idea of a finite cache of wealth, a fund or a larder, in which things have been stored, and out of which things can be withdrawn at a later date. Is this really a practical matter, as no doubt Brian Walden would believe, or is it the promulgation of an ideological programme?
Admittedly the roots of this "larderism" lie deep in the facts of prehistory, when the store of food for the winter exemplified the model of a limited physical source determined by the real quantity and the real fertility of the land. This model still provides a basic formula for the operation of banks and nations, the only difference being that food has been replaced by an abstract symbolism of money, taking the form of bank reserves or national currency reserves representing all forms of production, not just agricultural.
This larderism has a powerful hold on the level of folk economics. On this level, the constraints of fixed budgets emerge in populist style as slogans such as "you can't just print money", "there is no bottomless pit", "you can't have your cake and eat it", "you don’t get ought for nought", "money isn’t made in heaven it's earned here on Earth", "there's no such thing as a free lunch", etc. Ah, the stuff tabloids are made of. And on the academic level, the principle seems to be simply elevated by nobler terms of expression rather than critically evaluated. Lord Robbins urged us to accept economics as the eternal problem of matching infinite wants against finite resources; the fundamentals of Mercantilism insist that "no man profiteth but by another's loss". All these aphorisms, ranging from crudity to casuistry, suggest a store of goods gained by toil in the summer as protection from the oncoming winter.
Despite creditable origins, this economic picture is logically flawed by its attempt to project the properties of a primitive domestic situation upon the complexities of the modern macroeconomic world. Some systems do follow the model of a fixed fund of goods, but the patterns of complex interaction between humankind and the biological and physical world, are, or can be, either synergistic or mutually exclusive. In the case of synergy, the more you take out of them, the more you have left; in the case of exclusivity, activity in one area has no effect on activity in another. The universal form of money makes all activities mutually burdensome, and insists, for instance, that the growth in education must be paid for by cuts in health, or investment in transport must be paid for by defence. Thus a kind of universal parasitism is established. One must question the nature of a formula of mutual burden which happens to have the very useful effect, for the Establishment, of dividing factions of society as competitors for limited resources.
The concepts of synergy and mutually exclusivity seem to violate the plausible, but examples are easy to find. The human body is synergistic in that the more you expend its energy as in exercise, the more energy you have as in fitness. If the linear economic model was applied to the body, you would get fit by sitting still and eating, thereby accumulating capital as fat. Mutual independence is clearly a fact of the natural and human worlds; there is no logical or physical connection between distant objects and activities. A bee taking honey in Glasgow is not constrained by one doing the same in London, yet Strathclyde is constrained by public spending in the Home Counties. Why do we impede ourselves in this way? Well, the popular wisdom is that there is only one pot of honey (money), for which we vie for attention. We should learn something from the symbiotic ecology of insects.
Free lunch
An even more serious error of money symbolism concerns the frontier of possible growth. The pseudo-physical arithmetic limit on economic development seems to be rooted in the Physiocratic principle that all wealth comes from the Earth, or the similarly-arbitrary Mercantilist precept that all wealth comes from the trade, or for that matter from the Marxist view that value is added by labour. But not only are the Earth’s resources, in contradistinction to the money model, symbiotic; they are also supplemented, as is the human body, from an external source. The human body is an organism in the world and receives its energy through food, and the Earth is a planet in the solar system, that likewise receives, free of charge, an inexhaustible input of fuel from the star in the middle of the solar system: the sun.
The sun is the free lunch that orthodox economics can’t come to terms with. The money system operates on a closed world assumption, on the much-stated monetarist principle that money is made here on Earth, it doesn’t come down from the sky. In fact all the wealth-making processes on the Earth are driven by extraneous energy that does come down, as it happens, from the sky. If money fails to reflect this reality and its function becomes not to reflect actual resources but to impose an ideological limit on their development and distribution. And if those limits demand that the homeless cannot be housed and that the hungry cannot eat (because where’s the money going to come from?) then that ideology isn't innocuous but a necessarily ethical, and unethical, force.
So Aristotle’s point is proved: the effect of money does poison the transactions and distributions it enforces its rule over. But not just directly because of the profit motive or exchange, but indirectly because of the general nature of the abstract form of exchange which embodies false assumptions about the nature of the world: the assumption that the fiscal frontier is the final frontier.
But to make Aristotle’s analysis fully consistent we ought to abandon the means/ends distinction which had a confused relation to the use/exchange distinction, and say not that there are two types of money (use money and exchange money) but that money necessarily is exchange value, that exchange value is necessarily perverse, and that true usefulness is necessarily contrary to the abstract value which money imposes on the physical world.
If Aristotle had accepted this analysis it would have solved a number of problems for him. Instead of having a tension between the two natures of money, one related to use, and one related to exchange, he could have rejected exchange completely and have said that the evaluation of goods should be dependent solely on their quality as defined in use. In a socialist system it is indeed use value that is the criterion of true wealth, and the spurious abstraction which exchange relations arbitrarily, and harmfully, apply to useful things would be simply removed.
If the premise of inherent scarcity is abandoned, as it can be when the qualitative, generous and realistic physical frontier is substituted for the miserly quantitative economic frontier, then it is no longer necessary to measure all goods by one universal standard as a means of rationing them. Is money the measure of all these things or are humans? Let us say the latter and thus advocate, along with an Aristotle-made-consistent, the abolition of exchange and the abolition of money. And if money is abolished, the question, where is the money to come from, is obviously redundant.
Norman Armstrong