power; but the power to create money is of more fundamental importance. Money-creating power is an essential element of state sovereignty; yet we shall see that in modern capitalism this power is shared with the banking system. Here, the dual nature of money’s power as an ‘infrastructural’ public resource and a means of ‘despotic’ domination becomes apparent. We have noted that modern money can be produced by the creation of debt, which necessarily entails an inequality of power between creditors and debtors (Graeber, 2011; Hager 2016). A central theme of the book will follow the lead given by the great sociologist Max Weber, who interpreted modern capitalism as ‘the struggle for economic existence’, in which money is a ‘weapon’ wielded by conflicting interests to achieve their aims and strengthen their position as much as it is a public good for pursuing our collective welfare (Weber, 1978, 93).
Today, we are encouraged to believe that the questions of who creates money and for what ends and in what quantities are technical matters to be decided by experts; but they are political questions. As we have noted, the control of money creation lies behind major political struggles in the representative democracies. Those in favour of monetary expansion to finance employment and consumption – the broad Keynesian camp – are opposed by those who place the avoidance of inflation as the main priority of monetary policy. Furthermore, there is no single definitive rational means of deciding between them. Whichever route is taken depends on which school of economic theory and conception of money is chosen, which, in turn, is related to different interests in society: for example, debtors versus creditors; possessors of accumulated money wealth (rentiers) versus those dependent on the employment of their intellectual and physical labour – ‘Wall Street’ versus ‘Main Street’, as the question was posed during the Great Financial Crisis in 2008. Most academic theories of money – especially those held in most orthodox and mainstream schools of economics – fail entirely to address the question of money and power: that is, to register that money is a question of political economy.
The following chapter explores these astonishingly persistent intellectual disputes and their impact on the conflict over who should create money and control how it is used. Chapter 3 draws the theoretical discussion together in a summary of a social theory of money which is used to frame a brief account of Weimar Germany’s severe hyperinflationary crisis, where money’s social and political foundations are ‘unveiled’ (Orléan, 2008). Chapter 4 continues the twin themes – theories of money and struggle for its control – in an account of the development from the sixteenth century onwards in western Europe of the distinctive system of shared money creation in capitalism created ‘exogenously’ by states and ‘endogenously’ by private banks.
Chapters 5 and 6 examine how this dual monetary sovereignty and capitalism’s private contract law have resulted in complex and fragmented monetary systems comprising state-issued currency and bank credit money mediated by central banks; myriad ‘near’ moneys issued as IOUs by financial institutions; local community ‘complementary’ and ‘alternative’ currencies; and crypto-currencies such as Bitcoin. In chapter 7, we see that proposals for monetary reform raised by the Great Financial Crisis of 2008 remain informed by the unresolved intellectual disputes which mask and obfuscate the essentials of the money question: who should control its creation and how it is to be used. Some tentative observations are offered in the concluding chapter.
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