5.

Money, Debt and Growth

1. Presence
2. Givenness and Confidence
3. Making Unalterable
4. Growth and Money’s Modern Origins
5. Debt and Growth
6. Recovery and Restraint
7. Humanity as speculation

In this chapter we tackle the question of money. Each of us is familiar with it and
believes that we would be able to achieve more if we had more of it. But what is
money?

Money is a medium that makes flows visible. It signals the flows that, over the
long term, transfer goods from one generation to the next. Life is transferred
from one to another generation, so all the material means of life by which our
bodies are sustained must move from older people to younger people. Money
enables us to observe this flow, but it also disguises it. We have discussed what
one generation owes another; in this chapter we relate money to the issue of who
owes whom, and to the idea of growth.

1. Presence
Embodiment
A society depends on its acknowledgement of the debt between parents and
children and between one generation and another. Without this sense of
obligation to a new generation, no new generation would appear and society
would come to an abrupt end. If we feel no gratitude to those who were generous
with us, we will not know how to be generous with one another. Without an
understanding of what we owe to previous generations, we will begrudge leaving
anything to future generations.

Face-to-face, person-to-person
We present things to one another. Perhaps the most fundamental gift that can be
given, is life. Your parents gave you life. Whatever you gave them would be a
form of acknowledgement of that prior gift of theirs. Your gift would tell them that
their offspring recognises the goodness of his life and is glad of the love that
created it. The most fundamental gift you can give your parents is a grandchild.
When you present your first child to your father and mother you demonstrate
that you are aware that you have received your existence from them and regard
that gift as good. By bringing generation one face to face with generation three,
you communicate that they have not wasted their effort and so you vindicate
them.

Grandparents, uncles, aunts, cousins, neighbours and friends come to pay

homage to mother and baby, bringing clothes for the baby and so starting the
torrent of gifts that appear at all subsequent birthdays, the impracticable
character of which indicate the gratuitousness of the original arrival of new life.

The sheer bodiness of babies is the obvious thing about them. They cannot help
you, so you have to help them, entirely. Their neediness encourages us to pick
them up and take them into our care, a gift impossible not to accept. Though all
persons may come as gifts, the gift of the newborn is not obscured by attempts
at reciprocity. Parents and friends must pick them up and lead them into all the
complex forms of reciprocity by which they will learn to relate to others.

1
Grandparents must turn up and be present to their grandchildren in order to pass
on to them knowledge of their origins, give them the familial basis of their
identity and with it, assurance of their value. They give their grandchildren a
past, a context and with it an identity; when those children know their origins
they can begin to bring their own particularity to bear in their encounters with
others. Decades later they can tell their incredulous grandchildren about their
own parents and so communicate a sense of intergenerational continuity. Such
private family sentimentality is the means by which any of us becomes a mature
and public person. Through years of care and interaction children grow into
greater command of their bodies, and increasing ability to reciprocate and take
up their personhood as a public status. They learn how to inhabit their own
bodies as the instrument of their public personhood.

Over the long term all economic action must serve the upbringing of another new
generation. All commerce is the slow transfer of property from the older, receding
generation to the younger, advancing generation. The exchange of commodities
has to serve those who are directly involved in this work of first providing infants
and then supporting them whole they grow to maturity. The economy is about
turning children from mere bodies into adults in the course of two decades, in
order that these adults will so affirm one another in the market and public square
that they will then be ready to repeat the process. The economy has no other end
than to serve this process of the procreation and formation of persons. The more
that this purpose is obscured, the greater is the disincentive to embark on
procreation. Nonetheless the torrent of manufactured goods can only have this as
its end, for everything we do, the commodities that we purchase, all derive from
our parent’s gift of life to us, and serves to reflect that gift by this return gift.

The continuing presence of the tradition

We may bring a new generation into existence. We have all the permission that
we need. By producing a new generation we honour our parents, their parents
and all our forebears. We hope that our children will do the same for us when we
are gone, and that their children do the same for them. We make this more likely
if we remember our own forebears. If we decline to make this acknowledgement
and pay this debt, no one will do for us. We have to assume that inter-
generational debt will continue to be acknowledged and paid, or .

We have permission to bring a new life into existence. Our society’s past gives us
all the licence needed. That the past has resulted in this present is reason enough
for us to work for a continuation and future. We may take that ‘was’ as our own
‘shall’. Life is part existent (‘is’) and part to be sought (‘ought’), part present and
part future. It is faith that holds together that ‘was’ and this ‘is’ and this ‘should’
and ‘will be’. This connection and unity is not imposed, it but may be discovered,
with joy. Our past gives us the licence we need to enter relationship and do
business with one another. We may have sufficient confidence and motivation to
work and bring new things into existence, and to go into the public square in
order to procure what we need and so we have an economy. An economy
depends on such presumptions in order that there be continuity and stability;
continuity is more fundamental than change or growth. At the basis of any
economy is the gift of life and its later thankful acknowledgement as a second
generation presents a first generation with a third, so that generations continue
to come face to face with their forebears and successors and recognise and affirm
them in gladness.

Presence and co-presence –

Every transaction is a meeting of persons. We see some transactions as
encounters of two persons, others as encounters with many persons with whom it
is impossible to come face-to-face. But even when there is no explicit meeting,

2
but an apparently faceless process, a transaction is an encounter of two persons,
and through these two, of many persons. The two parties will of course meet and
come face-to-face when the transaction is important enough to warrant it. But
every single transaction is fundamentally a meeting of persons, and we may
regard all of them as a meeting face-to-face. We will deal with the transaction
both in terms of two and of many persons, whose encounter takes the complex
form which we will describe in the next chapter as ritual.

First though we must concede that each one of us is not simply one, but one who
is also many. Each of us is both an individual person and the work of many other
persons. No individual is his own creation. Since each of us present to other
persons in the world because we have a body. It is our body that makes it
possible for others to find us. But this body is not our own creation. From the first
we found ourselves in it, and are unable to find ourselves without it. This body,
which is the form our presence takes, is their work, and thus evidence of their
presence too. Our presence in the world is not merely a matter of what we do,
but also of what all others do for us and what they do to us. Their action serves
to make us the people we are. In large part we receive our life and identity from
others. We talk each other up and we talk each other down and thus our
individual stock as a public being goes up and down in the market place of public
opinion. And we give one another the material means of life, for we are bodies
that need sustenance. We talk one another up and we give one another the
material means of life: for embodied persons these two elements of material
provision and public recognition are required. Persons may meet one another only
because they have been taught to inhabit their bodies as members of society,
and this because many other people, parents and others, invest their effort over
many years in order to make this possible. Our bodies are the means by which
we can be present to one another, physically, in one place. Bodies are not inert
things; they are the means by which we are present to another, and thus are
persons.

Making one another present

Now imagine that we meet face to face. You are one person and I am another,
yet we are not simply two individuals. I am the product of many people and
though you do not see them when you meet me, but I could not be present
before you without them. I can modify my presence, but I cannot entirely create
it. I am made presentable to you by the clothes I chose for our meeting. When I
come into the room to meet you for the first time I am wearing a particular set of
clothes. I picked this shirt and jacket in the hope of giving the right impression, of
appearing sober and trustworthy, the kind of person you would ready for an
ongoing relationship with, to do business with, at least not recoil at.

I chose this shirt, from the many shirts in the shop, in anticipation of just such a
meeting. This shirt makes me presentable to you to the degree that it appears to
have sprung from its cellophane wrapper, free of association with earthy material
or to anyone's effort. It was made by someone on the other side of the world,
servicing machinery designed, built, transported, insured, fuelled and driven by
people from all corners of the world in connections only traceable statistically.
You see me better because you see me in this shirt. You don't see the many
people, unknown to me, who made this shirt. The material means by which we
make ourselves presentable and so present to one another are a token of our
success in separating the work from its makers, making the commodity visible,
with it to make ourselves visible, and its makers invisible.

I am dressed and covered by other people. Perhaps you should see the clothes I
wear or car I drive as evidence that I have been coercing people, on the other
side of the world, to supply me with the material resources by which I intend to

3
impress you. If you are discerning enough you may be able to tell whether they
have not been recompensed, so that unknown to me, my appearance
communicates more about them than it does about me.

This is my body. Of course you have to be in the same room as me, or at least
see a picture of me, in order to see it. My body is a function of the food I have
put into it, but I didn't produce any of this food myself, nor have I ever met any
of the people who produced it for me. Given that I eat so many kilos of meat a
year, you could estimate that I am the product of so many animals, so many
hundredweight of vegetable matter, transported to us by so many tons of fossil
fuel. Yet, you have been brought up not to see these many animal or vegetable
inputs when you see my body, but just to see me.

Every one of us is a material being, a creature of flesh, who requires inputs that
he is unable to source for himself. Imagine a peasant farmer. He regards his
animals as the meat that will feed his family: when these animals are eaten their
bodies will become part of his body and that of his children. They are animal
bodies now, but they will turn into human bodies by next year. As he looks at this
flock or herd he knows he is looking at the future of the bodies of his own people.
And what is so for him is true for us too.

In order that your body remains healthy so that you remain alive, something like
the following events have to occur. A farmer takes his flock to market where they
are bought by the wholesaler; the slaughterman turns them into carcasses; the
butcher who turns these into packets of meat taken on by the distribution people,
the freight transport people, who are supported by the insurers, the
transportation people and all who crew and service those craft and maintain that
network, and all those who train them, and police and protect them. The meat of
this sheep travelled from a hillside on the far side of the world to your plate
because a hundred people operated the machinery by which this meat was
packed in this box into this pallet, into this container and this trolley and onto this
display shelf. We may not see them when we put this cut of meat into our
shopping trolley, but it is our evidence that this great host of people has done its
work. They have provided us with the edible products that we have to consume in
order to have a functioning body, and thus to continue be present before one
another. Over a year our body is the product of thousands of people, supported
by hundreds of thousands of others. At every point we can ask whether those
people earned enough to keep their families and send their children to school.
Our body is the synthesis of such agri-industrial processes, and thus we owe it to
those many people involved in those processes. But we can ask whether they are
built up by this process or exhausted and consumed by it? We do not know
whether the food that has nourished and ultimately constitutes our bodies has
come from producers who have not been adequately recompensed for, whose
own bodies are not adequately nourished. We live with who knows what debts,
our lifestyle sustained at what long-term cost. We may have been living at their
expense.

Despite all this my body is absolutely crucial to you. For when you decide that
you want to do business, with me, we have to meet. We decide to come together,
so that your body and mine are in the same room. We want to grip one another’s
hand, look into one another’s eyes, and on the basis of a thousand tiny physical
cues, each can decide whether the other is reliable enough to do business with.
We want to see, hear, touch and smell the physicality of the other man in order
to satisfy ourselves of the particularity of this event of transaction.

4
 ‘Cues of intimacy such as facial communication, testimonial and non-
verbal gestures bypassed the filter of reason. They are compelling even
when consciously disbelieved.’1

When it is important enough, every transaction must be based in this person to

person meeting; at bottom, person to person meeting is all that every transaction
is. We know that particularity, and some of the time, the unique character of such
personal encounter cannot be faked. It has to be done properly.

We can carry out great numbers of everyday transactions in the abbreviated

account, that is, with money and ‘credit’, only because at other times we take
care to perform the ritual of transaction in full, person-to-person. There can be
many retail transactions because there are larger wholesale transactions, and
there can be wholesale transactions because there are long-term contracts
between persons, acting for corporations, who have secured their relationship
with lots of expensive personal contact time. The food and other material
resources that sustain my body and make me a presentable person travel from all
corners of the world to reach me through hundreds of thousands of transactions,
each of which is based in a contract secured through the face to face encounter of
executives who crossed the world in order to meet. Although most transactions
simply involve the communication of data, we may deal with them as person to
person encounters.

2. Givenness and confidence

We need to relate two apparent opposite things. We need to establish that an
economic contract is simply a convention, and to establish that those conventions
that we call contracts are absolutely reliable and as unyieldingly solid as anything
thing on earth. We need to show both that money is the function of people’s
recognition and nothing more than that recognition. And we need to show that
our financial and judicial institutions are nonetheless unshakeable. Economic
reality is given, and it is given by us, or more specifically to us by our forebears
in the hope that we will pass it on in good shape to our own successors.

The fixedness of past event

We want to get to know each other. We do so because we hope to gain from each
other the recognition that each of us needs, and which we can only source from
other persons. And through them we hope to gain the material means which
support our bodies and so make us present to one another.

We meet one another in the marketplace. Specifically, you and I have to meet in
your offices or mine. We have a big contract that we want to award to someone
and believe that you may be the right person for us. We see that you have the
right qualifications, we know your reputation, we are convinced that you are a
significant player and believe that business with you will be worth our while. Yet
to give us greater confidence that you are worth this contract we need to know
what credit you have, and that means we need to know your credit history. Tell
us more about your previous big projects, and who else you have done business
with. Convince us that you are the right person to give this contract to. Give us
an account of yourself – again.

Exchanging accounts
We demand an account of each other for we want to know that the other person
is worthy of our investment in him and we want evidence that he is going to
invest in this relationship too. We exchange accounts of ourselves, and of our
place in our industry. Our business relationship is articulated by this exchange of

1
Offer The Challenge of Affluence p. 359

5
our accounts of the world; each specific event is an abbreviation of the whole
account. A business relationship is a conversation which is made up of the
separate transactions which are our individual speeches. A transaction is an
exchange of accounts. We want to be reassured that the other man shares our
view of what we may achieve together. Our separate pasts open the possibility of
a shared future. past is taken to enable a future, but we need each other before
this future can take place. When we do not like the valuation that this group offer
us, we can go to another, and appeal to them for a new and higher valuation of
our place in a shared future.

Money is a form of speech. In it we offer one another abbreviated accounts of our

joint identity, and each is intended to bring about the relationship it describes.
Every utterance intends to persuade: if enough people say that so-and-so’s stock
is falling, it falls. We are worth what other people say and believe we are worth.
‘Utterances receive their value only in relation to a market’, as Bourdieu puts it.2
Business is about persuading audiences to give their consent for your account of
what takes place. You have to convince them and hold them by out-narrating
your rivals. You have to give them an attractive account of who they are, by
telling them a story that offers them a bigger part than alternative stories
provide. This story holds them for narratives have power.

Action involves convincing an appropriate audience of your action. Various

routines may be employed in order to bring about the acknowledgement of the
necessary audience. It does so through the practices which our society refers to
as the law of contract. Most transactions take place without the need to make
these practices or that law explicit. Large contracts require a more thorough
demonstration that all relevant practices and canons are being observed, and we
instruct lawyers and accountants to be on hand to provide such demonstration.
This transaction may take place because it meets the criteria and satisfies all
relevant constituencies and audiences. Where there is doubt, the issue may be
settled by a more prolonged public examination of how this case fits the rules
established by all previous successful cases and how this transaction fits the
precedent made by all previous transactions. Law courts rule on the basis of case
histories. They decide which earlier cases the case currently before them is; they
identify the precedents by which to understand this case. In court the two sides
offer analogies from previous cases when these are accepted as analogies by the
court, they argue from them. Argument (logic) follows analogy (narrative). The
event of a contract is inseparable from the process of the creation of a narrative,
and records of that narrative, and symbols that are abbreviated forms of those
records and that narrative.

Formalities are employed to enforce the sense of occasion that is intrinsic to any
large transaction. Contracts in the ancient world were secured by creating a
public event through the employment of animals and their blood, which we term
‘sacrifices’. A large public contract may require the employment of a good
number of symbols and tokens. Even when two corporations sign a contract, the
terms set down on paper are a public demonstration by the two parties to the
witnessing and sponsoring community of the earnestness of their intent. At the
founding of an institution there is an event, with speeches, votes of thanks and
the unveiling of a plaque. There may be drinks and a banquet. A sense of the
pure intentions of the whole project may be lent by public ceremony involving
young people in sport or music. We may decide on a concert, fireworks, the
release of doves, the giving of memorabilia to the participants. We will do
whatever is required to make a memorable event, for we want to establish a
widespread public recognition of this founding contract.

2
Pierre Bourdieu Language and Symbolic Power p. 77.

6
 ‘The persons present at these ceremonies followed, with attention either
pious or casual, the progress of a ritual elaborates by specialists in the
art. They were not interested in the details; all they wanted was that it
should be a real ceremony... for rites essentially symbolise nothing, any
more than music does. They do not necessarily refer one back to a
different reality, to beliefs. They form a species of behaviour sui generis
in which what matters is to do things ceremoniously, the details
remaining arbitrary.3

The gesturing with these various props and tokens is intended is to create a
narrative that will win and hold an audience to watch to see that the narrative is
subsequently honoured. The audience bound by this narrative will be the
guarantee of the contract. The paperwork and other ritual of the contract are the
means with which this community is gathered and the contract is written, we
might say, on the memory of the community that witnesses and judges it
binding. Contract and oath-taking is the means of enthralment by narrative
enlarged by the public gestures that require physical objects to serve as the
props which amplify our gestures and create the drama which establishes and
secures this new relationship which we have agreed upon. Physical things matter,
for they remind us of our relationship and signal the existence of this relationship
to others.

Things in exchange
There are three parties to every transaction. The third is made up the present
audience. We hope that this audience is aware of the many earlier contracts
secured by earlier audiences. Our ritual alludes to precedent and so the many
people who have done things this way, and a satisfactory reference to precedents
secures the contract.

Things have places in relationships. We cement relationships by formal events,

which are shaped by particular rituals in which specific objects are involved.
When – we may make use of plaques, fireworks, doves, tee-shirts or anything
else that bears the company logo. We may give each other some executive toy
again with our company crest or livery as a formal gift; we might arrange a
meeting in exotic location in which a whole panoply of in as the meeting of two
tribes. But in the vast majority of transactions just three things are exchanged:
the first is the good that is purchased, the second is the money with which it is
purchased and the third is the receipt that records that purchase.

Say you buy a book from me. You present the book you want to purchase at the
cash desk, and offer some form of payment. Having rung the sale up on the cash
register, I offer you a receipt. We have these three things – money, receipt and
the purchase itself. We should take the thing-like quality of the money and
receipt as seriously as the book itself. You leave with book and receipt. This book
entered my bookshop accompanied with paperwork, a despatch note and invoice
from the distributor and publisher. When you give the book to your sister you
send it off to her along with a birthday card, so that she knows that the book is
from you. Every commodity comes to us accompanied by the record of its
provenance. Invoices, lading bills and all the other forms of record tell us where
each thing is from, and are evidence that we got it legitimately and may
legitimately pass its ownership on. The receipt is part of the technology and
practices of record. But here is the new part – so is the book. This book is part of
the technology and practices of record. This book marks the years of your

3
Paul Veyne Bread and Circuses p. 317

7
relationship with your sister. Even before that, it marked your, fleeting,
relationship with me, the book store owner.

Here I am offering you an account of our economic exchange that you are
unlikely to have seen before. It is not only the receipt that records this relational
event, but every single thing is employed by us to mark the relationships we
enter. Each thing is a record. It is so because some set of people understand it in
that way. The transaction and the relationship of which it was just one event, was
recorded on both the ostensible records (receipt and all the other paperwork) and
on the goods and gifts that are exchanged. This is so even if they are as
immediately necessary and instantly consumed as a bottle of water on a hot day.
The transaction is written on the memory of the witnessing community, the
expert audience, defined by contract, itself defined by the apparatus of a
tradition.

The circulation of things

Banknotes circulate, changing hands several times a day. Valuables circulate
more slowly. People buy odd, apparently valueless, things in car-boot sales and
sell them again years later. Social anthropologists are fascinated by such
circulations. In the early twentieth century they were amazed by the traffic in
yams and shells that spanned the archipelagos of the Pacific, a traffic which at
first sight to be useless. Anthropologists understood that the yams were gifts in
an economy of generosity between great men. But were these gifts, or were they
transactions? Was this merely play or was it business? Why side of the modern
economic account should they appear on? Each yam was accompanied by a
recital of the many hands it has passed through, from which it gains value. It
comes with an oral record of its many who have been in possession of it, a
genealogy of members of the Kula ring. Each yam functions as a travelling
logbook in which is recorded who received it from whom. The names of its
holders are not recorded on it, but travel alongside it as oral tradition, its value
rising as the details of its provenance lengthen. Each transfer is the occasion of
the re-negotiation of a balance sheet of account between Big Men. The history, of
which our transaction is just the latest episode, is a continuum. Each event of
interaction stands complete with its history, contained in the materiality of this
commodity. Each thing is just a record of its provenance. It is for us to ensure
that that record remains readable, to us, and those who follow us. This is the
purpose of labels and our financial record-keeping. The yam is a credit-history. It
is an account of all the people through whose hands it has passed and so an
account of the credit-worthiness of the man who holds it now. Many hugely
influential people have held this yam, and this combines to give us the status of
the present holder. What goes for the yam also goes for the multifarious media of
account that we use in the modern economy. Few of these are so focussed and
embodied in any one artefact. We only see such forms of value-embodiment at
the top end of the market, provided by works of art. Each Picasso on the wall of
the boardroom is a ‘yam’, or a banknote enlarged in order to communicate the
prodigious worth of its holders.

Money as abbreviated identity-giving and account-rendering

Money is the means by which we give one another our approval. It is a mark of
permission given. We give them licence to go on producing their account, as this
is exemplified by the wares they are selling. Looks and glances are all the
confirmation they need. As Pierre Bourdieu puts it: ‘Our acts mean more than we
do. Our acts leave our intentions way behind.’4 But these looks and glances must
have a ceremonial and ritual form, and these commodities and money together is
that form.

4
Pierre Bourdieu Outline of a Theory of Practice p. 73

8
 ‘When population were smaller and less mobile, people got to know each
other through participation in ceremonies, religious other otherwise, and
decided how much they could trust one another. Trust is not only a tenet
of civil society but an investment that facilitates trade. People learn to
establish norms concerning contingencies, to settle feuds, and to enforce
contracts, skills that serve beyond a single transaction.’ 5

The two parties exchange conviviality in the form of giving and receiving accounts
of the world. Accounts are what is being exchanged. These accounts of the world
also take an abbreviated form, so they appear in the two forms of telling (writing,
the medium recognisable to the humanities), and of the abbreviated form,
counting (the medium of finance recognisable to economics). The two parties to a
transaction are swapping abbreviated accounts of the world. These accounts are
not being given by one side and kept by the other side, but accounting is an act
performed by two parties together. The numbering of the two parties is the
modality of exchange and idiom of the hospitality of the firm.

Money is what persons do: it is just talk, but as talk it accounts for the greater
part of the linguistic medium in which Western persons subsist. The concept of a
universal currency, and of exchange as a distinct and separate economic category
relates to the idea of equivalence and the management of particularity. A
universal medium can only obliterate what is particular to each encounter. As the
instrument of this universal uniformity, money and the whole economy of
financial discourse represent a particular idiom of human behaving, an idiom that
understands all interaction as difference-reduction and control, and the
enforcement of a single master idiom and economy.

The market is a continuous world-wide conversation and money is the language

in which it takes place. Though money represents a very constricted vocabulary,
which through repetition, allows us to communicate a great number of options so
that we do not need to repeat in full our account of the relationship between us.

In small contracts we don’t need your full recitation of your business history to
give us your value. We use figures, profit-and-loss accounts and balance sheets.

Because the greatest part of credit networks consisted of masses of

informal sales credit, which were maintained by the continued liquidity of
such transactions, trust was considered the a crucial factor in buying and
selling.6

We employ figures as a short-hand: they are an abridge the accounts we render

in speech. With it we indicate how wide is the range of repetition of the
relationships defined by previous contracts. Thus most transactions involve
truncated exchange of accounts and valuations.

‘The purpose of keeping good accounts was not to see how much
‘capital’ the merchant had at any one time but rather to maintain his
reputation for honesty and just dealing thus keeping chains of credit
fluid.’ 7

5
Reuven Brenner Labyrinths of Prosperity: Economic Follies, Democratic Remedies (Ann
Arbor: University of Michigan Press 1994) p. 148
6
Craig Muldrew The Economy of Obligation: The Culture of Credit and social relation in
early modern England (Palgrave Macmillan 1998) p. 124
7
Craig Muldrew The Economy of Obligation: The Culture of Credit and social relation in
early modern England (Palgrave Macmillan 1998) p. 128

9
Money exists not simply in those forms which anyone can identify as financial
tokens. Only a tiny proportion of money has any tangible existence, as coin and
banknotes. The majority of it exists as figures in financial statements, which only
the numerate can interpret (M2, M3).

‘Accountancy practices (are)… a rule-governed kind of writing that

tended to create what it purported to describe..’8

Money appears as bonds and a vast variety of promises to pay that only appear in
financial reports and on balance sheets. The accountants have made their
decisions, all of them controvertible, about which side of the balance sheet each
item should appear, whether an asset or liability. Whether it is presented as the
one or the other depends on the timing of financial reports, year ends and
negotiations with the tax authorities. The auditor affirms that this is a true and
fair account of the finances of the company and the shareholders meeting votes
to accept it as such.

Money appears in the events in which decisions are made which we call contracts.
There is nothing between the two contracting parties, but accounts rendered in
words, and rendered again in the figures that appear in financial reports. There
are many forms of material and bodily interaction between us, but they are all
shaped and controlled by words, and by the financial figures that are their
abbreviation; these words are shaped and controlled by ritual involving many
forms of material and bodily interaction. Not all communication between persons
takes the form of speech. Our communication also has other forms of
embodiment that we will examine in Chapter Six.

Each economic agent, whether individual or firm, observes the market and
registers who is doing best. Each is able to follow the series of relationships
created by the most recent contracts. Each is glad to business with those who
have been in the limelight and hopes to connect themselves to those who have
secured the most visible recent contracts.

All financial reporting and market gossip is a continuous rendering of accounts. It

is not simply the liquidity recorded by a firm’s cash balances, nor solvency
represented by its lines of credit, nor the strength of its balance sheet and annual
report, but the whole cloud of gossip and rumour that twitches share prices
minute by minute. The whole market ‘knows’ what that firm is worth for market
opinion is weighing this very question as long as the market is open.

Prices of stocks, bonds and currencies are averages of the individual views of
market participants, and which are revised constantly as long as trading is in
progress. Fundamentally, credit-lines exist in the head of every participant in that
market. The formal records are no more than tokens of ‘what the market knows’.
Each member of that market can say who is up and who down. It is the task of
every participant in that market to know who has not been doing well and thus
whose turn it is to prove themselves. The slacker’s credit is poor: everyone knows
who the slacker is currently, and waits for them to exert themselves and
demonstrate that they still have it in them to perform well.

A settled market is cosy for its members, but perhaps in the long-run, those
members as a whole make themselves forfeit their ability to respond when a set
of more energetic market-makers burst in.

8
Mary Poovey A History of the Modern Fact: Problems of Knowledge in the Sciences of
Wealth and Society (Chicago 1998) p. 56

10
 ‘A strong notion of reciprocity in exchanges and communal bonds of
neighbourliness co-existed with the free movement of prices. It was
through these numerous small, personal face-to-face acts of credit that
agents interacted within the market…’ 9

Thus each member has to balance the demands of patience and impatience. They
have to show some patience with the laggards, if they wish their fellows will
patient when their own performance lags. Yet they must be eager to distinguish
themselves from the laggards, and so insist that the laggard must lose his rating
if he cannot proves himself. He who cannot prove himself will drop down the
market to the point at which no one is interested in doing business with them;
eventually it will be difficult for him to remain a member of the market at all.
Thus every member of the market must strike the right balance between
ambling along safely, not pushing too hard against other market participants, and
attempting an unsustainable rate of progress that brings a more serious testing
from aroused rivals. A market is based in the trust shared by its members: a
minimum of trust is required just so that business ticks over. Again, this what is
historians notice when they examine the markets with the perspective of
centuries.

‘As households became more dependent on one another for their

security through long chains of obligations, the combination of
competition and dependence meant that they increasingly had to try to
find a balance between hospitality, neighbourliness and charity on one
hand, and thrift and profit on the other, because both were needed to
keep credit alive and maintain the financial security of the household and
commonwealth at one and the same time.’ 10

You need to have good stable relationships in order to enable business, but you
also need to demonstrate your own virility.

3. Making unalterable
At centre of each transaction is a contract, a promise that must be kept. The
contract may not be broken. But how can either of us be confident that the other
will keep it? How can we trust one another? We have to spend enough time in
one another’s presence for confidence to grow, and observing the procedures and
performing the ritual by which people become sure of one another.
‘The first form of trust is methodical. Founded on routine or tradition it
derives from the repetition of actions which bring trades to a successful
conclusion.’11

We need to concoct an event of slow and deliberate public account-rendering and

agreement. We need a meeting in which each of us gives our account of our
possible future relationship. After much negotiation, first by our juniors and then
face-to-face, we settle on a joint account which we have constructed together
with detailed reference to the canons of agreement, contract law, specified by the
precedent accumulated over years of profitable business built up by our industry.
We have our lawyers and accountants working on it through the night. Our verbal
agreement becomes a signed contract. We sign in a public event in which will

9
Craig Muldrew The Economy of Obligation: The Culture of Credit and social
relation in early modern England (Palgrave Macmillan 1998) p.124
10
Craig Muldrew The Economy of Obligation: The Culture of Credit and social
relation in early modern England (Palgrave Macmillan 1998) p. 158
11
Michel Aglietta ‘Whence and Wither Money’ in The Future of Money (Organisation for
Economic Co-operation and Development - OECD) p. 35

11
display our confidence in one another for the benefit of our investors. Our
separate accounts of our identify in this moment converge to create this joint
speech-act. Together we make big public gestures that indicate how hard and
unchanging our relationship with one another now is. The negotiated then
becomes the non-negotiable.

If you and I sign a major contract we will do so in the offices of the legal firm or
the bank that has arranged the financing. That firm of lawyers is backed by the
authority its peers and Bar Council and the whole panoply of the Inns of Court
and Appeal Courts, by which the judicial process communicates its absolute
reliability to us. That bank is backed by the Bank of England, around which the
headquarters of the banks cluster in the City of London. This proximity makes
possible their mutual oversight and adds to the authority of each other of them,
and so to the ability of these institution to lend their authority across the
economy through their branches. People come from all corners of the globe to
have their case heard in London because they reckon that here there is a better
quality of justice; contracts made here tend to last because they are well-made.
This justice is secured by the long tradition represented by this close clustering of
legal and financial institutions. Each bank receives its authority from the whole
company of banks, and it lends its authority to our contract, so that you and I are
able to rely on this authority to finalise our contract. If our business is big
enough, we will negotiate and sign our contract in the City of London

Trust is economically quantifiable. It measurably affects both speed and cost,

one way or the other. When trust is high, speed goes up and costs go down.12
When trust is missing we have to make expensive efforts to re-create it.
Contracts depend on events in which persons come together in one place and
time. We rehearse and practise and make opportunities for such events. Life in
the City is made up of rounds of face-to-face meetings, and receptions, which are
opportunities to meet without agenda, in which drinks will help us to all to
unwind enough to show our hand a little. We need to see the other man’s body
language, to drink in all the signals he emits, to decide on his sincerity through
by reading the signals given by a hundred muscles in his face that reveal that he
cannot force his eyes into the same smile as his mouth, to feel how sweaty his
palm is. We will decide on the subliminal basis of these very physical and animal
characteristics whether we trust him.

‘Trust... becomes incorporated into market practice through the

repetition of business relationships. Its main infestations in this context,
include keeping one’s word in financial dealings, the existence of a club
mentality that creates mutual assurance, the acceptance of prudential
standards in organised markets. ‘13

So we meet in the City of London. Location is important because it indicates our

commitment to the particular account of the past, as good and unalterable,
represented by this location, and by these bodies making a unique event in this
location. Let us make this point in more picturesque terms. Let’s say that you
and I want to make a contract. Each wants the other to appreciate its weight so
that it is unthinkable that they would break it, no matter how difficult economic
circumstances become. If we were children in the playground we would make
each other swear on our mother’s life, or pledge eternal alliance by mixing blood
smears. Here in the modern economy we have similar solemn ways of
communicating – the absolute taboo of breaking of defaulting on contracts. We

12
Stephen Covey The Speed of Trust
13
Michel Aglietta ‘Whence and Wither Money’ in The Future of Money
Organisation for conomic Co-operation and Development (OECD) p. 35

12
make them swear on something precious, indeed on everything that is most
precious. We marshal all the symbols of great preciousness, and make them
swear on that. Together we gather around, with our top men all present, together
demonstrably and emphatically pointing out tokens of the solid and unyielding
nature of contract. We do so by placing our hands on dense symbols of our past
economic success. We grasp the past. What can we show one another, and make
one another defer to but the past?

Gold in the ground

Let us say that we are in London, my town. Perhaps location will help us make
this contract. It is as though we are swearing on the Bank of England. The Bank
is a metonym for all the banks and for the centuries-long history of successful
contracts that has made these banks what they are. Beneath the Bank of England
are vaults of gold. We could place sums of gold there, and offer to forfeit them
should we renege on our promise to one another. But of course we cannot raise
such a sum of gold, and neither we nor anyone else can afford to place so much
wealth out of circulation. So notionally at least we place our hands on the gold
that is already in those vaults, and which is there as evidence of a vast number of
earlier successful contracts, made over centuries. We make our contract there
because this particular place has this established record for creating productive
contracts.

Ancient man buried artefacts of great value. When he buried his king he did so
with all the panoply of his power, interring him with his sword and armour, and
thus with the emblems of the military power by which he established political
stability. His military power appears awesome, and thus it is highly crafted from
precious metal, which more per ounce than we will earn in a lifetime. Did ancient
societies worship at such burial sites? Or did they simply meet there to remind
one another, and enforce on one another, the political stability that they
associated with that king and the economic prosperity that stability enabled? Do
we have to decide between a religious and a political explanation? Perhaps they
brought their children here to this burial bound to tell them about this king, that
stability, and about the penalties for breaking the peace. They meet around this
hoard of regal bones and belongings, concealed in the ground beneath them.
This combination of proximity with inaccessibility adds to the aura of
irreversibility.

The king created a gold hoard and so took that gold out of circulation. Why did he
bury weapons and other valuables? Swords make threat and fear visible. To put
this gold, jewellery or armour in the ground is not a waste. By this act, that
creates this scarcity so that these swords and other items become more precious.
By burying them, swords become more valuable as artefacts that display and
broadcast his reputation. Then they serve to embody the achievement of previous
generations and they become the capital which his subjects bank on. The afterlife
that ancient people wished for their kings was surely the stability which that king
established should continue so that the economy which we personified should
remain live and valid for them.

‘In primitive society, institutionalised by ritual and sacrifice, there is no real

money because desires for being are focused not on things but directly on other
persons and their conduct. In a second era the monarch or sovereign emerges
as a more stable institutionalised representative of the sacred excluded/elected
victim: here money has a secondary status as reflecting the monarch and his
sacred prerogatives. Finally in mercantile society, with the kind of long-distance
exchange relations explored by Braudel, money escapes the control of the
sovereign and becomes in itself the primary embodiment of wealth.’14

14
Michel Aglietta ‘Whence and Wither Money’ in The Future of Money (OECD).

13
This potlatch amplifies this story. Ancient man did not worship his ancestors any
more than we worship ours. But we understand that doing things here in this
locality, around the physical tokens of this story – the gold hoard – we create
with all the magic that our performance can conjure a public event, that is an
event in which the public becomes convinced that this contract and relationship is
final and irreversible. The bank vault is a burial chamber; what has been buried
here will not quickly be dug up. This treasure is valuable only because its burial
makes it, its buriers hope, irreversibly unavailable. Irreversibility is what we are
trying to achieve in our every contract, and it is the reason why we make those
contracts that are important to us here, around the bank. What has been done
here will not be reversed, which is precisely what we intend for our contract too.
It is the public creation of reserves, of capital. The gold is our aide-memoire,
technology of memory that allows us to create these embodiments of social
capital.15

It is the approval of the whole audience – representing so much legal and

financial expertise – that now gathers round as finally we sign our contract, that
makes it a contract. It is final because this authoritative audience believes it is.
The more nebulous contracts or covenants of the social and political realms have
to be regularly – yearly – reinforced, in a memory-refreshing operation, in which
the whole saga is repeated.16 The tokens of kingly power were buried in long
barrows. Through centuries barrows gave way to palaces, basilicas and
mausoleums, all the location which secures all our publicly made undertakings.
Finally the long barrow developed into our central bank. To make the point more
vividly still, we could say that our forebears act as witnesses to our contracts. We
require their approval, and have to perform the correct and costly rituals to
procure it, in order that the level of trust remains high. We do not explicitly
revere, much less worship, our forebears, but we do respect and observe what
the achievement that emerged through them for it represents an accumulation of
social capital for us. It makes this City of London a good place for us to make our
oaths and contracts. That so much social capital is already accumulated, so much
case law available, that we do not need to create the foundations of our society
and our economic contracting again. This accumulation of good practices allows
for efficient repetition and represents a vast saving of energy.

‘Belief in symbols of sovereignty have yielded to conventional definitions

of the unit of account. Trust has shifted from a quasi-religious belief
towards the critical acceptance of the institutional capacity of controlling
the flows of money.’ 17

Money is credit tokens, that is tokens of public permission, and these tokens are
tokens of the existing stock of public permission. The people living in the British
Isles became confident in their ability to make contracts that would hold. The
British have traded with one another successfully enough to have become a

15
Michel Aglietta ‘Whence and Wither Money’ in The Future of Money Organisation for
Economic Co-operation and Development (OECD) p. 66 ‘The electronic purse does not
have the edge over fiduciary money, since fiduciary money offers non-pecuniary
advantages of liquidity, anonymity and security that the electronic purse does not have.’
16
Using a unit of account sets up a relationship between each economic agent and a the
society of traders as a whole. It is not a contractual relationship between private agents.
Providing a unit of account therefore amounts to providing a collective good. Michel
Aglietta ‘Whence and Wither Money’ in The Future of Money Organisation for Economic
Co-operation and Development (OECD) p. 66
17
Michel Aglietta ‘Whence and Wither Money’ in The Future of Money Organisation for
Economic Co-operation and Development (OECD) p. 45

14
vibrant nation, and a growing economy. We trade on that large deposit of
confidence and permission.

Each time the inhabitants of these islands contract with one another a little is
added to the total sum of British stock. A over the centuries a big mound of it has
accumulated. Each pound sterling is a chunk of that large hill of that confidence
that we take as the permission we seek. Each coin is a piece of this hill. That hill
is made up of the accumulated events in which the rule of law have been
honoured and publicly vindicated, and the unity of this people has been honoured
and secured against threat. The hill is always leaching and crumbling as there are
losses of confidence, and as enterprises and hopes fail to succeed, but so far the
hill seems to be holding. If it is not growing, it has not noticeably diminished.

Each coin is the history of all previous generations of our society. Imagine that in
every transaction one of us gives the other a little stock of coins, of the metal
refined from the ore of that mountain. Each time we buy and sell, we pay or are
paid, as one of us passes these little metal discs mined from that hill, so the
other. These tokens pass from one pair of hands to another. The two of us
exchange by passing through our hands this miniature version of the sacred hill
that is the accumulated past of the British nation.

Money is the whole body of Western history, broken up into manageable chunks.
We refer one another to that history by passing these coins around. A coin is the
history-and-achievement of all previous generations of our society, in handy
form. Money is valid as long as it is refreshed by continued reference to that
whole tradition. In the long term we have to hope that we are not merely
consuming and depleting that heap of capital, but also renewing and replacing
what we consume and so leaving this pile of capital as big for our successors as
we found it.

In each transaction we call to witness the whole company of the British, past,
present and future. Each of us wants the other hand to regard this act of ours as
just as unalterable as that hill and the coin is solid. What want the other man to
see the future as solid in the same way that the past, this accumulated past that
stands as the hill of British achievement. The unalterable and therefore reliable
nature of the contract refers to and depends on the solidity of the affirmation
given by traders to traders in this place, and the solidity of that gold and this
currency is a metonym for it. The accumulation of successful human convention
secures our transaction, and those conventions are, we insist, as unchanging and
non-negotiable as our history or as the earth itself.

We trading on the good name of a country, and so on the confidence that its
history will continue to give us an equally settled and prosperous future. In the
next chapter I will suggest that this passing of the metal of the British ‘hill’ from
hand to hand is a token of our unalterably, non-negotiable setting on earth. The
unyielding givenness of the world is both here before us, and we impose this
recognition of it on one another and so it is constituted by us.18

18
The account I have sketched here combines the two concepts of metallism and
cartelists. Charles A.E. Goodhart ‘Two Concepts of Money’ in Geoffrey K. Ingham
Concepts of Money (Edward Elgar 2005) p. 441 ‘There has been a continuing debate
between those who argue that the use of currency was based essentially on the power of
the issuing authority (cartalists) - ie that currency becomes money primarily because the
coins (or monetary instruments more widely) are struck with the insignia of sovereignty,
and not so much because they happen to be gold, silver and copper, (or later of paper) –
and those who argue that the value of the backing of that currency, (Metallists). A conjoint
debate exists between those who have argued that money evolved as a private sector,
market-oriented, response to overcome the transaction costs inherent in barter, (let us call

15
A society is sound to the extent that it knows that not everything can be dug up
and cashed in. Though our fixed capital lies deep in the ground of our past, it is
not unproductive and we cannot render it productive by digging it up. It is not a
mineral ore that can be extracted until it is exhausted but a reservoir that must
always be there and be allowed to fill again so that it will always be there for us
to draw on. It will fill again as long as a healthy society generates the social
capital that trickles back down to that aquifer. This reservoir supplies our society
and economy with the great mass of deep commonalities and motives that must
be assumed but which cannot be made explicit, and which we can sum up as
‘trust’. But we cannot put a price on the resource represented by this reservoir.
For what is tacit and implicit is the basis on which other values can be made
explicit, and so allows us to put a price on them. Economic transactions depend
on us, our initiative, motivation and perseverance, and so they are ‘soft’; and
they depend a vast accumulation of successful past economic event which, since
it is past, is unchanging and ‘hard’.

The aim of all economic transacting is continuation. We act in the hope that there
will be transactions and an economy in the future. Both materiality and
convention, the ‘hard’ and the ‘soft’, are required; there may be change and
growth but there must be continuity and stability. Every transaction is based on a
balance between sameness and difference; too much ‘difference’, whether we
call it ‘change’ or ‘growth’, puts continuity into doubt. A curious conceptual
anomaly creates a bias that promotes difference over sameness, at the
foundation of modern economics, which means that it gives poor description of
actual macro-economic changes. All other things being equal, a thing remains
the same: something changes only when it is affected by something else. It is
therefore normal that things stay as they are, and it is a departure from the norm
when they change. Next we must sketch the deep connections in their
relationship between money and change. Then we will be able to ask whether the
assumption that growth must be a normal feature of our economy makes our
economy unstable.

4. Growth and Money’s modern origins

The driving narrative of modernity is growth. But it has cast off the thought that
persons can grow and that they may freely take on any course of formation by
which they could do so. ‘Growth’ means only not personal growth but merely
material growth, a rising standard of living. We have to compare two accounts of
growth, one of which relates to an account of persons, while the other is
unrelated to persons, and within this second account, that is offered by modern
economics, in which money and growth are deeply connected, at the level of
logic.

What is growth? In Chapter Three we compared two accounts of man as an

economic agent. On the one hand he was a public being, who acted before his
peers, and on the other he was a private being who acted without an audience.
The moral philosophers who affirmed this account of man as private and solitary
insisted that man was already mature. This man did not need to grow because he
already was all that he possibly could be. He stood at the summit of perfection,
and the only limit on him was formed by those who did not see this so. According
to these thinkers, the individual man could grow by allowing his own innate
character to emerge from within him, as simply as a seedling unfurls out of its
seed pod, almost without inputs. For this growth, such an individual did not need

them Mengerians), and those who again argue that the State has generally played a
central role in the evolution and use of money (Cartalists).’

16
any other human being for he had no need to undergo any course of formation at
the hands of others.

In the Christian account of grow we grow as persons as we grow towards other

persons. We may grow towards that maturity through a prolonged process of
recognition that other persons as ultimate. We are enabled to recognise one
another as gifts, who come to us without any effort of our own, by the grace that
comes from God, and as also as our goal, whom we have to want to come to
know. We can love one another and find our true satisfaction in one another,
through God. The love of God for man is the source of all human loves, whether
proper or improper, and God is the destination of all human loves. We may grow
as persons through an apprenticeship by which we may acquire good practices
and virtue.

The long Christian tradition contains the resources for an economics which was
not based solely in material growth, but primary in personal growth, which is to
say, the growth of persons. Growth is not a matter of the value of goods traded
or number of transactions, but relates to a population, its motivations and all
those intangibles which we have called alternately ‘culture’ and ‘social capital’. I
suggested that Modernity represents our attempt to withdraw from a close
involvement with other persons and thick description of our social life. The
Christian tradition regards economics as a matter of learning to make good
judgments about what is valuable. From it we can re-discover the insights of
other ages which also regarded economics as a matter of decision-making and of
making good decisions, when economics was inseparable from moral and political
economy. We may grow as persons; our aim is not that we become more than
persons, but that we become more truly persons. We may recover the
conceptuality by which we can judge and acquire those skills by which the
community says what is true and good, and becomes an articulate and political
community, in which alone persons are encouraged to grow to maturity.

Only persons can judge what is the good life. We are embodied persons. Our
bodies and material needs arise for us persons and are not independent of them.
We need bodies because they are the means by which we are present to one
another and so are public beings. Persons cannot be separated from bodies, and
bodies cannot be separated from persons. Yet modern economics does indeed try
to separate the two and to understand them in separation from one another.

If ‘Growth’ means only material growth, rather than personal growth, it refers to
a rising standard of living. But how should we assess this when we have given up
the criteria by which we can decide between differing measures by which to
assess any standard of living? We are left with Gross Domestic Product (GDP),
which is to say, the sum of monetised transactions in any national economy. The
‘economics of happiness’ suggests that more choice and greater access to
material goods is as likely to bring dissatisfaction as contentment where the
economy is entirely detached from the self-government of the particular person.19

In an economy dedicated to an account of growth as material growth, unrelated

to the growth of persons, three factors grow. Money grows, debt grows, and the
consumption of resources grows. First, as the economy grows, so does the level
of indebtedness. Debt has to be repaid and since there is always a question about
whether it will be repaid, debt brings a fragility to an economy. Moreover as the
economy grows, and money grows, so does the split between the body and the
person , and so between material growth and our development as persons. We
have to ask whether material growth simply represents a division between

19
Frey The Economics of Happiness

17
ourselves considered as bodies (needs and wants, and so the demand side of the
economy) and ourselves considered as persons.

Modern economists are the heirs and successors of the modern champions of
autonomy and so of the expansive period of European and American empires,
that lasted from the seventeenth to twentieth centuries.20 For them economics
can only be about growth, and material growth. Such growth is related to the
growth of money. So we must turn next to the creation of money.

Governments and banks

Where does money come from? Here is a thumb-nail sketch. Wealthy men
corresponded and did business with one another by letter, and expect that the
bearer of the letter would amplify and interpret what the letter contained when he
reached its recipient. Money is a form of letter. The wealthy wrote letters of
introduction which the bearer could present as they travelled to other noble
houses. Such a letter functioned as a passport through foreign territory and as
their introduction to polite society. Within a great house such letters functioned a
chit or requisition slip, instructing the kitchen or stores to provide whatever its
bearer required. 21 A letter of recommendation, became letters of credit, and a
letter of credit became a cheques which could be drawn on that man’s resources,
and by extension on those resources held for him, or lent to him, by his banker.22
Such letters functioned as money, or to put it another way, ‘money’ is our term
for the sort of letter that functions as a passport or requisition slip. Money is a
form of writing.

Every kind of monetary token also relied on some kind of writing to

enable it to serve the three functions that money had to perform, this
writing might be as simple as the inscription on the face of coin, where
the writing typically shared the space with images; or it might be
complex and not confined to the monetary instrument at all.23

But as Mary Poovery points out, ‘money has become so familiar that its writing
has seemed to disappear and it has seemed to lose its history as (various forms
of) writing.’24

In the British Isles only parliament had the authority to raise taxes from the
country, and practically, its members has the ability to do so. A king who
determined to avoid parliament could perhaps meet his obligations for a while by
borrowing from his own aristocracy, or from the City of London or from bankers.
He might consider it better to borrow from, and be in hock to, those outside the
political nation, without military power or dynastic claims of their own, such as
the Church, Jews, Lombards, Dutch. Since they could not so easily enforce the
payment, these could be defaulted on in extremis, and carry the blame for
20
See Scott B. Macdonald and Albert L. Gastman A History of Credit and Power in the
Western World (New Brunswick; Transaction 2001) p. 127-51. John Brewer The Sinews
of Power: War, Money and the English State 1688-1783 (NY Alfred Knopf 1989) pp. 185-
89; Andrews Kenneth Trade Plunder and Settlement: Maritime Enterprise and the
Genesis of the British Empire 1480-1630 (CUP 1984)
21
Valenze Deborah The Social Life of Money in the English Past (Cambridge University
Press 2006) p. 49 ‘They also learned to approach the act of exchange with an eye to both
the past and future values of certain items, understanding that in some case the ‘store of
wealth’ represented by money might change over time’
22
Bruce Carruthers City of Capital pp. 127-31.
23
Mary Poovey Genres of the Credit Economy: Mediating Value in Eighteenth and
Nineteenth Century Britain (Chicago 2008) p. 59.
24
Mary Poovey Genres of the Credit Economy: Mediating Value in Eighteenth and
Nineteenth Century Britain (Chicago 2008) p. 3

18
difficult economic times. All money was understood as a form of promissory note:
the note is as good as its issuer, and the other agents in the market who accept
it. Each seller critically examined the payment he was offered not merely in terms
of its quantity, whether the sum offered was enough in its nominal value, but also
its quality.25 No one assumed that all money was the same, for there was no
single authority that took on the responsibility for ensuring money’s uniformity. 26

Money and government

Where does money come from? Money is created by states. The government
creates money and it does so by fiat, that is, simply by declaring that ‘this’ is
money. It rules out attempts to make anything else serve as money and so
makes its money sole valid currency.

Government is simply is our communal and national agreement to trade with one
another and uphold the conditions – justice – in which we may do so. No nation,
and no national government, has to buy or borrow money; it has the authority to
issue its own money, for there is no source with more authority that the consent
of the whole people which that government serves. The government is dedicated
to the service of the whole society and can provide for that society whatever
range of public services they require. It declares that such-and-such is legal
tender, and it thereby bring money into existence, for the whole people and on
their behalf. That money is intended to facilitate the transactions that they will
want to enter. Money is a metric, like other weights and measures. A government
can provide this particular metric just as it provides us with laws and a legal
system that enforces them. It can declare that certain weights and measures are
legal, and others are not. The historical origins of our form of money is as a
specific measure of weight – of precious metal.

Governments create money by minting coins and printing paper currency. These
give us the small denominations in which to make many small transactions. On a
larger scale government makes money by making entries in its own national bank
account, and most money exists only as the numbers recorded in bank ledgers.
The money that the state produces is money because the population agrees that
it is so, and this money will be tried by the international money markets. Some
economies use other reserve currencies for international trade and perhaps if
they find own local currency inadequate also use foreign currencies for domestic
exchanges. It is the affirmation of these economic agents, given by their use of it,
that makes it money. There are always many things in circulation that act like
money; most of them are ephemeral, like coupons, vouchers, store cards,
cigarettes and bottles of whiskey. Any firm, or community or indeed individual
may issue their own coupons and have some success in getting them accepted
and a circulation of them established. But since the government does not accept

25
Mary Poovey Genres of the Credit Economy: Mediating Value in Eighteenth and
Nineteenth Century Britain (Chicago 2008) p. 58-9 ‘Forced to adapt to the presence of
multiple kinds of coin of uncertain worth, early modern Britons developed great virtuosity
in exchange relations that enabled them to evaluate a great variety of coins by weight,
‘chink’, color, thickness and to decide when and how to deploy better and less good coins
and to determine which coins should be hoarded and which ones paid away.
26
Mary Poovey Genres of the Credit Economy: Mediating Value in Eighteenth and
Nineteenth Century Britain (Chicago 2008) p. 162 ‘As long as competing kinds of paper
credit circulated, and as long as no one – not even the Bank of England – took responsible
from controlling the nation’s currency, paper money remained controversial. No credit
money could be taken from granted in other words because every banknote was as subject
to evaluation in relation to notes of competing banks as every bill of exchange always
was… all notes would compete with each other and would remain objects of cultural
scrutiny.’

19
such scrip for the payment of taxes, it does not have the sanction of law that
makes it ‘legal tender’.
State and banks
Bank-issued money as failure of government authority
But this is not yet an adequate account of where our money comes from. For the
majority of our money is not made by government fiat. Granted, governments do
mint coin and print bank notes, but these represent only 3% of the money
presently in circulation in the UK. If government-created money is just a tiny
fraction of the ‘money’ in circulation, where does the rest appear from? All the
rest is debt, used as money. Most of what we employ as money is debt, albeit
that when it passes through our hands it is indistinguishable from non-debt
money. How did this come about?

Those in power in any government can be expected to know that the whole
people, and traditions of the people, is the source of their authority to
government, and that they therefore have the authority to issue by fiat the
enough money to enable trade in that nation. But what if those in power do not
comprehend that this authority is theirs to exercise, and do not have the
confidence to issue fiat money? As they became more impressed by the authority
of bankers, and their confidence in their representative powers fell, so they
allowed the proportion of government-issued money to fall, throughout the
eighteenth and nineteenth centuries, until it stands as its present negligible
proportion. But national governments did not maintain the level of fiat money,
but allowed banker-issued money to take its place.27

Instead of issuing it, our governments allow other bodies to issue money, which
the government then borrows from them. So it is that most of our money is not
issued by governments, but by other institutions, banks, which over time
governments have allowed to take on that role until they effectively hold this as
their right. By default and over centuries governments have conceded this right
to them. They condone this arrangement because this money comes back to
them as taxes. Central banks are not branches of government: the Bank of
England operates under royal charter, while the American Federal Reserve Bank
is owned by the banks themselves: both are able to resist accountability to their
legislatures.

Individual persons take out loans from banks in order to invest in their
enterprises. It is the job of the bank to identify those who will make good
productive use of this money. It is there to select real entrepreneurs who will
identify new commercial opportunities, make new productive capacity and create
new industries, technologies and jobs, from those who will not. It is their job to
separate the long-termers from the short-termers, the investors from the
speculators. The central bank out-sources this job to the banks, for on it relies
the quality of money. For it we issue money, through loans, to those who will
make no productive use of it the economy will be worth less rather than more.
Money is issued in order to enable future transactions, but it could turn out that
we have more money, but less economic activity and thus less real wealth, than
we anticipated. All money is seed money: it has to be properly placed in the
economy in order to create the growth that it is intended to manifest. Badly-
placed money will not deliver the looked for quantity of transactions. The money
that was created to enable the large number of transactions of a growing
economy will only very inefficiently enable the smaller number of transactions of
a shrinking economy. Too much money and too few transactions will cause
dislocations of resources that will make that economy smaller yet.

27
Ellen Hodgson Brown Web of Debt

20
To make a good money supply is not merely a matter of the central bank deciding
how much money the economy needs for the coming period. It is also about
every bank deciding which of the applicants for funds who come before them are
most likely to be a good investment. Which of these borrowers is likely to be a
good economic multiplier because they understand that this money is seed
money? They have to exercise their judgment and to decide that this applicant is
feckless but this one competent and responsible. They have to distinguish
between investment that is productive and which is going to be spent on
consumption. Money represents a judgment on the future character of the
economy. It is not just the one central decision by the central bank, but the
myriad decisions of banks and other investors that keeps the money supply
healthy. Money is not simply constituted by the decision of one central authority,
but of many, many decisions by different agencies, exercising their representative
function across the market, and ultimately it is constituted by the market as a
whole. This means that it is not simply a technical decision, but a decision about
character and deserts and so a moral decision.

Anyone who takes out a mortgage brings new money into existence. Despite our
conviction that we are borrowing money from the bank, the amount of your loan
was not given to you by the bank, for it did not exist until you went into the bank.
The bank entered a covenant with you by which you are putting money into the
economy. You spend money, for example, paying the seller of the house you now
buy, and buying the services of the suppliers and tradesmen who refurbish it for
you. As you pay them, they are able to pay others, and the money that has been
brought into existence by your mortgage spreads through the economy,
indistinguishable from any other money. You and your bank have brought this
money itself existence together, for each bank is licensed by the central bank to
exercise this function of issuing money against the surety of your future labour
and the asset that is your house.

We can put this another way. When you go to a bank for a mortgage, the bank
gives you permission to issue IOU’s, in just the way it is given authority to issue
IOUs by the central bank. These IOUs will appear as pounds sterling, in all
respects indistinguishable from all other money in circulation, except that you
owe the bank interest on them. The pounds in circulation are IOU’s issued jointly
by individual mortgagees and their banks. When you borrow money by taking out
a mortgage, it is as if you yourself become a bank, lending to everyone from
whom you make purchases. You are passing on to them your IOU’s, granted the
status of pounds by the bank, and for everyone downstream of you, your IOUs
will be hard currency. As soon as we take any of these pounds from the cash
machine, they appear as the banknotes issued (or guaranteed) by the Bank of
England, with all the panoply of the familiar portraits and features that identify
this as the national currency of the sovereign nation. For you, however, they will
be debt bondage, the commitment to produce 200% of the amount of your
mortgage over the next twenty-five years. The loans taken out by individuals and
corporations are the currency that serves a whole economy by financing every
transaction in it.

People bring money into being as they take on debt. By taking on debts money
comes into existence. When you pay off that mortgage and no longer owe the
bank, that money has gone out of existence and the total money in circulation
has shrunk correspondingly. It is only the appearance of more people coming to
borrow that prevents the total amount of money from diminishing. If people did
not take on new debts, there would not be enough money to enable transactions
to take place. We all rely on other people to go into debt in order that we have
the money by which we can buy and sell. The whole economy, and every agent
in it, needs this money and rely on people to go into debt. Yet we put the onus of

21
its creation on the one individual: transaction costs are invisibly transferred to
those who are in debt. As long as money is created by one particular section of
the community, the banks, and so reckoned to belong to them (our mortgage
appears as an asset on their balance sheet) money comes with this spin that
skews all subsequent economic relationships. Once started, that captivity can
only spread. An asymmetry, that creates an entirely unnecessary status
differentials everywhere in the economy. It inserts a differential into every
relationship that need not be there. This has the effect of separating the economy
into creditors, at the top, and debtors at the bottom. Whether we consider it as
credit or debt, it polarises.

The state that does not acknowledge its own sources does not know its own
authority. The source of its authority is the whole people, past and future as
much as present; it has a mandate to issue money for the whole economy, not
only present but future. The state that does not acknowledge that it receives its
authority from the whole people does not serve that whole people equally. There
is no need for governments to seek take their authority from the banking industry
or any other oligopoly.28 But government is content with the way things are,
perhaps because those at the top of governments are unable to believe that they
can create by the fiat the money by which they themselves should be paid. By
relinquishing to banks the power to create money, banks take on a
disproportionate power that distorts the economy. Perhaps we should charge
members of government with not governing with enough confidence.

Surely there is another way? Indeed, there are many. There are many
movements for money reform, particularly when, as now, the existing system
comes into crisis.29 We do not need to issue money in the form of debt. Money
can simply be issued by fiat. Each state can issue fiat money. There are forms of
money and its issuance which do not involve central banks. Perhaps we do not
need a fractional reserve banking system at all. We need a clearing system, or
many such systems. We do not need the currency of one country, the United
States to function as international currency, with the effect of keeping the US in
yawning deficit. We could see the emergence of a global currency, in which
international trade could be carried out. Indeed currencies could be traded
without the involvement of states defending ‘their’ currencies, in the same way
that shares are traded now.

5. Debt and growth

We have seen that money is related to debt. Now we must relate debt to growth.
The modern origins of money in debt have resulted in repeated crises, but though
there have been national and international collapses, the global economy has
survived. It has been possible for debt money to continue to grow because the
world economy grew. It did so because Europeans discovered new territories,
regularly finding that the horizon was further away than they had believed. The
world was bigger than their forebears had known and much emptier than their
own continent. For Europeans the world appeared to be expanding.

Europeans sailed across the Atlantic and took possession of the vast lands of
north and south America, discovering the resources that enables the growth of
the population and that powered the greater prosperity of those populations. The
imperial age – the period of the East India Company and Hudson Bay Company –
was the result of this territorial expansion and discovery of new resources and
trading partners. The age of the open frontier and of empires is the founding

28
Ellen Brown The Web of Debt
29
Bernard Lietauer The Future of Money, James Robertson; Greco, Douthwaite.

22
period for Modernity. The economic mechanism that the champions of the
autonomous economy required this open frontier, these new material resources
and markets, and made it the foundation of its self-understanding. Modern
economics is premised on this expansion. Modernity is inseparable from growth.

In earlier centuries, growth was indeed possible. There were repeated national
and international crises and collapses, which impoverished a proportion of the
population, but nonetheless these were intermissions in the growth. There are
always crises in capitalism, but these are essentially corrections, and they are
bigger and more painful when we attempt to prevent them. Our question must be
whether it is still possible to run a system in which there must be constant
growth.

Debt and interest

We are all in debt. But we are in debt to one another. Surely we could simply
write off our debts to one another? Not quite. For we not only owe the capital but
also the interest we have undertaken to pay on it. The debit and credit sides of
the global economy do not equal one. Modern economics works on the
assumption that if we got rid of money our economic exchanges would continue
as before without it. The requirement of interest payment means that this is not
so. 30

We owe interest. Each of us has to pay back more than we borrowed, which
means that each of us has to come up with more money than we borrowed. We
have to work to find that money. By lending we set someone to work, and when
we all lend to and borrow from one another, we drive everyone to work. Because
they have to pay interest in additional to the capital, the world’s borrowers have
to find more money than presently exists.

The total debt is the same as the total credit, but the total debt plus the interest
– that sum is greater than all the money in existence. In order that all capital
repayments and interest payments can be made, the amount of money in
existence has to grow. Since money is (very largely) the same as debt, this
means that the total amount of debt owed has to continue to grow in order that
we call all meet our present re-payments. There has to be growth in the total
amount of money, and we have to increase our supply of money by new debt in
order to pay off this interest.

What is the work that we drive one another to do? Our work must consist in
inducing other people to take on new debts. We are all engaged in encouraging
other people to borrow in order to put more money into the economy and raise
demand so that we can all come up with the money to meet the interest
payments on our own loans. The chief work of the modern economic agent is to
expand the money supply.

There is not yet enough money in circulation to pay everybody off, along with
interest. But we can only bring more money into circulation by creating new
debts. We all need to make sales in order to pay off our own debts so we hurry to
secure new sales. It is not enough for everybody to trade with one another at the
present rate. There has to be economic growth in order to generate the money
with which we are going to meet the interest payments on our present borrowing.
There is an imperative to keep growing the economy irrespective of human need
or environmental consequences in order to stimulate sufficient new borrowing to
put enough money into circulation

30
Steve Keen Debunking Economics

23
When we create money as debt we are assuming that the economy as a whole
will expand. All the balance sheets that represent the present state of the
economy, can only be justified on the basis that the future economy will be
bigger. The economy has to get bigger in order to repay the loans that appear as
assets on other people’s balance sheets. More resources have to be found and
consumed to create this bigger economy, and this is so even though the world
itself is not going to get any bigger. If the future economy is not bigger, our loans
will not be repaid, we are making claims about our assets that are not true and
the present economy is already bankrupt.

If we make less this year than last we are all in trouble because we have to make
our interest payments. If we start missing payments because we can't find
enough business because there is less money in circulation, we will have to find a
significantly greater sum in the following period and so will quickly be in much
deeper debt. Interest is compound, so our debt can spiral beyond our ability to
pay. Eventually we can no longer disguise from one another that the money we
are owed will never be repaid, the assets disappear from our balance sheets. The
economy is not in equilibrium, but in a perpetual state of overreach, toppling
forward into the future. When it suddenly becomes clear that that future is
smaller than we all said it would be, we have a crash.31

Inflation and deflation

The way that we define money means that we are hurling ourselves against the
limits of a finite world. Debt and compound interest commits us to trade faster.
Without the need to make repayments on our debt we would be satisfied with
achieving fewer transactions. We would have less need to pressure others to
make formal acknowledgement of each service we render them, by paying us
individually for them. More of our accounting could remain informal. We would
not be looking for new ways to bill one another for services that used to be
understood, and which involved no invoice.

The system which employs debt as money, and requires growth to pay the
interest on that debt, inevitably faces crises. Compound interest means that debt
grows faster than the real economy ever can. Productivity may grow
geometrically, but debt grows exponentially. When we fail to make our
repayment, our debt climbs steeply, and finally vertically. People cannot pay what
they owe, and thus there are defaults. As a result of the way that we define
money by this relation to debt, interest and growth, gap between geometrical and
exponential growth means that money periodically goes into crisis. Will the global
economy meet a crisis it cannot overcome?

When nations cannot meet their national debt interest payments, they create
more money and run inflation. Inflation is not caused by too much money but by
the lack of permanent stable money stock and our reliance on debt-money. 32
Inflation is the result of the two sides of the economy – consumers and
producers, wages and prices – in permanent conflict because of a lack of
purchasing power. The result of debt-money is that there is under-payment, and
so not enough money in the economy, so individuals do not have enough money
to enter exchanges, and thus cannot buy even basic needs.33 It is often assumed
that inflation has to be brought down by taking money out of the system, but
when this is done a sudden shortage of money is created, there is a drop in the
number of transactions, which is disastrous for those at the bottom. Once people

31
Chris Martenson
32
Richard Rowbotham (292)
33
Amartya Sen

24
drop out of the economy, it may not be easy for them to get in again later, so
deflation may cause a permanent loss of demand.

Inflation is a great de-motivator. It saps away savings and so dispossesses those

who have worked, so that those who have worked have no greater reward than
those who have not, and are unable either to look after themselves or have
anything left over for anyone else. Inflation destroys the independent self-
subsistent individual and family and draws people into closer dependence on
government.

We are eager to earn money in order to provide for our old age. Our
determination to accumulate a capital sum represents our fear that whoever is
prepared to look after us when we are old, will demand more than we can pay.
We said that the money supply has grown much more rapidly than is warranted
by growth in the real economy. This inflation of the money stock reflects the fact
that there are already more old savers than young borrowers. But more than
that, it reflect the fear of the majority of those savers that, despite their saving
and virtue, and despite their successful speculation, they still do not have enough
money to ensure that that they will be looked after in their old age. Money
expresses our fear of the gap between retirement and life’s end.

The long growth of the money supply in Western economies and boom in the
financial services are the result of this fear that each of us feels that we need
more money in order to pay for our retirement and old age care. We need more
money than we are able to save from our earnings. The years ahead each of us
will need a family about us again to wipe our chin without charging us for it, but
we have long since allowed that family to break up as an economic entity. It is
not there to provide inter-generational care. The distended financial services and
ballooned money supply are here because the family is not.

The driver of the capital market

The capital markets are about the efficient, that is the best, allocation of
resources, so that resources go to those who can make best use of them, and
best use means the use that will generate most new economic growth, so that it
acts as seed money, getting the highest multiplier, so the whole economy is
bigger as a result. We want returns that led to more returns that lead to still
more returns – that is what we are looking for. We need the capital markets to
serve the productive economy by providing the best allocation of resources to its
various industries. It is the job of financiers to assess which seem likeliest to
surge ahead and to put money there. But they are having the reverse effect. The
capital markets are attracting money away from long-term investment in
productive industries, taking money out of production and into the reservoir of
money that is guessing where to go next – and of course it goes where it think
that all other money will go next.

It would be most efficient if we simply assigned money from the wealthier to the
least well off, for the least well-off will always we better spenders, that is, more
productive, spenders than the wealthy. For the first few pounds you spend, on
essentials, have a greater multiplier effect than the last few pounds. But money is
going to the richer, who put it into speculation into asset prices, that is, they are
pushing up the prices of commodities thereby making it more difficult for those
not well-off to put those commodities or assets into production, to make produce
(multiplier effect) use of them

Fear, greed and speculation

We have said that each of us is driven by anxiety to make themselves secure so
that they can afford the care that they need. There are no natural limits to this

25
need for care, of course, so . the market is driven by those who have achieved
least serenity in the face of their own mortality. The angry and desperate are the
front of every market. The game is to plunge into every game and market just
before the majority plunge in behind them and to get out again before they stop
plunging in. Some ‘market-makers’ manage to create rushes into particular
stocks and sectors, just by getting into them, and just by talking certain areas
up. So the market is a competition to talk certain areas up (ramping up the
price), without revealing that you are in those areas and trying to get out again.
The market is like a crowd of children rushing across the playground. As long as
you are in just ahead of the average more often than not, you are winning. You
are trying to spook others out of the game you are not in, and into the game you
are in, in order to dump your shares on them, meanwhile others are trying to
spook the market you are in, and you are weighing up whether it is worth holding
your nerve or whether you should take a loss and get out before the position
deteriorates. The old game of selling and talking down a stock, in order to buy it
again when the price has dropped, is accelerated by automated dealing; here the
institutions with the greatest data-processing power are fastest, able to identify
and complete trades in fractions of a second, benefit at the expense of all others
by selling and re-buying your shares in that stock at a lower price.

The market sometimes reduces the feverishness of a myriad individual emotions,

alternating between confidence and caution. At other times, the market amplifies
the sum of the individual experiences and exacerbates our individual panic.
But there is always an inner circle, the tapeworm that eats away at the body
politic from within, as one commentator refers to it.34 The bigger, full-time,
investors or players are winning at the expense of the small investors, selling
them stocks that they are moving out of, or repeatedly moving in and out of,
pushing the price down. The insiders are milking the outsiders, the smarter are
gulling and fleecing the fools, and perhaps it has always been that way. But we
see a new burst of such activity, in particular which we see that the very biggest
players have captured the state and are engaged in its pillage, we should say so.
If we are seeing an inexorable concentration of control over real wealth, this
would result in a significant loss of economic motivation.35 In particular it is for
Christians to put these questions.

6. Recovery and restraint

We have created a vast excess of money over actual economic growth. Though
one bubble appeared to burst in the financial crisis of 2008, our leading banks
and central banks have been preventing the deflation that should have occurred.
Governments have been created new money and preventing any major
correction. The healthy thing would be to let market – which is the assembly of
mankind – decide values. If a bank or corporation or indeed whole nation is
bankrupt, the market should be allowed to discover this and re- value its stock.
It is good to let this happen, it is damaging as long as we delay this correction,
and this correction is in the long term inevitable.

Stock market crashes might seem to make us poorer and so be thought to be

avoided at all costs. But they are only apparently so. We have lost money, but
that money was long-term social capital cashed in by the many individuals
seeking to distance themselves from their inherited contexts. When the money is
gone we have to return to that more primitive economic form, the domestic
household. We are all still stuck in a much large bubble, that will persist for as
long as we do not value two factors at their replacement value at least. One of

34
Solari
35
Catherine Fitts – Solari

26
these factors is the entity that reproduces and motivates the next generation of
economic agents, the family. The other is energy.

We said in chapter 3 that the long-term functioning of the economy depends on a

basis level of national unity, endangered by excessive disparities of wealth. A
crash may be a revelation of essentials that enables us to discover that is
permanently valuable. Perhaps what we took to be our economic prosperity is not
the result of our own productivity, but simply a credit-created delusion. If it
disappears, perhaps we will be much poorer, or perhaps we will only discover that
we have been living a long way above our real, earned and sustainable standard
of living. JS Mill points out that a crash is not the destruction of value, but the
revelation that value has already been corroded away. After all, when we lose all
our money, do we not become more directly and personally dependent on one
another again? Don't we go back to our families and eat humble pie? Perhaps we
might experience this discovery of our economic reality not as poverty but simply
as a relief.

We have seen that since money is brought into existence by loans on which
interest is paid, the number of relationships in which one side must recognise the
service of the other in the explicit currency that we know as money. The economy
denominated by money grows as we opt out of the specific relationships of
family, household, local and national communities and industry, and into the
abstract, distant and global relationships.

But first there is another factor to consider, the limits of the material world. Could
it be that the real bubble has not yet burst? Could it perhaps be that little of the
growth that we have experienced in the last fifty years will turn out to be real and
sustainable? Perhaps we are all riding a ‘super-bubble’.36 Is there a much bigger
correction ahead?

The limits and sustainability of growth

We have not addressed the issue of how this near-exponential growth in global
capital relates to the finite resources. Can the economy grow when some basic
natural resources, chiefly fossil fuels, not only do not grow, indeed actually
deplete? Can we continue to have growth in a finite world?

We said that the modern conception of growth as material growth was dependent
on continuous expansion. The effective frontier remained open through the
twentieth century because we discovered oil. It made long-distance transport
possible and transport costs so minimal that the world became single global
economy. Distance was abolished, and every place became the immediate
neighbour of every other place.

Debt and our obligation to pay compound interest, a compulsion to seek the most
immediate opportunity, regardless of how short-term. We extract material
resources from the ground. The pumped oil that gives us the plastics, and the
mine that produces us the rare metals required for the electronics, brought
together in a factory in China, brought by container ship to our shopping centre,
where I purchase it. It then has a couple of year’s life in my front room. Then it
goes into my garage and from there to the dump and landfill. Each industry
attempts to externalise the costs onto the common purse or environment. This
looks like a commitment to denude the earth as quickly as we can.

36
Niall Ferguson The Ascent of Money pp. 342 ‘It may even be that we are living
through the of a deflation of multi-decade ‘super bubble’.’

27
Energy
What makes the economy go round is energy. Cheap oil has allowed us to replace
labour. Some labour allows particular industrial communities to develop their own
particular dignity, and that to separate ourselves from labour entirely would be to
forfeit the particularity of relationships by which different groups serve the good
of the whole. ‘Labour-saving’ may mean ‘man-replacing’, which leaves sections of
our population without employment or dignity.

Have we been spending our engineering effort to supporting the wish of each of
us to act as an individual without responsibility to the next generation? Have we
employed technology to avoid learning to exercise self-restraint. Has the flight
from the discourse of morality that I described in chapter Three been enabled by
technology and reckless expenditure of oil? Our unwillingness to discuss what is
good, the abdication moral discourse and unconditional turn to the technology
that empowers consumption means that we have surrendered ourselves to one
particular appetite, our appetite for oil. We have looked for a technological
‘solution’ to every inter-personal and relational problem, so that we do not have
to deal with our responsibilities and find the virtue to do so.37 Our dependence on
oil represents our flight from individual industry into indolence.

Oil is used by every other industry. As the global market marginalises subsistence
production, world food production has become dependent on a small number of
crop species, production of which is dependent on the inputs of fertiliser and
pesticides manufactured from oil. As oil becomes expensive, so does everything
else. Will a rising oil price make these inputs and the agriculture that depends on
them more expensive, putting them out of the financial reach for the poor?
Ecological issues are assuredly also economic ones. Water scarcity means that
land ceases to be productive and able to support a population; crop failures will
speed up the flight to the cities. Will this process further reduce the number of
subsistence farmers, and endanger the resilience they represent who once grew
a wider a more sustainable range of crops. As refugee populations attempt to
move around the world, these will translate into political problems.

As the oil that is available become more difficult to reach, we need more
technology to reach it, technology which itself needs more energy. Oil is required
for the extraction of oil (‘energy returned on energy invested’ - EROEI). This
means that less of the oil we pump is available for our use in other industries. Yet
we will want to dedicate a proportion of our present energy supply to look for oil’s
replacements. We would have employ a significant proportion of our present oil
into finding a replacement source of energy (hydrogen, cold fusion). Yet we are
consuming all the oil we drill just to maintain the economy at its present level.
Where will the extra energy resources come from that create the new
technologies that will make us independent of oil?

This enables us to say something additional about money. We have said that we
are attempting to pump up our economy to give the impression of growth, so that
others will be convinced, dive in and start creating new demand. Bluff is required
to create the appearance of growth. Truth will follow confidence, we believe. But
should we be pumping up the economy, trying to increase demand simply in
order to save our concept of money. I have suggested that our understanding of
money has an in-built bias for an expanding and prejudice against a steady-state
economy. Money keeps getting our economy into trouble because it has a bias in
favour of ‘more’ and against the same.

37
Patrick Deneen

28
Money should channel our energy resources to where they are best employed to
keep our economy viable. Money works well when it closely reflects the amount of
energy any activity consumes. Energy is human labour and it is the mineral
resources that have allowed us to achieve ever higher gearing of our labour.
Money is doing its job badly if it does not reflect the amount of oil we are using.38
Since we have a declining oil supply we should have a currency that reflects that
oil, which makes (oil is required for the supply of every other commodity). Money
is virtual energy. Energy is the only true money.

It is not money, but energy, that drives the economy. Let us put this more starkly
still. Money is imitation of oil. Oil consumption and industrial production are in
lockstep. But either we attempt to save our account of money by continuing with
our policy of economic acceleration which involves consuming energy resources
without restraint. Or we could decide to change our understanding of money and
alter our account of growth so that we understood growth as not merely material
but also personal. This might help us to re-discover some restraint in the
consumption of resources: we could regard our fossil fuels reserves as fixed
assets. If we refuse to alter our conception of money, we will continue to burn our
fuel reserves until they are gone. Oil is presently the sole means by which there
is any economy at all. We have to give up on our present conception of money,
that is, default on the promises implicit in the present nominal value of our
money, in order to preserve our energy resources. If we do not give up on our
conception of money we will save our nominal financial positions by destroying
the actual economy.

Perhaps we should find a more sustainable conception of money. perhaps we

should adopt a conception in which everything is understood to remain the same,
until it changes. Sameness and thus Continuity should be the default setting, not
change and growth. Instead of increasing the money supply we should reduce it.
We should not be adding to the number of pounds in circulation, so making each
pound already in circulation worth less, but rather make each pound in circulation
worth more. If, for example we decided that each penny presently in circulation
(or down the back of the sofa) was a pound (so that each existing pound coin was
re-denominated as a hundred pounds, and each ten pound note was a thousand
pounds) we would have put a great deal of our money stock into the hands of
those best placed to spend it with greatest multiplier effect, the poorest. There
would overnight be a fall in the need to borrow. The amount of credit-debt in
circulation would fall, and so there would be far less money in total circulation,
and so far less need to push relentlessly for growth on our present definition.

Interest on debt is driving our manic economic activity which is driving our manic
oil consumption, which threatens destruction of the future economy. Energy is
the real currency. We have to take this vast cloud of debt-credit money out of
the atmosphere. We have to default on our conception on money.

Usury and Reform

What can be done? We need to distinguish between the financial economy and
the productive economy, and so between the financial and the real economy. If
we can tell them apart, conceptually at least, we may be able to cram the
financial economy back into more sustainable dimensions. There are many
proposals that could help reform aspects of the financial system. We could
replace the current debt based money system with a money system in which
currency is actually issued by government, and banks are limited to the role of
financial intermediaries between savers and borrowers.39 We cannot have high
reward for low risk. The investor has to venture something, that is, to be ready to
38
Frederick Soddy Wealth, Virtual Wealth and Debt
39
James Robertson

29
lose something if he wants to see a high interest rate. We can reduce the function
of banks to clearing, a service for which we will pay them so that they will not
make money from charging interest.

We could create a range of parallel currencies in which city-wide and regional

currencies operate alongside the national currency, and we each get paid in a
mixture of currencies.40 Other international currencies may emerge alongside the
dollar that will reduce the US trade deficit and allow the US to recover some of its
own productivity and industry. Perhaps there might be more than form of
currency in any one territory. In addition to the one legal tender, there could also
be complementary local currencies and local trading schemes and credit unions.

We can individually and corporately make less reliance of debt. If we cannot

afford it, we can decide not to buy it. In order to redeem money as an effective
means of communicating relationship and allocation resources, we have to do
much more without charge for those nearest to us, and operate a pricing
differentials that restore the advantage to our local communities.

In order that the changes in the elements of the human economy are fairly
represented, money must be able to register not only growth but its opposite. If
money only has a forward gear, it cannot be an adequate metric of the human
economy and will only prevent us from noticing that the human economy and the
economy of the earth are decaying, not growing. Money must be able to reflect
negative growth. We can opt for negative interest rates, so that we will hold 99p
for every pound we put on deposit at the bank over the year. Thus our bank will
be able to charge us for the service of holding our money.

The good of work

The modern assumption of a steadily increasing material economy is a function of
willingness to allow the market to replace the provision of our own particular
relationships. The corporations that create a single global economy do not
encourage us to reach out first to those who are nearest to us in our own town,
region, country. The global economy rubs away at each particular locality, as at
every other particularity. We cannot simply exhaust the potential of each
particular place, directing each culture to a faster and more complete integration
and dissolution within the global economy. We could bring back some of economic
functions, industry and agriculture, that we have pushed overseas. We could
bring some of our inter-personal functions back into the domestic household and
commit fewer household functions to the market. If globalisation means the
eradication of the particularity of each place, we are simply flattening the world.
Yet when each place is without particular feature or significance, why should
people in any other place want what it produces? We divorce the material
economy from the social-and-cultural economy, separating our day-to-day
‘economic’ effort from the long-term ‘cultural’ achievement of social capital. Work
is good when it does not strip us of our skills, the company of our peers and with
it our dignity. Work is good when it creates social capital and allows the worker
himself to keep some proprietorial control over it. 41 Wages can never be an
adequate payment; stock options must be part of our remuneration, and perhaps
some part of our pension provision should be invested in the stock of the
company we have worked for. 42

40
Bernard Litauer
41
James Bernard Murphy The Economy of Labor pp.2-3 Ever since Aristotle we have had
theories of justice in the distribution of goods (distributive justice) and theories of justice
in the exchange of goods (commutative justice), but very little in the way of a theory of
justice in the production of goods
42
John Médaille The Vocation of Business on widening forms of ownership.

30
Collective delusion and recovery
The last forty years have seen the steady relaxation of the money supply. Money
has become has become cheaper, so that it has become possible for us to buy
more. We were able to buy far more than we earned. But we have done so only
at a cost that we have not admitted. We financed this spree by cashing in
quantities of social capital. In our lifetimes we have witnessed. We could call this
a great unfolding of usury. We talked one another into borrowing more, and of
lowering the conditions under which all these financial arrangements could remain
plausible. We have been foisting a delusion on one another, that we could
consume more than we were producing. For a long time we have been taken in,
and been content to be taken in, and indeed demand that such bubble-conditions
are sustained. Talk of ‘recovery’ assumes that we can go back to the conditions of
lax credit by which we encourage one another to resume borrowing, regardless of
whether this is in their interests, all assume that next year’s economy will be
bigger than this year’s. Economic recovery requires that we tempt others to take
on still higher levels of debt, even though we can be fairly sure that this will ruin
them.

Perhaps we need a drastically reduced banking system. But the notion that things
must be financed, by credit, runs deep. We have assumed that no one can do
anything simply from their own resources, and thus from what they themselves
have saved.

Perhaps there is no return to normality, but only a coming to terms with a new
normality. Perhaps we ought not to expect the banks or even our governments to
do anything of the sort. They should not attempt to create a recovery. We have
to save the real economy from the clutches of the financial economy, and prevent
attempts to revive the financial economy from throttling the real economy
altogether. We have assumed that we can enjoy a steadily increasing economy
and allow the market to replace the provision of our own particular relationships.
We have to point to the underlying human economy in which one generation
more willingly concedes it place in the ongoing history of the nation and more
willing passes on another generation what it has received. It is not our present
standard of living, but a deeper and more permanent way inter-generational way
of life, that has to be upheld. But what if it is not so easy to distinguish between
financial and real economies? What if the human economy is at bottom just a
speculative enterprise?

7. Humanity as speculation
At the beginning of this chapter we said that the economy is fundamentally about
the transfer of life, and all the means of life, from one generation to another. It is
therefore about an exchange between generations. On this basis economic
agency is not solely about what individual adults want, but about how to produce
adult economic agents in the first place, and to maintain a working majority of
active economic agents over the number who are dependent on them.

If our economic agents are inactive, they are no longer agents, and then it is
precisely the agency of the agent that is at stake. Each of us is active
economically in a shortening period in the middle decades of life. Macro-economic
policy recognises that the periods of childhood and old age are growing in relation
to the period of economic activity. But modern economics is unable to integrate
this into its fundamental conceptuality, in which each person is only ever an
agent, an autonomous, active individual unit.

For modern economics, all daily life appears about a progress towards a self-
fulfilment which is individual, and which has nothing to do with parents or
children or past or future generations. The modern economy is about us, as

31
individuals, here and now. And yet we cannot talk about the economy solely in
term of the fulfilment of the individual adult without coming up against
contradictions. It is time for us to mention some of these.

In the real economy we go to work in order to make money. The money we make
we get to keep and to spend as we please. We are only frustrated that actually
making money, not only earning it but hanging on to it, is such a slow business.
But there comes a point perhaps in which we leave this ‘real’ economy in which
we are the employee of one particular firm in order to enter what we could call
the ‘hyper-economy’.

After ten years of work perhaps we settle down with someone and have children.
The moment our own first child arrives we realise to our horror that we have
entered a much more primitive economy. We are trudging along on foot, pushing
a buggy. The project of children had turned from the notional hobby of evenings
and weekends into the bad dream from which we cannot wake. You have found
the one event in twenty-first century life which is not reversible. Your friends in
the real economy meanwhile speed on out of sight, moving briskly up through
promotions from one salary level to another, occasionally coming back to
commiserate with us, and take the warning not to do as we did.

So with what relief do we find that after only three or four years we can put the
children into child care, and in Britain and Europe that is even into free, state
care, so we can get back into the job market, clamber back onto our career and
resume life in the twenty-first century. There are then two economies, the unpaid
economy of child-birth and child-care, and the ‘real’ economy of paid
employment. There are as it were, two economies, the agonisingly slow one with
children factored in, the other, faster, child-free economy.

But above the ‘real’ economy in which we work and trade goods and services,
there is another economy, of finance. Money is on the way to becoming a second
economy that exists far above the first, a kind of stratosphere in which there are
strong winds. We can feel the strength of those winds even down in the ordinary
economy. They entice to send our money up there, where the fast flows and big
rewards are. This hyper-economy draws money out of the lower levels where the
real economy is, in which people work to live and to save for their retirement.
The rewards of this stratospheric economy of pure money tempts us to decide to
give up work. Earning a salary seems too pedestrian a way to save for our
retirement. The temptation is to get out of the work-and- relationships economy.
They tempt us to cash in our work and the relationships it represents and to put
the cash we raise into the high speed economy of financial flows. We cannot wait
to retire, in our fifties, to receive the lump sum which we can place up there in
the hyper-economy.

This vast explosion of economic growth represents an increase in our itemisation.

Though we talk about ‘the economy’, as though there were only one. Perhaps it
would be easier if we identified difference economies: let us say that there are
three parallel economies. First is the economy is the one in which we produce
children and all our income, and our time, are taken up with looking after the
family. This is the household; here we progress at walking speed; this is the
economy which no twenty-first century person can endure. A second is the
economy in which we go work, put in our forty years at the office, get promoted
and are able to save so that one day we can retire in comfort. Perhaps we should
call this the ‘real’ economy or the ‘twentieth-century economy’ . The third is the
hyper-economy of pure money. This hyper economy is the based on the belief
that the ‘real’ economy of employees laboriously earning their pensions will

32
continue to grow, but that it is the duty of other more pedestrian types to inhabit
that economy and put in that work. In brief interludes out of work, they may
procreate and from then on gratefully hand their offspring over to the state first
thing each morning. And it is the duty of the even less lucky classes and
populations them to produce the children who will become the workers for that
economy. For they must do so, in order that, far above the hyper-economy can
blow and the hyper-wealthy fly. For the hyper-wealthy can no more be expected
to work and drive to work, than they can to walk, bear children and bring them
up themselves, any more than they can be expected to work in the fields or
factories.

The vast flows of the hyper-economy of money is a function of our failure to

produce a generation to succeed us, and this is the result of a loss of individual
economic self-sufficiency or contentedness and a diminished cultural confidence.
We communicated to our children that we were their merely part-time parents;
and that through school and the TV, their fundamental loyalty was with the state
and the market. We all demeaned our own household, so now it is not there for
us. This is the result of letting the formal economy squeeze the family household,
and of our determination to get out of the family economy and into formal
employment. The vast credit-and-debt flows of the hyper-economy are the
function of our determination to get out of the prosaic business of earning a
pension by working and saving, and get into the leverage business in which we
prise an ever-large gap between credit and debt. Then we can scoop the credit
towards ourselves and push the debt off into the distance. It is about calling the
credit backwards towards us and pushing the debt forward into the indeterminate
future. It is future-denial.

Members of the Baby Boomer generation have been speculating with our finances
and searching for higher interest rates, because we know that there are more of
us, the boomer generation, than there are of them who will succeed us. If you
are, like me, somewhere between forty and sixty years old, there are more of us
than there are of those now between twenty and forty. So we middle-aged
‘boomers’ are suddenly realising that, in order to be sure of being able to
purchase the care we will need when we are old, we will have to out-bid all our
boomer contemporaries. We need more money than they. In the hope of getting
ahead of the crowd we have been speculating with our money. Each has hoped
that we have got into the fast-flow, big-reward stratosphere of the financial
hyper-economy, earlier enough and that enough idiots pour into these markets
after us to drive stock prices up so that we can take our profits, get out again and
be laughing. But when this behaviour becomes so widespread that whole global
markets are heaving so that all markets become fragile and unsafe, where are we
going to put the profits that we have gained through our earlier speculations?
Now we have unsettled the global markets that even the US dollar is in
difficulties, whose bonds are we going to buy? Some of the boomers have made
enough money to be confident that they can sit out a long retirement and pay for
their own old-age medical expenses and care; but most do not. Those of us who
do not have sufficient financial resources are in trouble. Who will we turn to? We
left the family years ago, so it is not going to be there for us. Can we re-create it?

This hyper-economy of money exists because we do not believe that our own
children are going to wipe our chins for us when we are old. We do not believe
that they will be there for us because we have been there for them. The bonds
between us have not grown thick enough to hold them and us together, two
generations held together person to person. We do not believe that they will
there because we have not had enough children to be available to provide care
for all of us, and perhaps because we personally have not had any children at all.
We are importing the children of other societies, but we do not believe that those

33
we import now will still be prepared to do such menial work for us at that future
moment when we will need it.

Age and Demography

Populations are falling. If children are money in the bank, those societies which
are producing fewer are becoming poorer. Their poverty will become apparent
only when the present larger ‘boomer’ generation retires, becomes elderly and
then dies off. Each generation will be smaller than the last, have a bigger burden
of the unproductive elderly, and so poorer and perhaps also less motivated. Each
generation will have to carry a larger burden. But will those arrive from abroad
have the incentive to support and care for the previous generation.

We have be inflating the money supply for decades. We have intent on making
everything more explicit. The principle product of the economy has become
accounting itself, which is what money embodies. What has motivated us to do
this? We are intent on making explicit what we are owed, because we are not
sure that there will be people around us who share enough with us for our
informal economy and informal accounting to be sufficient. If I fear that my kids
and their friends won't know who I am, and won't care of me and offer me the
services that comes from their honouring of me and my generation.

Our determination to make out that we are richer than we are makes for
economic delusion, a societal pathology. I have suggested that this has to do first
with our wish to cut ourselves from the particular sets of relationships of our
inherited social context. When we are young we define ourselves as units without
intrinsic relationship, rather than as persons. When we are no longer young we
fear that it is so, and thus fear that we will not be looked after by those who
know and love us. There is no household economy to receive us and confirm and
console us.

Money represents our current forecast of our own most personal future prospects.
Our conviction that we have to earn, or otherwise find, more money represents
our failure to have children, and to bear such children that have a keen enough
sense of obligation to us that they will be prepared to care for us in our old ager
as we cared for them in their childhood, and so to their readiness to sustain the
family as a functioning economic unity from one generation to another, so that no
family member becomes that isolated individual who has to be picked up by the
state when he can no longer pay for himself. We fear that we will not be allowed
to grow old within the family and household economy. It was us who effectively
disbanded the family when we went back to work after having our kids and this
decision became final when the last of them left home. We ensured for ourselves
that the family would not be there and thus that there would be household, no
home. Now there is no family that is an inter-generational economic entity, rather
than as a merely sentimental entity, to receive us again.

Having put even our own work to out-workers in China, we ourselves will be put
out. We will be put out to that care that can only be made explicit and paid for in
formal terms. But this process runs both ways. It is because we make this explicit
accounting that we are put out. And because we have made this explicit
accounting we retire, separate ourselves from our work and colleagues. We fail to
see this as a social death, the beginning of death. It starts the process of our own
marginalisation that ends when no one knows or cares whether we are still alive
and the only way of telling is by look at the bill from the care home .

By accepting the premature form of death that is retirement, in which our labour,
skills, and relationships and dignity are taken away from us, we will have a
lengthening life-span. Modern medicine will prolong our old age. This extended

34
dying will make us much poorer and making the state that pays for this
prolonged dying , much poorer, putting a prohibitive burden on the dwindling
population of the economically active, who will see their own chances of receiving
such care vanish to nothing. If we decided not to have anyone to follow us and
honour us and be present at our deaths, some non-Western societies might say
that we have already started the dying process.43

Work is good. If we work for as long as we can, it brings the slow social death
which is retirement and biological death back into connection. We can die
surrounded by, perhaps even able to say goodbye to, those who know who we
are. You can die in the company of those who have lived and worked with you,
rather than those abandoned to carers in hospital or care home who do not know
you, in your last years and months, expensively staving off the inevitable.

We have a paradox. The concept of growth is essential to the modern

understanding of the economy, but it is not related to the two factors basic to any
economy and any society – the biological factor of the procreation of new bodies,
and the cultural factor of the formation of new persons. If neither bodies nor
persons, and thus future workers and consumers, are part of the modern account
of growth, what is it that we want to grow? We grow money, but as we have
seen, this money may not be linked to growth of productivity, and may even be
preventing the growth of productivity or the culture from which productivity
arises.

What would make us all more rich and secure? It seems that only a home-grown
population bulge and a new attitude which would welcome it. Nothing would
make you and me as economically secure as the birth of a large number of
children who in twenty-years time will be in work, paying the tax and pension
contributions which will provide a pension, health care and then old-age provision
that we will enjoy. To ensure that this population bulge was economically
productive for the long-term it would help if these children were produced by
those whose mutual love we honour and hold secure by the public covenant of
marriage. Bodies can beget bodies, but only persons have the inter-generational
reason to do so. Babies are wonderful, but babies who will be formed by the love
made public and enduring by a marriage have a good chance of growing into
wonderful persons. Our economy needs an influx of young people. We could
import them from other nations, but such a policy also depends on their readiness
for the pedestrian economy. We need those who are ready to work and pay taxes
to support the growing indigenous dependent population. But then there is the
question of whether it is right to deplete other economies of those young and
dynamic people who are their chief resource.

The growth of the economy has simply been the growth of the finance services
‘industries’. But their growth has not been a growth of productivity in the real
economy, but just a competition to account with ever more sophistication, in
order to stay ahead of others. It is the function of many baby boomers
individually trying to ensure that they should be looked after in their old age
before their peers. It is their failure to raise a household and family that would
care for them, life-long, that has created their fear and their fear that manifested
in the long finance services boom. Nonetheless, in view of the dropping total
population, the savings of each of them will have to work harder to out-compete
the buying power of the savings of others. Thus financial services capitalism is a
simply a competition to itemise with ever sophistication. We divide the existing
entity so that we can identify two where there was only one and and so declare
the creation of ‘more’. It is a proliferation of itemisation. So the ‘growth’ of the

43
Strathern

35
champions is just the ‘dividing’ of body on one side, person on the others. It
takes the embodied person apart to make body (inert) and life (volatile). The
economy only grows by this division. Ultimately what is itemised and individuated
is ourselves.

Steady-state economy?
In chapters four, I suggested that a particular generation, which I called the
champions of modernity allowed us to definition which we have settled on for
ourselves. they are the moderns, and since we have not demurred from their
definition, we are their followers, we are moderns. This was broadly the
generations, which included those who founded the Bank of England, the
founders of American republic, and the speculative finance that funded the
European empires.

The myth of our modern ancestors is that the world will grow and our economy
will always be able to expand. So far from being based in the givenness of
nature, the modern economy is based in a powerful myth of the ever-expanding
world, in which the horizon recedes before us as we advance so that there is
always more territory to conquer. Because the world economy has grown the
assumption is that it always will. The assumption is of continuity. Modernity
expects things to continue the same – this is the fundamental neoclassical
economic concept of equilibrium. But things do not remain the same, there is the
unforeseen.44

The myth is that there can be unlimited growth of material resources. The myth is
that things can grow and proliferate without limit, and that is the myth. There can
indeed be some growth without limit, for persons can grow without limit, and
human ingenuity can grow without limit. We just have to tell these two forms of
growth apart. We have brought about a long economic crisis because we have not
been honest about growth. Growth must be about moral growth, that is
willingness to work, and so to produce and buy from our own regional and
national community a good proportion of our material resources.

Such material growth has in fact simply been about estranging ourselves from the
processes that sustain our own bodies, involvement in which is a major part of
our contribution as persons. I have suggested that the idea of growth must not
be separated from the growth, or at least maintenance, of culture, and to the
formation of persons in a culture. Through such formation we can learn self-
restraint and aim for a degree of self-mastery. Then we would not be in such a
hurry to consume will be able to regard resources as savings and so avoid
devastating the environment for the generations to come. The economy of
modernity consists in making everything immediately explicit, so in realising
wealth as present wealth, and separating the economy from the cultural
economy, capital from social capital, body from person, and separating the
immediate from the long-term that is the unity of past and future. But it is culture
that supports, or fails to support, an economy. Economics can only ever be a
shorthand that refers to a certain culture, and prosperity can only be sustained
across generations, when that culture is passed on. Perhaps we will enter a more
subdued period of low-growth, in which we will re-discover an economy for which
growth not determined by growth.45

The materiality of persons, or materiality without persons

44
Hyman Minsky Stablizing an Unstable Economy (McGraw-Hill, 1986), Nassim Taleb
Fooled by Ramdomness; The Hidden Role of Chance in Life and the Markets (New York:
Random House 2001).
45
Patrick Deneen

36
The modern and early modern champions of autonomy divorced growth from
human formation. Growth that relates to the maturity of embodied persons (not
private individuals, but public citizens) is possible. ‘Growth’ that does not relate to
persons, and that therefore merely refers to bodies, to the material things, and to
the great torrent of material goods.

If growth means that we never have to exercise self-control and so never have to
become persons in this strong sense, then growth refers to the torrent of stuff
and then ‘growth’ is utterly unsustainable. This torrent of material goods, each of
which distracts us for a moment makes it unnecessary for us to develop the
character of mature, self-governing persons.

We have to ask whether the apparent economic prosperity of recent years has
been premised on the wasteful and destructive consumption of existing social
capital, without its replacement. Have we experienced in which our standing as
persons is less than it was, so that we have achieved the very reverse of growth.
We only need to recognise when we are well-off. ‘The misfortunes of by far the
greater part of them have arisen from their not knowing when they were well,
when it was proper for them to sit still and be contented.’ 46

In these earlier periods the economy was premised on growth of persons and
societies towards maturity, rather than on merely material growth. If the
economy was only about growth that was materially conceived, it would be about
the degree to which persons separated themselves from their social and cultural
contexts and distanced themselves from those around them. On this basis the
economy would simply be about identifying and separating the bodily and
material from the social and cultural, and stripping off all inter-personal
relationship to turn the human being into a bare individual unit. This earlier and
more rounded account of economics had a more measured approach to credit,
interest and consumption, that made explicit the relationship of personal
motivations and integrity to the health of the economy, and made explicit the
relationship between the value of the money in circulation and the long-term
future-orientation on economic agents.

The Christian account of growth

We grow towards one another
Christians offer an account of the universal economy, in which every person may
come into relationship with each other. We are oriented and headed towards this
universality, the kingdom of God, but since we are not ready for this universal
economy, it withholds itself. Jesus Christ is the true and universal form of man,
and fellowship with him is the way in which each human being may fairly and
without coercion, sustain a relationship with every other human being. Each
encounter with every other person is the way by which we may prepared for that
universality. That kingdom gives us time, and time as we presently experience it,
is for no other purpose than that we become fitted for that universality. The
universal economy already exists, in Christ. Where his communion is, that is
means that the

That global economy already has bodily form, albeit the form that is hidden, but
which in faith may be recognised as the body of Christ. The future of the human
economy is concealed within the catholicity and universality of the Church. The
Christian faith is able to give us the name by which we can call that universal and
catholic spirit, the Holy Spirit, to wrench us free us of all these particular forms of
captivity, so that we can come unforced into the freedom of his communion. This

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It was a question Smith asked. Adam Smith Theory of Moral Sentiments (ed, Knud
Haakonssen, Cambridge: Cambridge University 2008 ) p. 237

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God lets us come to him in freedom, so that in his company, we may come to all
men. We must contrast this freedom with the brute givenness represented by the
monism of any occult divinity that does not care to give us its name. So the
Church insists that there are many forms of life and ways to give one another
recognition, and thus that no form make all relationships explicit. There are
therefore many currencies, and that each of us issues our own in love and, free
from coercion has to affirm the worth of whatever payment, and means of
payment, is offered to him.

In the Christian account of the economy we can acquire those (political) skills,
through an apprenticeship by which we can judge what is true and good, and can
grow to maturity. Any Christian account will compare the private and individual
account of modernity and the economics that results from it, with the public and
political account of other earlier periods. The long Christian tradition contains the
resources for an economics which was not based in material growth, but in
another sort of growth, personal growth. The Christian tradition does not regard
economics as an autonomous domain. It regards it as an apprenticeship in good
judgment, and so in decision-making, that is in making good decisions, and so
regarded economics as inseparable from our duty of enquiring what is good, and
so into the purposes of human life.

The Church insists that we are able to find and meet each other in the public
square, approaching one another simply as fellow citizens. There may be a
secular economy because there is an area of public concerns which may be
tackled together without any centrally-imposed ideological unity. We may ask
each other for what we need and we may provide for one another. We may use
our judgment in describing our needs and meeting others’ needs. We come up
with pragmatic – secular – responses to specific circumstances. Christians
suggest that economics requires the discourse of virtues and character. We have
to say that each event of encounter results in some (private, not easily-
denominated) growth or deterioration in our character. We have to give ourselves
the means by which the assess the movement through time towards the goal
which is man. We can say that the man or the economy which swings between
extremes of emotion will not reach that settled maturity.

Summary

1. The economy is about the transfer of life, and the resources required for life,
from one generation to another. An economy depends on the presumption of
continuity.

2. None of us is our own work. Others make us present. Our body and presence
is their product of their work. We give the other man the resources he requires by
which he can be present, to us or to anyone else, and so give him what will
sustain his bodily presence.

3. We demand reassurance from one another; we want the other person to

demonstrate their commitment to our relationship. We produce accounts of
relationship and demand such accounts from one another.

4. We come together in order to exchange, examine and be reassured by these

accounts. Our accounting and examination of one another takes explicit,
expensive and long-term form. We come together in one place. We meet.

5. The past is all we have to show to one another that can secure our present
relationship. All human transacting is about sketching and gesturing accounts of

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our shared past. Money is the idiom in which we abbreviate such accounts of our
shared past.

6. Our economic encounters have ceremonial forms which employ tokens. Goods
and money serve as these tokens. We employ objects as tokens of our
relationships and so identify one another by them.

7. Things are given to us and are immutable to us. But we also present states of
affairs to one another as immutable. We insist on receiving from others that their
acknowledgement that this state of affairs is immutable. We police the hardness
of ‘things’.

8. Money is account-rendering. We give one another accounts of our relative

positions. Money grows as our account-rendering becomes more sophisticated;
we beguile one another with innovations in this account-rendering.

9. Money is a token of our shared past history. It is our society’s previous success
at making contracts, made tangible. We put this token in the hand of our
counterpart, and we demand an equivalent taken from him. Each coin is a
miniature version of the accumulated hill of that nation’s history.

10. Money accompanies resources to the places that can make best use of them,
and draws our attention to that movement. Money is also a form of signalling by
which we encourage others into the stock that we presently hold.

11. The economy depends on maintaining levels of confidence and trust. Law and
its enforcement enables the trust that enables markets to operate.

12. We dissipate accumulated social capital when we do not conceive it as capital.

Social capital converted, deliberately or unwittingly, into money is dissipated.
The growth of money represents the loss of confidence in cross-generational
economic continuity.

13. Modern economics is premised on material growth. It accounts for material

growth in deliberate ignorance of the economy of persons. Christians believe that
we may grow as persons, or we may fail to grow as persons, or even grow
backwards and so become of diminished stature.

14. Modern economics assumes that present economic product is solely the work
of the present generation of economic agents. Yet time-lag in an economy may
be longer than a single generation. Our present prosperity and economic
openness may be the carry-over from previous generations, the product of
momentum.

15. Relationship is reciprocal. Debt is relationship considered as non-reciprocal.

16. Money is inseparable from debt. It comes into existence as debt. It is not
based the in the authority of the whole people, but of a undeclared clique. The
state delegates the creation of money to a financial elite, which creates money by
making entries in their ledgers, then lends it to individuals and government. Yet
governments have the authority to issue money, and even to buy up debt and
replace it with debt-free currency.

17. Money has the effect of separating its holders into lenders and borrowers, and
so tends to widen existing disparity, creating a divide between the top and
bottom, making the political participation of all its members difficult, and
threatening the unity of a society.

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18. Since debt bears interest, even when debt is cancelled or paid off, debt
interest remains to be paid. Since interest has to be paid, we have to seek new
transactions. The logic of compound interest means indebtedness drives a rise in
transactions and continual expansion in total (explicit, monetised) economic
activity.

19. The financial sector has to shrink. Governments can restrain it If

governments do not bring it back into a more so that it represents a smaller
proportion of our economies. If they do not succeed in this, their growth may
cause the collapse of economies.

20. Money comes into existence as debt; debt drives growth; growth is
sustainable as long as there are open frontiers and new sources of energy

20. The rise in transactions necessitates the rapid exhaustion of natural

resources, chief of which are fossil fuels. The growth of debt-as-money drives
the compulsion to realise our social capital now, rather than hold it for later.

21. Cheap energy has allowed us to create the massive complexity of the division
of labour of the present economy. Without it many of our present forms of
employment would vanish.

22. When becomes the sole medium of transaction, money is characterised by

volatility which can become severe enough to squeeze individual economic
agents, even entire populations, permanently out of the economy. Modern
societies tend to polarise between top and bottom, and so cease to be united
societies.

23. The growth of debt-as-money drives the compulsion to make all our wealth
explicit now, and so we press ahead to extract all natural resources, rather than
bank them for later.

24. As the energy component in every transaction rises, the demand for oil will
rise, the global economy is likely to stall repeatedly.

25. If the global economy stalls people fall out of formal employment, are without
purchasing power, so effective demand is destroyed.

26. Our concept of money is based in the belief in growth without limit in a world
of finite resources. The expansion of debt assumes that we can expand credit at a
faster rate than GDP, without limit. This leads to unsustainable growth and to
crisis.

27. Cheap energy making transport costs negligible puts every part of the world
in immediate reach and so under the discipline of every other. Local and national
economies have been hollowed out, the global economy over-extended and
rendered brittle.

28. Spreading risk re-locates, but does not reduce, risk. Conglomeration brings
transfers the possibility of instability from a part to the whole of the market.
When the whole market is threatened corporations persuade governments that
the economic costs of large-scale failures are unaffordable. Governments take on
corporation liabilities.

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29. Governments cannot resist reducing their liabilities by running inflation. By
running inflation the state negates virtue (abstinence) and so dissolves all
sources of authority other than itself.

30. We cannot fix a crisis of money with more money (or more debt), because
just what money is, is the problem. We have to fix it with something that is not
money. We have to allow social capital to accumulate by recognising it as real
capital.

31. The great cloud of debt is the embodiment of our fear of the dependency
that comes with the aloneness of our old-age.

32. Continuity is the unstated basis of any society. As it has been up to now, so
we want things to continue and no worse. Modern economics expects things to
continue the same; yet things do not remain the same. There is the unforeseen.
The unforeseen may be ‘more’ and ‘better’, but equally it may be ‘less’ and
‘worse’.

33. We assume that capital in the hyper-economy should command the work of
formal employment in the ‘real’ economy, which should itself command the
household economy of families from which new economic agents have appear.

34. The human pyramid scheme works as long as a new generation of sufficient
size arrives which the existing generation can set to work.

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