CHAPTER
4
The
Money Power of Men
MONEY
CANNOT OPERATE without competition to determine values. Such process
of determination of values is the only means of assuring money
acceptors that value equivalent to that surrendered will be available
to them in turn. It follows that the stability of the monetary unit
depends upon the spontaneous action and reaction of all participants
in competitive exchange, and not upon the creditability of the issuer
who, though known to the bank or central bookkeeper, is unidentified
with his issue in the actual circulation. This disposes of the idea
that the issue power must be exercised only by the wealthy.
Nor
should the credit from which money springs be confused with ordinary
commercial credit. Commercial credit involves the promise to deliver
money or goods to the creditor. It is defaultable by intent, and is
more rigidly structured than money-creating credit, since it
stipulates a specific creditor and date of maturity. Money-creating
credit is not subject to intentional default. The issuer is eager to
redeem the sum of his issue, since to do so involves only getting
money rather than giving. This eagerness on the part of everyone to
gain money by selling goods or services is the security back of
money-creating credit. Therefore, since it exists universally, the
criterion of the money creating power is not one of moral
responsibility of the issuer, but of his exchange capacity.
In
other words, the qualifying determinant of the would-be money issuer
is not his moral or material responsibility, but his capacity to
deliver value to the market in exchange for the money which he
eagerly desires. In short, anyone who has marketable goods or
services is qualified to issue money to the extent of such capacity.
Everyone is so dependent upon money, the medium of exchange, that he
needs no moral persuasion to give his goods or services for it. That
is what he is in business for.
In
fact, need of money is a condition precedent to the issue thereof. To
issue money, one must be without it, since money springs only from a
debit balance on the books of the authorizing bank or central
bookkeeper. No money can spring from a black ink balance, because
such balance indicates that the holder stands as creditor to the
economy, having obviously delivered more value to the market than he
has taken out. This statement does not mean that on his own ledger he
is in a creditor position, because therein is involved also the
weight of his commercial credit. But if on the books of the bank or
central money bookkeeper he stands as creditor to the economy, he
cannot be a money issuer without first establishing a red ink
balance.
The
statement that a would-be money issuer must be impecunious requires
the qualifying explanation that this does not include currency held,
as, obviously, there is no record of this on the central bookkeeper's
account. Nor does it mean that a "loan" may not be executed
to one who has a black ink balance. But the "loan" does not
constitute issue, and before the depositor can write new money, he
must exhaust his black ink balance. Nor does "red ink balance"
mean an overdraft as shown on the depositor's account. It means a
deficit when the sum of the note representing the "loan" is
taken into account. The fact that only those without money can be
money issuers shows that the adequacy of money circulation requires
adequacy of issuers, and that the supply can never be adequate for a
healthy economy when the number of issuers is restricted.
Since
moral responsibility is not a qualification for a money issuer, and
only the impecunious can be issuers, we must give up the idea that
money issuance is the prerogative only of the elite and the wealthy.
All money springs from those who have none, and just to the extent
that the money issuing policy is governed by snobbish and
aristocratic ideas will the economy be starved and restricted.
We
must also recognize that firms or corporations are more likely to be
disappointed in their ability to garner money through sales than
salary and wage workers. Business institutions are limited to the
marketing of specific items, which the market may turn from between
the time that they have issued money and the time that they undertake
its recapture by sales, whereas wage and salary workers deal in the
raw material, labor, which can be switched to the production of any
commodity for which there is demand. This flexibility of labor
application makes money redeeming power less speculative on the part
of employees than employers.
For
example, take a manufacturer with a thousand employees, and compare
the issuance of 100,000 money units by the employer with the same sum
as issued by the employees in average lots of 100 each. Suppose the
enterprise should fail and the corporation go out of business. The
employees would still be in business, since they could sell their
labor to other employers even if the product of their previous
employment were unmarketable by their erstwhile employer. Man, the
manufacturer of human energy, is less of a speculative enterpriser
than an employer who has converted that energy into a specific
commodity. The marketability of the latter is confined to a
particular category of commodities, whereas the former is the raw
product of all commodities.
Labor,
as services, is indeed the sole commodity dealt with in exchange, and
its value is determined by exchange. Now if money is based upon
value, and the only value lies in human services, mental and manual,
it may be seen that all money is service money. Does it not follow
that man, the fountain of all values, is the natural fountain of all
money?
There
inheres in every producer the power to issue the money necessary to
negotiate his production in exchange. Therefore as we humanize our
concept of money and exchange, we enlarge its power to advance the
social and economic order. As we have seen, a money issuer initiates
a money circle, and it is these circles that organize society into
cooperatives. The more circle organizers the economy has, the greater
its effect in elevating human standards. To be sure, not everyone can
act as a money circle initiator at the same time since, as pointed
out, one must be in a debit position to become a money issuer, i.e.
One must be moneyless, and therefore those with money are naturally,
as long as they hold that status, disqualified as issuers. But under
the existing monetary system, many who are naturally qualified are
artificially disqualified. This puts a limitation upon exchange
initiators, and as exchange is limited, so must production be also.
Producers
or potential producers must always be permitted to spark exchange and
thus, in consequence, production, when it stalls by reason of a
deficiency of money circulation. In other words, no producer should
be dependent upon the money circles initiated by others. When all
circles fail to include him and he is left impecunious, he serves not
only himself but the economy by starting a circle himself. For if he
does not, he must stop buying, and thus he reduces the demand for the
production of others and spreads the contagion of unemployment. By
buying, he absorbs materialized labor, thus creating demand for more,
which will react upon him, since when we buy of others we indirectly
buy from ourselves. This is the security against unemployment and
depression. It requires but the recognition that every man is his own
employer and must not be denied the opportunity of employing himself
by employing others, i.e., buying the production of others.
Two
misconceptions plague our ideas of money. One is that which admits
governments—which have not and cannot be invested with money
issuing power—to the money circulation, and the other is that which
bars those who by nature are qualified to issue. Thus money and
exchange and production suffer from a deficiency of true money and a
burdening of the false.
To
solve our politico-economic problems, we must eradicate these two
evils. Our inventive genius, so marvelous in mechanics, must be
turned toward contriving a monetary system that will liberate
invention in the industries, since without a facile and faithful
exchange system, further progress is stymied and industrial invention
is rendered useless.
The
key concept in the organization of a new and adequate monetary system
must be the recognition of the dignity of man as the producer and
provider of the means of exchange. The individual must be viewed as
the elector in the economic democracy who determines by his monetary
ballot the course of both the economy and the state, and he must
never be denied the use of such ballot. If these provisions are
respected, the economic democracy will dissolve within its operation
the evils that now exist and thus progressively confine the state's
activities and diminish its interventions in the economic affairs of
the people.
Political
democracy is a delusion and a snare when it undertakes to reflect the
public will in the field of economics. The ballot is too infrequent
and, even then, involves special effort. It undertakes to secure the
delegation of power to resolve legislative and executive action on a
myriad of questions, some of which were not even contemplated at the
time of polling and all of which are abstract, requiring objectivity
and a presumed understanding of the complex interaction of forces
that neither the elector nor the elected possesses.
Economic
democracy, on the other hand, using the money ballot, permits the
elector to cast his ballot subjectively and frequently in the regular
course of his living as he pursues his happiness. Furthermore, he is
not subject to the will of the majority. He may vote for and secure
what he desires even if he is in the minority.
To
seek liberation from our limitations not through political democracy,
which at best can only negative the state's invasion of natural
rights, but to pursue it by positive measures through the mastery of
money, utilizing it as an untrammeled ballot in an economic democracy
that knows no political boundaries—this is the new approach to
freedom and human fellowship.
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