It is assumed by everyone – and clearly by economists – that money is a neutral and accurate medium; that money does no more than reflect the economic facts. This trust is shown by the unquestioning acceptance, not just of unrealistic debts, but of a whole range of other monetary data. For example, America is currently expanding its already colossal output – but not to supply itself – simply driven by the need to obtain export revenues to improve its balance of payments. At the same time, many Third World nations are striving to develop a stronger export sector, again not producing goods for themselves, but to improve their balance of payments in order to fund debt repayments.
Thus we have the bizarre situation in which the richest nation in the world is seeking to increase output simply to remain financially viable, whilst the poorest nations, who desperately need to improve their domestic agriculture and industrial infrastructure, are orienting their economies towards a glutted world market – all this being driven by monetary considerations. This again places economics, and financial economics in particular, quite simply in the realm of unreality.
It is not just in the macro-economic sphere that questionable monetary statements prevail. Every budget and every election is dominated by spending plans, spending cuts, savings made here, and accusations of money wasted there. `The other party’s spending plans don’t add up’ they all chorus. Scores of economists and political commentators then huddle round their calculators to check whether one party’s promises have more financial credibility than the other’s. With a triumphant shout, the claim is made that `there isn’t enough money’… So we can’t do it. Money is trusted. Money is accepted as the final arbiter. Money is the overall economic truth; the limiting reality. And if there isn’t enough money, well that’s that…
But this perennial shortage of government funds, enshrined in the repetitive cry `We haven’t got the money’, has got to be challenged.
Money is a man-made device, and for an entire economy to be perpetually in the position of not being able to do what it wants, simply for lack of bits of paper with numbers on them, is strong evidence that the shortage of those bits of paper and numbers lacks all validity.
Consider some of the decisions taken in pursuit of cuts in expenditure…
The building is already there, the equipment is in place, the people that are employed there can be good at their jobs, providing a much valued service to local residents. And then along comes a `Grey Suit’ who tells us that the hospital, college, library, post oftice, coastguard station, research laboratory, swimming pool or whatever has to be closed for lack of money.
But in what possible sense can we not afford what we already have, and which is already there? A town can be in desperate need of a school, community centre, or repairs to its roads and drains. The raw materials may be lying idle in a builder’s yard, people may be desperate for work, but there isn’t enough money… so we can’t do it. In what possible sense can we not afford to do what we plainly can, in physical terms, achieve?
This situation is accepted because it is assumed that monetary statements are valid, and that a lack of money means a lack of something vital. But what is missing? If the lack of money were paralleled by a lack of manpower, raw materials, desire or demand, that would at least be rational. For any one person not to have enough money is rational; for an entire economy constantly not to have enough money, and thereby prevented from doing what it is clearly capable of doing, is absurd.
Money is trusted. Monetary statistics are trusted. No one refuses to pay their mortgage on the grounds that the monetary system is defective. No one complains to the government that the latest export drive for foreign currency is misdirected because our balance of trade figures are a misrepresentation. When ministers claim they cannot fund some service, no-one says, `Your figures are irrelevant’.
It is assumed by almost everyone that the financial figures provide an accurate statement of our affairs. If we are indeed so deeply in debt and on a daily knife edge of solvency, then surely we must all work harder. All the economists, politicians, businessmen and industrial experts agree, so we simply must cut expenditure, become more competitive, improve productivity, start new enterprises, create more jobs, export more to other countries. They are saying the same in America, France, Germany, Sweden, Canada, and Japan. Tragically, they are now saying the same in Sudan, Ethiopia, Madagascar, the Philippines, Sri Lanka.
This was an extract from the lucid, incisive book The Grip of Death by Michael Rowbotham.
This book challenges the widespread assumption that the monetary statements and statistics commonly used as the basis of economic decisions are valid. The general confidence in modern money and monetary judgements is utterly misplaced; the apparent neutrality of the present financial system is quite false.
Modern money is not a neutral medium; indeed, the way in which money is currently created gives it a specific nature and serious bias. Modern money actually operates within its own detached and limited mathematical world. It projects its own version of `the facts’; its own version of an economy; its own reality. It tells us what we can and cannot do; it tells us what we can and cannot afford. But these amount to demonstrably false, irrelevant and misleading statements.
If you haven’t read it already, you can get a copy here.
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