Money as public good

The politics of monetary thought

John Tang

The Currency of Politics

by Stefan Eich Princeton University Press

US$35 hb, 339 pp

What is money? To most, it is currency in the physical form of bills and coins. To others, it encompasses any form of financial credit that mediates present versus future consumption. To the author Stefan Eich, it is an institution that was historically conceived to promote social justice and democracy, but over time has been neutered of its political nature as a public good.

Over six chapters bookended with a short introduction and epilogue, Eich traces a genealogy of monetary thought from Aristotle to Karl Marx to John Maynard Keynes, who each wealth (chremata). According to Eich, this linguistic distinction mattered in that, while wealth can be measured with currency, the use of the latter also represented reciprocal exchange among equals and solidarity with the values of a democratic state. differed on what money represented but agreed on its symbolic value, not just its transactional use. In doing so, Eich aims to recover money’s political past so that governments might become accountable for the social consequences of restrictive monetary policy and use it to reduce economic injustice and inequality.

Furthermore, the issuing of money by government, as opposed to its modern creation by private banks, demonstrated that communal values superseded individual interests and that divergent needs could be made compatible through a common form of exchange. Missing from Eich’s version of coinage history is that, while Athenian citizens may have valued equality and democracy, the widespread practice of slavery undermined these ideals.

The book’s selective historical lens continues with an abrupt elision of thirteen hundred years in the chronology, when, according to Eich, the political symbolism of money was usurped by the theory of sound money. Eich views this paradigm shift – that money had an intrinsic relationship with scarce precious metals – through the work of English philosopher John Locke and the belief that secure property rights demanded that the nominal value of currency remain constant over time. In the context of highly volatile supplies of gold and silver during the second millennium and the problem of devalued coinage, Locke justified limiting government manipulation of money (e.g. devaluation) as an issue of public trust in sovereign pledges, even if it entailed social costs like deflation and reduced spending. As sound money policies like the gold standard were increasingly adopted in western Europe, money became ‘depoliticised’ and adherence to orthodoxy was legitimised. In Eich’s view, this conception of money merely masked its political nature and reflected the interests of democratically unaccountable elites.

Eich contrasts this revisionism with sound money detractors like the German philosopher Johann Gottlieb Fichte, who argued unsuccessfully in 1800 for the creation of fiat money that would decouple currency from precious metal supplies. Fichte’s proposal was motivated in part by growing international commerce and its attendant economic competition, which he believed were sources of international conflict, imperialism, and domestic inequality. By creating a money system independent of precious metals and closing its borders to trade, a country could, without international repercussions, issue as much money as it needed to sustain domestic spending and consumption. The value of a currency would derive from a country’s reputation, whose legitimacy was derived from its people and would thus prioritise their collective interests instead of those in industry or overseas, demonstrating Aristotle’s view of money as a public good.

Economists usually describe money by its functions: a store of wealth, a medium of exchange, and a unit of account. As a political theorist, Eich challenges this technical definition in his opening chapter with a discussion of ancient Greek coinage, where the word for currency (nomisma) differed from that for

Fichte’s later compatriot Karl Marx was similarly concerned about rising inequality and social welfare, but less concerned with rejecting metal-based currency. Believing that money was like capital in representing the labour value of production and thus accumulated through exploitation, Marx considered monetary reform to be futile since the financial system was a crucial component of advanced capitalism and would collapse on itself. Thus, expanding credit beyond precious metal supplies would only delay the inevitable emancipation of labourers. Eich suggests, however, that Marx’s support for sound money was more nuanced in that he saw it as possessing social value, albeit in a negative sense. To Marx, since money was a crystallisation of human labour, its exchange and accumulation effectively dehumanised that value and those who contributed to creating it.

Eich’s most sympathetic treatment is reserved for John Maynard Keynes, who, after seeing the economic consequences of the gold standard in the Great Depression, advocated an end to central bank rigidity in managing a country’s money supply. While Keynes’s views on monetary policy have been overshadowed by his fiscal policy recommendations, both were consistent about active government intervention to limit damage from economic downturns. Unemployment in exchange for price stability (as was prescribed for an internationally traded, metal-backed currency) would no longer serve societies with an expanded franchise that demanded greater transparency, accountability, and social justice. To both Keynes’s and Eich’s regret, however, sound money remained a marker of macroeconomic prudence with the US dollar replacing the British pound as the hegemonic currency tied to gold in the postwar Bretton Woods period.

While Keynesian policies were dominant in the mid-twentieth century, their inability to address supply-side shocks, starting with the 1970s oil shocks, meant that fiscal and monetary restraint regained ascendancy. Furthermore, President Richard Nixon’s announcement that the US dollar would no longer be pegged to gold marked the end of international sound money. Eich notes that fiat money, which could have been used to redistribute economic gains, was instead wielded by unelected central bankers to target price stability, which meant increased unemployment and economic recession. This democratic deficit became even more apparent with increased wealth disparities in the subsequent neoliberal decades and the preferential treatment of private banks in the aftermath of the Great Financial Crisis.

The book concludes with a reassessment of how money can re-emerge as a political institution with democratic legitimacy, including recommendations to recreate national postal banking systems and use central banks as open laboratories promoting social welfare. Missing from this discussion are considerations as to whether progressive populist policies such as modern monetary theory (MMT) are more legitimate than conservative ones like sound money, and whether democratically elected leaders like Donald Trump or Boris Johnson would use money to improve social welfare as it was originally intended.

Readers may wonder about the target audience for this book, given the frequent references to obscure political philosophers and academics, as well as eighty-one pages of endnotes. The seemingly arbitrary lineage of monetary theorists and the exclusively Western bias also narrow the scope to those who appreciate the ‘natural’ connections between money, democracy, and social justice. These ideological and cultural blinkers notwithstanding, more important is how salient is the book’s central argument, and this remains unclear. Had this book been released a year earlier, before the rapid increase in inflation refocused attention on price stability, its main thesis might have resonated more strongly with those seeking continued pandemic-era public spending and redistribution. Until grubby practical concerns about money are addressed, Eich and sympathetic progressives who want to reclaim it as a political institution may have to wait. g

John Tang is Senior Lecturer of Economics at the University of Melbourne.

An illustrated anthology showcasing many of the most exciting poets writing in English across the globe.

Just another strategic sideshow

Syria’s descent into carnage

Tom Bamforth

Syria Betrayed: Atrocities, war, and the failure of international diplomacy

by Alex J. Bellamy Columbia University Press US$35 hb, 427 pp

As the war in Syria enters its second decade, the human scale of the catastrophe is difficult to comprehend. Shocked by the security service’s torture of children who had graffitied the words ‘Down with the regime’ on a wall in the city of Daraa in 2011, nationwide demonstrations rose up against Bashar al-Assad’s tyrannical government. When I ask my now-exiled Syrian colleagues what life was like under the Assad family, they struggle for historical parallels before agreeing that, for them, it resembled Stalin’s Soviet Union and North Korea (a regime the current president’s father, Hafez Al-Assad, looked to for inspiration).

During the Arab Spring of 2010–12, as one after another of the region’s ageing kleptocrats fell, many Syrians felt they could throw off the shackles of the Assad family that had come to power in a military coup in 1971. The Syrian opposition threatened to overwhelm Damascus, only to be driven back by Russian airpower and Iranian ground troops; it was also undermined by internal division.

The United States, under President Barack Obama, committed to ending the ‘forever wars’, was wary of another potential Middle Eastern quagmire. Obama doubted the ability of an opposition coalition of ‘farmers and pharmacists’ to take on the Syrian government, with its Russian and Iranian backers. Under Donald Trump, the focus, for want of a better term, of US policy was on combating the perceived threat of extremism rather than on the state-based terrorism of Assad. Despite the suffering of civilian populations, in John Bolton’s words Syria was little more than a ‘strategic sideshow’ to US administrations. But in the brutal struggle for Syria’s future, torturing children was just the beginning.

Of Syria’s pre-war population of around twenty-one million people, fourteen million people have been forcibly displaced (seven million have fled as refugees and another seven million remain displaced within Syria’s borders). In the north-west of the country, an area still controlled by opposition groups, 4.4 million people occupy the ‘new Gaza’ – an area caught between the frontlines and an EU-funded wall that runs the length of the Turkish border. Hyperinflation, chronic shortages, and an economy controlled by the kleptocratic Assad family mean that seventy-five per cent of households across the country now cannot meet their basic needs. In what was once a middle-income country, half a million children now suffer from malnutrition and stunting, and 2.5 million children do not attend school.

Civilian suffering is a deliberate military strategy, now being practised in Ukraine. The use of chemical weapons and barrel bombs, targeting hospitals, schools, markets, and aid convoys, has defined the regime’s war on its own people. The statistics fail to convey the country’s suffering and devastation. After the murder of George Floyd in the United States, empathetic murals appeared in Syria along with his tragic last words, ‘I can’t breathe’, the local reference being to the effects of sarin gas. One colleague told me that he can no longer bear to look at the family photos he managed to salvage when he fled: too many of the people in them are dead. Every few days, local aid workers operating near the frontlines send out graphic images of dismembered bodies in bombed-out houses.

What can be described, however, is the systematic failure of what some misleadingly call the ‘international community’ to bring an end to atrocities in Syria. Alex J. Bellamy – Professor of Peace and Conflict Studies and Director of the Asia Pacific Centre for the Responsibility to Protect at the University of Queensland – has brilliantly documented how international actors with the power to bring an end to the conflict ultimately succeeded in enabling Syria’s descent into carnage. In the words of veteran peace negotiator Lakhdar Brahimi: ‘Everybody had their own agenda and the interests of the Syrian people came second, third or not at all.’

With the Security Council deadlocked by Russian and Chinese vetoes, few meaningful resolutions, except those articulating weary phrases about ‘grave concerns’, were allowed to pass. Zombie peace processes filled hotel rooms and conference venues in Geneva, meandering on even when it was clear there could be no negotiated settlement. Veteran international diplomats Kofi Annan and Lakhdar Brahimi floundered under the regime’s intransigence and the impossibility of achieving a peaceful transition of power, one that, at Russia and Iran’s insistence, left Assad in the presidency. This was the one proposition that the otherwise fractious opposition groups, with separate and disunited backers in Saudi Arabia and Qatar, could jointly oppose. Their successor as negotiator, the hapless Staffan de Mistura, introduced a policy of localised ‘de-escalation zones’ that brought temporary peace in one place while allowing Assad, operating under military advice from Iranian general Qasem Soleimani, to concentrate his forces on besieging another. The effect of this doomed peace initiative was to facilitate the regime’s military strategy. Russia and Iran provided Assad with vital political and military support, with Syrian skies controlled by the Russian air force and an annual budget in Iran of US$6 billion for military support of Syria.

The United Nations comes in for harsh criticism, not only for the inertia of the deadlocked Security Council. UN operating agencies provided material support to Assad. In 2015, for example, ninety per cent of the US$900 million in humanitarian assistance delivered in Syria passed through government hands. In 2016, the UN funded US$500 million in contracts to companies connected to the Syrian government, while ninety-six per cent of food aid went to government held areas. The Assad family’s Four Seasons Hotel in Damascus, used to accommodate UN staff, has earned them more than US$80 million since 2014. While humanitarian support to refugees in neighbouring countries has alleviated suffering, this material support in regime-held areas has enabled the Syrian government to redirect scarce resources to its military efforts. The United Nations has, as Bellamy writes, ‘aided and abetted the government’s atrocity crimes’.

Despite its own political and military objectives relating to controlling Kurdish areas in Syria, Turkey comes off as the country that has done the most for Syrians. Turkey has intervened militarily, taking on the Syrian army to create the Euphrates Shield safe zone to the north of Aleppo. It has also intervened effectively against armed extremist groups. Turkey now hosts 3.5 million Syrian refugees, though attitudes are hardening against Syrians living in Turkey. (The threat of waves of refugees to Europe has been instrumentalised by the Turkish government in exchange

History

Politics by other means

Philip Dwyer

War: A genealogy of Western ideas and practices

by Beatrice Heuser Oxford University Press

£35 hb, 444 pp

Writing in the eighteenth century, Jean-Jacques Rousseau argued that the life of a king was made up of two objects: to extend his rule beyond the frontiers; and to make it more absolute within them. Reading those lines, I couldn’t help but think of Vladimir Putin, whose primary political goals seem to mirror those of absolutist monarchs. Rousseau was implying that war was an instrument wielded by capricious princes to serve their own interests. Not long after Rousseau, AntoineHenri Jomini was the first military strategist to unpack the idea that war is the continuation of politics by other means. Many politicians and military strategists throughout the nineteenth and into the twentieth century agreed, whether democrats, fascists, or communists. General Ludendorff, Marshal Shaposhnikov, and Mao Zedong all came to the same conclusion: war and politics – one and the same thing.

These are two different explanations for why states go to war. For another kind of explanation that also echoes Putin’s behaviour, we can go back to the Peloponnesian War (431–04 bce). ‘If leaders of individual entities,’ writes Beatrice Heuser, ‘do not regard other entities as having the right to self-determination and independent statehood, the stronger may be tempted to swallow up the weaker.’ The Peloponnesian War was thus an example of a tendency among larger powers to eliminate smaller powers.

I am not arguing that Rousseau, Jomini, or the Peloponnesian mainly for financial concessions.) Bellamy criticises the lacklustre Western strategy that has failed to back up negotiated positions with credible force. How could peace negotiations succeed when Assad and, latterly, Vladimir Putin saw only military solutions?

As the international focus shifts to Ukraine, and amid growing calls for ‘normalisation’ of relations with the Assad regime, the Syrian crisis is not going away. Assad presides over a shattered state. The cost of protecting him cannot be borne forever by Russia and Iran. The haunting question at the heart of Alex J. Bellamy’s book is: ‘Why did the international legal obligations established after the Holocaust to protect civilians from exactly this type of violence amount to so little?’ g

Tom Bamforth is a writer and aid worker.

War are adequate historical models that help explain Russia’s invasion of Ukraine – readers will understand the reasons are much more complex – only that a number of what might be called universalist principles of warfare and statehood appear to have remained largely the same for millennia. When one country decides to wage war and invade another, for example, there will inevitably be an appeal to the ‘national interest’, to security, and to a kind of toxic patriotism in which it is good to die for one’s country/ group/clan, killing being an honourable thing to do. This does not mean that countries which seemingly appear irredeemable, like present-day Russia, cannot change; think of how much Germany’s or Japan’s militaristic societies have been transformed since 1945.

Rousseau was implying that war was an instrument wielded by capricious princes to serve their own interests

Beatrice Heuser, a professor of International Relations at the University of Glasgow, has written an overview of three thousand years of ‘Western’ ideas and Western practices of war. The word Western is in inverted commas because Heuser also includes the larger Middle East. She examines many of the key texts, all fundamental to understanding changing attitudes and ideas about warfare through the ages, from the Bible and the Iliad through to Carl von Clausewitz (about whom Heuser has written before). After a short typological survey of enduring and recurring patterns in Western warfare, we get chapters on the ethical, political, and legal concepts of war; on the drivers of war; on the notion of ‘just war’; on why countries go to war and their aims; reflections on who fights and who the enemy is; the traditional and legal constraints on war, and the rules surrounding the practice of war. Heuser presents the reader with an astonishing amalgam of insights into ideas around warfare.

If there are a number of universalist principles, it is also obvious that the conceptualisation and the practice of war have changed over time, constantly recast to meet differing strategic and geopolitical requirements. We thus see incremental attempts over the centuries, to focus only on one aspect of warfare, to alleviate the suffering of non-combatants. For thousands of years, when war was waged, civilians invariably suffered the most; they were killed, enslaved, raped, driven out of their homes, and often stripped of all they owned so that they starved to death. It was only from the late medieval period on that élites began to question the morality of targeting civilians, and really only in the past two hundred years or so that human rights have been articulated in such a way as to prevent civilians being the target in warfare.

The problem is that, as we have recently seen in Ukraine, war is conducted by people, and the in-principle humanitarian gains made by one generation can be lost by another. This illustrates the disconnect that often exists between ideas on warfare, even those people in the world today would argue war is a bad thing, but this is a relatively recent development. For most of Western history, war has been considered a good thing – good for the men fighting it, and good for society and civilisation as a whole. In the nineteenth century, this idea developed into an ideology – Social Darwinism – the concept that war is good in absolute terms because it strengthens the character of the people pursuing it, shaking them out of the complacency that supposedly comes from long periods of peace. Warfare cleansed and even healed society. If it were not for conflict, humans would still be scratching around in caves. This kind of thinking cut across European societies but was especially strong in countries like France and Germany, where militarism had a long tradition. The idea that war is good has not entirely died out. We still find contemporary thinkers – Edward Luttwak and Colin Gray among them –arguing that we should ‘give war a chance’. that have become embedded in international law, and what happens on the ground. Nor has warfare necessarily diminished (an ongoing debate among historians and political scientists). Despite the humanitarian gains that might have been won since the end of World War II, the causes of civil wars have not disappeared, which means that people flee to save their lives. The UNHCR estimates that by the end of 2021 almost ninety million people had been forced to flee their homes. Tens of millions were displaced internally, but around twenty-seven million were refugees.

This is a demanding book, so I can’t recommend it to the general reader. A much more accessible book on warfare is Margaret MacMillan’s War: How conflict shaped us (which Rémy Davison reviewed in the April 2021 issue of ABR). Heuser’s work is something that students and academics interested in war would use as a reference, possibly even something that politicians and their staff might consult to get a broader perspective on some of the things going on in the world today, dipping into the book for lessons on a particular topic.

The refugee crisis is one of the reasons the vast majority of

At the end of the book, after telling us that warfare in the future will evolve into something entirely different, Heuser reflects on whether war might one day be abolished. It was certainly the hope of an array of theorists and practitioners from the fourteenth century through to the founders of the League of Nations, the United Nations, and the European Union. It is true that enormous strides have been made in that direction, but I fear that with the development of air and sea drones, cyberattacks, and military robots, we still have some way to go. g

Wartime fates

A remarkable snapshot from Dunera Francesca

diaries’ appeal is partly due to his many literary and musical references, his self-awareness and passion for self-improvement, for learning everything from languages to carpentry to mathematics. One might interpret his many obsessions as a survival mechanism, distractions from the grim reality of internment, but they also speak to an eclectic interest in science and the arts. He is saved from arrogance only by the occasional foundering of his convictions.

Shadowline: The Dunera diaries of Uwe Radok

edited by Jacquie Houlden and Seumas Spark Monash University Publishing

$34.99 pb, 189 pp

Uwe Radok was born in 1916 in East Prussia to a family of Christian converts who identified as German Protestant. Nevertheless, after the Nazis came to power in Germany, the Radoks were classified as Jews – their five children Mischlinge, of mixed ancestry. In 1938, the family applied to emigrate to Australia. When their visas finally arrived in August 1939, it was too late.

This is a familiar story: family scattered. By late 1939, Uwe and his two younger brothers had left for Britain, his father had been arrested and sent to a concentration camp, and his eldest brother was completing military service in Germany (still required of Mischlinge until 1941); only his sister and mother remained at home. What is more astonishing is that they all survived the war and that Uwe left twelve notebooks documenting the years of his internment as a Class A enemy alien.

The diaries begin aboard the SS Arandora Star in 1940 and end in Melbourne in 1943. His account of those three years – the sinking of the Arandora Star, the voyage to Australia aboard the infamous HMT Dunera, life in internment camps, and the relative freedom of working for the Australian Army’s Employment Company – is impressively even-handed and without rancour. Only occasionally does Radok succumb to ennui or allow a note of sarcasm to creep in, betraying his bitterness:

There are people who were treated particularly badly every time the democracies expressed themselves compassionately, and now they sit behind the democratic barbed wire as dangerous enemy aliens, while outside the fight for justice and freedom is being fought. Redesign required.

Otherwise, Radok is constantly pushing himself to learn, to work, to give meaning to his enforced isolation from normal life. He is articulate about the effects of the Arandora Star’s torpedoing – constant dread, panic, ‘trembling like an animal’ – but generally takes the cataclysmic events in his life without undue perturbation. ‘This is one of the milder of wartime fates,’ he says of the looting aboard the Dunera. His philosophical attitude to the barbarities inflicted on the internees by the Dunera guards can be attributed to the numbness induced by shock: ‘suddenly everything loses its meaning; one cannot do anything more than die. A strange sense of calm at this thought alone.’

Radok comes across as an intellectual, a cultured man. The

Most interestingly, it is not to resolve any persistent trauma that Radok begins reading Freud and Jung, but to glean some understanding of what he refers to as his neurosis. It is at the internment camp in Tatura, about 180 kilometres north of Melbourne, that the tenor of the diaries changes. Here, Uwe meets and becomes infatuated with Fred, a narcissistic individual with whom he has a volatile relationship. Uwe’s attempts to please, to educate, and to influence backfire. He has time to reflect, not only on his future beyond release from internment but also, importantly, on his sexuality. Although his language is couched in euphemism (‘hunger’ for desire; ‘starvation’ for abstinence) and his sexual experiences remain cryptic (‘snoozing’ for intercourse?), Uwe is remarkably open about his attraction to both men and women. It is in Tatura that he meets the fifteen-year-old Anita Holper, whom he will later marry despite warnings from friends that she is not his equal. The diaries end on an encouraging note: ‘She’s not the proper person yet altogether, but more completely than anyone before her.’

Understandably, the diary entries of this period speak of fragmentation and anxiety. At one point, Radok proposes listing the pros and cons of suicide – ‘too theoretical to be of value’, he concludes. He equates sexual frustration with loss of energy and an uncertainty that affects his ‘purpose and ambition’, and has trouble reconciling same-sex desire with fulfilment in a heterosexual marriage. That ‘the objective after all is marriage’ is undisputed.

In what is a perspicacious piece of literary criticism, Radok unwittingly provides us with a key to reading the diaries. After ‘a weary start, annoyed at having to get into stride,’ he finds Dostoevsky’s Demons ‘fascinating’.

This is the way a book ought to be written – not a minute explanation of complicated feelings and experiences that it is far more satisfactory to have for oneself, but a terse collection of facts and remarks, from which one has to get the mental position of the persons presented. It takes some capability to integrate things seen from near, to the picture they represent from a great distance.

From fragments to bigger picture, this remarkable document is a snapshot of extraordinary resilience written by an ever-inquisitive man with the capacity to express the results of his self-analysis. If the selected diary entries are at times impenetrable, it must be remembered that Radok wrote for himself alone – ‘Why is it things I feel completely sure about get blurred when I try to put them into words for others?’ – not for strangers. Further elucidation from the editors – his daughter Jacquie Houlden and historian Seumas Spark – would have been welcome. A familial interpretation from Houlden might also have provided an interesting counterpoint, but I imagine she wanted her father’s perspective to stand without comment, as it does. g