Part
I: Philosophy
CHAPTER VII
THE
NATURE OF MONEY
OUT of the two conceptions of abstract justice and abstract
value, arises an important misdirection of thought in connection
with a subject with which we shall become more and more concerned
as we proceed; the subject of Money. There are few people who
would claim that the money systems of the world are perfect,
and the number of such persons is decreasing daily. But when
asked to define the various defects in the money system, it
is remarkable to notice with what monotonous regularity these
ideas of "justice" and "value" are paraded. It is claimed that
money is defective because it is not an accurate measure of
value, or that it results in an unjust "reward" for labour,
but when such critics are asked to suggest a method by which
the relative value of a sunset, and say, the Venus di Milo might
be assessed, on the one hand, or, on the other hand, what is
the "just" return for a given amount or variety of labour, their
answers are not usually helpful from a practical point of view.
Reams of paper and many valuable years have been expended in
endeavouring to define and standardise this thing called "Value,"
and with it, the methods of relating goods and services to the
standard when obtained. The line of thought which is usually
followed, is something after this fashion.
"Money
is a standard or measure of value. The first requisite of a
standard or measure is that it shall be invariable. The money
system is not giving satisfaction, money is not invariable,
therefore, the problem is to standardise the unit of money."
As a consequence of this line of argument, a dazed world is
confronted with proposals for compensated dollars varying from
time to time in the amount of gold they contain in accordance
with the price index, or even with card money out of which holes
are punched to represent its adjustment to the physical realities
of economics. Nor is the misdirection of thought confined to
professional economists. Almost the first idea which seems to
present itself to physical scientists whose attention is directed
to this problem, is in the nature of a search for some adaptation
to finance of the centimetre-gramme-second system of units.
Yet perhaps the most important fundamental idea which can be
conveyed at this time, in regard to the money problem - an idea
on the validity of which certainly stands or falls, anything
I have to say on the subject - is that it is not a problem
of value-measurement. The proper function of a money system
is to furnish the information necessary to direct the production
and distribution of goods and services. It is, or should
be, an "order" system, not a "reward" system. It is essentially
a mechanism of administration, subservient to policy, and it
is because it is superior to all other mechanisms of administration,
that the money control of the world is so immensely important.
The
analogy of the "Limited" railway ticket is for all practical
purposes exact, a railway ticket being a limited form of money.
The fact that a railway ticket has money-value attached to it
is subsidiary and irrelevant to its main function, which is
to distribute transportation. A demand for a railway ticket
furnishes to the railway management a perfect indication (subject,
at present, to financial limitations) of the transportation
which is required. It enables the programme of transportation
to be drawn up, and the availability of a ticket issued in relation
to this programme enables the railway traveller to make his
plans in the knowledge, that the transportation that he desires
will probably be forthcoming. It is every whit as sensible to
argue that because there may only happen to be one hundred tickets
from London to Edinburgh in existence, that, therefore, no more
than one hundred passengers may travel, as it is to argue that
because the units of money happen at the moment to be insufficient
(whether they are "invariable" or not), therefore, desirable
things cannot be done, irrespective of the presence of the men
and the materials necessary to do them. The argument only assumes
validity if a deficiency of tickets is a reflection of a real
deficiency in transport, and not vice versa.
The
measurement of productive capacity takes place, or should take
place, in regions other than those occupied by the ticket office,
or its financial equivalent, the bank, and the proper business
of the ticket department and the bank is to facilitate the distribution
of the product in accordance with the desires of the public
and to transmit the indication of those desires to those operating
the industrial organisation, to whom is committed the task of
meeting them. They have no valid right to any voice in deciding
either the qualifications of travellers, or the conditions under
which they travel.
It
will no doubt be observed that there is a close connection between
the point of view which it is here suggested is vital to a solution,
and the contrast indicated in the opening chapter of this book,
between the Classical and the Modem system of education. Just
so long as a rigid abstraction is made the test to which physical
facts must conform (and any theory of money which pretends to
measure values comes under this description), just so long must
there be friction and abrasion between the theory and the facts
(and facts are much harder than theories). Dissatisfaction and
disappointment in the world as a result, can be predicted with
certainty. In other words, Utopia is - Utopia. It has been said
before, but it will bear repetition. The picture and specification
of the world people desire at the present time, is, like the
kingdom of heaven, within each one of them, and their desires
in general are not more likely to be satisfied by a card-indexed
Paradise after the heart of M. Stalin, than by an Imperialistic
millennium ruled by Mr. Kipling's "Aerial Board of Control."
It is quite arguable that material wealth, with the emancipation
it can carry with it, will not bring happiness, but it is not
arguable that the vast majority of people will take this truth,
if it is truth, on hearsay. It is as probable that a starving
man will listen patiently to a lecture on gluttony.