Aaron Braaten's Entry For The 2004 Moffatt Prize in Economics
Abstract:
Most political economists tend to be highly integrated minds; that is to say, they take the prevailing social, economic and ideological order to be 'normal'. IPE theorists often talk of the monetary reform of the IMF and the New International Financial Architecture in terms of institutional structures, but rarely do they question the institution of money itself. Neoliberal theorists, who take money to be the measure of all value, take the institution of money as a given; that is to say, money is a medium of exchange, unit of account and store of value. Furthermore, neoliberal theorists define the economy as 'the market', as distinct from the state, when the two are a part of a greater system, the capitalist process, as defined by Institutionalists. Money is the underpinning of this process, and constitutes a social, economic and political construct. Furthermore, this construct shapes classes, behaviors, institutions and preferences such that class factions who are organized around money-capital are able to make their preferences and ideologies hegemonic on a world stage. The development of this hegemony derives from the process of money creation through the issuance of debt by private players. Any attempts to reform monetary institutions such as the IMF must begin with a thorough examination of the institution of money itself. Unless money is re-invented and subordinated to the real economy of production, financial crises, economic collapses and private power will continue to overpower state sovereignty and authority. Finally, classes who hope to form a counter-hegemonic bloc must begin with reforming the institution of money itself.
Introduction
E Pluribus Unum reads the inscription on the US Dollar bill along with its counterpart Novus Ordo Seculorem - meaning "From Many, One" and "New Secular (World) Order" respectively. On one side of the Dollar is an engraving of an American eagle, strangely reminiscent of a rising Phoenix, the mythic bird of regeneration and renewal. The other side of the Dollar shows an esoteric engraving of a great pyramid, its luminescent, eyed capstone hovering mysteriously above the base; the capstone both separate from the base, yet completing it (or significant of a great work, yet to be completed). The artwork of the Dollar is eerily descriptive of the U.S. Dollar's role in the global pyramid of currencies described by Cohen1. Post WWII, the US Dollar (USD) has usurped the Sterling's position and has become the global capstone. Its role as an international reserve currency enables it to 'complete' the pyramid, but it hovers separate from the base of lesser currencies, supported by a magical force - magical because the Dollar appears to violate the laws that govern the value of other 'lesser' currencies2. In addition to smoke and mirrors, the practice of magic requires the suspension of disbelief and reliance on the part of the magician that the audience does not know his methods. The US Dollar has traditionally occupied its place as the global hegemonic currency due the structural power given to it by the willing consent of the lesser occupants of Cohen's currency pyramid. The value of the US Dollar arises not from market forces, but from US structural economic power in the global arena. Finally, the creation of money through the debt process is taken as a given, natural order, when, instead it is a method by which private actors exercise coercive and consensual power over states, markets and individuals. Money creation creates an asymmetry of power between lenders and borrowers due to the absence of opportunity costs for the lender.Be Sure to Continue to Page 2 of "E Pluribus Unum: Dollar Hegemony and Money Creation in IPE".
