Keynes in Stagira: Stefan Eich’s The Currency of Politics
1. Eich in Context
There’s a hot new book about money, recently out on Princeton University Press: Stefan Eich’s The Currency of Politics. As an entry into current debates about money, Eich’s book sits on one side of a subterranean fault line within the revival of chartalism — a fault line that has been identified by Colón and Mann of Strange Matters as a tension between the intellectual lineages of Georg Knapp and Alfred Mitchell Innes. This tension is manifested in the current divide between two distinct groups of scholars: the card-carrying MMTers, on the one hand, who emphasize the tradition of Knapp, and researchers affiliated with the “Law and Political Economy” or LPE project on the other, who are aligned more with Innes. We can characterize the difference between these intellectual lineages as hinging on whether they emphasize “law” or “the state” as the basis of money. (Since the question of the relationship between law and the state just is the problem of sovereignty, we can therefore observe that the problem of sovereignty is manifested sociologically in the division between two different groups of scholars within the revival of chartalism itself.)
I’ve characterized this tension between Innes and Knapp as a “subterranean” one because neither of these groups has any particularly strong desire to pick a fight with the other, despite some differences of emphasis in the way they approach the theory of money. Both of them share a basic orientation towards soft money politics against austerity, and an interest in forwarding policies like a jobs guarantee (a policy explicitly endorsed by Eich in the 2019 article version of his chapter on Aristotle, though not in the book). But nevertheless a difference remains. Anecdotally, I would characterize this difference as constituted by a reliance of MMT scholars on the work of the LPE scholars — in particular, on the work of Christine Desan, who sits at the apex of the LPE scene — and a certain kind of coyness on the part of the LPE scholars towards MMT.
MMT relies on the work of LPE to supplement the somewhat narrow gee-whiz economism of their branded literature, and Desan’s Making Money (along with some of her other work in various edited volumes) is usually cited by MMT advocates as the final (and conversation stopping) authority on the history of money. In return, however, the LPE scholars generally decline either to identify as MMTers or to criticize them too directly — one gets the impression that the former group sees itself as a bit too sophisticated to go around spamming #LearnMMT hashtags, while at the same time regarding the MMT movement as basically aligned with their values and goals (even if less tuned-in to the high-minded appeals to subtleties, complexities, and nuances appropriate to the LPE’s more rarefied Ivy League spaces).
Eich’s book is firmly on the LPE-and-Innes side of this scholarly divide. It’s been blurbed by Desan herself — “Deeply in dialogue with the past, Stefan Eich compels us forward to conceptualize money as a medium for democratic agency—or its loss. A tour de force” — and been the subject of a somewhat fawning review by Eich’s sometime-collaborator Adam Tooze, perhaps the most influential tastemaker in heterodox economics: “You might suspect that a book that stretches from Aristotle to the New International Economic Order is overreaching,” Tooze gushes. “But Eich has the skillset to pull this off - the benefits of a German humanistic education! Like Keynes, and unlike most of the rest of us in the early 21st century, Eich can read Aristotle in the original Greek and comment authoritatively on the texts.”
Endorsements like these will guarantee Eich’s book a wide and positive reception. It will, however, likely be received a bit more coolly among the partisans of MMT, due to the fact that Eich characterizes their theory as a “just-so” story — albeit a “slightly more plausible one” — early on in the Introduction. According to Eich, the textbook Econ story and the MMT story “have more in common than they care to admit. Both are implicitly driven by certain ideological commitments, and both are meant to promote a particular understanding of money. Both also make sweeping historical claims. Indeed, in (rightly) seeking to displace the myth of barter, chartalism risks swapping one transhistorical assumption for another… Where politics is entirely absent in the barter account, it appears as an undifferentiated mass of tax power in the chartalist account. Where the state is missing in the economics textbook, in chartalism it is presupposed as fully formed…” (5).
Since the MMTers are somewhat famously thin-skinned and allergic to any criticism of their doctrine, one suspects that even this gentle rebuke will ruffle some feathers (I’ve said similar things to them myself, and they didn’t like it at all). For the partisans of that theory, Eich’s characterization of money as “an ambivalent political project suspended between trust and violence” may be a bridge too far, since it suggests that the state’s monetary power may be both less total and less beneficent than they would like to admit. Will Eich’s book contribute to a thawing of the tacit detente between the two slightly different versions of chartalism forwarded by MMT and LPE? Only time can tell. But what of the book itself? If Eich finds their theory not to be wholly adequate, what does he propose instead?
2. Keynes, Psychopompos
The first thing to note is that the book’s subtitle — The Political Theory of Money from Aristotle to Keynes — somewhat oversells its true historical scope. After an opening chapter on Aristotle, to which we will return in a moment, the book skips over two millennia to the late 17th century: to Locke and the Glorious Revolution, with an analysis of the debates surrounding the founding of the Bank of England and the “Great Recoinage” of the English money. This is followed by a chapter on the German idealists (mainly Fichte, with a bit of Kant), a chapter on Marx, a chapter on Keynes, and a final concluding chapter on the crisis of the 1970s surveying a number of thinkers: Hayek, Bell, Habermas, Rawls, and others. Thus, three quarters of the book’s length cover only the final 10 percent of its stated historical scope, and a more accurate subtitle might have been The Political Theory of Money from Locke to Nixon, with Aristotle in the Background.
As I will argue later on, this historical lopsidedness really matters, and is symptomatic of some important difficulties involved in the Desanian project — carried forward by Eich — of recovering a lost political dimension of money that they take to have been obscured in modernity after Locke. But first, however, we should recognize that there is a certain logic to the fact that Eich has ignored nearly two thousand years of the subtitle’s stated scope, which is that — despite the fact that the book moves forward chronologically over the course of its six chapters — the real temporal logic of The Currency of Politics is actually retrospective. Having critiqued both the textbook and MMT as telling “just-so” stories, Eich is quite clear that his task is not to tell an “origin story” of his own. Instead, as he states at the outset, his task is to follow the gaze of Keynes backwards in time (during the period that he described as his “Babylonian madness”) in order to explore the way that “monetary crises tended to open up historical wormholes. Over and over again I witnessed philosophers, historians, and economists returning to previous monetary disruptions in the hope of stabilizing their own present and taking stock of the conceptual resources at their disposal. The traces these time travelers left behind can often be found by following their footnotes… Tracing these sedimented layers, I have conducted a kind of geological stratigraphy of the political theory of money. This book is structured as a study of six historical layers of monetary crisis and their imprint on the history of political thought.” (xiii-xiv).
Here, at least, I think that Eich is on firm methodological ground. In my own research into the political history of money, I have observed much the same phenomenon — that, wherever one looks in moments of monetary disruption, one finds contemporary thinkers casting their gaze backwards into the past, even into deep antiquity, in an attempt to understand their problems and furnish these problems with solutions. The ground of history always seems to be falling out from under us, when we think about the problem of money, sending us careening into a Loony Tunes wormhole that dumps us out in ancient Athens, in Mesopotamia, or beyond. Thus, thinkers like Keynes or Locke might be “haunted” by the Greeks even without being directly connected to them in any straightforward linear fashion, and so Eich didn’t make this strange temporal logic up — it’s right there in the sources. So that, in itself, is not the problem.
Once we read the argument of The Currency of Politics in the correct order — backwards — it starts to make a lot more sense. The argument begins with Chapter 6 in the 1970s, when the neoclassical orthodoxy about money — today under fire from the chartalists — first put itself on the throne by dethroning the Keynesians, who found themselves hoisted on the petard of “stagflation.” The outcome was “a new politics of disinflationism” that “oversaw the institutionalization of novel modes of economic discipline based on a dedemocratization of money. We can detect the force of this most recent politics of monetary depoliticization in the constrained monetary imagination of contemporary political theory. The neglect of the politics of money by political philosophers after Bretton Woods is no historical coincidence; it reflects the violent repression of the specter of inflation” (180). Eich’s starting point, in other words, is basically that money was depoliticized (which, for him, means de-democratized) by the Volcker shock, and that this depoliticization is manifested in political theory itself, which worked to render the politics of money as an ‘increasingly irrelevant sideshow’” (181). Once we recognize this depoliticization at work in our own inherited concepts, the task becomes to mount an exploration of the ways that money has been both politicized and depoliticized over the course of its history.
Thus, in the next chapter — Chapter 5 — we need to investigate what it was that the neoliberals overthrew, when they overthrew something called “Keynesianism.” It turns out, of course, that “Keynesianism” was something rather different than Keynes: “Keynes was no ‘Keynesian.’ Instead of postwar Keynesianism’s narrow reliance on fiscal fine-tuning along national lines embedded in the Bretton Woods system, Keynes himself had had in mind… a much more radical conception of money and monetary management…” (175). The replacement of the “real Keynes” with a “fake Keynes” was, on Eich’s telling, the result of the geopolitical victory of the US delegation to Bretton Woods over the delegation of its debtor country, Britain, resulting in two fundamental flaws in the new system: first, the reliance on the dollar as an international reserve currency, rather than a clearing union based on SDRs, and a reversion to “the old asymmetric convention of imposing the entire burden of adjustment on debtor countries,” rather than “distributing the burdens of adjustment equally to debtor and creditor countries” (176). The official “Keynesian” order overthrown by neoliberalism already fell short of Keynes’ real vision, as a result of the defeat of the British delegation at Bretton Woods… and thus it falls to Eich to recover Keynes’ vision of monetary politics for what it really was.
Keynes thus emerges as the hero of Eich’s narrative, as the one who might have — if things had gone just a bit differently — emerged as the one who brought us the true political theory of money. What would this theory have been? In order to understand it, Eich suggests, we need to follow his footnotes, down the wormhole through the sediments of history. Eventually, this Keynesian historical gaze will lead us back to ancient Greece, but along the way it will have to encounter some more proximal objects: Marx, in Chapter Four, Fichte, in Chapter Three, and Locke, in Chapter Two. Together, these three thinkers present “three possible responses to the central problem of international politics posed by modern money” (142) between which Eich’s Keynes — in true Aristotelian fashion — seeks to find a happy mean or middle way. This basic schema unlocks the organizational logic of Eich’s book: we ourselves are gazing backwards, past Nixon, and even past “Keynesianism,” towards Keynes himself, whom we also find gazing backwards — past Marx, past Fichte, and past Locke — towards Aristotle; whom Keynes is recovering, repeating, and working through. Keynes thus rediscovers the truth of Aristotle in precisely the same way that we, with Eich’s guidance, are to rediscover the truth of Keynes, or are to rediscover Aristotle by rediscovering Keynes… this is the real meaning of The Currency of Politics. And it makes the subtitle make a lot more sense: the meaning of From Aristotle to Keynes is a conceptual one, denoting a certain Keynesian repetition of Aristotle, rather than a chronological one, describing a span of historical time that Eich intends to investigate.
What are these three alternatives? Chapters Four (on Marx) and Three (on Fichte) set up an antithesis between two extremes, painting a picture — respectively — of the futility and the power of monetary governance. Fichte, the theorist of the self-positing-I, is obviously a chartalist, emphasizing “a new need for the rational state to control its own currency so that it could secure a set of economic rights” (101). Marx, by contrast, is presented as having developed a view — partly out of a growing frustration with heterodox monetary theorizations of his own day — emphasizing “that laws to reform the monetary system would prove to be unworkable as long as the pervasive rule of capital had not been fully grasped and, indeed, overcome” (135). These chapters I found to be competently executed and often illuminating: the Marx chapter, in particular, would have saved me some time, had I been able to read it ten years ago.
It is with the third member of this triptych — Locke, in Chapter Two — that some problems begin to emerge. We’ll address those problems in a moment. But first, what does Eich say? In large part, he follows Desan in attributing to Locke a foundational gesture of “depoliticization” that ushered in the modernity of money by forwarding a “radical and novel” argument that “led to a wholesale reversal of standard government policy” by insisting “on the unalterability of metal money even in the face of changing silver prices” (73). What Eich adds to the narrative already familiar from Desan is a more detailed reading of Locke’s monetary politics in relation to his theories of language and political order — a reading that places Locke as the middle term of the sequence Aristotle-Locke-Smith. Eich’s point, basically, is to revise readings of Locke that saw him as “naturalizing” money in the sense of seeing the metal content of coins as embodying, as Adam Smith would later on, some kind of natural value prior to any human convention or political association.
Locke, Eich argues, can be more fruitfully read as occupying a moment of transition between two different theories: an Aristotelian theory, according to which money is “conventional,” and a Smithian theory that “naturalizes” it. In between, there is Locke, whose view is characterized by “an insistence on the limits of the politics of money that was itself politically motivated even where it sought to hide its own politics… Locke began by emphasizing the conventional origins of money. But instead of building on this nominalist foundation an account of currency as a malleable political institution, he derived from it a radically novel argument. In attempting to stabilize money’s nominalist instability he sought to tie it to an arbitrary but then unalterable quantity of metal. Once set by fiat, Locke insisted, no future government should meddle with the monetary standard.” (72-3). Money was for Locke, as it was for Aristotle, “conventional,” but this conventionality was rooted in pre-political consent of all mankind to the originary social contract, thus placing it wholly beyond the interventionary “fiat” of sovereign or executive power. Thus the decision to establish a monetary measure could be arbitrary in a way that the decision to alter it could never be, since it took place in that vanishing moment of temporality that divided the state of nature from the state of political order. Altering the standard of the money — at all, in any way, and for any reason — would thus be tantamount to the rejection of that originary contract, and therefore a rejection of political order as such. Thus, Locke’s theory could serve as the intellectual underlaboring of the “Great Recoinage” of 1696, which “intervened in the name of nonintervention” in order to restore the metallic standard of the English money to the rate established by Elizabeth in 1560-1.
The argument about Locke, and the precise nature of this monetary-historical watershed at the turn of the English 17th century, requires more careful consideration, to which I will turn in the next section. But first, we need to remember that we are viewing all of this from the perspective of Keynes, who is seeking to “navigate between” three “competing visions of monetary justice” — represented by the figures of Locke, Fichte, and Marx — in order to “reconcile their respective attractions while dispensing with their downsides” (142). We can characterize these three visions as follows. For Locke, monetary politics is about depoliticizing money in the service of legitimacy. For Fichte, it’s about empowering the state’s control of money in the service of rationalization. And for Marx, it’s about diagnosing money as a symptom of the inner movement of capital. Keynes, in his turn, according to Eich, was seeking a theory of monetary politics that would constitute a Aristotelian mean between these three extremes — embracing the virtues of each without falling prey to their vices. The true political theory of money offered by Keynes, then, would be one that sought, at all once: legitimacy, rationalization, and the analysis of capital… each in their right proportion or measure.
Here, then, Eich actually breaks in certain respects with the narrative forwarded by Desan, in which Locke plays the role of a simple villain. For Eich, and for Eich’s Keynes, there is something a bit more ambiguous about him, which is that there is actually something to be said in favor of the depoliticization of money. This is illustrated by what is, perhaps, one of the most centrally important events of the book, though one mentioned only in passing: “the general election that followed little more than one month after suspension in the fall of 1931,” which “was fought exclusively over the currency issue and won by the Conservatives on the basis of a promise to restore gold. Labour, which had refused to commit to restoration, lost 215 of its 267 seats. Democratic politics could produce surprising results in the realm of money” (158). The election of 1931 illustrates, for Eich and for Keynes, a certain paradox about democracy and the politics of money — which is that democratic politics does not necessarily produce democratic money! Thus, the condition of possibility of democratic money may be a certain insulating of money from democratic politics, which could place it beyond the reach of popular elections into the hands of a more enlightened sort of technocratic management… into the hands, that is, of John Maynard Keynes and his intellectual heirs.
Eich is not unaware of this problem. On my reading, it is in fact what the book is really about, although he does not foreground this problem as such. Perhaps, in a way, it is a problem that “dare not speak its name”… or at least not too loudly. I will return to this problem again in the concluding section of this review. But first, we will need to consider some historical and conceptual issues that plague the first and second chapters of the book: an exploration of which will better illuminate what Eich says — and what he doesn’t quite say — about the problem of democracy and democratic money.
3. Down The Memory Hole
The problem with Eich’s narrative about the “radical and novel” intervention of John Locke into English monetary politics — and this is a problem that he shares with and inherits from Desan — is that it just isn’t quite true, and that making it requires presenting a dehistoricized caricature of everything that happened before this supposed watershed moment of the “depoliticization” of money. It requires, that is, putting almost everything that happened in the vast majority of the subtitle’s historical scope — the entire history of money after Aristotle, and before Locke — down the memory hole. This history then gets imagined purely as the negation of what Desan and Eich believe (mistakenly) to be a specifically modern kind of problem, a problem to which we can then search for a solution by attempting to “recover” something from the past — a past which we will, however, have to refrain from examining too closely, lest we discover that it contains just as many problems (and many of the same problems) as it does solutions.
In closing, I will reflect in a more general way on the problems this tendentious historical framing poses for the project to “recover and articulate money’s lost political promise” (11). As I will suggest, it just won’t do to assume at the outset that money has made any “promise” at all, to anyone, lost or otherwise. First, however, I will need to make some criticisms of a more technical nature about Eich’s presentation of the history of English money before Locke and about his reading of Aristotle and Aristotle’s historical context. The problems with the story here — at the end of Eich’s argument and at the beginning of the book — are likely to go unnoticed by the book’s intended audience of economists, political theorists, and modern historians, but they are in fact quite serious and threaten to undermine the basic thesis in some important ways. So I’ll examine Locke in this section, Aristotle in the next, and then, in the final section, close with some more general reflections about the stakes of telling stories about the history of money.
So bear with me for a moment. It’s wormhole time.
Let’s begin with Locke, Lowndes, and the recoinage of 1696. In the summer of that year, Eich argues, “Locke’s radical proposal won out against plans for a devaluation… The government instituted a wholesale recoinage at the Elizabethan old rate, just as Locke had demanded. It was an exercise of enormous scale, the first full recoinage since 1299” (49). The claim about it being the “first full recoinage since 1299” is a bit puzzling, since there had in fact been two other significant recoinages of the English money in the intervening period: one under Henry VII around 1586 and another under Elizabeth in 1560-1. Thus, interpretation of the claim hinges on what Eich means by “full.” In the article version of his chapter on Locke, the word “wholesale” appears in place of “full” — suggesting, along with his reference to “enormous scale,” that Eich means “full” in the sense of “replacing all the previously existing coin.”
If that were in fact the case — that the 1299 and 1696 recoinages had been more effective in fully replacing the coinage than the two intervening ones — I would be glad to know it. Maybe it is! But Eich gives no citation for the claim. I was, however, eventually able to track down the ultimate source for the comparison to 1299: it appears in Glyn Davies’ History of Money, a standard reference on the topic (though one that is not cited anywhere by Eich). Davies writes that “In January 1696 an ‘Act for Remedying the ill State of the Coin’ was passed, and for the first time since 1299 the weight standards were fully restored” (247). What Davies writes is less ambiguous: the meaning is that in 1299 and 1696, the weight standard was restored fully to the standard of the previous recoinage (in 1271 and 1560), while in 1560 and 1486, by contrast, the money was “recoined” to a higher weight above its currently circulating standard, though not all the way back to the “ancient” standard of the previous recoinage. Thus, the intervening recoinages differed from those of 1299 and 1696 in that they in some way “ratified” a decline in the unit of account in metal terms by lowering the standard (thus officially “admitting” that sterling was now worth less in silver terms), but without going so far as to simply redefine the standard as equal to the average value of the currently circulating coin.
This difference, though it might seem arcane, is a big problem for Eich’s reading of the dispute between Locke and Lowndes, for two reasons. The first is that Eich clearly wants to present Locke’s position as prefiguring “the eventual struggle in 1925 over whether Britain should return to gold and if so, whether it should do so at the old rate” (149), a struggle in which Keynes opposed the return to the “old rate” and which he eventually lost. The problem with this restoration of the standard was the deflationary shock it implied: “Whether one was for or against gold, Keynes argued, a commitment to the old rate implied that the government would somehow have to bring down all money wages and all money values” (ibid.). One does not, however, have to return all the way to the “ancient” rate in order for a recoinage to be a deflationary shock (nor is a simple comparison of the new rate with the old rate enough information to measure just how deflationary of a shock it might be, given the existence of secular changes in the values of the monetary metals among other factors). The recoinages of Henry VII and Elizabeth, in other words, had also been deflationary shocks in just the same way as the recoinage of 1696, and attempting to asses the relative deflationary impact of these events is beyond the scope of anything Eich has undertaken to argue. Regardless, the difference is one of degree rather than kind.
Thus, Locke’s view — that it would be advisable to undertake a deflationary restoration of the coinage to its old standard — was not nearly so new or so radical as either Desan or Eich want to suggest. While it is true that this was something that had not happened in such an “ideal” way for a long time in English history, it must be kept in mind that this — the span of time between Edward I and the Glorious Revolution — was a period of significant monetary “whiplash” at the scale of the world-system. A growing European scarcity of silver that was already beginning to be felt in the early 14th century before being temporarily “solved” by the Black Death turned into the “bullion famine” of the 15th century, which was then followed by an influx of American treasure in the 16th, which began to peter out again in the 17th. These large secular changes (and changes in rates of changes) in the relative values of monetary metals (relative both to one another, and to other goods) were the result of catastrophic reorganizations of global-scale networks of money and trade, driven by the abrupt closing of some routes (the end of the Pax Mongolica) and the opening of others (the crossing of the Atlantic). Thus, the simple fact that it wasn’t done doesn’t necessarily indicate that it wasn’t what lots of people thought ought to have been done, if it had been at all possible. And something like it — in the way that is relevant to Eich’s argument — had in fact been done, under Henry VII and Elizabeth.
It may well be that, given the particular context of the state of the monetary system in 1696, Locke’s prescription to fully restore the ancient standard was fairly radical in its social or distributional implications. But it wasn’t really radical in principle. Thus, we have a second problem for Eich’s narrative of the dispute: that it was actually Lowndes, rather than Locke, who was making the more theoretically radical proposal, and not simply, as Eich would have it, mouthing some kind of widely accepted Medieval and Aristotelian good sense being perversely rejected by Locke:
Up to the seventeenth century there had been nothing sacred about the metallic value of the unit; instead, successive devaluations through nominal adjustments had saved Europe from a perpetual fall of prices as the silver discoveries in the New World slowed down. As the legal historian of money Christine Desan has illustrated, the monetary nominalism undergirding such adjustments was a hallmark of English medieval and early modern monetary thought and practice. In Lowndes’s words, it was “a Policy constantly Practised in the mints of England . . . to Raise the Value of the Coin in its Extrinsick Denomination from time to time, as Exigence or Occasion required.” Raising the nominal value to bring the new price in line with the market price of silver, Lowndes promised, would immediately eliminate the disastrous gap between the price of silver and coins’ nominal value and put an end to the profitability of clipping. (55, emphasis mine)
Lowndes (though he might have been, from our perspective, proposing sound policy) was engaging in a highly tendentious reading of the history for his own polemical purposes — a reading that is unfortunately taken at face value by Desan and subsequently by Eich. In doing so, they present a caricatured view of “more than a millennium of monetary wisdom” (73, n. 164) that renders it “already Keynesian” in the sense of being characterized by a general acceptance, free of any notable conflict or contestation, of technocratic intervention into the unit of account “from time to time, as Exigence or Occasion required” by people like Lowndes — which is to say, by men of unexceptional social background employed in a technical capacity at the mint. By, in a word, “clerks.” Nothing could be further from the truth.
Eich is aware of the problem here, but buries it in an endnote: “While Lowndes was right that raising the coin had been a widespread policy for hundreds of years across all of Europe, the English standard (as well as, interestingly, the Dutch one) had not been raised for decades, though at least in the English case largely because of political weakness and instability” (55, n. 51). In addition to Desan, he refers to Braudel — but Braudel doesn’t make any of these specific claims in the cited passage. So I’m not quite sure where Eich got the idea that the supposed failure of the English to cry down their unit of account (by crying up the reference coin) for the last “decades” was due to “political weakness and instability.” Regardless of where it came from, this claim doesn’t make any sense — because the specific monetary intervention being proposed by Lowndes was in fact (and contrary to his own assertions) radically novel, at least in England. The English hadn’t just not done it in recent “decades” — they hadn’t done it ever.
In order to appreciate this, we need to understand exactly what Lowndes was proposing and how it differed from other downward alterations of the unit of account since the original sterling standard of Henry II was broken after 1299 (those under Edward III, Henry IV, Edward IV, and Henry VIII). Thus, I beg the reader to note that I do not mean here that the English unit of account was never reformed downwards — as it was — in addition to being reformed upwards — as it also was. But the debate between Locke and Lowndes was disingenuous on both sides, because Lowndes was in fact citing a historical record of one kind of reform as a precedent for another kind of reform: “Before I proceed to give my Opinion upon this Subject, it seems necessary for me to assert and prove an Hypothesis, which is this, namely, That making the Pieces less, or ordaining the respective Pieces (of the present Weight) to be Currant at a higher Rate, may equally raise the Value of the Silver in our Coins. The former of these finds many Precedents in the Indentures above recited, but the latter seems more suitable to our present Circumstances, as will afterwards be shewed…” (emphasis mine). Lowndes, in other words, cites a list of precedents in which the weight of the English coins was adjusted: “making the Pieces less.” But this, in fact, is not the policy that he is proposing, and he says so explicitly. Instead, he proposes that coins of the present weight should be “ordained… to be Currant at a higher Rate.” In other words, it should be proclaimed that one and the same coin should now be valued at a higher rate in terms of the unit of account than it had before: specifically, in this case, that the silver Crown should be raised from 5s to 6s.3d, or “enhanced” by 25%.
The first of these reforms is a “reduction” of the weight standard of the coinage: in other words, a lightening of the target weight for coin production at the mint. The other is an “enhancement” of the coin: a proclamation that changes its legal value in terms of the unit of account. Both are distinct from a “debasement,” with which they are often (incorrectly) conflated: a debasement refers to an alteration of the standard of fineness — which, as we saw, is the meaning of “sterling” (which now referred to the slightly lower fineness of 37/40 rather than Henry II’s 15/16). For our purposes, we can ignore debasements, since neither Locke nor Lowndes supported one — they are both agreed that debasement is, in some way, a bad idea without any legitimate precedent. Lowndes, however, anchors his proposal for an enhancement of the silver coin by arguing from the precedent of reductions, with the result that he feels it necessary to prove the “Hypothesis” of their equivalence.
There is an important way in which these reforms are indeed equivalent — and this is Lowndes’ argument — which is that they both reduce the value of the unit of account in silver terms, and in the same way. If Abbot owes Bartleby a debt of one pound sterling, and the standard is changed in the meantime (either through reduction, enhancement, or debasement), then the silver value of Abbot’s liability will fall — along with the silver value of Bartleby’s asset. And it’s certainly the case that Locke opposed this simply because it was therefore bad for domestic creditors: mostly importantly landlords, who would see the silver value of their sterling-denominated revenues fall. All of this is obvious enough, and in itself it’s sufficient to explain why Locke — and his audience in Parliament — were invested enough in defending the silver value of sterling to refuse the proposed enhancement.
But just because we can correctly diagnose Locke and his supporters as reasoning backwards from their personal interest as members of the creditor class does not mean that Lowndes can be taken as an impartial representative of the monetary wisdom of the middle ages. And there are at least two important dissimilarities between the enhancement Lowndes proposes and the reductions he cites as precedent.
The fundamental difference between enhancement and reduction is that enhancement redefines the unit of account, while reduction alters the coins to which that definition refers. These operations are not strictly identical. After a reduction, the statement “the unit of account is equivalent to a given number of coins” remains true as stated — it is simply the coin to which the statement refers that has changed. But after an enhancement, the statement is no longer true; it has to change, to reflect the altered number of coins that go into the unit of account. So an enhancement forces statements in language about money to change and becomes different statements in order to remain true statements, in a way that a reduction does not. This abstract observation has two very concrete consequences.
The first is that reduction of coins is subject to a technical lower bound that enhancement of coins is not, because numbers can get arbitrarily bigger while coins cannot get arbitrarily smaller. Even the ancient and just penny of Henry II had weighed only 1.46g, and the pennies of Charles II only about a third that much. If the penny got much smaller, it would for all practical purposes cease to be a coin at all, but merely a notional fraction of some larger multiple. Thus, if there was to be a coin in sterling silver called a “penny” at all, this implied some sort of vaguely defined lower bound on how low the silver value of the unit of account composed of 240 pence could fall. By contrast, if the coin were enhanced, by redefining the coin that had once been a “penny” as being now worth 1 and a half pence, the “penny” itself would become a purely abstract accounting unit, with the result that it would be just as easy for it to be worth a thousand pence as to be worth one. Thus, a system that is constrained to instantiate the unit of account into a fixed number of actual coins, and to alter the unit of account by altering the coins, is limited by a technical lower bound in a way that a system that instead alters the unit of account by changing the number of instantiated coins is not. Thus, the difference between these two operations presents a much larger policy space to the discretion of the monetary authority.
The second and more interesting consequence is that enhancement takes effect at the speed of a proclamation, while reduction takes effect at the speed of the movement of coin. Both operations raise the value of currently existing coin in terms of the unit of account: the reduction by offering a bid at the mint for the silver in the old coins, to be reminted into new, and the enhancement by simply crying up the existing coins to the new value. But there was an important difference in that the profit due to the holder of existing coin would, under the reduction, be realized at the mint window in London, while under the enhancement it would be simply be realized directly, as if by magic, into their pocket (since it was language, rather than the things themselves, that had been changed). This difference has distributional consequences, due to the fact that actors with large balance sheets and efficient communications would be able to “pick up the spread” between the mint window in London and local money markets where the old coin was still circulating. This was possible because a person of small means might find themselves forced to sell off their old, heavier coins for something less than the official premium being offered at the mint, to someone who actually had the means and the patience to send the coins to London for reminting. In other words: those who had the most to lose from a reduction of the minting standard (landed and moneyed interests), were at least partially hedged against this reduction by their ability to “front run” the mint by buying up old, heavy coin in the country. With an enhancement, this would be impossible.
The examples that Lowndes gives, in his survey of his research into the minting indentures of the 14th, 15th, and 16th centuries, are all examples of reductions, rather than enhancements, of the silver English coinage. And these reductions of the penny were not simply made as neutral, technocratic “adjustments” as “Exigence or Occasion required.” Rather, they were all made in the context of political violence and conflicts over dynastic succession: as a rule, when the English penny is unstable, so is the dynasty, and thus the political order as a whole (readers interested in a more detailed account of this should consult my dissertation — The Difference That Money Makes). Now, it was true that the English had occasionally enhanced their gold coinage, introduced to England by Edward III in the 1350s. But it was not in terms of gold that England reckoned its unit of account, even if English gold coins might be assigned a value in terms of that unit: a pound sterling was a name that referred to 240 sterling pennies, an actual coin; and by the time that Locke and Lowndes were arguing over what the mint should do, this statement — that a pound sterling referred to 240 coins called pennies — had been true for well over five and a half centuries.
What Lowndes was proposing, then, was to take an operation that England had previously confined to its gold coinage and apply it — for the first time — to the silver coinage as well, thereby changing the object of the definition of “pound sterling” from a concrete thing (a coin called a penny) into a pure abstraction (a notional fraction of a real coin). The difference between gold and silver coins here is important because these different moneys, though their values are reckoned in terms of the same unit of account, flow through circuits of exchange at very different levels of the social hierarchy. Silver was the money of everyday life, and the money that governed — and through which was reproduced — the basic relationships of social inequality at the heart of English society. Gold money, by contrast, was the money of wholesalers, merchants, and foreigners. Thus, the contractual relations in which the pound sterling was more likely to be paid with gold coinage were those that were also more likely to obtain between persons who were more or less social equals. They were, in other words, people who were just as likely to be one another’s creditor as to be their debtor, and could thus more easily form a consensus amongst themselves as to the proper value of money (as did the merchants of the great exchange fairs when they set the deposito, which is a wormhole for another time).
But contractual relations paid in silver coin were more likely, by contrast, to be relations between unequals — by which I mean simply that the landlord is always the creditor of the tenant, and almost never the other way around. Thus, the constitutional “rules of the game” that governed the way that the monetary authority was expected to be able to intervene into the value of money were different for gold and silver, because of the divergent distributional outcomes of the various kinds of monetary operation. It was these rules that Lowndes wanted to change, in order to give the English monetary administration increased operational leeway to interfere with basic relationships of social inequality in the interests of commerce and trade — a conflict that pitted “new men” like Lowndes against established elites like Locke. This was, more than anything else, simply a repetition of an ancient dance as old as money itself, and another tilt at an argument that the English themselves had been having in one form or another for many centuries.
Ironically, what unites Locke and Lowndes was the fact that they were both forced to respond to a situation in which the penny — a silver coin about yea-big in terms of which the English monetary system was defined — was becoming, ineluctably, a ghost-money. There was no way to preserve it, and no matter who had won the debate, it would have ceased to exist as an actual coin of that name. The difference between them was, mainly, a social difference, reflecting a divergence between “elite” and “middling” viewpoints on the world. This divergence of perspective led them to different conclusions about the desirability of allowing the central monetary authority access to an increased policy space in terms of the options that would be available to it to change both the sense and reference of the words people used about money. Lowndes, in order to preserve the reference, proposed to sacrifice the sense: the mint would still produce the exact same coin that was once called a “penny,” but it would no longer be called that. The sense of “penny” would change from indicating a coin to indicating a notional fraction. Locke, by contrast, in his commitment to preserve the sense, doomed the English monetary system to give up the reference: the word “penny” would still refer to a silver coin of the standard set by Elizabeth, worth 1/240ths of a pound sterling, and so the sense of the word would be preserved. But because this was a coin that could not exist, it would not exist: there would be no actual coins in existence (or at least not in circulation, as money) to which such an expression referred. All sense, no reference.
Why was the penny becoming a ghost money? Answering this question will involve even more technical detail, chiefly surrounding the the question of how to understand the operation of the exchange by bills, the consequences of the legal regulation of interest, and the relationship of England to international markets in money and goods. However, since this discussion has been long enough already (and since I don’t yet claim to understand it all myself), I will leave it as a wormhole for the reader.
It is enough here to say that a central plank on which Eich’s story in Chapter Two rests — that the debate between Lowndes and Locke was a debate between the voice of tradition and good sense, Lowndes, and the voice of a radical new modernity, Locke — is demonstrably false. Locke’s pigheaded insistence that a penny must be a penny must be a penny would not have been out of place in England in the 14th century, whereas Lowndes’ proposal to simply cry up the penny would have been perfectly scandalous (if such practices were common on the Continent, then this — to the English mind — would have simply confirmed the depravity of Continental rulers and the undesirability of importing such tyrannical constitutions across the Channel). What is most radical about Locke’s view in these texts is in fact his belief in the salutary effects of a higher legal rate of interest — a discussion of which would quickly lead us into the aforementioned wormhole about credit and the operation of the exchange. Eich notes in passing that “Locke was primarily concerned with critiquing demands for lowering the legal rate of interest from 6 to 4 percent,” but then says nothing more about the matter. But if there is anything Locke says that is truly modern, it is this consideration of the rate of interest as an important policy variable for the administration of money.
It is clear that there is a lot more research that needs to be done in order to properly understand these debates and events in the context of the “operational realities” of their contemporary monetary systems. The outcome of this research will be to seriously challenge the basic outlines of the story told by Desan and accepted mostly uncritically by Eich in Chapter Two. At stake is the entire project of “recovering” some kind of “political possibility” from a past that we imagine as having not yet developed the kinds of problems that we want to solve. But when we turn to the history of money without assuming, at the outset, that it will contain the solutions we are looking for, what we might find is that it contains a lot of the exact same problems we have, though perhaps arranged in slightly different ways. I’ll say more about this in closing. But first, we need to consider the conclusion of Eich’s argument, in the first chapter on Aristotle… which has some significant problems of its own.
4. The Idea of Athens; the Shadow of Macedon
Finally, here at the beginning of Eich’s book, we have found our way to the real object of our search: Aristotle, The Philosopher. We’ve been searching for him along with Keynes (the real Keynes, whom we found trapped Merlin-like in the cave of what actually happened at Bretton Woods), who peers through the looking glass of endless footnote wormholes; past Marx, past Fichte, past Locke, seeking the middle way between all three of these figures back towards the “birth of politics” (24). Politics, it seems, was born sometime around the 6th century B.C., in Greece, alongside the “emergence of coined money in the Mediterranean world… While money had existed for millennia, the first coins in the Eastern Mediterranean coincided with the emergence of the Greek polis. The proliferation of coinage went hand in hand with a new conception of the political community and it gave money a new political dimension closely tied to the notion of self-governance” (12).
There’s a certain temptation to make fun of a passage like this — which intones a very pious and now old-fashioned (read: Eurocentric) view of “the Greeks” — and it’s part of the reason I wrote this review backwards: Eich’s book is strongest at the end, with Keynes and the 19th century German material with which he is clearly quite comfortable, and weakest at the beginning, where he flounders, in Chapter Two through an uncritical reliance on Desan, and in Chapter One with an origin myth of exactly the sort that he promised he wouldn’t give us. His origin myth is a myth, not of the origin of money, but of the political theory of money, which emerges out of the constellation of three concepts — coinage, the polis, and self-governance — and is voiced by Aristotle in the two classic texts in which we can find his discussions of money: Politics and Nicomachean Ethics.
Eich’s reading of Aristotle (not wholly novel) presents him as the ur-chartalist based primarily on The Philosopher’s observation that the word for currency — nomisma — derives from “the conventional law of the polis (nomos). Both,” Eich tells us, “derive from nomizein, to acknowledge or to sanction something by established belief or custom” (27). Unfortunately, this is not right: nomizein is in fact derivative of nomos, not the other way around. Nomizein simply means “to nomos-ify” something. The root sense of nomos is in fact derived from the verb nemein, meaning to “deal out” or “distribute,” especially in the sense of dividing up pasturage. So the the word nomos (and this is pretty deeply important to the whole problem) is best translated as “distributional law,” is associated with the social organization of pastoralists, and is etymologically linked to vengeance or Nemesis, the goddess who punishes the hubris of the tyrannos who oversteps the limit.
I’ll come back to Eich’s reading of Aristotle in a moment. First, however, it’s necessary to say something about the historical framing in which Eich places this thinker. The chapter begins with an ekphrasis on the Athenian tetradrachm, or “owl,” which is “perhaps the most familiar of all ancient coins” (22). Eich then briefly surveys some of the literature on ancient coinage, in which he mostly comes down on the side of Moses Finley and those scholars who emphasize about coinage that it plays “a wide range of symbolic functions beyond any narrow economic logic,” though conceding that coinage “had of course an important economic dimension since coined money saved ponderous weighing and removed uncertainty” (24). Eich’s discussion here is somewhat perfunctory, so although he comes down on what is, on my view, the wrong side of this debate, we don’t need to litigate the issue here.
What does need to be litigated is this: after presenting the ekphrasis of the owl tetradrachm, and briefly surveying the “substantivist” school of the scholarship on ancient coinage, Eich then dives into his main theme: “The political centrality of currency in the ancient world was most fully reflected in Aristotle’s account of reciprocal justice in the Nicomachean Ethics. ‘A polis,’ he asserted there, ‘is maintained by doing things in return according to proportion.’ Similarly, in the Politics he wrote, “Reciprocal equality preserves city-states” (25). All of this might give the unwary reader a somewhat misleading idea of Aristotle as seeing the world primarily from an Athenian perspective, and as seeing “money” primarily under the sign of the Athenian owl.
But Aristotle, although he “went to grad school” in Athens, wasn’t from there: he was from Stagira, a city on the southern end of the Strymonian gulf. In the late 6th century, around the time of the Athenian tyrant Peisistratos (who probably introduced the first Athenian coins), the region around the river Strymon seems to have been under Athenian control: the metal in the earliest Athenian coins, the Wappenmunzen, seem to have been originally been acquired in mines up the Strymon valley. Later in the fifth century, Stagira was a member of the Delian league, and thus an Athenian “ally” — but sided with Sparta in the Peloponnesian War. Stagira is then supposed to have been sacked by Philip of Macedon in 348, when Aristotle was in his late thirties and still studying at the Academy. About a year after this event, Aristotle seems to have left Athens, and a few years later he is in the employ of the Macedonian court, tutoring Philip’s son and heir, Alexander. It was in this period, at his own school rather than the Athenian academy, surrounded by his own students, and tutoring a boy who would turn out to be a world historical monetary reformer in his own right, that Aristotle was producing his mature work. And it probably wasn’t Athenian owls that he had tucked into his gums, but “Phillips”: the silver tetradrachms and gold staters of the king of Macedon. And Philip didn’t put owls on his coins. He put his face on them.
“Self-governed” — i.e. autonomos — Greek cities of the 5th century didn’t put the faces of rulers on their coins. They also didn’t mint gold. The Great King in the East minted gold coins — his “darics” or “archers.” But for Greeks, especially for Greeks during the height of the “democratic polis,” gold was a reserve asset, rather than a currency. They had plenty of gold (were, indeed, a bit obsessed with gold) but held it in plate and objects d’art (which, tellingly, tended to weigh round-numbers according to Persian measures) rather than coins. This changed — another wormhole — around the end of the 5th century and the defeat of Athens by an alliance between Sparta (supported by the Persians) and various rebellious “allies” like Stagira. There was, around this time, a crisis of the silver coinages of the Aegean basin (visible in the numismatic record, and commented upon by Aristophanes) during which they were lightened and debased, accompanied by a new prominence of gold coinage: especially Macedonian gold coinage. Thus, by the time of Aristotle, the heydey of the “Owl” — the silver money of the democratic power of Athens — was over. Owls were still being minted, though of a reduced standard. But the money that Aristotle would have been most directly concerned with was likely to be the “Phillips”: a coin that made it very clear to all who used it that, whatever they were, they certainly weren’t autonomos.
There is, however, not a single mention of Philip, Macedon, or Alexander anywhere in the book. The equivalent would be as though Eich had written his chapter on Keynes without a single mention of World War II. As a result, Aristotle is exploded out of his historical context, given a misleadingly strong association with Athens and thus with democracy, and dis-associated from the monetary-political project whose main protagonists he was directly advising: the rise of the Macedonian kingdom to the status of overlord over the n0-longer-self-governing Greek cities and a gold-minting imperial power to rival — and topple — the Great King of Persia himself.
Thus, despite the fact that The Currency of Politics is billed as examining “six crucial episodes of monetary crisis” in order to recover “foundational ideas at the intersection of monetary rule and democratic politics,” there is, strictly speaking, no crisis in the first chapter at all. There is simply Aristotle as the dehistoricized mouthpiece of timeless wisdom, theorizing for us the “emergence” of the relation between coinage and democratic polis that we are then going to “recover” in order to solve a set of problems specific to our own modernity. But there really was, at the time of Aristotle, a perfectly good monetary crisis that could have been discussed, and in relation to which Aristotle could have been situated — precisely the collapse of the reign of the “Owl” as the dominant international money of the western Aegean, the transition to an epoch dominated by the circulation of gold, and the rise of Macedon. Eich ignores all of this because it cuts against the basic thrust of his argument: that there is any particular connection between Aristotle’s theory of money… and “self-government” or something called “democracy.”
Aristotle, simply put, is not a “democratic” thinker. He — like pretty much everyone in the aristocratic literature we’ve inherited as the Greek canon — thought that democracy was basically a bad idea and a flawed constitution. Eich knows this: “Indeed, the polis with the most extensively attested and widely circulating coinage in the Greek world was democratic Athens, an inherently flawed regime from Aristotle’s perspective” (37). Nevertheless, however, Eich takes Aristotle as being the figure who gives us the resources to “politicize” money, and in doing so counter the “depoliticization” that is, as such, also a “de-democratization”: “much of what passes as the depoliticization of money is a sleight of hand that would be more accurately described as the de-democratization of money. Unsurprisingly, this antidemocratic politics is rarely spelled out openly. After all, doing so would likely be counterproductive in the realm of democratic politics” (19). So Eich is turning to a critic of democracy, in order to recover the political dimension of money, with which we oppose, in our own time, the process of de-democratization. And he knows this. So how does he propose to square this circle?
Eich’s reading of Aristotle hinges on reconciling what we might take to be two slightly different views on money expressed in Politics and Nicomachean Ethics. In Politics, his discussion centers on a “critique of wealth accumulation” in which he condemns the notion of “money breeding money” — the basis of later condemnations of usury. In Nicomachean Ethics, however, he gives “an account of monetary reciprocity as a tool of justice” (26). But these views, Eich argues, can be reconciled:
Put to ill use, money can become a serious threat to any political community. Employed as a tool of reciprocity, however, currency serves political justice. The point is not that the institution of money cannot lead to distortions—it obviously can and does. But it also allows us to recognize those injustices and, possibly, amend them. Currency contains within itself the necessary condition for its own improvement. Reemphasizing money’s role in furthering equality and reciprocity instead of undermining them is a significant challenge for our own time. (27)
The key to the use that Eich wants to make of Aristotle is the notion that money, in a non-ideal regime, is both the cause of “distortions” and “injustices” but also the means through which they can be recognized and fixed. Thus, for this reason, the fact that democracy is for Aristotle a “non-ideal regime” becomes a feature rather than a bug:
Aristotle was, however, also concerned with constitutions that had flaws but might nonetheless be second-best given certain limitations… He described reciprocity as the bond of cities, enabling commensurability and sustaining polities when used correctly. Given their inflamed desires and defective institutions, it was likely that certain flawed regimes would extensively use currency for unjust purposes. This produces a paradox. In the best regime, in which currency would function best because it was aligned with use and justice, citizens will likely rely least on it—though even in the best political community, currency will be required. In flawed regimes, by contrast, in which currency was most removed from use, citizens will likely rely on currency all the more but in unjust ways. Currency seems needed least when it functions best and used most when it functions worst. (39)
Aristotle’s non-democratic “ideal regime,” in other words, would be the regime in which money really lived up to its billing in neoclassical theory: as comprising a neutral medium through which exchange takes place, without itself mattering in the sense of “making a difference.” In this ideal regime, money would work so perfectly that it nearly vanished. In a non-ideal regime, however, currency would be used extensively for unjust purposes — but for just precisely this reason, would allow these unjustice to become visible to political theory, which could then theorize how to fix them. And “fixing them” just means “furthering equality and reciprocity instead of undermining them.”
Equality and reciprocity. That sounds pretty nice! Who could object to that? But what Aristotle means by this is not what you might think. Again, Eich knows this:
Indeed, Aristotle’s oscillating references to equality and difference… have often frustrated commentators. Yet, if we understand equality (to ison) here not as arithmetic equality but as proportional or fair equality, a first share of the puzzle disappears. Once we conceive of political justice as aiming to achieve or preserve a status of fair equality, it becomes clear why Aristotle repeatedly describes justice as a form of analogy and a kind of mean… Aristotle evidently conceived of political justice as a state of balance” (35).
What is the difference between “arithmetic equality” and “proportional equality”? Eich is a little bit slippery about this. But Aristotle himself is perfectly clear. Simply put, arithmetic equality is what we would call “equality”… and proportional equality is what we would call “inequality.” More to the point, it’s what we would call “class.” This is just what Aristotle says: “For it is not from two doctors that a community comes about but from a doctor and a farmer and, in general, from people who are different and not equal. And these must be equalized. That is why everything that is exchanged must be in some way commensurable” (NE 1133a). Proportional equality, in other words, is the way in which unequals can be “equalized” — in the sense of being priced against one another by comparison to some equal thing — while nevertheless preserving their relation of inequality to one another. And this is what money is for. Thus, “furthering equality and reciprocity instead of undermining them” really just means “maintaining the class hierarchy rather than undermining it.”
Thus, Eich’s attempt to rescue a hidden “political potential of money” from Aristotle, a potential that might serve the cause of something he calls “democracy,” hinges on constructing a false dilemma: “Emphasizing nomisma’s possible role in serving reciprocal justice must then not lead us to overlook the persistence of power, the inevitability of losers, and the hidden violence of money” (40). But the persistence of power and social hierarchies is just what Aristotle means by “reciprocal justice”! Reciprocal justice is when everyone in society knows their place, and stays there. And that is what he — in much the same way as liberal thinkers two millennia later — feared about democracy.
This matters, because it reveals what exactly Eich means through repeated appeals to the “ambivalence” of the kind of democracy that he is after, and the way that he understands Keynes as taking up and recovering Aristotle’s political theory of money: “As Keynes recognized two millennia later, behind Athenian democracy there loomed another political innovation: currency issued by the polis” (43). As a matter of historical fact, however, this statement is quite misleading — it gives the impression that it was the democratic polis that somehow introduced the institution of coinage. But in fact, the introduction of coinage per se has little to do either with the Greek polis or with democracy. Rather, it was first invented in the monarchy of Lydia, a territorial Anatolian power, in the context of the breakup of the Neo-Assyrian empire and the ensuing self-assertion of more regional powers (one of these powers, Persia, would eventually go on to found a new empire and become the most important minting power of the 5th century, in relation to whom Athens was essentially a rebellious peripheral province, after having given “Earth and Water” to Darius in 507). And coinage, when it was introduced to the Athenians and other western Greeks, was not associated in any particular way with “democracy.” Rather, it was associated with another sort of regime, that came to be known as tyranny.
The Athenian democracy did not introduce coinage to Athens. Nor was it introduced at the time of Solon, as was previously assumed by many scholars (Solon’s “drachmas” are units of weight, and not coins). Coinage, rather, was almost certainly introduced to Athens by the tyrant Peisistratos. And the coinages of Peisistratos and his sons differed in important respects from the famous “Owl” tetradrachms that Eich wishes us to associate with Aristotle. Whereas the “Owls” are of consistent weight and purity, and stamped with a type that remained unchanged for the entire period of Athenian hegemony, the earlier Wappenmunzen were of variable weight and purity and display a large number of different types. It is likely, in other words, that these earlier coins were a more heavily “fiduciary” currency, which the tyrant forced everyone to accept at face value no matter their actual silver content, and that they were periodically demonetized and reminted in order to provide revenues to the ruler. Tyrannical shenanigans with the money — in which they asserted the sovereign power to arbitrarily redefine the unit of account — abound in the literature. Indeed, it is an act that is very nearly synonymous with “tyranny.”
The democracy, by contrast, had a money of exactly the sort that Eich sees as being fundamentally anti-democratic: a unit of account, denominated in silver, that never changed for the entire duration of the democracy’s power. The democracy very specifically did not alter its unit of account, from time to time and as exigency and occasion demanded. And it did so (as I have argued elsewhere) precisely to prove — against critics in the mold of Aristotle — that it was not a tyranny.
The democracy, in other words, was ambivalent about itself, and it was anxious about this ambivalence. And, as Bonnie Honig has argued, it worked through this anxiety about itself through the genre of tragic drama, whose basic theme was about the reformation of the tyrant: the tyrant, Kreon, who thinks that he alone holds the power to define the nomos, must be chastised by the aristocratic critique, voiced by Antigone, and learn from it, in order to learn the lesson that it is better for him to rule in accordance with the “established laws.” And one of the most important of these “established laws” was, of course, the definition of the unit of account — what was meant as the object of a contract, when contracts talked about “drachmas.” To alter this would be to take a step down the slippery slope towards tyranny — and the accusation that the democracy was basically tantamount to, or inherently on the road towards, tyranny already was, of course, the accusation of thinkers like Plato and Aristotle.
Thus, the accusation that “democratic money is bad money” (19) was something that the democracy itself was incredibly anxious about. And so it responded to this anxiety by insisting on maintaining sound money. And that is why the Athenian tetradrachm enjoyed such wide circulation: in contrast to the numerous regional “bad monies” of variable weight and purity that circulated only locally, the “Owl” was a reputable coin with a fixed content of silver. Everyone knew that, when they had “Owls,” they had good, sound money. Thus, both medieval England and classical Athens — the two regimes towards which Eich turns in search of “political money” — were in fact some of history’s most notable sound money regimes. They were regimes that emphasized, like Locke, the overriding importance of good credit and a stable unit of account. Even the democracy was fundamentally ambivalent about itself, and feared the specter of “democratic excess.” One of the the ways that Athens managed this anxiety was through strict laws about who counted as a “citizen,” and the policing of these boundaries through the prohibition of intermarriage and the sequestration of citizen women. And another was through the maintenance of the period’s most famously sound money, which nobody could accuse of being “tyrannical.”
Eich, for all his appeals to democracy and the attempt to roll back what he sees as the “de-democratization” of money, shares this fundamental ambivalence. And so did Keynes, which is why, ultimately, the analogy between Keynes and Aristotle actually works: both of these thinkers disdained democracy, at the same time as they acknowledged some of its possible virtues, because democracy threatened to undermine the basic relations of inequality between elites and non-elites that made political order what it was. As Eich writes:
Keynes’s call for the constitutionalization of currency takes us to the limits of a liberal politics of depoliticization that seeks to neutralize economic relations yet hopes to do so in the service of social justice and with possible political safety valves built in. Like the enshrining of certain framing principles in constitutional law, depoliticization meant in this context the freezing of certain foundational political compromises… there was nothing per se wrong with monetary depoliticization, particularly if such depoliticization allowed for the superior management of money. Indeed, if the principles thus enshrined were just and left enough room for discretion, monetary depoliticization would occur in a way that reflected the reciprocally shared burden of the founding compromise. His critique of the interwar gold standard was not born from a desire to democratize monetary policy or a rejection of economic depoliticization. Instead, it derived from a critique of the gold standard as a fundamentally flawed attempt at neutralization by naturalization that was both unfair in violating basic principles of social justice and profoundly counterproductive in sowing instability by insisting on stability. (174, emphasis mine)
The problem with the gold standard, in other words, was not that it produced social inequality. The problem was that it produced too much social inequality, and it produced social inequality of an unstable sort — social inequality, allowed to grow out of proportion and without constraint, would eventually annihilate itself. Thus, the goal would be to “depoliticize” money in such a way as to put it under the “superior management” of those, like Keynes, who recognized that the successful preservation of “reciprocal justice” — that is, the continuing inequality of social classes in the right proportion — would require containing, in some way, the destabilizing effects of having “too much” rather than the “right amount” of inequality. This is, indeed, a good Aristotelian politics… but it’s certainly not a democratic politics, in any meaningful sense. Or if it is a democratic politics, it’s the politics of the actually existing Athenian democracy, characterized by — among other things — intensely xenophobic and misogynistic social legislation and a deep, even foundational commitment to sound money.
Against Eich’s embrace of the “wisdom” of the Keynesian-Aristotelian search for the “proper mean” that would enable social inequality to be successfully reproduced without succumbing to its own internal contradictions, I would suggest that it is precisely the supposed wisdom of “freezing certain foundational political compromises” that needs to be called into question. Eich is not really quite explicit about what exactly this means (perhaps it cannot be voiced out loud, and still remain in the arena of democratic politics). But the nature of the compromise is quite clear: the compromise is that the basic relations of social inequality (or, euphemistically, “proportional equality”) are not to be threatened. These inequalities are not only relations between rich and poor, or between white and black, but also between those who are qualified to be “experts” on economics and those who are not. In an age in which the commitment to these “foundational political compromises” threatens to undermine even the very conditions of human life on earth, this sort of “wisdom” begins to seem very unwise.
To be fair to Eich, he is not unaware of the problem that I am outlining here. Indeed, it is central to what he argues: “Keynes never quite reconciled these two aspects of his thought: on the one hand, his call for exercising deliberate control over monetary and fiscal aggregates in order to submit economic life to general welfare, social justice, and democracy; on the other hand, his related insistence on the need for technocratic governance, with its somewhat antidemocratic suspicions and epistemic demands. To stress this tension between democratic politics and economic governance also helps to deepen our understanding of Keynes’s ambivalent relation to monetary depoliticization” (174-5). But his suggestion seems to be that this “ambivalence” or tension is accidental, rather than constitutive; that it might have been resolved in the end if things had gone differently at Bretton Woods, with the result that we would have inherited the “real Keynes” rather than “Keynesianism.” But what Eich does not see is that his analysis of the ambivalence inherent in Keynes’ thought already predicts the outcome that he describes as “falling short of Keynes’ true vision”: an international monetary order dominated by the money of the imperial victor (the US dollar), and privileging the interests of creditors over debtors. It was precisely these features of the system that enshrined the “foundational political compromise” that guaranteed the maintenance of “proportional equality” — meaning inequality — between what might then have been called the First, Second, and Third Worlds.
The problem that Eich is unwilling to confront head on is the problem that, once we admit that money is a “political convention,” and that “anything we can actually do, we can afford,” the question becomes who the “we” is that does the doing, and what kind of “proportionate reciprocity” this “we” is willing to bear in relation to other “we”s. If money is ultimately a social convention, and a social convention that governs the reproduction of social inequality… then why should there be any social inequality at all? Why should there not be a truly radical democracy in which “proportional equality collapses into arithmetic equality” — or in which, less euphemistically, inequality is simply eliminated as such? This, of course, was the possibility that even the democracy itself feared, and which it was at pains to prove that it wasn’t doing, with the result that, in some way or another, the “conventionality” of money had to be repressed — by tying the unit of account to an arbitrarily chosen standard that could not later be changed.
My feeling is that Eich can’t really decide, for himself, which horn of the dilemma he wants to fall on. He seems to want to accept the pious common sense that “real” democracy would be good, if only we could actually figure out what it was and figure out how to have it. He doesn’t want to mount an argument, against Keynes and against Aristotle, as to why social inequality is actually inherently undesirable, with the consequence that the “foundational political compromises” that ground this inequality should be simply torn up in a tyrannical act of re-foundation of the entire social order. But at the same time he sympathizes with these two heroes of his narrative, the Cantabrigian and the Stagirite, whose political thought is — as Eich himself reveals — fundamentally motivated by the fear of democracy: by the belief that the democracy doesn’t even know what is actually good for it, and thus needs to be guided by experts, and by anxiety about the potential for radical social levelling that the very notion of “democracy” seems to threaten and imply. In short, Eich’s true political sympathies seem to lie with a tradition of thinkers who would have openly admitted to opposing something called “democracy,” which they might have thought of as the “tyranny of the mob.” But he feels it necessary to claim that what he is doing is a “democratic” politics — which leads him to a kind of cognitive dissonance that he recognizes in his subjects, but fails to see in himself.
5. The Uses of History
Let me conclude with a brief meditation on the stakes of turning to monetary history in order to illuminate political controversies over money in our own day. Contemporary scholars who want, in some way, to “politicize” money by reviving some version of the chartalist theory — whether the Modern Monetary Theorists, in the vein of Knapp, or the Law and Political Economy scholars, in the vein of Innes — find themselves falling into a historiographical trap. They begin by attacking (rightly) the mythological story found in the Econ textbook — the myth of barter, according to which money arises spontaneously and naturally out of exchange. But having done this, they inevitably begin spinning a mythology of their own.
The nature of the trap is this: these thinkers find themselves needing to assert that, today, money is a political problem because it is not properly understood as being political. We think that money is natural and neutral, when really it isn’t, and that’s why it’s a political problem. The way to try to solve this problem is to realize what money is: thus, once we correctly realize that money is political, then it will cease being a political problem! They then need to tell a story about how it came to be that everyone somehow forgot about the political nature of money.
Because the main interest of these scholars tends to be in modern events, modern history, and modern problems, they can turn to something that feels, to us, like it happened a long time ago, in order to explain when the problems all began: the English late 17th century, with the founding of the Bank and the writings of John Locke. Thus, according to Desan — who is the one writer universally embraced as an authority by every persuasion of chartalist — it was only with Locke that money became depoliticized, and, before that, everyone already know what the chartalists wish us to discover — that money is a political convention, and that there is, therefore, “nothing sacred” about the unit of account. The unit of account, in the middle ages, was already-Keynesian in the sense of being nothing more than the object of technocratic management according to exigence and occasion.
But this story just isn’t true, and it relies on the fact that the audience doesn’t know anything about this history other than what they read in Desan. When we take the history of money seriously, in its own right, what we will find is that they had problems too — and that these problems were a lot like our problems. Neither the European middle ages, nor classical Greek antiquity, were periods that took place “before the Fall” of money into depoliticization and modernity. As I have argued here and elsewhere, however, this tensions between the “politicization” and “depoliticization” of money is not something that happened in history, but is rather inherent in the phenomenon of money itself: it is what is money is, rather than something that simply happened to money.
If we want to move past this dead end in the important project of telling a new historical story about money, I suggest, we need to begin by taking more seriously the dimension of money that is deemphasized by Eich and almost entirely ignored, and even defined out of existence, by Desan — the problem of foreign exchange. It is not the case, as Eich suggests in the Introduction, that there existed “two parallel monetary systems across Europe for much of the Middle Ages—a nominalist one for local and domestic transactions, a commodity-denominated one for transactions with foreigners” that “became entwined” only in the later 17th century (14). As I have shown elsewhere, elaborating on the work of Boyer-Xambeau, Deleplace,and Gillard, sovereign coinage and the exchange by bills are fundamentally related phenomena, and the policy stance of the mint (the way that it defines a relationship between metal and the domestic unit of account by quoting a price for coin) cannot be properly understood without understanding its relationship to international credit markets and the flow of specie at the scale of the world-system. Domestic money and foreign money have always been entwined, ever since the beginning, and understanding this is necessary for understanding both the phenomenon of money and its political stakes. This is something that is (tendentiously and deliberately) ignored by Desan and those scholars, like Eich, who take her as an authority — much to the detriment of their analysis. So trying to understand this deeply ancient relationship — between domestic money and foreign exchange — is the project that should be carried forward now by those of us who want to understand how the problems work, before assuming that we know where and when we are going to find the solutions.
That is enough for now. I have been rather harsh in this review. But this is a serious book with serious problems. I can only hope that Eich will take this review in the spirit that it is intended — not as a threat to his expertise as a credentialed political theorist, but as an agonistic contribution to democratic debate and contestation over the nomos of our political order.