Thursday, 28 August 2014

A short comment on money and independence

During the (now ironically labelled) 'Arab spring' I read Alistair Horne's A Savage War of Peace: Algeria 1954-1962. Reading the introductory chapters describing the state of the French Departments of Algeria in the first half of the twentieth century it struck me that control of the financial system was essential for a political entity to be truly democratic.  The context was that after 1848 the Mediterranean coastal region of Algeria had been administered as 3 Departments of France; that is it was integrated into the French National Assembly, unlike British colonies and dominions or the French colonies in West Africa and Indochina.  Despite the fact that the political arrangement implied Oran, Algiers and Constantine were on a par with Gironde, Haute-Garonne and Rhone, the financial system of Algeria was controlled from Paris.  The result was investment in the 3 departments was made in favour of non-residents rather than the local population, whether pied-noir immigrants or indigenous Arabs.   The people did not participate in producing their money; it was alienated from them.

I do not believe that the value of money is based on a commodity, gold or land, or even captures/stores labour.  Rather I think that money is a social construction, something that is much harder to explain and therefore harder to believe in.  It strikes me that commodity theories of money facilitate the alienation of people from their currency because if money=(gold, land, land+labour) then only the possessors of (gold, land, land+labour) can posses money.  In this scheme money ceases to be something to enable social interaction, it becomes something that needs to be accumulated.

I have become interested in financial mechanisms such as peer-to-peer lending and crowdfunding, because I see these as having the potential to re-connect the public with their currency.  I am comforted to know that this is emerging as a key theme in Brett Scott's conception of an improved finance.  I find it comforting because Brett and I view the problem from very different positions, yet seem to converge on a common understanding.  In mathematics, this type of phenomenon is usually taken to mean the common view is likely to be correct.

These ideas have been developed by reading Richard Seaford's excellent  Money and the Early Greek Mind: Homer, Philosophy, Tragedy that argues the unique nature of 'Greek civilisation', the basis of Christian and Islamic culture, is public 'ownership' of money.  Specifically Greek money emerged out of the communal distribution of sacrificial meat rather than the redistribution of goods from the temple.

Currency has emerged as one of the key topics in the lead up to the Scottish Independence Referendum.  I am 1/4 Scots and 3/4 English, but born in Africa (my father was working for the UN); I encourage my 6 yo son to support Scotland in rugby and football; and will be voting against independence.  I tend to associate the Yes campaign with men over the age of 40 who blame the ills of Scotland on the closure of the coal, steel and ship-buildling industries orchestrated by English Tories, not on cheap North Sea gas, obsolete manufacturing facilities or innovative Koreans.  I believe there is an incoherence between proclaiming green energy but financing yourself by selling oil (the Norwegian model) and I suspect that with an ageing population, declining oil reserves and the prospect of the English fracking to compete with costly North Sea reserves, we are better together.

 I know both campaigns are lying to me. The nationalists tell me the only thing that will change post independence is the constitutional arrangement - we will keep the pound, the Queen and the Bank of England, be part of the nice parts of NATO and have exactly the same relationship with Europe.  While the unionists promise me that in the event of a No vote Westminster will address all the financial/welfare concerns (without explaining how: I suspect there will be a deal resolving the West Lothian Question in exchange for more financial independence, unless there is a No vote and a Labour government next summer).

I don't think currency is a reason to vote No, if the fundamentals are fine the currency will be fine, but I also don't think the nationalists position on the currency makes any sense. It seems absurd that an independent Scotland would wish to be shackled to the Bank of England, because the people must own their currency to have their freedom. The only explanation I have for the reluctance of the nationalists to opt for the Euro (where the Scots are at an equally disadvantageous position to everyone else outside Germany, rather than being uniquely disadvantaged) is their whole campaign is based on popularity polls rather than coherent policy; this is terrifying and I believe is at the heart of why the polls are so stubborn at the moment.  I would be more in favour of an independent Scotland committed to Europe, including the Euro and Schengen (to really annoy the English), than one neither committed to England nor Europe, yet expecting the favours of both.  I think it is a shame that the Referendum is essentially a Referendum on SNP policies, not on independence (the emphasis is on getting rid of Trident, not on having the power to get rid of Trident).

Fundamentally I think the whole focus on the currency issue is an expression of the alienation of people from money.  If people appreciated money as a social relationship, the significance of the currency would be obvious but the debate would be on the nature of the relationship between England and Scotland, not the embarrassing, unproductive slanging match  that, unfortunately, has been the reality of the independence debate and was played out last Monday.

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