Proposition 12.1

12.1 As an empirical instrument and one that can only remain so, money is subservient.

1. Currencies are instruments.

Currencies¹⁷², both in their metallic (coins, ingots) and fiduciary (notes) and scriptural (bank accounts) forms, are instruments:

for economic exchanges and transfers: on the one hand, exchanges of commodities for commodities by intermediary money¹⁷³, on the other hand, transfers of purchasing power (donations, taxes, legacies, thefts) as an alternative or complementary to the transfers of other objects that have a economic exchange value;
for measuring economic exchange values¹⁷⁴, an expression strictly synonymous with economic exchange values, and therefore as such an instrument of measurement of prices in the economic sense of this word – prices, including those of individual supplies of labor services and placements in exchange for their remuneration;¹⁷⁵
for storing purchasing power, this reserve function being all the more poorly fulfilled because, over time, the monetary unit quickly loses its exchange value through nominal price increases that are referred to as inflation (from the Latin, by English, inflatio : inflation), but which nevertheless constitute a monetary depreciation, generalized or niche (real estate and other investments).

2. There is no orthodoxy in monetary matters.

This statement is from Jacques Rueff¹⁷⁶:

"Contrary to what laymen believe, there is no orthodoxy in monetary matters. A large number of systems can be conceived, which are distinguished by their own virtues. It is only in relation to the ends that are assigned to society that one of them can appear preferable to the others. ".¹⁷⁷

Three paragraphs later, Rueff explains:

"The extreme types of monetary systems are: the 'realist', where each unit of money has as its counterpart in the balance sheet of the issuing institution an asset that can be sold on the market for an equal value, and the 'nominalist', where money is only a sign empty of substance. It is between these two models that all the systems that have been, are or will be in force are scaled. »

Paul Fabra, in The Best System for Getting Rid of Gold, notes that "a monetary system being by destination empirical in nature, it can never be entirely rational¹⁷⁸" and concludes one of his analyses with: "In a rational monetary system, the sign is as abstract as possible but the value it represents is as real as possible.¹⁷⁹ ".

3. A currency inspires all the more confidence when anchored to strong economic policy points.

It is also in this sense¹⁸⁰that, as Jacques Rueff has said many times, money is served. To the extent that a country is able to maintain or re-establish economic policy strengths as quickly as possible as if by an innate mentality, protection against inflation, deflation and imported recessions of financial origin is raised to its highest level in that country. The history of people, even in its most difficult to recognize underground courses, means that some countries are more apt than others to economic practices that bring to the highest level the protection just mentioned and that protectionism in the sense attributed to this word in economics does not provide.

4. The highest level of monetary protection depends only in part on the governance of the market economy.

What is the burden of military spending for the country in question and its allies, both in terms of investments and expenses? And what is the weight of prestige spending? These and other burdens, including those of so-called social transfers, can be so high that they have become an abundant source of currency depreciation – as far as military spending is concerned, the greatest wars have administered the most resounding examples¹⁸¹. The prevention of these risks depends only, subsidiarily or very subsidiarily, on international agreements on good practices in the governance of the common good of the whole of humanity, which is the market economy.

5. The calibration of economic exchange values by economic policy strengths cannot be excluded.

The highest protection against inflation, deflation, and imported financial recessions is also contingent on exchange rate manipulation, which disrupts transcontinental and intercontinental trade flows. But succeeding in overcoming this obstacle is possible where, from one monetary zone to another, economic exchange values become calibrated by policies all endowed with the seven strong points that the propositions to be followed review. In the case of a monetary area common to several nations, such as those that are part of the euro area, it is all these nations whose economic policies must have these strengths.

6. Achieving such a convergence can only be very laborious.

Will giving each of the currencies most used in international trade a fixed price for the same product of human labor prove to be less laborious?¹⁸². In terms of economic exchanges and transfers, the duration of the emergence of a change of guiding ideas is likely to be counted in generations, for many because of the affects that reason struggles enormously to reduce in everything related to money.

Notes

More colloquially it says money, a word that in this use has a rich palette of slang synonyms: wheat, embers, flouze, fric, galette, grisbi, rushes, maille, sorrel, pèpètes, pèze, picaillon, pognon, ronds, sou, thune, clover (Le Robert, entry Argent, II). ↩
The expression "exchange of commodities for commodities" gives a fairly complete account of an elementary economic reality when, as recalled at the end of the next point, only are the services of labor and investment provided in exchange for their respective remuneration expressly recognized as commodities. See Chapter 2 where it is also explained why currencies are not commodities. ↩
Sraffa seeks an invariable measure of value in a different instrument: the Standard commodity, a composite commodity built so that the price movements measured in it originate in the commodities measured and not in the standard itself (P. Sraffa, Production of Commodities by Means of Commodities, Cambridge University Press, 1960, ch. IV). Fabra sees in it an answer to Ricardo’s problem of an invariable standard (P. Fabra, Capital for Profit, Rowman & Littlefield, 1991, ch. 9, n. 6) and distinguishes this theoretical construct from the proposals to make the whole set of commodities the monetary standard, which he rejects as circular (ch. 11, section “Old Ideas Back in Vogue”). The Objective Political Economy requires no invariable measure: all prices have in common only that they are exchange values (Proposition 11.12), and money measures them as an empirical instrument. See the appendix Objective Political Economy and Sraffa. ↩
On the fact that economic exchanges, in other words economic exchanges, are a finite subset of social exchanges, see Introduction to the Objective Political Economy / Defining the scope . ↩
Jacques Rueff: see wikiliberal.org. ↩
Monetary Regulation and the Institutional Problem of Money, first published in 1953 in the Revue d'économie politique, section VIII – The Institutional Problem of Money, first paragraph. The following quotation from Jacques Rueff is the fifth paragraph of the same text. ↩
The best system for getting rid of gold is the title of chapter 13 of the Essay on the Rehabilitation of Political Economy entitled Anticapitalism (15 chapters). The phrase quoted is found under the subtitle Qu'est-ce que l'étalon or?, page 280 of the Arthaud edition (1974), page 334 of the Champs Flammarion edition (1979). ↩
Page 290 in Arthaud, page 345 in Champs Flammarion, where this sentence, underlined by its italics, is the last of a paragraph of which the first half is as follows:
"In this day and age, the idea that the reference to gold is a relic of the past is firmly anchored in most minds. Those who support it [...] draw from an indisputable fact a consequence that is foreign to it. I will call this reasoning "Professor Triffin's illusion" because it was the famous Yale University professor who made the most systematic exposition of it, consisting in "proving" that gold will be gradually eliminated from the international monetary system in the same way and for the same reasons as it has already been in the monetary circulation of each country. The indisputable fact on which Professor Triffin relies is that men are using more and more abstract instruments of payment. Metal money was gradually replaced by banknotes, then fiat money ceded most of the ground to scriptural money with the generalization of payments by set of entries and the more frequent use, for current expenses, of credit cards. This evolution has certainly not yet come to an end. It clearly reflects a progress in economic rationality. But this same rationality requires [...] that the principle of equality be respected in exchange. Now, how can we expect exchange to become value for value if the instrument through which it normally operates does not have an objectively determined value? »
The "objectively determined value" that Fabra referred to is a fixed price, between a very close high and low, of a "quantum of the commodity chosen as a standard". In favor of such a pegging to the conditions that were fulfilled from 1870 to 1914, there is a great reduction in the fluctuation of exchange rates, which has all the more repercussions since international trade is a major provider of jobs and enrichment. However, this is not the only way to achieve less currency depreciation and, in so doing, less monetary disturbance of prices, in any case gradually anchored to those of them which are the minimum hourly wages of the countries from which what is sold comes. By refuge in real estate ownership in particular, the leakage of investments most exposed to currency depreciation is a loss in the healthiest financing of job creation, a penalty aggravated by the increase in housing costs resulting from these losses. ↩
Fabra: "The 'objectivists' think, according to Jacques Rueff's strong expression, that money is served, in the sense that its demand is and must be subordinated to the impulses of economic life. The 'subjectivists' are inclined, like Keynes, to see in money an 'elixir' that should be injected into the economic body in order to stimulate its activity" (page 295, Arthaud, page 352, Champs Flammarion). ↩
And the lavish spending of Louis XIV at Versailles, unrelated to the genesis and course of the French Revolution? The Concorde, the liner France and the Plan Calculus, unrelated to the mediocrity of the economic results of the Fifth Republic, since the 1970s and until now? Etc. ↩
For more on this subject, read the entirety of chapter 13 of Paul Fabra (work cited above) or chapter 11 of Capital for Profit (1991, Rowman & Littlefield Publishers, Maryland), pp. 279–300, bearing in mind that the author stated: "I now consider the English version (which incorporates some changes) to be the more authoritative." ↩