Thursday, January 10, 2008

Towards a Philosophy of Money-4

Replication through multiplication and vice-versa
The notion of currency reinvents itself very smoothly e.g dollar is top rated currency but even dollar exists in a fiercely competitive financial world of Yuan, yen, sterling pound and recent rise of euro. With those, countries buy oil, gold, arms, merchandise and whatever they need for themselves. These different currencies are not only used to trade internationally rather they are themselves traded. To be precise, the truth of matter is that definition of currency keeps playing double game of musical chairs and slipping through hidden interstices of financial life. The value-determining process of anything is so dynamic and labyrinthine that it becomes quite difficult to pin it down to any singularity. To add on, when so many tradable things are competing for value enshrining, the whole question of currency enters into a problematic category. e.g. From Plaza Accord to the current period, the realm of international currencies turned seriously competitive.[1] There was a serious intermixing of oil, dollar, arms, forex reserves and debt. What holds what is totally difficult to answer? By the beginning of January, 2000, the emergence of Euro as a counter-balance was a major event in the realm of currency. The majority of European trade went a step ahead in freeing itself out of the dollar-denominated trade figures. Within the continental Europe, the root currency definition was being realigned. It was just not here rather even in China, there was a strict pegging of dollar-yuan exchange rate by the Chinese government. The mandarin exports overwhelmed American consumer market in such a big way that the current account deficit of America with China went in latter’s favour by hundreds of billions of dollars. The newspaper columnists jokingly started writing that yankies borrow from the dragon, purchase homes and resell it to make a profit. China was successfully creating a multi-polar world by using simple tools of currency. It was not an ideological war at all. There was no ‘end of history’ sort of theoretical baggage involved and no clash of civilizations at any point yet there was working a power discourse that was being underplayed. On the one hand, deep financial pockets of the world unleashed the credit facilities throughout the consumer territories of the globe and on the other hand, there was a rise in debt profile of individuals and majority of poor and developing countries. One’s debt was other’s credit and the equation proliferated through the multiple forms of financial derivatives. Here, even the nations played the role of either indifferent player or helpless referee with a minor role of a beneficiary. The currency replicated and multiplied so efficiently that its causative role could not be pinned down. So, what we ask is
1) If currency is the single causative factor in international relations, how the debt as a liability and credit as a negative asset fit into its theoretical realm of currency?
2) Is there any in-built ‘fizzling operative’ in the creation of values?
3) How the multiple forms of interest keep shifting the value-determinants of a currency?
4) What is the distinction between the intra-currency and inter-currency shifts?

Distinguishing between the Practical and the Transcendental

The defining process of currency occurs in relation to the defining of political community. Our conventional thinking around this has been statist which is rather exclusivist. The critical school of IR theory has come out strongly against this trend at three levels, normative, sociological and praxeological. Their stand is that political community as defined by the ‘state’ needs to be de-centered. They reject the Westphalian link between sovereignty and political association by critiscizing the appropriatory history of the state. The works of Andrew Linklater particularly Men and Citizens, Beyond Realism and Marxism and The Political Transformation of Community needs to be studied so that currency can be reviewed from the angle of economic association rather than determination. Linklater along with R.Shapcot has even proposed some forms of international society which have elements of pluralism, solidarism and inclusivism embedded. This ‘thin cosmopolitanism’ needs to be dissected. What is the status of exchange relations within it? How shall currency fit into this?
The basic task before us is to distinguish the realm of the practical from the realm of emancipation. Currency belongs to the earlier one while the expectations from the IR theory belong to the second realm. It is not a segregation of the two rather both have their own operational limits. Talking about good money is as much essential as understanding the limitations of money-talk. It fits into the requirements of both dialogue and negotiation. Even adversaries can sit together over this what to talk of partners.

Perpetual, Singular and Political

Though the definition of currency stretches itself or rather transforms itself yet the perpetual control that currency holds over us is a marvelous achievement of this tiny tool of human creation. It enshrines a philosophy of permanent linkage. Whether it was barter system, silver, gold or even oil and paper notes or e-money today, it never lost its touch with earthly needs of humanity. There may have been a rise and fall of certain systems of currency but as a tool of exchange between two persons or entities, it never loosened its hold over people. Its influence over other forms of political life is hegemonic. It would be quite close to what Nicholas Ruiz in the context of 21st century says, “Capital is not merely a mythical sign of value; it is the Logos that we refuse to acknowledge as the arbiter of metaphysical being, which in turn informs our operative being—socially, politically, economically, and otherwise. Every decision that is made, regarding the spirit or the flesh, by every individual and every institution, is made in reference and with reverence to Capital. What is best for the Church is certainly what is best for its ledger balance, that is, what is best for communion and access to its true Deity—Capital. What is best for the nuclear family is the same, and that is why child-care centers have waiting lists (demand) for enrollment, while paradoxically, child-care workers (supply) are among the most poorly paid individuals in America—all relationships are determined by the divinity of Capital………”[2] There is a deeply interconnected hegemonic value-system in operation which is pointedly singular across different societies and economies, painfully perpetual and hence redefining/reshaping the political furiously. This change needs relocation in terms of monetary governance, power distribution and money allocation. Any shift in its form or structure magnifies into substantive changes in power discourse of the times. The reasons can be found in the recent histories of global finance e.g. The rise of petro-dollar was not an upward curve rather after the fall of gold standard in early 1970s it underwent a serious crisis in 1973 and 1979. The Plaza Accord in 1985 eventually saved its status. But these tremors shifted the role of IMF and the World Bank from the Atlantic to Asia, Africa and Latin America. There was a mega accumulation of debt over countries of these continents. All these events were unfolding when a big push for globalization through GATT was undertaken. Japanese economy sank into negative growth rate. Mexico, Argentina and almost all ASEAN countries underwent serious economic crisis. This period witnessed the paraphernalia of Peak Oil theories, collapse of rouble and emergence of OPEC as a strong arbiter in international relations. The irony of the whole change is that fault lines were not military or civilizational rather they were financial in nature. Currency values ballooned as well as shrank so vigorously that entire gamut of international politics could be seen as Arthashastra, an interplay of forces of Artha. This period transformed its war strategies by shunning arms and taking currency as a weapon instead. But this was not a unilateral move. It was a big collaboration among the many who might not be a formal part of superpower blocs. The root currency of the international trade, aid and development was being defined and offshoot currencies were switching/disguising their loyalties. The obviously broader peacefulness of the world had serious financial disjunctions which need to be revisited from the perspective of currency.
Not just that, from Washington to Sydney, there is a big perception that 21st century is going to be an Asian century. Paul S. Kennedy shares this view in quite a fundamental manner. Recently, Andre Gunder Frank in his book “ReOrient” has stressed the inevitable rise of hidden giant of Asia. It is not that we doubt these positions rather we feel that neither has taken the currency factor in a serious methodological analysis. The rise of America as a superpower was accompanied by so many fundamental financial, military, social and industrial changes that to define Asia as an emerging power with many other dimensions remaining unchanged shall be quite a superfluous reasoning to believe. The role of currency in the rise of Asia is going to be a crucial one but the nearly two trillion dollars of forex reserves in the Asian central banks are working to safeguard themselves from sudden capital outflow and sponsoring the floating value of dollar in that game. What they seem to be doing is playing a zero-sum game. They export in order to earn dollars; they amass dollars in order to earn security and they amass security to enrich dollar. This directly gets translated into myopic management of currency relations. There is an over-treatment of currency factor among the national governments in Asia. It is indicative of the least common understanding among them. That is why Asian politics need to be re-looked from this angle. A preliminary work into ACU (Asian Currency Unit) has been in existence for some time which must be researched.
[1] Rajadhyaksha, Niranjan and Celestine, Avinash, “The decline of dollar” in the Jan 03, 2005 issue of The Businessworld, India.

[2] Ruiz, Nicholas ‘The Metaphysics of Capital’, “Kritikos: an international and interdisciplinary journal of postmodern cultural sound, text and image”, Vol. 1, July 2004,, ISSN 1552-5112

No comments: