Dublin Opinion

I’m writing up an article on the shadow banking system for the print edition of Irish Left Review that we’re hoping to bring out sometime in September, and at the moment I’m working through my description and analysis of the emergence of the euro-dollar and the break-up of the Bretton Woods system. I’ve gone back to Michael Moffitt’s The World’s Money for some help and just came across a great section where he talks about the gold standard and Keynes’ opposition to it (quoted at the end of this piece).

There are certain ideas around money and inflation that need to be treated as the right-wing infections that they are. One of these is the idea that we need to return to the gold standard as gold, somehow, has ‘intrinsic’ value.

Everytime I hear this I think of the scene in Zoolander where Derek and Hansel smash up the Apple Mac because the files they are looking for are somewhere ‘in’ the computer. The gold standard works on pretty much the same concept, that the socially-created value gold represents is somehow ‘in’ the gold itself.

The opening ceremony of the Olympics paid tribute to Tim Berners-Lee for the world-wide web, and rightly so. Thankfully, they did not use the occasion to show what exactly the world-wide web consists of, which is mainly porn, conspiracy theories, metallist-money crackpots and Facebook. It’s hard to battle against that, but in a vain hope here’s what Moffitt has to say:

In the monetary area, the Bretton Woods accord sought to achieve both stability and flexibility. In the nineteenth and early twentieth centuries, most major nations tied their currencies to gold. Under the gold standard, which was the darling of the London financial establishment, the volume of currency in circulation was limited by the nation’s gold supply.

Keynes had long argued that the gold standard contributed to unemployment and depression because monetary supply was hamstrung by the limited global supply of gold.

Gold, he wrote, “is and always has been, an extraordinarily scarce commodity. A modern liner could convey across the Atlantic in a single voyage all the gold which has been dredged or mined in several thousand years.”

For Keynes, this meant that the real economy was held hostage to the vagaries of gold production. Governments that were on the gold standard were unable to expend money supplies to counter business downturns or pursue other social goals, such as expanding services to the poor. At bottom it was a gimmick to control government spending.

Keynes attacked the gold standard as “part of the apparatus of conservatism” and ridiculed bankers who considered it the “sole prophylactic against the plague of fiat moneys.” Long before Keynes’ brilliant polemics against the gold standard, William Jennings Bryan ran for president n a silver or bi-metallist platform. He attacked the gold standard as the hand-maiden of Wall Street bankers. In the United States, the issue effectively died when he lost the 1896 election.

The gold standard, corporation tax, low inflation - the lists just goes on and on of right-wing economic concepts that are held by the progressive elements of Irish society. Trying to get the Irish Left to think left is a battle in itself.