The Currency of Politics

The Political Theory of Money from Aristotle to Keynes

Stefan Eich

• Publisher: Princeton University Press
• Year: 2022
• Print ISBN: 9780691235431, 9780691191072
• eBook ISBN: 9780691235448
• Topic: Philosophy
• Subtopic: Economic History

Money in the history of political thought, from ancient Greece to the Great Inflation of the 1970s

In the wake of the 2008 financial crisis, critical attention has shifted from the economy to the most fundamental feature of all market economies—money. Yet despite the centrality of political struggles over money, it remains difficult to articulate its democratic possibilities and limits. The Currency of Politics takes readers from ancient Greece to today to provide an intellectual history of money, drawing on the insights of key political philosophers to show how money is not just a medium of exchange but also a central institution of political rule.

Money appears to be beyond the reach of democratic politics, but this appearance—like so much about money—is deceptive. Even when the politics of money is impossible to ignore, its proper democratic role can be difficult to discern. Stefan Eich examines six crucial episodes of monetary crisis, recovering the neglected political theories of money in the thought of such figures as Aristotle, John Locke, Johann Gottlieb Fichte, Karl Marx, and John Maynard Keynes. He shows how these layers of crisis have come to define the way we look at money, and argues that informed public debate about money requires a better appreciation of the diverse political struggles over its meaning.

Recovering foundational ideas at the intersection of monetary rule and democratic politics, The Currency of Politics explains why only through greater awareness of the historical limits of monetary politics can we begin to articulate more democratic conceptions of money.

CHAPTER ONE

The Political Institution of Currency

ARISTOTLE AND THE COINAGE OF THE POLITICAL COMMUNITY

Money is the true bond of society.

—JEAN-JACQUES ROUSSEAU¹

THE STARE OF THE OWL’S enormous eyes would have been a familiar sight for every Athenian. More than 2,500 years later it has lost none of its intensity. Athenian tetradrachm (four-drachma) coins are perhaps the most familiar of all ancient coins. Worth roughly a week’s wages, they were referred to as “owls” after the image of Athena’s big-eyed bird stamped on their reverse side. Next to the owl they depicted a crescent moon, an olive branch, and the Greek letters Alpha Theta Epsilon—abbreviated “of the Athenians.” On their obverse side the coins carried an image of Athena, goddess of wisdom and patron deity of the city. Tetradrachms were prized throughout antiquity for their quality and uniformity. Each weighed around seventeen grams and was made from nearly pure silver, mined by slaves at Laurion on the southeastern tip of Attica.²

And yet there was much more to the coin than its silver value. It is easy to miss what truly made an “owl” special. The tetradrachm was the proud symbol of Athenian power; indeed it embodied the political community itself. As the classicist and political scientist Josiah Ober has put it, Athenian owls possessed a “fiduciary value added.”³ Like most Greek silver coins, they traded at slightly more than the worth of the silver alone. This has long been a mystery. According to economists, the “value added” reflected the ease with which the coins allowed parties of exchange to transact without having to weigh and assess the metal.⁴ But there looms another, altogether more political dimension behind the fiduciary value of Athenian owls. In trusting the coin, one trusted the Athenian polis.

FIGURE 1.1: Athenian silver tetradrachm (four-drachma) coin from the late fifth century (450 BC–420 BC) (ANS 1968.34.40). The obverse side shows Athena in profile wearing a crested helmet. The reverse side depicts Athena’s owl next to a crescent moon and an olive sprig as well as the inscription AΘE, which was short for “of the Athenians.” Photo: Courtesy of the American Numismatics Society.

The classical Greek world featured a striking abundance and diversity of coinage. The earliest known coins in the Western world were minted in Lydia, in present-day Turkey, sometime in the mid- to late seventh century BCE.⁵ Solon’s mythical visit to the king of Lydia, Croesus, formed part of ancient Athenian lore and was frequently linked to Solon’s monetary reforms.⁶ Over the following centuries, coinage spread rapidly throughout the Greek world. At its peak close to five hundred Greek poleis issued their own coins.⁷ In Athens, by the end of the fifth century BCE uncoined metal had ceased to be legal tender in the agora and almost all payments had to be made in local coinage or a small number of approved coins from other poleis.⁸

While the Greek passion for coins is well-known, its meaning and significance remains disputed. Confronted with the fragmentary monetary map of the classical Greek world, economic historians have puzzled over the obvious “inefficiencies” of constant foreign currency exchange. Bewilderment over hundreds of Greek city-states issuing their own coinage only grows once we appreciate that both domestic and external trade had for centuries been conducted perfectly well with older forms of money such as uncoined metals based on weight.⁹ What those puzzled by the proliferation of coinage had missed, the classicist Moses Finley pointed out in The Ancient Economy (1973), was that ancient Greek coins were “essentially a political phenomenon.”¹⁰ Instead of seeing the fragmented Hellenic monetary map as a nuisance, the Greeks proudly celebrated their local coinages and established ferocious penalties for counterfeiting by treating it not merely as a commercial offense but a form of treason punishable by death.

Where Finley had still left the precise political role of coinage somewhat vague, over the past two decades scholars have since recovered the symbolic dimensions of exchange, drawn attention to the contentious political struggles behind the spread of coinage, and traced its profound philosophical implications.¹¹ Despite important differences in emphasis, it is now clear that the adoption of coins bearing the stamp of individual city-states was closely related to a number of crucial intellectual, social, and political changes in the transition from the archaic Greek world to that of the classical polis. Specifically, the rapid spread of the new institution of coinage went hand in hand with the development of a new form of political rule. The birth of politics had a pronounced monetary dimension.¹² By minting their own coins, citizens of Athens, Corinth, Delphi, and other city-states were distinguishing themselves from each other but also tying each other together. In an age before the printing press, circulating coins were reproducible symbols that inscribed the polity into social memory.¹³ Ancient coins functioned as a medium for the construction of the social and symbolic imaginary of the polis, just as the rise of modern imagined communities would be tied to new technologies of print and mechanical reproduction.¹⁴

The spread of coinage throughout the ancient Greek world had of course an important economic dimension since coined money saved ponderous weighing and removed uncertainty. But on its own such an economic approach struggles to explain both the extraordinary monetary fragmentation of the Greek world as well as the wider social and political meaning of coinage. Ancient monetary exchange had instead a wide range of symbolic functions beyond any narrow economic logic.¹⁵ Most broadly, the introduction of coinage was linked to a shift in the conception of political authority and how it was wielded; a shift away from divine justice and toward a form of political authority that was more terrestrial, more conventional, more political. Coinage accompanied and enabled the development of more abstract forms of reciprocity, a new philosophical interest in an impersonal universe, and a more autonomous conception of the individual.¹⁶ Polis and coinage developed in parallel, and both marked a shift in the conception and practices of reciprocity away from the tributary gift exchange that had characterized the archaic world depicted by Homer and toward more abstract monetized forms of redistribution and exchange conducted in the currency of the polis. Recovering the politics of coinage serves then as a reminder that the Greek polis was structured around the agora—not as a purely commercial space but also as a communal and political one in which the exchange of words and coins mirrored and complemented each other.¹⁷ As the classicist Alain Bresson puts it, Greek coins “were a value that circulated, just like words.”¹⁸ This ancient politics of coinage forms the neglected background to Aristotle’s ambivalent account of monetary reciprocity. I turn to it here as the foundational but also forgotten—indeed repressed—layer of my genealogical inquiry.

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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.”¹⁹ Similarly, in the Politics he wrote, “Reciprocal equality preserves city-states.”²⁰ Political theorists have recently begun to give reciprocity the attention it deserves as a crucial part of Aristotle’s answer to the problem of political justice and civic equality. In doing so, they have tended to focus on how law and speech can foster relations of reciprocal justice.²¹ When they acknowledge the role of coinage at all, it is often moved into the background, be it out of suspicion of its crass commercial connotations or incredulity that the great philosopher would stoop to such a tawdry consideration.²² Perhaps thanks to its association with exchanges of gifts in modern anthropology, reciprocity is often assumed to be opposed to monetary exchange. As a result, it is tempting to read references to reciprocal exchange as implying nonmonetary forms of gift exchange.²³ But Aristotle’s discussion of reciprocal justice pivots around the correct use of currency (nomisma).²⁴

There are also conceptual obstacles. Most English editions of Aristotle tend to translate two distinct terms as “money”: chrēmata, which signified material wealth in general, and nomisma, which meant coinage in particular. Translating both as “money” elides the conceptual distinction between wealth and currency, and risks obscuring Aristotle’s argument. In attending to the ancient meaning of currency (nomisma) and in disentangling Aristotle’s account of currency from related but distinct discussions of wealth accumulation, this chapter focuses on how a well-used currency can contribute to reciprocal justice. This was the case in three interrelated ways. According to Aristotle, currency can ground civic relations by equalizing citizens, maintain the polity by serving as a measure of political justice, and cultivate practical wisdom and deliberation.

Recovering the political purpose of currency allows us to reframe the role of money in a subtle but far-reaching manner with implications that point far beyond Aristotle. Many influential readings of Aristotle’s political thought contrast the political world of speech in the polis with the private realm of domination in the household.²⁵ After all, Aristotle rebuked Socrates in the Politics for having insufficiently distinguished between households and the polis.²⁶ While households are structured hierarchically and satisfy daily needs, the polis is a community of equals based on difference. Sometimes readers have radicalized this distinction into a bifurcated view by elevating the polis as a space in which citizens debate about justice by means of speech, while marginalizing exchange and currency as belonging to the household. But just as the household was also characterized by speech about the just and advantageous, exchange and currency were central to maintaining reciprocal political justice. According to Aristotle, when used correctly (a crucial qualifier as we will see), currency could bond society, bringing citizens together rather than dividing them, serving justice rather than corrupting it. Reconstructing the role of currency (nomisma) in analogy to law (nomos) highlights Aristotle’s expectation that money could be an institution that would contribute to the cohesiveness of the polis—but one that was also insufficient, imperfect, and laden with potentially tragic consequences for a self-governing political community striving for justice.

Aristotle held high hopes for currency. But what is perhaps most striking in recovering these promises is how greatly they have since been disappointed. Even by Aristot...

Table of contents

• Cover
• Frontispiece
• Title Page
• Copyright
• Dedication
• Epigraph
• Contents
• List of Illustrations
• Preface
• Introduction
• Chapter 1. The Political Institution of Currency: Aristotle and the Coinage of the Political Community
• Chapter 2. The Modern Depoliticization of Money: John Locke and the Great Recoinage of 1696
• Chapter 3. The Monetary Social Contract: Johann Gottlieb Fichte and the Politics of Paper Money
• Chapter 4. Money as Capital: Karl Marx and the Limits of Monetary Politics
• Chapter 5. Managing Modern Money: John Maynard Keynes and Global Monetary Governance
• Chapter 6. Silent Revolution: The Political Theory of Money after Bretton Woods
• Epilogue
• A Note on the Cover and Frontispiece
• Acknowledgments
• Notes
• Index