The Ideology of Money Scarcity

by J.D. Alt, New Economic Perspectives

I’ve been continuing to work on the book I first proposed here at NEP last spring-The Millennials’ Money-and am getting close now to having it ready for publication. The aspect of it that was least successful (and there were several NEP comments to that effect) was the framing of the “ideology of money scarcity” as having evolved from the particularities of the baby-boomer’s generational experience.

That was always a shaky and not-very-insightful argument-and I recently came to realize it had to be replaced with a “framing” that focused the “target” of the book in a more useful way. This “target” became clear to me while reading a series of collected essays by Wendell Berry (The Art of the Commonplace) in which he very forcefully explains how and why local, self-sufficient economies are being exploited and destroyed by the multi-national corporate economy-and why it is essential for those local economies to somehow be re-established and regain some useful portion of their self-sufficiency. I realized this was, in fact, precisely what my book was suggesting ought to be the ultimate purpose of the “millennials’ money”-and that modern fiat currency, itself, makes achieving that goal uniquely possible. What follows here is part of my revised introduction, which is titled:

“The Ideology of Money Scarcity – A Brief History”.

…. Most important, however, all the monetary procedures that had been put in place to protect against the government issuing more dollars than it had in gold-even though they were no longer necessary-were left untouched. These protective “money procedures” (which we’ll outline in Chapter 2) kept everyone thinking and behaving exactly as they had before 1971. That is to say, they behaved as if the quantity of dollars available in the world was a finite and limited “resource” (like gold) for which everyone-including the sovereign government itself-had to compete to have a share of.

We could call this perception and belief the “ideology of money scarcity”-and we could speculate about who, or what interests, have most benefited from maintaining (and even reinforcing) its imposition on our common view of the world.

We might imagine, for example, one group of beneficiaries to be those who, for one reason or another, believe the federal government should be small and unobtrusive in the daily affairs of its citizens. Members of this group might believe as well that local governments should have more power and more to say about things than a big, central bureaucracy that’s out of touch with people’s needs. To keep the sovereign government small and its activism in check, this group only needs to argue that whatever it is the sovereign government wants to do, there isn’t enough money available to do it. The current presidential campaign of Bernie Sanders is a case in point: Mr. Sanders forcefully ticks off his list of collective goods the federal government ought to create, only to be confronted with media pundits who calculate that his federal programs will cost $18 trillion dollars-a number that is approximately $18 trillion dollars more than anyone believes the federal government has to spend, or could reasonably collect in taxes. “Tax and spend”-it’s an argument that shuts down any enthusiasm for national collective accomplishments every time.

I would argue that the primary beneficiary of the ideology of money scarcity, however, is the modern corporation-especially the multi-national corporation which has as its business model the transformation of self-sufficient local economies into the unwitting and dependent consumers of global supply chains from which the corporations greatly profit. The ideology of money scarcity assists this business model in numerous ways. The most powerful assist derives from the perception that the corporate economy itself is the “broker” of the money that’s available to be used in the world. This perception is projected and reinforced by the global stock and financial markets which seem to be the exclusive decision-makers about who gets to spend money, and for what purpose-even to the point of establishing and reinforcing the belief that sovereign governments themselves must borrow their money from the corporate economy’s “financial industry.” Thus the multi-national corporations are positioned perfectly to manipulate and guide the political decisions that support their business model, and their bottom line.

In his book Shattered Consensus, James Piereson argues that America today is thinking and acting with two diametrically opposed belief systems. On one side, those who call themselves “conservatives” believe that an intrusive sovereign government has not been constrained enough, and that what is needed is a radical new shrinkage of federal spending. To this I would add that the “conservatives” are strongly encouraged, supported and manipulated in this belief by the interests of the corporate economy which specifically want to shrink any efforts by the federal government to restrict or regulate their profit-making enterprise. (As an illustration, I give you the Coca-Cola Company which, it was recently revealed, paid millions of dollars for “scientific research” to debunk the connection between sugary drinks and childhood obesity, thereby discouraging any “health-based” regulation that might impact its profits.)

On the other side, according to Mr. Piereson, those who call themselves “liberals” believe the unfairness, inequities and environmental destructiveness of the corporate economic system-coupled with its inability or refusal to address major societal needs-demands a radical expansion of the government’s role and activism. This stand-off seems a fairly accurate description of our present political landscape, but it fails to observe the singularly important detail which we are now trying to see: Each of these opposing views is firmly grounded in the fundamental ideology of money scarcity. The conservatives wield every opportunity to invoke the mantra that the government is broke and its spending must be reined in, while the liberals (like senator Sanders) find themselves helpless to refute the “logic” that the many things they want the government to spend money on are severely limited by the fact that everyone (including the U.S. government itself) is competing for what appears to be a finite and limited pot of dollars.

The Millennials’ Money

As I’m about to demonstrate, this view of money is illogical at its core-and profoundly counter-productive for our society as a whole, not to mention millions of specific individuals and families who comprise the vast majority of that “whole.” Furthermore, the only true beneficiaries of maintaining the ideology of money scarcity are the multi-national corporations which are now, as I write, dramatically accelerating their global control of local resources. Local economies are cudgeled and manipulated into first becoming the providers of export commodities-which the corporations buy as cheap as possible-and then beguiled into becoming the eager consumers of imported commodities which the corporations sell as profitably as they can. It’s a “beautiful” business model if your goals are to maximize shareholder profits and executive bonuses. As a business model for humanity-and for humanity as a dependent member of the earth’s community of integrated ecosystems-it is fast becoming, quite simply, an unmitigated disaster.

What I believe (and hope) is that today’s Millennials, being the first cooperatively oriented (civic) generation to come to power in the first true era of modern “fiat money”, will also be the first to grasp the astonishing possibilities this “modern money” perspective makes available to a collective democratic society. Equally important, it’s my hope that those BGXers who legitimately (I believe) bemoan, mistrust, and abhor the bureaucratic behemoth that is our sovereign federal government, will come to see that modern fiat money is not a license to fatten the beast further, but rather a true opportunity to trim it into something lean and effective in assisting the affairs of both collective and individual aspirations.

This is why I believe that modern fiat money truly is, or will become, the “Millennial’s Money”-and, I might add, just in time. What they, as a generation, are inheriting is a growing cloud of collective problems that actually must be solved-and solved by whatever method gets the job done. Most challenging, perhaps, is the fact that these problems are not going to be solved by a corporate economy operating with a business model that, in fact, creates and exacerbates the problems themselves. Rather than obsessing about ideological norms and dogmas (like their parental generations), the Millennials have already begun searching for real, pragmatic, concrete solutions to the unfolding difficulties that they, and the rest of life on planet earth, are facing. Fortunately, as it turns out-and as I now hope to demonstrate-this kind of effort is exactly what modern fiat money is ideally suited to accommodate.