In my previous posts I stated several times that a currency should be equally spendable, savable and earnable. But I never tried to justify that idea, or explain why we should pursue those features as opposed to others. So the purpose of this post and the next is to explain that position. It is impossible to say what features the currency should have without some underlying value system to motivate the existence of currency in the first place. So in this post I will lay down the values I think should guide a sound currency administration. And in the next post I will use those values to explain my view that an equally spendable, savable and earnable currency should be our primary objective.
In choosing that value system, out of all possible value systems, I have made my best effort to choose values that are both useful as policy guidelines, and already acceptable to a large segment of the population. I didn’t make these ideas up myself, I merely identified them as highly common strands of thought. I believe that many people are already willing to take these ideas as obvious, regardless of where they sit on the political spectrum. And for those that will not take them as obvious, I think that once they see how this collection of ideas can lead us beyond the political impasse that has brought human progress to a standstill, they will find this value system to be at least acceptable on purely pragmatic grounds.
So it isn’t that I think these are inalienable truths, or facts of nature, or laws of any kind. I don’t even know if they are the best set of values that could possibly be chosen. Even if I did believe that, it would be unnecessary to ask you to believe it. My only ambition here is to find some philosophical common ground from which we can develop a set of policies that are both popular enough to find broad acceptance, and which will actually work when put into practice. So here are the three principle assumptions that I would like to take as the guidelines or values for a currency system, also known as a market.
Functional Markets The market exists for a reason and the reason for the market is to create value for its participants.
It is hard to see how we can choose between any two sets of policies without recourse to any notion of why the market exists. In choosing value creation as the underlying reason for the market, I assume that we want to somehow improve our lives through our interactions with the market. But I assume nothing about what it means to improve ones life. Are our lives best improved with better access to food? energy? medicine? art? entertainment? education? something else? The Functional Markets principle doesn’t answer those questions. It delegates the selection between the various forms of value to market participants. What it does assume is that whatever form value takes, we want more of it. Value is assumed to be a good thing and by enabling its participants to find more value, the market is fulfilling its purpose. Likewise, if the market is failing to add value (or actually subtracting value) on top of what would have existed in an alternative scenario where the market did not exist, we should consider the market to be failing in its purpose. By a similar way of thinking, if we are considering two alternative market structures or policies, we should choose the path that we believe will create the most value for its participants.
Free Exchange Participation in the market should not be obligatory nor prohibited.
Free Exchange is what makes a market a free market. It is the idea that individuals are free to interact with the market however they like. This includes the freedom to buy, sell and hold assets of various types. It includes the freedom to withdraw from the market and to return at a later time. Perhaps most importantly, it includes the freedom to create NEW assets and even new types of assets, and to bring those assets for sale in the market. Advocates of Free Exchange may believe that freedom is its own form of value. Or they may believe that markets based on Free Exchange are the optimal value creation mechanism. The definition above should be acceptable to both views. Free Exchange is what makes a currency system a capitalist system.
Equal Access The market values all participants equally and exists to serve all participants equally.
If Free Exchange is the basic capitalist principle, then Equal Access is its democratic counterweight. Because all participants are thought to have equal value, the market maximizes its value by appealing to the largest possible number of participants. In choosing which services the market should provide, it should choose those services which are beneficial to the most participants. The market, in creating value for its participants, should not try to create more value for favored participants and it should definitely not attempt to redistribute value from one group of participants to another. It should not provide tiered access or tiered services. It should not provide additional services to participants who can pay for them, after all, the market has no need of the currency that only it can create. Only participants need the currency. So other participants should provide those services that go beyond the basic services of the market. It should not take sides between participants in competition and it should not stand in the way of cooperation between participants.
Taken together, I feel that these three ideas can form the intellectual foundation of a truly sound currency system (market). I would like to assign equal weight to these three ideas, but not because I believe or can prove that equal weighting is optimal. Again, it is for the simple reason that if one of these three ideas is thought to have priority over the others, we will be mired in debate forever, and we will be unable to move forward on policy. So where these basic values are in conflict, I would like to find a compromise that restores a reasonable balance between them. I also believe that these ideas contain the necessary ingredients to address all of the primary concerns with the incumbent theories of markets and money. And I believe that when taken to their logical conclusions, the conflicts between these ideas will be minimal.