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Episode 188 – Moral Economies and Money with Jakob Feinig
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When Jakob Feinig speaks of moral economies, he’s talking about we, the people – the currency users – and how we relate to the institutions that issue money, as well as our monetary knowledge and its ability to inform direct action. Needless to say, Modern Monetary Theory is an essential component of this.
This week he and Steve discuss both moral economies and “monetary silencing,” a concept that gives shape to the frustration MMTers experience on a daily basis. Feinig has said he derived the term “silencing” from Paolo Freire, the Brazilian educator and philosopher who wrote about the dehumanizing nature of political silencing, denying people the right to participate in their own history.
“There are moral economies that enable people to connect their lives and their needs to monetary design. And there is another process, and that’s what I call monetary silencing, that disconnects people, that makes it seem like, oh, those are forces that are beyond your reach. This is something you should not be thinking about … You have to try to work as hard as you can as an individual. And if you don’t make it, or if you don’t have enough for a decent life, that is your own fault. But please do not think about where it comes from.”
Feinig gives historical examples of both moral economies and monetary silencing – though rather fewer of the former than the latter in recent times. During the US Civil War, the federal government issued the greenback, a brand new currency. Not only did it enable them to win the war, it also made visible the fact that the government has the power to spend money into existence. (Haven’t we said the same about Covid stimulus checks?)
The gold standard and bitcoin are among the notable monetary silencers, but some may be surprised to find FDR in this category. Feinig makes the case that he was one of the most successful. We cannot disagree.
Jakob Feinig is a historical sociologist who writes about the connection between justice, democracy, and monetary design. He teaches at the State University of New York (Binghamton). His book, Moral Economies of Money: Politics and the Monetary Constitution of Society, will be published in October, 2022.
@FeinigJakob on Twitter
Macro N Cheese – Episode 188
Moral Economies and Money with Jakob Feinig
September 3, 2022
[00:00:05.290] – Jacob Feinig [intro/music]
Money is not just a quantity. Money is the rules that we create and that allows certain entities or people or institutions to create it and others not.
[00:00:22.530] – Jacob Feinig [intro/music]
The New Deal gave a select group of people rights. At the same time, it undermined moral economy. So, it gave them a right without the knowledge and the practices that are necessary to defend them, without the institutional understanding that chartalist or chartalist thought had given them in the past.
[00:01:35.110] – Geoff Ginter [into/music]
Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
[00:01:43.180] – Steve Grumbine
All right. This is Steve with Macro N Cheese. I’m going to take a trip into what we’re going to call moral economies of money. This is a great book. I did have the opportunity to read it this week by none other than Jacob Feinig, who is a historical sociologist who writes about the connections between justice, democracy, and monetary design. He teaches at the State University of New York in Binghamton. And with that, welcome to the show, Jakob. Thank you so much for joining me today.
[00:02:15.610] – Jakob Feinig
Thanks so much for having me. And thanks for reading my book.
[00:02:18.700] – Grumbine
It was a pleasure. So I think that everybody wonders what they’ll be when they grow up, and I did not end up being what I thought I would be when I grew up. When I was young, I fancied myself being a history teacher in high school or something to that effect. And so I’ve always found myself interested in documentaries and history, especially history that uncovers some important facts.
And having been a part of this modern money movement for the last decade, some of the things that we think we know just ain’t so. And the more you dig into the history and the more you understand the way decisions were made previously and some of the things that maybe work well in a different era, and then something changed, and what changed and how did it impact society?
And why are we where we are today? I think you really made a lot of great points in this book to tie all that together. So for me and my need for that historical perspective, this was just so deep and rich. I probably will read this three or four more times just so I could take some of these great stories that you tell in there and some of the great “AHA!” moments and incorporate them into the things that I talk about frequently, because I think this book is incredibly important.
I’m just grateful that you wrote this. I don’t think anybody’s quite captured the things that you discuss in here as succinctly and also with depth. So let me ask you, what was it that prompted you to write this book?
[00:04:01.030] – Feinig
So I grew up in Europe, in Euroland, in Austria to be more specific. And just as I was awakening from my monetary slumber, like so many people in my mid 20s, approximately when I was a student, the changeover to the Euro happened. And so I was learning about the possibilities of monetary systems. There was at the same time this huge event that changed pretty much everything, right?
And then I was shocked to see that there was so little debate and also so little knowledge among the people that I thought were politically interested, politically savvy, et cetera. So I wanted to understand how that’s even possible, that there is this huge change that impacts so many people’s lives and limits what governments can do in so many ways and almost no one really seems to be getting it.
Then I started doing a PhD and I wanted to research that, and I wanted to understand how everyday people understand that or if they have any kind of take on that. And that led to nowhere because most people had very little to say. So I started looking at historical cases and I also moved to the US. I started doing my PhD. And the US. It turns out, is a really interesting case.
So I spent a decade researching, writing and publishing about British colonial and US monetary history and looking at what people knew about money pretty much since the early 18th century to today. So it’s this whole range. I moved basically from trying to understand the Euro to 18th century America.
[00:05:36.670] – Grumbine
What an incredibly expansive topic. Just the Euro alone is a case study in what not to do, it seems like. But in the US, people aren’t doing much better here either, if at all. And some of the insights that the base case for Modern Monetary Theory makes about currency being a public utility and being a creature of law and the credit relationships that it puts forward, and understanding the hierarchies of money and the role of taxation.
Those are basic things and we take some of them for granted after we’ve read some of the literature. But some of the things that you brought out I feel were particularly interesting. This concept of monetary silencing. I think what we’re suffering through today in many cases, if you talk to an average person about what they think money is or where they think the dollar comes from.
I imagine if you get two people to say the same thing, it would be a miraculous thing, because outside of the MMT community there are so few that really understand the money creation story as it is today. But going way back (to the) 1600s in colonial US and the British colonial territories as your starting point, take us through a little bit of the book and help me understand what you are trying to get at with this. Start in the beginning talking about settler democracy.
[00:07:08.420] – Feinig
Right, so maybe I can frame that to connect it to what you just said. Even though MMT is new, chartalism as a political force is not new. And even though two people rarely agree on what money is, chartalism as a political force was strong and very large groups agreed on what money is and agreed on the fact that they have to design it together to make it work for them.
So MMT is new, but chartalism as a political force is not. And in fact, this might seem surprising or counterintuitive, but the surprising thing is really that MMT has been absent for so long because it emerges and disappears periodically. So when I talk about 18th century settler democracy, I call it settler democracy, not just democracy, because it was a very limited form of democracy.
So not everyone could vote, of course. It was European men with some property. So this is not an ideal or exceptional situation in almost any respect, but it’s an interesting situation because the people who could vote were directly connected to the mechanisms that created money. So there was no separation of fiscal and monetary policy.
For instance, in 18th century Massachusetts, everything went straight via the legislature. And the legislative process, the process of making laws was much closer to, let’s say, the everyday life of people, I would say, because in towns, the settlers would elect a representative, sent them to the general court, which was the lawmaking body, and they could even recall him if they didn’t do what they wanted.
So they instructed him on how to vote, and they could recall him if they didn’t vote the way they wanted to. So there was a strong knowledge, and those people brought back knowledge about how money is made. So it’s kind of like an interesting moment in an interesting situation that can tell us that if people are involved in various ways, then they also come to understand money in different ways.
[00:09:08.770] – Grumbine
The hierarchy of money that many of the great papers at Levy Institute and other scholars within this movement have written or have referred to, talked extensively about stamps and money nests. And you go through that, and I found it fascinating to see how many competing currencies were floating through this period.
You address, especially in the beginning, and almost a universal currency of wampum, or at least a low level currency of wampum that was used and then referring in later chapters to metal, silver and things like that. It’s quite fascinating to see what people accept as money and what they think of it and what that means in terms of the relationships and the democracy of that money. Can you talk about the hierarchy of money and how that pertains to this moral economies that you’re referring to?
[00:10:07.510] – Feinig
So I think when you talk about the receivability and acceptability of money, then you’re going straight to one of the key things of moral economies. And when I talk about moral economies, I talk about situations where people can understand, can connect their everyday life to the larger institutions that enable their lives and make demands based on that understanding.
So it’s kind of like articulating the JG [Job Guarantee] as part of everyday life, not as an abstract policy. And back then there was no job guarantee proposal on the table. There were different kinds of moral economies, different kinds of demands where those settlers wanted to basically preserve what they called independence.
They wanted a male-dominated household with small or medium sized land ownership and they wanted to preserve that against creditors who might use predatory means to get ahold of larger amounts of land. So they have that moral economy. And money comes in when they say we need to be able to exchange and get credit for the things we need from year to year in such a way that creditors cannot disown us because we have the right to live as patriarchal heads of household on this land that we have taken away from native people.
And we defend that right by defending our right to access credit, but not just access credit, but by designing money in such a way that we have enough that we’re not at the mercy of creditors. So in order to do that, we have to create money and make it accepted. And by making it accepted that it was usually tax receivablity at the level of the province, at the level of the polity.
But there are also moments when, let’s say the government didn’t want that, they created their own currencies and decided at the town level, well, we’ll just bypass the legislature, the governor is vetoing what we’re doing. So we’re going to create a lower-level currency and we’re going to just accept them. 15 towns decide we’ll accept that, and then it starts circulating.
So they had kind of that understanding that money is what is accepted and we have a role to play in making it accepted and then deciding what gets accepted. I don’t know if that’s helpful to you or to your listeners.
[00:12:31.610] – Grumbine
Oh, absolutely, yeah, it plays into the Buckaroo story that so many of us have heard as well.
[00:12:36.950] – Feinig
Exactly. And to UNI’s and all those very exciting projects that are out there right now.
[00:12:43.030] – Grumbine
Absolutely. One of the things that jumped out at me, and I want to get a formal definition from you, what moral economies means in your mind. But the other thing that I wanted to bring up, and tied to that, is this concept of monetary design. It sounds like the intention of what you’re elevating, the power dynamics, the role of money in this design and using a moral code, whatever that moral code of society at the time is, and how that moral code instructs the design of said money and what they prioritize and who has given favored status. Can you break that down?
[00:13:22.960] – Feinig
You put it in a nutshell very beautifully. There’s hardly anything left for me to say after what you just said. So, just to add that, of course, monetary design, that is a concept that Christine Desan came up with and it basically means what you just said, that money is not just a quantity. Money is the rules that we create and that allows certain entities or people or institutions to create it and others, not; to prevent other institutions from doing the same thing.
So monetary design is really critical. And what I’m adding to that is what happens if there is a situation where most people or many people understand monetary design and try to change it in such a way that it works for them. That’s for me, maybe the best definition of moral economies of money, their knowledge and practices that are shared among large numbers of people and enable them to shape money creation.
[00:14:21.070] – Grumbine
When we look at the modern incarnation that we’re experiencing today, and you do touch on this later in the book, we have a federal system, we have a nationalized currency issuing federal government and we have states that are currency users. They’re not in a position to impact this monetary design, so to speak. And that wasn’t always the case.
There were state and colonial currencies abounding that had more of a local democratic flair. But the current setup came to be as a result of trying to address various moral economies. So many of the things that we take for granted in our economy today, they’re just rules. But they are representatives of the moral economy as it was established.
Those rules that govern money creation and the way money is distributed, those are all manmade rules that we can change depending upon the morals of society, depending upon their power and their ability to impact that. Any one of them can be changed at some level. Is that a fair statement?
[00:15:31.950] – Feinig
I think that’s absolutely fair and I think that’s very critical because when we look at history, sometimes you think, oh well, the one thing that really connects the past to the present and never changes is money. But actually that’s the one thing that maybe changes the most and changes constantly. It’s just that most people like me, before I became monetarily aware, live in a kind of monetary sleepwalk.
Or it’s not just that we tend to live in this monetary sleepwalk. It’s also that the current institutions encourage us to do that. Financial literacy—oh, that’s about managing your finances. It’s about making sure there’s enough money coming out of the ATM if you still use physical cash, or about making sure you have enough for retirement, etc.
But no one actually, or very few people impel us, or very few books impel us, to think about money as a collective good, as something that is changeable. But it’s like the only safety is if I, as an individual, try to make as much as I can, then I’ll be safe. But it’s not, well, there’s another way of being safe and of making a good life.
Which is trying to understand and organize it in such a way that people can take care of each other, people can take care of themselves. All the knowledge that is out there, what we learn in schools; barter, what people say about financial literacy, all those things are all on the individual level. So there’s a whole set of knowledge and institutions that creates that kind of mindset.
[00:17:05.770] – Grumbine
You’re coming from a heterodox perspective that involves a certain level of intersectionality. And given your background, clearly you fit well into that interdisciplinary view of money. And I often talk about how the discussions of money, the scarcity of money, now that I’m thinking of this term “moral economy,” the lack of moral economy that we experience today is evident.
And I know folks like Scott Ferguson and the “Money on the Left” crew do so much work about the aesthetic and understanding literature and media. And I got the pleasure of listening to your podcast from, I believe it was 2019, on the Money on the Left podcast. But the idea of these structures and rules that make us feel negative about ourselves and feel that pressure, the additional scarcity, the harsh reality comes out in the books we read, the advertisements we see, the things that are pumped to us in schools.
It’s all reinforced concepts, even the ones that aren’t really real, which is where we are today. We are filled with a bunch of myths that passed as a narrative about the way money works. And it’s a narrative that has enabled austerity, and austerity is murder. So we have witnessed a harsh, brutal monetary economy in the United States.
[00:18:38.310] – Feinig
I’m going to interrupt you right there, because that’s actually one of the things that I want to introduce in the book. There are moral economies that enable people to connect their lives and their needs to monetary design. And there is another process, and that’s what I call monetary silencing, that disconnects people, that makes it seem like, oh, those are forces that are beyond your reach.
This is something you should not be thinking about. This is something that is unintelligible and you shouldn’t even try to grasp it. You have to try to work as hard as you can as an individual. And if you don’t make it, or if you don’t have enough for a decent life, that is your own fault. But please do not think about where it comes from.
So in the book, I document those processes where some people tell other people, do not think about this. I got it. I know how to run the system. You don’t have to do this. And of course, the people who tell other people to basically shut up, they do that in various forms. They use all kinds of different tactics and strategies to achieve that. But it’s an open-ended process.
That’s why it’s not monetary silence, it’s monetary silencing. Someone always has to do it. Someone has to block the view. And there are always processes of silencing where the people who do the silencing seem to be winning, and then there come a big event and everything is progress again. And the big example is probably the Civil War, because overnight the US government spent Greenbacks into circulation and they couldn’t have won the war without that.
So that had the effect of having them win the war. But it also made it visible that the government has powers that people before that weren’t really aware, or after the Constitution they had been in a process of silencing where people actually started embracing the idea that money is metal. And that was the popular view, that was the Jacksonian view, where the people who said, we’re the people’s champions, we’re the champions of the little man, we hate the banks, we hate paper money.
And they said the only honest money is gold and silver, because the only other alternative is banks. The public option was not really on the table anymore. And the Civil War put that right back to the center of policy base within a very short period.
[00:21:03.550] – Grumbine
Yeah, when we think about how the south lost the Civil War, one of the key things was the fact that they didn’t know how to operate a currency properly. The Confederate dollar went into hyperinflation, they couldn’t enforce a tax, they didn’t have the production to back up the currency either. What are your thoughts on the Confederate dollar, and if it might have been different there?
[00:21:28.450] – Feinig
So there I’m going to say, from what I know, historians tend to agree with what you said, but I’m not myself an expert on that, so I don’t have a really good take on that. But from what I’ve read, it seems that what you said is true, that they didn’t have a good system. They imposed taxes in kind and that was very efficient.
And Randall Wray, I think he talks about that in one of his books in some detail and comparing the Confederate and the US currency…Sorry, I’m not an expert. I can’t claim to be an expert on that.
[00:22:01.760] – Grumbine
I understand. So within that space, though, you do go into some great length about the gold standard and you talked about how that is definitely a form of monetary silencing, these metal based currencies, there’s quite a bit about wampum in there as well. But what made metal a form of monetary silencing? Why was that such a big deal?
[00:22:29.470] – Feinig
Because it enabled people to make a convincing claim that money is natural. OK, that convinced some people at least, even though in the 18th century and in the 19th century they were always chartalist, or chartalist-like knowledges. There were also those who tried to silence often with metalist knowledge and practices.
So – think they appeal to the idea, or they tended to appeal to the idea that gold and silver are natural money and they’re superior and they don’t allow anyone to cheat. So that was from the get-go, from the 18th century onward, that was always a part of silencing knowledge. Kind of like bitcoin today.
[00:23:26.330] – Intermission
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[00:24:17.490] – Grumbine
One of the other things that I thought was interesting, you talked about how there are people that create these monetary designs. “You don’t need to know how this works. I’ve got it covered. I’m the expert here.” And that was a church hierarchical position as well. The lay people were not allowed to read the Bible.
They were required to have one of the clergy that was deemed worthy of The Word. And religious life was such a huge part of society during this time period, in particular as it comes into the United States, before the United States it was colonies, during the occupation of native lands. I think there may be some parallel there because there was a lot of hierarchy back then, even going back to the plague era.
You had the people that prayed, the people who fought, and then the people that labored, and there was a class basis for the way society was structured. It feels a little bit like some of that was brought to the New world as well, and it may have played a role in understanding monetary operations. Do you care to weigh in on that?
[00:25:29.490] – Feinig
I think what’s interesting, what you’re saying, or what interests me, is when you talk about the social organization of knowledge, that there are different kinds of hierarchies and they change and they might be connected to money in different ways. So I think it’s probably correct to say that even as late as the 19th century, when you look at the New York Times, which was a gold Democratic newspaper at the forefront of monetary silencing in the 1890.
They published a survey to bolster the idea that good and respectable people were on the side of the gold standard. And they published a poll not of economists, they published a poll of college professors, but included at the same level professors of geology and ethics and history and all of them. So the New York Times was not trying to push economists as a discipline with scientific claims. They tried to push the respectability thing. So it was a very different kind of hierarchy of knowledge than the one we have right now.
[00:26:30.450] – Grumbine
One of the things you brought up that I felt was really powerful, piggybacking a little bit off of that religious angle. But your specific understanding and the way you wrote so eloquently in the book talked about how money was this neutral being and how dare you question money’s ruling, like if you were unsuccessful then it’s nobody’s fault but your own.
And this bootstrap mentality, tying it back to the biblical stuff of putting it on that personal responsibility. And you hear a lot of that currently, especially as we went through this recent fight over student debt forgiveness in the United States, another angle of moral money and moral economies. This was a departure from some previously-held beliefs—by introducing greenbacks, people saw paper money as bank money, so it was bad.
But this greenbacks concept coming out of, I guess, the treasury, this was a different period of time. Can you explain the conditions around the greenback coming into being and what that signifies in terms of monetary design?
[00:27:38.970] – Feinig
Yes. When the war started, no one in the US Congress or in the treasury really wanted to create treasury money—that’s money that is issued by the treasury and accepted by the treasury and that’s not convertible into anything else. They didn’t want to do it even though they had done it before. They had done it during the War of 1812, for instance.
But they were running out of options because the banks couldn’t advance them cash anymore. So they basically had to do that. And it’s maybe the simplest possible one, or it’s a very straightforward monetary design. It’s under the direction of the treasury and managed by Congress. They printed greenbacks. They were called like that because of the color.
And they were spent into circulation to pay people who were involved in the war and all kinds of capacities from suppliers to soldiers to the whole range of activities that are necessary to make war. And people accepted them because they knew that they could pay taxes with them, with those pieces of paper.
[00:28:41.970] – Grumbine
Folks, when you get this book, and you need to get this book, the introduction is a phenomenal primer in basic modern monetary theory. Go through this extensively. Why is “payable in tax” so important for the people listening? Explain what that debt obligation or the tax itself does, why that is important in a monetary design.
[00:29:05.730] – Feinig
Well, it’s important because it gives people a reason for accepting it. Most people have that recurring obligation and pretty much everyone has the possibility of incurring fees or penalties or being ordered by a court to pay something. Everyone works in that logic because we know that might be coming our way or that is coming our way, we accept it.
And that was also much more obvious in the past. If you go back to the 18th century, it actually said of the currencies, this bill of credit is accepted at this treasury for the years 1736 and 1737. So you knew you were going to be able to pay in those two years with the piece of paper you had in your hand, and it said that it gave you instructions on how to use that.
And that’s what I mean by intelligibility because money changed a lot more and a lot more frequently than it does today. And it did so in a really obvious way, right? Overnight, to go back to the Civil War, there was primarily bank money that was in circulation before the Civil War. Within a few months you have only treasury-issued money that has to make you think, so the tax receivability and you knew that you could pay taxes with that.
Before that, with state bank money it was much trickier which treasury accepted what in payment of taxes and there were different types of state bank money and also federally chartered bank for some of that period. But it was a problem, it was not obvious. And people were relieved to have that one paper that was high quality because they knew they were going to be able to discharge their taxes with it and it was a novelty. Is that helpful?
[00:30:50.190] – Grumbine
It’s very helpful. What you said there was very important to me. We feel varying ways about the world we’re in, various pressures on our personal lives that drive us into action. Warren Mosler would say that taxes create buyers and sellers of goods because now you got to do something to get the currency, and you just made mention that there might be fines and fees.
Most definitely a pressure element; dealing with plumbing, you want to make sure you have enough pressure in the tank to push the water out the spigot. How do we design a monetary system that is both democratic and fair and yet doesn’t have so much pressure in it that it creates other negative externalities in an individual’s life? Is there a way of balancing that obligation with a fairness that doesn’t create so much angst, pain, fear and hopelessness?
[00:31:57.070] – Feinig
I think that’s a really big question. I wish I had a really good and clean answer to give you, but I think it’s possible. And I think it’s possible not only because of how heavy those obligations are and about adjusting those obligations, but also at a deeper level, if you have a certain level of democratic involvement in monetary design, then that channels money to where people think it should be or that creates money in such a way that the people who need it most can get their hands on it.
I think it’s possible to create that kind of system and I think throughout history or the last several centuries that was what animated moral economies of men. The idea that that is actually possible.
[00:32:45.330] – Grumbine
It’s exciting because as a leftist and someone who is trying to understand today using the lens of history as well as systems thinking, we all have an understanding of what FDR did during the Great Depression and the New Deal. And, for socialists, they see FDR as a villain who propped up capitalism and took away the chance of a socialist revival. Others see FDR as the lynch pin between a social democracy and capital where he created a balance.
But you go on in the book and discuss how FDR leveraged the scarcity narrative, the false narrative of money, that the government was like a household. What led to that change that led to the Great Depression and the monetary system prior to FDR making these bold, sweeping changes? And then what helped create that new form of moral economy?
[00:33:57.330] – Feinig
Actually, I want to stop you right there, because I’m going to make a really counterintuitive claim. So I’m going to say that he is actually maybe one of the more successful monetary silencers. Very counterintuitive. Because he is known as the person who did all kinds of really important reforms and radical changes with respect to the way money is designed, with respect to what the different articulations of how officials are involved and banks are involved, and the power relations within that.
And people can read up on that. There are many books on that and I think those are almost very overwhelmingly, really positive developments. And the book says at the same time as he did that, as he did this, uncoupled the dollar from gold, he created deposit insurance. They did all kinds of really sweeping changes. But in addition to that, he also enabled more stable access to cash for many people.
Of course, primarily white men, excluding through all kinds of ways, women, agricultural workers who were primarily nonwhite. But he did enable easier access to cash for many people. So with all that said, at the same time, the way he sold that to the people, the way he talked about it in his fireside chats and his speeches and addresses, it advanced monetary silencing, because the way he talked about it, he said, government is a household, we have to match income and outgo, money is scarce.
If not, we’ll be in Weimar tomorrow. If we talk too much about money as a creature of the law, every group of society will make unrealistic demands and we’ll just end up in chaos. So even though I’ve made all those vast changes, I’m going to stick with the gold standard logic, not the substance, and without really relying on metal so much, but I’m going to stick with the household logic.
[00:35:59.370] – Grumbine
That household logic has been hurting us for a long time, hasn’t it?
[00:36:03.230] – Feinig
Yes, on and off for a long time. On and off. But because he is this hero to so many people and I think rightly so, in some respects, that’s what made him such a successful proponent of monetary silencing. It’s relatively easy to question, let’s say, Andrew Jackson or the gold bugs of the 1890s. It’s a very different story when it comes to FDR.
[00:36:28.950] – Grumbine
I know there’s a lot of people out there that are trying to strip away the insights of Karl Marx and Engels and other thinkers within the socialist sphere. Some of their conclusions were wrong. You can see Marx did not really understand state currency, fiat money, or at least it wasn’t a part of his writings per se. I guess my question to you is there’s no one in history that can’t be critiqued?
Every one of them have their failings. But in particular, though, it seems like we have a lot of people currently that are trying to get us back to FDR, the golden chalice of modern economies. And it would be the greatest thing ever. But as we are fighting as activists, and in your case as academics and journalists and writers, it appears that many of us are trying to say we need not monetary silencing.
We need real open discussion. We need a democratic understanding of the commons and putting money in its proper place as a public utility with even many in our own movement pushing for a return to FDR-like policies and what that moral economy looked like? What do you think we could do differently than what FDR did that we could maybe improve upon as we look to the design of money in the future?
[00:38:00.870] – Feinig
Well, I think FDR nostalgia is very tempting for many people. And I think the way I would think about that is that he wanted to give a select group of people rights that they didn’t have before and maybe he personally would have wanted to give it to more people. But the New Deal gave a select group of people rights at the same time it undermined moral economy.
So it gave them a right without the knowledge and the practices that are necessary to defend them, without the institutional understanding that chartalist or chartalist thought had given them in the past. There’s a huge tension and people like Aziz Rana talk about that in his book, The Two Faces of American Liberty. And my story is kind of a version of that.
The right, without the knowledge, the practices to defend them, are very limited. They’re limited, one, because then when the Austerians come, you don’t have the knowledge necessary to push back. And also, but maybe as importantly, or maybe even more importantly, if you don’t understand how rights come about as part of an institutional process, then the process of becoming more inclusive is also different because it’s not just about giving rights, it’s about how do you think about monetary design, how do you think about moral economies?
Whose experiences do those moral economies channel? So it’s no longer this savior-figure parting out right, but it’s collective moral economies that stabilize access to, let’s say, cash and jobs and stuff like that. And so of course, for me, the federal job guarantee, yes, you can say it goes back to a theory. Yes, you could say it’s a New New Deal, but also if there is a job guarantee accompanied by a moral economy of money, by the institutional understanding, then it’s going to be a lot harder to undermine that, it’s going to be a lot harder to make it exclusionary and to justify making it exclusionary.
[00:40:03.030] – Grumbine
We don’t have any energy in the United States. The Biden administration during the transition period where Bernie Sanders’ team and Biden’s team got together, Stephanie Kelton was part of that. Sarah Nelson, Darrick Hamilton was part of that. That were trying to impact the Biden administration and across the board, these broad-based FDR-style policies were rejected. We have no energy in this country for a federal job guarantee.
In fact, you see a lot of populist movements sadly pushing for the universal basic income. I believe that these are an outcome from that monetary silencing. And I believe that the austerity that we have grown used to, this extreme prejudice towards private property and private solutions… are these forms of economies that have been brought about by monetary silencing, or is this just an extreme power grab that the proletariat have no real way of fighting back against?
[00:41:14.910] – Feinig
Well, yes, I think when you contrast UBI and a job guarantee, I think the difference is, or at least the potential difference is that the UBI isn’t really connected to the logic of thinking about monetary design, about who gets to create money, for what purpose, and how to make that democratic. So if you flesh it out, if you translate it into widely shared moral economies, then you actually have a moral economy.
Whereas UBI, that’s more, in a sense, FDR style that I have the right to $1,000 or $1,500 a month. But I don’t really know where that comes from, what it does. So I would think that absolutely the reason why UBI is so plausible to many people than JG – is easier to even teach or talk about is because we’re living in a period that’s marked by decades of monetary silencing.
[00:42:12.870] – Grumbine
I want to ask you, having done all this work, you really sacrificed to put this book together. You missed family, you were a continent away. There was so much you poured into this effort, not only academically getting your degrees, but also in writing this work. What would you say is your big takeaway? What are the things that you learned above and beyond what you may have known prior to going into this? What were your outcomes?
[00:42:41.070] – Feinig
Well, the first thing is that I would say that it’s actually surprising that we lost journalism. That’s the first thing. And the second thing is that it can come back into the center of public sphere really quickly and in very surprising ways. So my takeaway is keep doing what you’re doing because it just might pop up as it has done several times in the past, and it might become plausible to very large numbers of people very quickly.
[00:43:09.450] – Grumbine
Very good. One final thing, and this is near and dear to my heart. We have some real serious things that are happening around us that we can’t escape, like the climate catastrophe. And we’ve been lied to by the fossil fuel companies who have done a form of science silencing. Maybe this could be seen in part as a form of monetary silencing as well.
But we’ve been lied to about the conditions surrounding smoking cigarettes being cancerous. We were lied to about so many things over the course of time, and so many people have a scrambled view of what reality is, not just on money, but on pretty much everything. And that’s why I point to something like an existential crisis, like the climate.
You talk about that and I’m curious as to what your takeaway is within this moral economy, within the space of post-pandemic but climate-change-driven world. What do you think we should know about what you’ve learned and what do you think that we should do to influence how we approach this existential crisis?
[00:44:18.750] – Feinig
Yes, and I would very much say that we’re still in the pandemic and many people are still dying every week, and we’re also in this even larger emergency that’s the climate crisis. And I think moral economies are so critical, not because it’s about money, because it helps people think differently about how we can live together, what we can do together, and how we think about what we can do for each other.
And all those things are, with every passing day, they get more urgent because we have to respond to all those crises and we have to create new forms of relating to each other. So I think if there was ever a time for more economies of money, that’s now.
[00:44:59.010] – Grumbine
I love it. I think that’s a great way to end. Jakob, where can we find more of your work?
[00:45:05.310] – Feinig
Well, obviously, as you have mentioned, the book is coming out in October. It’s available everywhere books are sold. I have also written a number of academic articles. I’m happy to share some of my writings. If people write to me, I have a Twitter account and maybe you can put up the Twitter handle. And also in addition to this interview, there’s a wonderful Money on the Left interview from 2019. And I’m always happy to hear from people who get a chance to listen or read my work.
[00:45:36.990] – Grumbine
Fantastic. We will be putting this in the Real Progressives bookshop for people to get. Also in our podcast we have an “extras” section. So if you go to the website when this is released and go to the extras, we will have all the links that we can find to your writings and anything else that would help support this show, including that interview you did in 2019 on Money on the Left. So with that, Jakob, thank you so much for joining me. This was a pleasure. I really appreciate it, I wish I had talked to you before now. I hope I can talk to you again in the future.
[00:46:12.420] – Feinig
I would love to. Thank you so much, Steve.
[00:46:14.830] – Grumbine
You got it. All right. This is Steve Grumbine with Jakob Feinig. Have a great day. We’re out of here.
[00:46:27.190] – End credits
Macro N Cheese is produced by Andy Kennedy. Descriptive writing by Virginia Cotts and promotional artwork by Andy Kennedy. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit Patreon.com/realprogressives.
Jakob Feinig is a historical sociologist who writes about the connection between justice, democracy, and monetary design. He teaches at the State University of New York (Binghamton). His book, Moral Economies of Money: Politics and the Monetary Constitution of Society, will be published in October, 2022. Follow him on Twitter @FeinigJakob
binghamton.edu/human-development/contact/profile.html?id=jfeinig
Book
Moral Economies of Money: Politics and the Monetary Constitution of Society
Can be pre-ordered prior to October 4, 2022, publication
Articles & papers
The Moral Economy of Money Between the Gold Standard and the New Deal
Notes on Monetary Institutions in State and Class Formation Processes
The Pedagogy of the Job Guarantee
Toward a Moral Economy of Money; Money as a Creature of Democracy
Interview, Money on the Left, 2009
moneyontheleft.org/2019/09/13/money-politics-before-the-new-deal-with-jakob-feinig/
UNIs, complementary currency developed by members of the MMT community
realprogressives.org/podcast_episode/episode-80-unis-for-all-with-ben-wilson-and-scott-ferguson/
Greenbacks, US currency during Civil War
https://en.wikipedia.org/wiki/Greenback_(1860s_money)
Chartalism, a monetary theory that defines money as a creation of the government that derives its value from its status as legal tender. It argues that money is valuable in use because governments require that you pay taxes on that money.
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Show Notes
Transcript
Extras
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When Jakob Feinig speaks of moral economies, he’s talking about we, the people – the currency users – and how we relate to the institutions that issue money, as well as our monetary knowledge and its ability to inform direct action. Needless to say, Modern Monetary Theory is an essential component of this.
This week he and Steve discuss both moral economies and “monetary silencing,” a concept that gives shape to the frustration MMTers experience on a daily basis. Feinig has said he derived the term “silencing” from Paolo Freire, the Brazilian educator and philosopher who wrote about the dehumanizing nature of political silencing, denying people the right to participate in their own history.
“There are moral economies that enable people to connect their lives and their needs to monetary design. And there is another process, and that’s what I call monetary silencing, that disconnects people, that makes it seem like, oh, those are forces that are beyond your reach. This is something you should not be thinking about … You have to try to work as hard as you can as an individual. And if you don’t make it, or if you don’t have enough for a decent life, that is your own fault. But please do not think about where it comes from.”
Feinig gives historical examples of both moral economies and monetary silencing – though rather fewer of the former than the latter in recent times. During the US Civil War, the federal government issued the greenback, a brand new currency. Not only did it enable them to win the war, it also made visible the fact that the government has the power to spend money into existence. (Haven’t we said the same about Covid stimulus checks?)
The gold standard and bitcoin are among the notable monetary silencers, but some may be surprised to find FDR in this category. Feinig makes the case that he was one of the most successful. We cannot disagree.
Jakob Feinig is a historical sociologist who writes about the connection between justice, democracy, and monetary design. He teaches at the State University of New York (Binghamton). His book, Moral Economies of Money: Politics and the Monetary Constitution of Society, will be published in October, 2022.
@FeinigJakob on Twitter
Macro N Cheese – Episode 188
Moral Economies and Money with Jakob Feinig
September 3, 2022
[00:00:05.290] – Jacob Feinig [intro/music]
Money is not just a quantity. Money is the rules that we create and that allows certain entities or people or institutions to create it and others not.
[00:00:22.530] – Jacob Feinig [intro/music]
The New Deal gave a select group of people rights. At the same time, it undermined moral economy. So, it gave them a right without the knowledge and the practices that are necessary to defend them, without the institutional understanding that chartalist or chartalist thought had given them in the past.
[00:01:35.110] – Geoff Ginter [into/music]
Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
[00:01:43.180] – Steve Grumbine
All right. This is Steve with Macro N Cheese. I’m going to take a trip into what we’re going to call moral economies of money. This is a great book. I did have the opportunity to read it this week by none other than Jacob Feinig, who is a historical sociologist who writes about the connections between justice, democracy, and monetary design. He teaches at the State University of New York in Binghamton. And with that, welcome to the show, Jakob. Thank you so much for joining me today.
[00:02:15.610] – Jakob Feinig
Thanks so much for having me. And thanks for reading my book.
[00:02:18.700] – Grumbine
It was a pleasure. So I think that everybody wonders what they’ll be when they grow up, and I did not end up being what I thought I would be when I grew up. When I was young, I fancied myself being a history teacher in high school or something to that effect. And so I’ve always found myself interested in documentaries and history, especially history that uncovers some important facts.
And having been a part of this modern money movement for the last decade, some of the things that we think we know just ain’t so. And the more you dig into the history and the more you understand the way decisions were made previously and some of the things that maybe work well in a different era, and then something changed, and what changed and how did it impact society?
And why are we where we are today? I think you really made a lot of great points in this book to tie all that together. So for me and my need for that historical perspective, this was just so deep and rich. I probably will read this three or four more times just so I could take some of these great stories that you tell in there and some of the great “AHA!” moments and incorporate them into the things that I talk about frequently, because I think this book is incredibly important.
I’m just grateful that you wrote this. I don’t think anybody’s quite captured the things that you discuss in here as succinctly and also with depth. So let me ask you, what was it that prompted you to write this book?
[00:04:01.030] – Feinig
So I grew up in Europe, in Euroland, in Austria to be more specific. And just as I was awakening from my monetary slumber, like so many people in my mid 20s, approximately when I was a student, the changeover to the Euro happened. And so I was learning about the possibilities of monetary systems. There was at the same time this huge event that changed pretty much everything, right?
And then I was shocked to see that there was so little debate and also so little knowledge among the people that I thought were politically interested, politically savvy, et cetera. So I wanted to understand how that’s even possible, that there is this huge change that impacts so many people’s lives and limits what governments can do in so many ways and almost no one really seems to be getting it.
Then I started doing a PhD and I wanted to research that, and I wanted to understand how everyday people understand that or if they have any kind of take on that. And that led to nowhere because most people had very little to say. So I started looking at historical cases and I also moved to the US. I started doing my PhD. And the US. It turns out, is a really interesting case.
So I spent a decade researching, writing and publishing about British colonial and US monetary history and looking at what people knew about money pretty much since the early 18th century to today. So it’s this whole range. I moved basically from trying to understand the Euro to 18th century America.
[00:05:36.670] – Grumbine
What an incredibly expansive topic. Just the Euro alone is a case study in what not to do, it seems like. But in the US, people aren’t doing much better here either, if at all. And some of the insights that the base case for Modern Monetary Theory makes about currency being a public utility and being a creature of law and the credit relationships that it puts forward, and understanding the hierarchies of money and the role of taxation.
Those are basic things and we take some of them for granted after we’ve read some of the literature. But some of the things that you brought out I feel were particularly interesting. This concept of monetary silencing. I think what we’re suffering through today in many cases, if you talk to an average person about what they think money is or where they think the dollar comes from.
I imagine if you get two people to say the same thing, it would be a miraculous thing, because outside of the MMT community there are so few that really understand the money creation story as it is today. But going way back (to the) 1600s in colonial US and the British colonial territories as your starting point, take us through a little bit of the book and help me understand what you are trying to get at with this. Start in the beginning talking about settler democracy.
[00:07:08.420] – Feinig
Right, so maybe I can frame that to connect it to what you just said. Even though MMT is new, chartalism as a political force is not new. And even though two people rarely agree on what money is, chartalism as a political force was strong and very large groups agreed on what money is and agreed on the fact that they have to design it together to make it work for them.
So MMT is new, but chartalism as a political force is not. And in fact, this might seem surprising or counterintuitive, but the surprising thing is really that MMT has been absent for so long because it emerges and disappears periodically. So when I talk about 18th century settler democracy, I call it settler democracy, not just democracy, because it was a very limited form of democracy.
So not everyone could vote, of course. It was European men with some property. So this is not an ideal or exceptional situation in almost any respect, but it’s an interesting situation because the people who could vote were directly connected to the mechanisms that created money. So there was no separation of fiscal and monetary policy.
For instance, in 18th century Massachusetts, everything went straight via the legislature. And the legislative process, the process of making laws was much closer to, let’s say, the everyday life of people, I would say, because in towns, the settlers would elect a representative, sent them to the general court, which was the lawmaking body, and they could even recall him if they didn’t do what they wanted.
So they instructed him on how to vote, and they could recall him if they didn’t vote the way they wanted to. So there was a strong knowledge, and those people brought back knowledge about how money is made. So it’s kind of like an interesting moment in an interesting situation that can tell us that if people are involved in various ways, then they also come to understand money in different ways.
[00:09:08.770] – Grumbine
The hierarchy of money that many of the great papers at Levy Institute and other scholars within this movement have written or have referred to, talked extensively about stamps and money nests. And you go through that, and I found it fascinating to see how many competing currencies were floating through this period.
You address, especially in the beginning, and almost a universal currency of wampum, or at least a low level currency of wampum that was used and then referring in later chapters to metal, silver and things like that. It’s quite fascinating to see what people accept as money and what they think of it and what that means in terms of the relationships and the democracy of that money. Can you talk about the hierarchy of money and how that pertains to this moral economies that you’re referring to?
[00:10:07.510] – Feinig
So I think when you talk about the receivability and acceptability of money, then you’re going straight to one of the key things of moral economies. And when I talk about moral economies, I talk about situations where people can understand, can connect their everyday life to the larger institutions that enable their lives and make demands based on that understanding.
So it’s kind of like articulating the JG [Job Guarantee] as part of everyday life, not as an abstract policy. And back then there was no job guarantee proposal on the table. There were different kinds of moral economies, different kinds of demands where those settlers wanted to basically preserve what they called independence.
They wanted a male-dominated household with small or medium sized land ownership and they wanted to preserve that against creditors who might use predatory means to get ahold of larger amounts of land. So they have that moral economy. And money comes in when they say we need to be able to exchange and get credit for the things we need from year to year in such a way that creditors cannot disown us because we have the right to live as patriarchal heads of household on this land that we have taken away from native people.
And we defend that right by defending our right to access credit, but not just access credit, but by designing money in such a way that we have enough that we’re not at the mercy of creditors. So in order to do that, we have to create money and make it accepted. And by making it accepted that it was usually tax receivablity at the level of the province, at the level of the polity.
But there are also moments when, let’s say the government didn’t want that, they created their own currencies and decided at the town level, well, we’ll just bypass the legislature, the governor is vetoing what we’re doing. So we’re going to create a lower-level currency and we’re going to just accept them. 15 towns decide we’ll accept that, and then it starts circulating.
So they had kind of that understanding that money is what is accepted and we have a role to play in making it accepted and then deciding what gets accepted. I don’t know if that’s helpful to you or to your listeners.
[00:12:31.610] – Grumbine
Oh, absolutely, yeah, it plays into the Buckaroo story that so many of us have heard as well.
[00:12:36.950] – Feinig
Exactly. And to UNI’s and all those very exciting projects that are out there right now.
[00:12:43.030] – Grumbine
Absolutely. One of the things that jumped out at me, and I want to get a formal definition from you, what moral economies means in your mind. But the other thing that I wanted to bring up, and tied to that, is this concept of monetary design. It sounds like the intention of what you’re elevating, the power dynamics, the role of money in this design and using a moral code, whatever that moral code of society at the time is, and how that moral code instructs the design of said money and what they prioritize and who has given favored status. Can you break that down?
[00:13:22.960] – Feinig
You put it in a nutshell very beautifully. There’s hardly anything left for me to say after what you just said. So, just to add that, of course, monetary design, that is a concept that Christine Desan came up with and it basically means what you just said, that money is not just a quantity. Money is the rules that we create and that allows certain entities or people or institutions to create it and others, not; to prevent other institutions from doing the same thing.
So monetary design is really critical. And what I’m adding to that is what happens if there is a situation where most people or many people understand monetary design and try to change it in such a way that it works for them. That’s for me, maybe the best definition of moral economies of money, their knowledge and practices that are shared among large numbers of people and enable them to shape money creation.
[00:14:21.070] – Grumbine
When we look at the modern incarnation that we’re experiencing today, and you do touch on this later in the book, we have a federal system, we have a nationalized currency issuing federal government and we have states that are currency users. They’re not in a position to impact this monetary design, so to speak. And that wasn’t always the case.
There were state and colonial currencies abounding that had more of a local democratic flair. But the current setup came to be as a result of trying to address various moral economies. So many of the things that we take for granted in our economy today, they’re just rules. But they are representatives of the moral economy as it was established.
Those rules that govern money creation and the way money is distributed, those are all manmade rules that we can change depending upon the morals of society, depending upon their power and their ability to impact that. Any one of them can be changed at some level. Is that a fair statement?
[00:15:31.950] – Feinig
I think that’s absolutely fair and I think that’s very critical because when we look at history, sometimes you think, oh well, the one thing that really connects the past to the present and never changes is money. But actually that’s the one thing that maybe changes the most and changes constantly. It’s just that most people like me, before I became monetarily aware, live in a kind of monetary sleepwalk.
Or it’s not just that we tend to live in this monetary sleepwalk. It’s also that the current institutions encourage us to do that. Financial literacy—oh, that’s about managing your finances. It’s about making sure there’s enough money coming out of the ATM if you still use physical cash, or about making sure you have enough for retirement, etc.
But no one actually, or very few people impel us, or very few books impel us, to think about money as a collective good, as something that is changeable. But it’s like the only safety is if I, as an individual, try to make as much as I can, then I’ll be safe. But it’s not, well, there’s another way of being safe and of making a good life.
Which is trying to understand and organize it in such a way that people can take care of each other, people can take care of themselves. All the knowledge that is out there, what we learn in schools; barter, what people say about financial literacy, all those things are all on the individual level. So there’s a whole set of knowledge and institutions that creates that kind of mindset.
[00:17:05.770] – Grumbine
You’re coming from a heterodox perspective that involves a certain level of intersectionality. And given your background, clearly you fit well into that interdisciplinary view of money. And I often talk about how the discussions of money, the scarcity of money, now that I’m thinking of this term “moral economy,” the lack of moral economy that we experience today is evident.
And I know folks like Scott Ferguson and the “Money on the Left” crew do so much work about the aesthetic and understanding literature and media. And I got the pleasure of listening to your podcast from, I believe it was 2019, on the Money on the Left podcast. But the idea of these structures and rules that make us feel negative about ourselves and feel that pressure, the additional scarcity, the harsh reality comes out in the books we read, the advertisements we see, the things that are pumped to us in schools.
It’s all reinforced concepts, even the ones that aren’t really real, which is where we are today. We are filled with a bunch of myths that passed as a narrative about the way money works. And it’s a narrative that has enabled austerity, and austerity is murder. So we have witnessed a harsh, brutal monetary economy in the United States.
[00:18:38.310] – Feinig
I’m going to interrupt you right there, because that’s actually one of the things that I want to introduce in the book. There are moral economies that enable people to connect their lives and their needs to monetary design. And there is another process, and that’s what I call monetary silencing, that disconnects people, that makes it seem like, oh, those are forces that are beyond your reach.
This is something you should not be thinking about. This is something that is unintelligible and you shouldn’t even try to grasp it. You have to try to work as hard as you can as an individual. And if you don’t make it, or if you don’t have enough for a decent life, that is your own fault. But please do not think about where it comes from.
So in the book, I document those processes where some people tell other people, do not think about this. I got it. I know how to run the system. You don’t have to do this. And of course, the people who tell other people to basically shut up, they do that in various forms. They use all kinds of different tactics and strategies to achieve that. But it’s an open-ended process.
That’s why it’s not monetary silence, it’s monetary silencing. Someone always has to do it. Someone has to block the view. And there are always processes of silencing where the people who do the silencing seem to be winning, and then there come a big event and everything is progress again. And the big example is probably the Civil War, because overnight the US government spent Greenbacks into circulation and they couldn’t have won the war without that.
So that had the effect of having them win the war. But it also made it visible that the government has powers that people before that weren’t really aware, or after the Constitution they had been in a process of silencing where people actually started embracing the idea that money is metal. And that was the popular view, that was the Jacksonian view, where the people who said, we’re the people’s champions, we’re the champions of the little man, we hate the banks, we hate paper money.
And they said the only honest money is gold and silver, because the only other alternative is banks. The public option was not really on the table anymore. And the Civil War put that right back to the center of policy base within a very short period.
[00:21:03.550] – Grumbine
Yeah, when we think about how the south lost the Civil War, one of the key things was the fact that they didn’t know how to operate a currency properly. The Confederate dollar went into hyperinflation, they couldn’t enforce a tax, they didn’t have the production to back up the currency either. What are your thoughts on the Confederate dollar, and if it might have been different there?
[00:21:28.450] – Feinig
So there I’m going to say, from what I know, historians tend to agree with what you said, but I’m not myself an expert on that, so I don’t have a really good take on that. But from what I’ve read, it seems that what you said is true, that they didn’t have a good system. They imposed taxes in kind and that was very efficient.
And Randall Wray, I think he talks about that in one of his books in some detail and comparing the Confederate and the US currency…Sorry, I’m not an expert. I can’t claim to be an expert on that.
[00:22:01.760] – Grumbine
I understand. So within that space, though, you do go into some great length about the gold standard and you talked about how that is definitely a form of monetary silencing, these metal based currencies, there’s quite a bit about wampum in there as well. But what made metal a form of monetary silencing? Why was that such a big deal?
[00:22:29.470] – Feinig
Because it enabled people to make a convincing claim that money is natural. OK, that convinced some people at least, even though in the 18th century and in the 19th century they were always chartalist, or chartalist-like knowledges. There were also those who tried to silence often with metalist knowledge and practices.
So – think they appeal to the idea, or they tended to appeal to the idea that gold and silver are natural money and they’re superior and they don’t allow anyone to cheat. So that was from the get-go, from the 18th century onward, that was always a part of silencing knowledge. Kind of like bitcoin today.
[00:23:26.330] – Intermission
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[00:24:17.490] – Grumbine
One of the other things that I thought was interesting, you talked about how there are people that create these monetary designs. “You don’t need to know how this works. I’ve got it covered. I’m the expert here.” And that was a church hierarchical position as well. The lay people were not allowed to read the Bible.
They were required to have one of the clergy that was deemed worthy of The Word. And religious life was such a huge part of society during this time period, in particular as it comes into the United States, before the United States it was colonies, during the occupation of native lands. I think there may be some parallel there because there was a lot of hierarchy back then, even going back to the plague era.
You had the people that prayed, the people who fought, and then the people that labored, and there was a class basis for the way society was structured. It feels a little bit like some of that was brought to the New world as well, and it may have played a role in understanding monetary operations. Do you care to weigh in on that?
[00:25:29.490] – Feinig
I think what’s interesting, what you’re saying, or what interests me, is when you talk about the social organization of knowledge, that there are different kinds of hierarchies and they change and they might be connected to money in different ways. So I think it’s probably correct to say that even as late as the 19th century, when you look at the New York Times, which was a gold Democratic newspaper at the forefront of monetary silencing in the 1890.
They published a survey to bolster the idea that good and respectable people were on the side of the gold standard. And they published a poll not of economists, they published a poll of college professors, but included at the same level professors of geology and ethics and history and all of them. So the New York Times was not trying to push economists as a discipline with scientific claims. They tried to push the respectability thing. So it was a very different kind of hierarchy of knowledge than the one we have right now.
[00:26:30.450] – Grumbine
One of the things you brought up that I felt was really powerful, piggybacking a little bit off of that religious angle. But your specific understanding and the way you wrote so eloquently in the book talked about how money was this neutral being and how dare you question money’s ruling, like if you were unsuccessful then it’s nobody’s fault but your own.
And this bootstrap mentality, tying it back to the biblical stuff of putting it on that personal responsibility. And you hear a lot of that currently, especially as we went through this recent fight over student debt forgiveness in the United States, another angle of moral money and moral economies. This was a departure from some previously-held beliefs—by introducing greenbacks, people saw paper money as bank money, so it was bad.
But this greenbacks concept coming out of, I guess, the treasury, this was a different period of time. Can you explain the conditions around the greenback coming into being and what that signifies in terms of monetary design?
[00:27:38.970] – Feinig
Yes. When the war started, no one in the US Congress or in the treasury really wanted to create treasury money—that’s money that is issued by the treasury and accepted by the treasury and that’s not convertible into anything else. They didn’t want to do it even though they had done it before. They had done it during the War of 1812, for instance.
But they were running out of options because the banks couldn’t advance them cash anymore. So they basically had to do that. And it’s maybe the simplest possible one, or it’s a very straightforward monetary design. It’s under the direction of the treasury and managed by Congress. They printed greenbacks. They were called like that because of the color.
And they were spent into circulation to pay people who were involved in the war and all kinds of capacities from suppliers to soldiers to the whole range of activities that are necessary to make war. And people accepted them because they knew that they could pay taxes with them, with those pieces of paper.
[00:28:41.970] – Grumbine
Folks, when you get this book, and you need to get this book, the introduction is a phenomenal primer in basic modern monetary theory. Go through this extensively. Why is “payable in tax” so important for the people listening? Explain what that debt obligation or the tax itself does, why that is important in a monetary design.
[00:29:05.730] – Feinig
Well, it’s important because it gives people a reason for accepting it. Most people have that recurring obligation and pretty much everyone has the possibility of incurring fees or penalties or being ordered by a court to pay something. Everyone works in that logic because we know that might be coming our way or that is coming our way, we accept it.
And that was also much more obvious in the past. If you go back to the 18th century, it actually said of the currencies, this bill of credit is accepted at this treasury for the years 1736 and 1737. So you knew you were going to be able to pay in those two years with the piece of paper you had in your hand, and it said that it gave you instructions on how to use that.
And that’s what I mean by intelligibility because money changed a lot more and a lot more frequently than it does today. And it did so in a really obvious way, right? Overnight, to go back to the Civil War, there was primarily bank money that was in circulation before the Civil War. Within a few months you have only treasury-issued money that has to make you think, so the tax receivability and you knew that you could pay taxes with that.
Before that, with state bank money it was much trickier which treasury accepted what in payment of taxes and there were different types of state bank money and also federally chartered bank for some of that period. But it was a problem, it was not obvious. And people were relieved to have that one paper that was high quality because they knew they were going to be able to discharge their taxes with it and it was a novelty. Is that helpful?
[00:30:50.190] – Grumbine
It’s very helpful. What you said there was very important to me. We feel varying ways about the world we’re in, various pressures on our personal lives that drive us into action. Warren Mosler would say that taxes create buyers and sellers of goods because now you got to do something to get the currency, and you just made mention that there might be fines and fees.
Most definitely a pressure element; dealing with plumbing, you want to make sure you have enough pressure in the tank to push the water out the spigot. How do we design a monetary system that is both democratic and fair and yet doesn’t have so much pressure in it that it creates other negative externalities in an individual’s life? Is there a way of balancing that obligation with a fairness that doesn’t create so much angst, pain, fear and hopelessness?
[00:31:57.070] – Feinig
I think that’s a really big question. I wish I had a really good and clean answer to give you, but I think it’s possible. And I think it’s possible not only because of how heavy those obligations are and about adjusting those obligations, but also at a deeper level, if you have a certain level of democratic involvement in monetary design, then that channels money to where people think it should be or that creates money in such a way that the people who need it most can get their hands on it.
I think it’s possible to create that kind of system and I think throughout history or the last several centuries that was what animated moral economies of men. The idea that that is actually possible.
[00:32:45.330] – Grumbine
It’s exciting because as a leftist and someone who is trying to understand today using the lens of history as well as systems thinking, we all have an understanding of what FDR did during the Great Depression and the New Deal. And, for socialists, they see FDR as a villain who propped up capitalism and took away the chance of a socialist revival. Others see FDR as the lynch pin between a social democracy and capital where he created a balance.
But you go on in the book and discuss how FDR leveraged the scarcity narrative, the false narrative of money, that the government was like a household. What led to that change that led to the Great Depression and the monetary system prior to FDR making these bold, sweeping changes? And then what helped create that new form of moral economy?
[00:33:57.330] – Feinig
Actually, I want to stop you right there, because I’m going to make a really counterintuitive claim. So I’m going to say that he is actually maybe one of the more successful monetary silencers. Very counterintuitive. Because he is known as the person who did all kinds of really important reforms and radical changes with respect to the way money is designed, with respect to what the different articulations of how officials are involved and banks are involved, and the power relations within that.
And people can read up on that. There are many books on that and I think those are almost very overwhelmingly, really positive developments. And the book says at the same time as he did that, as he did this, uncoupled the dollar from gold, he created deposit insurance. They did all kinds of really sweeping changes. But in addition to that, he also enabled more stable access to cash for many people.
Of course, primarily white men, excluding through all kinds of ways, women, agricultural workers who were primarily nonwhite. But he did enable easier access to cash for many people. So with all that said, at the same time, the way he sold that to the people, the way he talked about it in his fireside chats and his speeches and addresses, it advanced monetary silencing, because the way he talked about it, he said, government is a household, we have to match income and outgo, money is scarce.
If not, we’ll be in Weimar tomorrow. If we talk too much about money as a creature of the law, every group of society will make unrealistic demands and we’ll just end up in chaos. So even though I’ve made all those vast changes, I’m going to stick with the gold standard logic, not the substance, and without really relying on metal so much, but I’m going to stick with the household logic.
[00:35:59.370] – Grumbine
That household logic has been hurting us for a long time, hasn’t it?
[00:36:03.230] – Feinig
Yes, on and off for a long time. On and off. But because he is this hero to so many people and I think rightly so, in some respects, that’s what made him such a successful proponent of monetary silencing. It’s relatively easy to question, let’s say, Andrew Jackson or the gold bugs of the 1890s. It’s a very different story when it comes to FDR.
[00:36:28.950] – Grumbine
I know there’s a lot of people out there that are trying to strip away the insights of Karl Marx and Engels and other thinkers within the socialist sphere. Some of their conclusions were wrong. You can see Marx did not really understand state currency, fiat money, or at least it wasn’t a part of his writings per se. I guess my question to you is there’s no one in history that can’t be critiqued?
Every one of them have their failings. But in particular, though, it seems like we have a lot of people currently that are trying to get us back to FDR, the golden chalice of modern economies. And it would be the greatest thing ever. But as we are fighting as activists, and in your case as academics and journalists and writers, it appears that many of us are trying to say we need not monetary silencing.
We need real open discussion. We need a democratic understanding of the commons and putting money in its proper place as a public utility with even many in our own movement pushing for a return to FDR-like policies and what that moral economy looked like? What do you think we could do differently than what FDR did that we could maybe improve upon as we look to the design of money in the future?
[00:38:00.870] – Feinig
Well, I think FDR nostalgia is very tempting for many people. And I think the way I would think about that is that he wanted to give a select group of people rights that they didn’t have before and maybe he personally would have wanted to give it to more people. But the New Deal gave a select group of people rights at the same time it undermined moral economy.
So it gave them a right without the knowledge and the practices that are necessary to defend them, without the institutional understanding that chartalist or chartalist thought had given them in the past. There’s a huge tension and people like Aziz Rana talk about that in his book, The Two Faces of American Liberty. And my story is kind of a version of that.
The right, without the knowledge, the practices to defend them, are very limited. They’re limited, one, because then when the Austerians come, you don’t have the knowledge necessary to push back. And also, but maybe as importantly, or maybe even more importantly, if you don’t understand how rights come about as part of an institutional process, then the process of becoming more inclusive is also different because it’s not just about giving rights, it’s about how do you think about monetary design, how do you think about moral economies?
Whose experiences do those moral economies channel? So it’s no longer this savior-figure parting out right, but it’s collective moral economies that stabilize access to, let’s say, cash and jobs and stuff like that. And so of course, for me, the federal job guarantee, yes, you can say it goes back to a theory. Yes, you could say it’s a New New Deal, but also if there is a job guarantee accompanied by a moral economy of money, by the institutional understanding, then it’s going to be a lot harder to undermine that, it’s going to be a lot harder to make it exclusionary and to justify making it exclusionary.
[00:40:03.030] – Grumbine
We don’t have any energy in the United States. The Biden administration during the transition period where Bernie Sanders’ team and Biden’s team got together, Stephanie Kelton was part of that. Sarah Nelson, Darrick Hamilton was part of that. That were trying to impact the Biden administration and across the board, these broad-based FDR-style policies were rejected. We have no energy in this country for a federal job guarantee.
In fact, you see a lot of populist movements sadly pushing for the universal basic income. I believe that these are an outcome from that monetary silencing. And I believe that the austerity that we have grown used to, this extreme prejudice towards private property and private solutions… are these forms of economies that have been brought about by monetary silencing, or is this just an extreme power grab that the proletariat have no real way of fighting back against?
[00:41:14.910] – Feinig
Well, yes, I think when you contrast UBI and a job guarantee, I think the difference is, or at least the potential difference is that the UBI isn’t really connected to the logic of thinking about monetary design, about who gets to create money, for what purpose, and how to make that democratic. So if you flesh it out, if you translate it into widely shared moral economies, then you actually have a moral economy.
Whereas UBI, that’s more, in a sense, FDR style that I have the right to $1,000 or $1,500 a month. But I don’t really know where that comes from, what it does. So I would think that absolutely the reason why UBI is so plausible to many people than JG – is easier to even teach or talk about is because we’re living in a period that’s marked by decades of monetary silencing.
[00:42:12.870] – Grumbine
I want to ask you, having done all this work, you really sacrificed to put this book together. You missed family, you were a continent away. There was so much you poured into this effort, not only academically getting your degrees, but also in writing this work. What would you say is your big takeaway? What are the things that you learned above and beyond what you may have known prior to going into this? What were your outcomes?
[00:42:41.070] – Feinig
Well, the first thing is that I would say that it’s actually surprising that we lost journalism. That’s the first thing. And the second thing is that it can come back into the center of public sphere really quickly and in very surprising ways. So my takeaway is keep doing what you’re doing because it just might pop up as it has done several times in the past, and it might become plausible to very large numbers of people very quickly.
[00:43:09.450] – Grumbine
Very good. One final thing, and this is near and dear to my heart. We have some real serious things that are happening around us that we can’t escape, like the climate catastrophe. And we’ve been lied to by the fossil fuel companies who have done a form of science silencing. Maybe this could be seen in part as a form of monetary silencing as well.
But we’ve been lied to about the conditions surrounding smoking cigarettes being cancerous. We were lied to about so many things over the course of time, and so many people have a scrambled view of what reality is, not just on money, but on pretty much everything. And that’s why I point to something like an existential crisis, like the climate.
You talk about that and I’m curious as to what your takeaway is within this moral economy, within the space of post-pandemic but climate-change-driven world. What do you think we should know about what you’ve learned and what do you think that we should do to influence how we approach this existential crisis?
[00:44:18.750] – Feinig
Yes, and I would very much say that we’re still in the pandemic and many people are still dying every week, and we’re also in this even larger emergency that’s the climate crisis. And I think moral economies are so critical, not because it’s about money, because it helps people think differently about how we can live together, what we can do together, and how we think about what we can do for each other.
And all those things are, with every passing day, they get more urgent because we have to respond to all those crises and we have to create new forms of relating to each other. So I think if there was ever a time for more economies of money, that’s now.
[00:44:59.010] – Grumbine
I love it. I think that’s a great way to end. Jakob, where can we find more of your work?
[00:45:05.310] – Feinig
Well, obviously, as you have mentioned, the book is coming out in October. It’s available everywhere books are sold. I have also written a number of academic articles. I’m happy to share some of my writings. If people write to me, I have a Twitter account and maybe you can put up the Twitter handle. And also in addition to this interview, there’s a wonderful Money on the Left interview from 2019. And I’m always happy to hear from people who get a chance to listen or read my work.
[00:45:36.990] – Grumbine
Fantastic. We will be putting this in the Real Progressives bookshop for people to get. Also in our podcast we have an “extras” section. So if you go to the website when this is released and go to the extras, we will have all the links that we can find to your writings and anything else that would help support this show, including that interview you did in 2019 on Money on the Left. So with that, Jakob, thank you so much for joining me. This was a pleasure. I really appreciate it, I wish I had talked to you before now. I hope I can talk to you again in the future.
[00:46:12.420] – Feinig
I would love to. Thank you so much, Steve.
[00:46:14.830] – Grumbine
You got it. All right. This is Steve Grumbine with Jakob Feinig. Have a great day. We’re out of here.
[00:46:27.190] – End credits
Macro N Cheese is produced by Andy Kennedy. Descriptive writing by Virginia Cotts and promotional artwork by Andy Kennedy. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit Patreon.com/realprogressives.
Jakob Feinig is a historical sociologist who writes about the connection between justice, democracy, and monetary design. He teaches at the State University of New York (Binghamton). His book, Moral Economies of Money: Politics and the Monetary Constitution of Society, will be published in October, 2022. Follow him on Twitter @FeinigJakob
binghamton.edu/human-development/contact/profile.html?id=jfeinig
Book
Moral Economies of Money: Politics and the Monetary Constitution of Society
Can be pre-ordered prior to October 4, 2022, publication
Articles & papers
The Moral Economy of Money Between the Gold Standard and the New Deal
Notes on Monetary Institutions in State and Class Formation Processes
The Pedagogy of the Job Guarantee
Toward a Moral Economy of Money; Money as a Creature of Democracy
Interview, Money on the Left, 2009
moneyontheleft.org/2019/09/13/money-politics-before-the-new-deal-with-jakob-feinig/
UNIs, complementary currency developed by members of the MMT community
realprogressives.org/podcast_episode/episode-80-unis-for-all-with-ben-wilson-and-scott-ferguson/
Greenbacks, US currency during Civil War
https://en.wikipedia.org/wiki/Greenback_(1860s_money)
Chartalism, a monetary theory that defines money as a creation of the government that derives its value from its status as legal tender. It argues that money is valuable in use because governments require that you pay taxes on that money.