Free Money by Felix Martin

accidental death. And as for the way in which the conventional view of money took over: you are right that if there had been a murder, that would have made it a perfect crime. But I’m afraid to say it’s really just a case of mistaken identity—albeit one driven by mass delusion.”
    “All right,” said my friend cautiously, “a case of accidental death and mistaken identity it is, then. But in any case, isn’t the whole pointof your argument that the rumours of the death of monetary common sense had been greatly exaggerated? There was Law, like you just said—and more to the point, Bagehot, and Keynes, and Kindleberger and those other characters that you went on about. They kept common sense alive—at least on life support. Luckily for you, actually—since you wouldn’t have known about it otherwise. You may have moaned that the conventional understanding of money is behind the failings of macroeconomic and financial sector policy that got us into the current mess. But then you brightened up and argued that the way those neglected geniuses thought about money can show us the way out again. And if I understood you right, what you really meant by that was a lot of inflation and debt restructuring to fleece the capitalist rich and bail out the oppressed masses—coupled with a shake-up of the banking sector to make the Big Bang of the 1980s look like child’s play. So you don’t get off that easily. Even if I buy your argument that there’s something wrong with the conventional view of money and that it has led to some big mistakes, I still think your alternatives sound like a load of irresponsible, revolutionary claptrap.”
    “Ah yes, I’d forgotten—the charge of fomenting revolution. Well, I think you’ve got me quite wrong there. I’ve argued that there are three basic policies that are suggested by the alternative view of money.
    “The first relates to the management of the monetary standard. You’re right that one of the principal differences between the conventional view of money and the alternative view is that the monetary standard can, and indeed should, be deliberately managed. The conventional view implies that economic value is a natural fact. As such, the job of money and finance is to measure it—but not to influence it. The monetary standard is the fulcrum of the scales of political justice, as it were—and just like the fulcrum on a physical pair of scales, it has to be fixed in place in order to be accurate. Any redistribution required in order to even things up between different members of society should be achieved by taxing stuff away from the people on one side of the scales and doling it out to the people on the other—or perhaps by making the process of accumulating stuff itself more equitable, so that redistribution of this sort isn’t needed.
    “The alternative view of money sees economic values not as a natural fact, but as a concept invented for the purpose of organising society in the most just and prosperous way. The job of money and finance is therefore not just the measurement of value—but the achievement of this objective as well. There is therefore nothing intrinsically wrong with moving the fulcrum of the scales of justice, since their purpose is not to achieve accuracy—a notion without meaning in the social world—but fairness and prosperity. On the alternative view of money, keeping the fulcrum fixed while shifting weight from one scale to the other via fiscal redistribution is certainly one way of doing things—and quite rightly the usual way in normal times. But the nature of monetary society is such that unsustainable inequalities that cannot feasibly be corrected in this way will inevitably occur from time to time. When that happens, it is time to move the fulcrum to restore balance.”
    “You and your scales again! I get it. But in practice what you are talking about is higher inflation, right? You think we need to go back to the 1970s.”
    “Well,