Shortly after posting this foreword, I publish an article titled ‘Towards A Trias Pecuniae’.
The contents of this article have been my pet project ever since graduating in 2007. It sums up my findings from a decade long journey through academic and economic literature in search of a structured approach to apply a theory of causality that is foreign to the domain of economics. It is about process-thinking in the tradition of Wilhelm Hegel, whereas economics applies – though never explicitly – systems-thinking in the tradition of Immanuel Kant. In its original form, I wrote this article as a proposal for a dissertation I have in mind. While unemployed and having time on my hands, I eventually pushed myself to write this approach as a stand alone article. Obviously, all caveats apply. In total, this manuscript is almost 20,000 words long so this article fits the category of a long read. Given my circumstances, I decided to publish it here and now, freely accessible for anyone interested. Although my ultimate ambition has been to teach one day at a university, the fact is I am turning 40 this year and I am slowly burning through my little reserves. I cannot afford waiting on academia longer. To take a step forward, I am opting for some closure on this decade-long effort. And irrespective, this perspective simply deserves to see the light of day. It may perhaps not be academic by consent, but I think there is sufficient merit to it nevertheless. The extent of which is of course for you to decide.
The philosophy central to this article dates back to my last course at university because in 2006 I was introduced to the use of metaphysics in the social sciences1. Then and now, I feel it should be a mandatory first year course at any respectable university. Please note this perspective necessarily takes a position that may contradict ideological preferences, or inclinations you otherwise acquired. Nobody can escape the politicization of analyzing our reality. I can’t either. Let us not forget economics emerged from the faculty of political philosophy. This article is about confronting causality and implicit theoretical assumptions we all make. And ultimately, it is about balancing power relations. How to render all wealth relations reciprocal. This makes this perspective ideologically neutral yet it is inescapably political. Please consider this article as my humble attempt to bring back philosophy to the center stage of the economics curriculum. And likewise its profession.
In subject matter this article confronts the two money theories and the three theories of banking attached to them. Tradition has it that combinations of money and banking theories vary from author to author and vary within schools of thought. With this article, I hope to provide a concise overview of money and banking theories by comparing them consistently based on its implicit use of a theory of causality, and also, based on the elements condensed in what I call a monetary matrix. While I was reading the money literature, this overview started out as a personal study aid, and it lists all money functions – five instead of the textbook three – and five currency attributes, yielding a squared 5×5 overview with each box listing a specific subject of a money/currency-related phenomenon. Over the years, it came in handy relating different authors and different perspectives on a varying range of monetary topics. It may help anyone make sense of things without this matrix prescribing any answers. From my perspective, it helps finding and identifying the many questions. It helps by providing a structured overview. Whereas this monetary matrix makes the concept of money elementary concrete and precise, the theories of causality help relating these elements in terms of the suggested causality by either this or that money or banking theory. From there on, or at least in my thought process, it seemed only logical to apply Montesquieu’s trias politica to all wealth in the third and concluding leg of this analysis. Hence a trias pecuniae. For your convenience here, a tripartite division of wealth powers consists of the fiscal, monetary and credit powers and are found with government, central bank and all houses of credit. Moreover, money is conventionally framed to be either public or private. But how about impartial instead?
The bit of philosophy may not interest everyone. As I was once a student of economics myself, I decided to include it because I genuinely think it is key for understanding the many subtleties in formal economic and theoretical thinking. Some students of economics have publicly called for a critical review of the books used in the economics curriculum on this very topic (see for example here) and I can only express my support for their plea. If philosophy and abstract ideas on theories of causality is not your cup of tea, you can always choose to skip ahead. (Take what you need, leave what you don’t.) If so, you can start reading from a relatively short paragraph on the mentioned monetary matrix (and ignore the bits and pieces in follow-ups).
Please understand I have contacted serious people with vast knowledge on the topic of money, credit and banking – from both sides of the money spectrum – and asked them politely to have a look at it. Despite my polite approach, unfortunately, over a year’s worth of waiting patiently on open and friendly correspondence with academia, my requests for professorial assistance yielded zero feedback. At the same time, in the category always-look-for-the-mistake-with-yourself, how can I be surprised? A dissertation proposal on the use of metaphysics in economics, the concept of money by introducing a monetary matrix, and an analysis that essentially synthesizes both the commodity and credit theories of money in a trias pecuniae?
No worries. Aut inveniam viam aut faciam. Maybe the internet proves useful here as a platform for resourceful assistance.
This is what I hope for. This perspective needs a round of real-world scrutiny. I invite you figuratively to shoot holes in this perspective; with bullets of intellectual precision mind you. I cannot deny bias and I am inclined to think this perspective really is bullet-proof. The logic applied is simple and straightforward and however odd this article is or may be judged, I feel sufficiently confident to publish this theoretical perspective in this raw format because a tripartite division of wealth powers kept in balance by one elementary check as I suggest is of real-world consequences. The objective is ensuring every one of us essentially and materially an unalienable right to live our lives in freedom of wealth. Surely my intention here is to contribute and add to the set of ideas that will change this world for the better, hence: “Towards a Trias Pecuniae”. Feel free to add to it here too. Be it in correction, addition, or otherwise in complementary terms. Irrespective of what happens in the realm of global finance, please interpret my thinking as a road map for future arrangements in mind. In my article on the legacy of Dutch Statesman Jelle Zijlstra, I phrased the question for the 21st century international monetary framework as follows: “Essentially, it is about removing any one country’s debt and this defines the question for the 21st century’s international monetary framework to be about, not which nation will be “hosting” a new reserve currency, but how this world can prevent having to rely on one.”
This is my take how our world can do without. How to go at things intelligibly with a clear understanding how these financial problems keep recurring; how exactly these three wealth powers can get out of sync. As far as I am concerned, this perspective provides a conclusive understanding how inflation, financial excess and a growing wealth disparity have one common element to them. Once future income becomes the collateral basis for arrangements of credit – created at technically zero costs by credit creating institutions, governments and central banks alike – then it necessarily goes at the expense of all. Arithmetically and historically. Once people’s future income is collateralized for credit creation, elements of slavery are materially introduced into law. Ultimately, this is the one essence I want you take at heart. To prosper, humanity is best served when all people are granted an irrevocable right to live their lives in positive equity. Always and everywhere. Simple and straightforward. A trias pecuniae as cornerstone to the freedom of wealth.
Last but not least. A word of sincere gratitude and special thanks to Martin Carbo, Sander Boon, and Twan Zegers. In our ongoing correspondence, Dutch entrepreneur Martin, with an honorable interest in matters of finance and public governance, triggered me to write about my ideas for a dissertation. Sander Boon is an expert himself in affairs of socio-political forces that have shaped and are shaping the international financial and monetary framework. Sander supported my efforts with useful advice and feedback. Sander himself wrote a book on this very topic in Dutch (see: “De Geldbubbel” (2012)). He told me, he is updating it for a new edition. I hope he opts for an English edition because his intellect deserves an audience well beyond the small borders of the Netherlands. At last, my good friend Twan Zegers. Beside a colorful character, Twan is an exceptional multilingual talent and a gifted writer. As a close friend, he is a whole lot more. Twan provided a much-appreciated final edit. Of course, I am fully responsible for any erroneous errors.
As I finished my graduation thesis with three simple words, this time too they remain worthy of repeating: alea iacta est.
June 6, 2019.
1 This course used a book by professor Ralph Stacey, “Strategic management and organisational dynamics: the challenge of complexity” (2003). Stacey applies two theories of causality in the traditions of Kant and Hegel to theories of entrepreneurial management and strategic business decisions. I highly recommend this book