How we view the idea of a common currency, whether for a nation, a region, a continent, or the world depends on our understanding of power. Our ideas of power, in turn, derive from our understanding of how individual people interact with one another, and the basis of that interaction — our "political philosophy." Our political philosophy in turn determines our ideas as to the specific role of the State. How humanity lives together in civil society, what Aristotle called the politikos bios. This is the "life of the citizen in the State" ("politics"), and is itself a product of how we understand personal sovereignty and human dignity.
The Foundation of the Civil Order
Many people tend to identify power with control over others or, more often, the control that others exercise over them. In these days when few people own a significant private property stake in the means of production, the proper view of power as control over your own life has all but disappeared. Consequently, when the subject of a common global currency or, worse, a world government comes up, people quite properly reject any discussion of the subject. Bad as the situation is today, it would only be worse if a single monolithic entity controlled every aspect of our lives. Power, as Daniel Webster observed, naturally and necessarily follows property. When most people have little or no private property stake in the means of production, they lack power, and are completely at the mercy of whoever — or whatever — controls money and credit and the State.
This is because the "life of the citizen in the State" as well as the institutions of money and credit are based on the ancient institution and natural right of private property in the means of production. Without the essential link that private property provides between the individual and both the State and the money and credit system, anyone without private property in the means of production is, to all intents and purposes, the slave of those who do own. This is true whether ownership of the means of production is concentrated in a small private elite, or private property is officially abolished and ownership of the means of production is vested in the State. As William Cobbett noted,
Freedom is not an empty sound; it is not an abstract idea; it is not a thing that nobody can feel. It means, — and it means nothing else, — the full and quiet enjoyment of your own property. If you have not this, if this be not well secured to you, you may call yourself what you will, but you are a slave. (William Cobbett, A History of the Protestant Reformation in England and Ireland, 1827, §456.)It is not an exaggeration, but a simple statement of fact to say that the human person's protection for life, liberty, and the pursuit of happiness rests primarily on access to the means of acquiring and possessing private property in the means of production. If people have democratic and meaningful access to the means of acquiring and possessing private property, people's lives, liberties, and pursuit of happiness will, in general, be secure. If people do not have democratic and meaningful access to the means of acquiring and possessing private property, then society is unjustly structured.
Without the security that only private property can give, a common currency and a common government — the State itself — become instruments of oppression by means of which some are able to misuse power and impose their wills on others. With widespread ownership of the means of production and the empowerment that ownership conveys, however, both the State and money and credit take their proper place as institutions that help and assist the human person in acquiring and developing virtue (pursuing happiness), thereby becoming more fully human.
Thus we cannot even discuss a common currency at any level — local, national, regional, or global, much less a common government at any level until and unless basic protections are in place for each person's fundamental rights. This is especially the case when the fundamental right in question is the natural right to property, the right that every human being has to be an owner. The right to be an owner — the right to control and receive the fruits (income) generated by what one owns — is part of what it means to be human. The rights of property, that is, what an owner may do with what he or she owns, must always be defined to conform to various demands of the owner, other people, groups, and society as a whole. No one may use what he or she owns to harm him- or herself, other individuals, groups, or the common good as a whole. Nevertheless, the rights of property must never be defined or limited in any way that effectively negates the underlying right to be an owner in the first place.
A Basic Legal Analysis
While we are focusing on private property, the same analysis applies to all other natural rights, such as life and liberty. A natural right is absolute in the sense that every human being absolutely has that right. No individual, group, or political body can take away the right. The exercise of a right may be suspended or revoked temporarily or permanently for just cause and through due process, but the right remains because it is part of the definition of what it means to be a human person. No one, whatever his, her, or its power, wealth, or ego, can re-edit the dictionary in that fashion.
No right, however, even a natural right, can be absolute in its exercise. That is, what an owner may do with what he or she owns is not absolute. No one may exercise his or her natural rights in any way that harms the right holder, other individuals or groups, or society as a whole. Even though the essence of the right is inalienable and unalterable, the exercise of a right can and must be defined in different ways to meet different conditions and needs, depending on circumstances and the wants and needs of a particular society. The exercise of any right must be tailored for a particular society, although never in such as way as to change or otherwise abolish the right itself. That is the role of human positive law. As Dr. Heinrich Rommen explained,
"Thou shalt not steal" presupposes the institution of private property as pertaining to the natural law, but not, for example, the feudal property arrangements of the Middle Ages or the modern capitalist system. Since the natural law lays down general norms only, it is the function of the positive law to undertake the concrete, detailed regulation of real and personal property and to prescribe the formalities for conveyance of ownership. (Heinrich Rommen, The Natural Law. Indianapolis, Indiana: Liberty Fund, Inc., 1998, 59.)No individual, group, or State thus has the power to take away the exercise of any of humanity's natural right except for just cause and through due process. Neither does the State or anyone else have the power to re-define any basic right . . . at least, not legitimately. The fact that history is filled with violations of fundamental human rights does not make any violation just, even one of long standing.
Private Property and Money
Nowhere is the violation of fundamental human rights more obvious than when it comes to private property — and nowhere is this violation more egregious than in the lack of access to money and credit, the chief means by which people become owners. To understand why this is important, we need a basic understanding of money.
Money is legally defined as anything that can be used in settlement of a debt. It does not have to be in any specific form. It is a basic right of private property as well as freedom of association (liberty) that parties to a contract can decide amongst themselves what satisfies the terms of the contract, as long as the matter of the agreement is not illegal. The State only steps in when there is a dispute as to whether a contract has been fulfilled — e.g., a debt paid — or whether a "true meeting of the minds" took place when the parties entered into the contract. Otherwise, the rights of private property and freedom of association normally dictate that the State has no legitimate interest whatsoever in the terms of a contract or the manner of its fulfillment.
Money is thus a medium of exchange. Many definitions stop there. (The additions of "store of value," "measure of value," "common unit," etc., are amplifications of money as a medium of exchange.) It is evident, however, that what is being exchanged is a private property right. It necessarily follows that whoever creates or issues money must have a private property right in whatever "backs" or stands behind the money.
This is a relatively straightforward matter when transactions remain among people who know each other, as is usually the case in a tribal group or small village. If A trades a cow to B for two sheep, money is involved because property rights have been conveyed. Both parties to the transaction as well as everyone else in the area knows whether A and B own the livestock they are exchanging. Their property rights, and thus their respective rights of disposal, are well established.
Origins of Coinage
Nor is this any different when there is a change to coined money, or even paper money in the form of bills of exchange. The first coins as such in the west (coinage developed along different lines in the east) were simply lumps of precious metal. Often this was electrum, a naturally occurring alloy of gold and silver. To facilitate transactions and avoid time-consuming weighing each lump every time a transaction occurred, private merchants stamped the lumps with some identifying mark to certify that the lump contained the stated amount of metal. This practice continued well into the 20th century with the Chinese practice of punching one's private "chop" on a coin to certify to its value.
The earliest known coin in the west is a lump of such stamped metal recovered from the Temple of Diana at Ephesus ("Great is Diana of the Ephesians!" — Acts, 19:34), where it may have been deposited as a votive offering. It bears the inscription, "I am the mark of Phanes." Phanes was apparently someone whose name carried weight in Ephesus, and whose credit was evidently unquestioned. We see something similar today when bills of exchange or personal or business checks, even personal IOUs and other promissory notes — all forms of money — change hands solely on the strength of the good name of the issuer or drawer.
There is also the possibility that the Temple of Diana might have been used as a bank of deposit. There does not, however, appear to be any evidence to support this other than it is known that people in ancient times frequently deposited coined money in temples. This added the protection of the god or goddess to the physical security of the temple guards, making theft (a violation of private property) a sacrilege as well as a civil crime. Similarly, ancient coins frequently bore the image of a tutelary deity in order to attest to the honesty of the coin and to make counterfeiting sacrilege.
The Role of the State
When money circulates beyond the local community, however, questions inevitably arise concerning the good word of the issuer. For this reason it has been found expedient that the State step into the role of guarantor. Because the State is based on the consent of the governed, the State's word is presumably good. The State is therefore the logical person (albeit an "artificial" person, deriving its authority from the people) to attest to the value of whatever passes in the community as current money — "currency."
This function is not, however, exclusive to the State — nor could it be, without violating people's natural rights to property and free association. Again, if two parties choose of their own free will to contract for a good or service, and the matter of the contract is not illegal, the debt may be settled in any way, shape, or form that the parties to the contract find mutually satisfactory.
With that in mind, we have to take exception to the "theory of money" expressed by the man who, probably more than anyone else, is responsible for the debacle of modern finance as well as the inherent injustice of today's monetary and fiscal policy: John Maynard Keynes. In his Treatise on Money (often disproved, but never repudiated), Keynes was quite explicit about where he believed true power and sovereignty lies — and it is not in the natural human person. Instead, in Keynes's opinion, sovereignty subsists in the artificial person of the State. That is the only possible interpretation that can be put on the following critical passage in the beginning of Volume I of Keynes's Treatise on Money, "The Pure Theory of Money." In a statement that blithely overturns millennia of contract law, to say nothing of free will, human dignity, and personal sovereignty, Keynes declared,
Now by the mention of contracts and offers, we have introduced Law or Custom, by which they are enforceable; that is to say, we have introduced the State or the Community. Furthermore it is a peculiar characteristic of money contracts that it is the State or Community not only which enforces delivery, but also which decides what it is that must be delivered as a lawful or customary discharge of a contract which has been concluded in terms of the money-of-account. The State, therefore, comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contract. But it comes in doubly when, in addition, it claims the right to determine and declare what thing corresponds to the name, and to vary its declaration from time to time — when, that is to say, it claims the right to re-edit the dictionary. This right is claimed by all modern States and has been so claimed for some four thousand years at least. It is when this stage in the evolution of Money has been reached that Knapp's Chartalism — the doctrine that money is peculiarly a creation of the State — is fully realised. (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt, Brace, and Company, 1930, 4)"Incredible" is the only word that comes to mind — at least the only word that is printable. While this writer is not a lawyer, three semesters of business law were at one time required to qualify as a Certified Public Accountant. An important part of business law is contracts. A CPA doesn't have to know all the ins and outs of contract law, but it is critical to know what constitutes a contract — any contract.
In Black's Law Dictionary (St. Paul, Minnesota: West Publishing Co., 1951) a contract is defined as, "A promissory agreement between two or more persons that creates, modifies, or destroys a legal relation. . . . An agreement, upon sufficient consideration, to do or not to do a particular thing." A critical part of this definition is "consideration." If no consideration passes, or the consideration is deemed insufficient, there is no contract. This makes sense, for consideration is defined as, "The inducement to a contract. The cause, motive, price, or impelling influence which induces a contracting party to enter into a contract." (Ibid.)
If someone does not own (have a right to) the consideration offered, the contract has either been violated or deemed not to have existed in the first place. All contracts thus involve the exchange of value — money — in some form, just as, conversely, all money involves a contract. Further, all contracts necessarily involve a conveyance of a property right. It is not, and never was a right of the State (begging the question as to where the State could have gotten such a right) to change the consideration in a contract by changing the definition of money unilaterally, manipulating its value, or in any other way redefining reality.
When a Common Currency is a Bad Idea
There are so many other things wrong with Keynes's understanding of the theory of money, pure or otherwise, that detailing them and explaining why Keynes's approach is wrongheaded would fill several volumes. The bottom line for our purposes here, however, can be stated simply. Using the Keynesian understanding of money, we not only end up with colossal government deficits and crushing consumer debt, the natural rights of liberty (free association) and private property are effectively abolished. That is, Keynes's monetary theory is directly contrary to what it means to be a human being.
That explains not only why many people fear the idea of a central bank with control over a national currency, but even more a regional common currency tying together several countries, and, most of all, a global currency . . . and the monolithic and all-powerful World State that Keynes's understanding of money and credit would require. When the State claims not only its legitimate power to regulate and set the value of the currency, but asserts a right of actual control over the creation of money, it effectively claims ownership of whatever backs the currency or other forms of money. To all intents and purposes, within this framework everything belongs to the State. (Thomas Hobbes, Leviathan, II.29.) This puts the State in the position of absolute power. As William Cobbett observed, this would render everyone thereby insecure in his or her property and thus a slave of the State.
Without the protection of widespread ownership of the means of production — and the democratic access to and control over money and credit that necessarily accompany widespread ownership — a World State or government would be the most complete tyranny the world has ever known.
The Right Way to Understand Money and the State
We can only understand the idea of a common currency the same way we understand a common government. Once we have that down and sufficient protections in place for every person in the form of an adequate and secure private property stake in the means of production, then it doesn't matter whether we have either a global currency or a world government — at least so far as personal sovereignty and protection of natural rights are concerned.
With directly owned private property broadly distributed and a properly structured banking system, actual, flesh and blood people will hold the real power, not an impersonal State or financial services industry. Without an adequate and secure private property stake in the means of production, any common currency or government, even if neither ever goes beyond the village level, will be a means of controlling others and imposing the will of the most powerful on everyone else.
The correct understanding of both money and the State is not "means of oppression," any more than either can be defined as "god" or "savior" — however much people may fear or desire the State or money in either role. Instead, these two institutions are merely tools to assist each person in the task of becoming more fully human — as are all institutions. In Aristotelian terms, humanity by its nature seeks the good, that is, pursues happiness. We attain happiness by acquiring and developing habits of doing good, that is, "virtue." Virtue comes from vir, "man," and signifies "human-ness." Thus, the more virtue we acquire and develop, the happier and more consistent with our own nature we are, and the more human we become. This is why the basic precept of the natural moral law is, "good is to be done, and evil avoided."
We therefore understand a common currency the same way we understand a common government, the State. Neither is supposed to be something by means of which one individual or group imposes its own idea of order or value on everyone else. Instead, money and the State are tools intended to assist each human being in the business of living, that business being to become more fully human. The role of the State with respect to money and credit is not to redistribute wealth or ensure equality of results. Instead, the State is there to regulate its creation and set standards, police abuses, punish offenders, and ensure equal access — opportunity — to the money and credit system(s) so that anyone who qualifies can use the tool of money on the same terms as everyone else.
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