From the point of view of logical consistency — plain common sense — the Keynesian claim that the State has the power to "re-edit the dictionary" may be the most outrageous and damaging premise of that entire economic system. Properly understood, the implications of Keynes's seemingly trivial statement that the State has the power to "re-edit the dictionary" are shattering.
First, let's look at what Keynes said exactly:
"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 realized." (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt, Brace and Company, 1930, 4)
The first sentence in this brief passage completely eliminates the natural right of liberty, that is, freedom of association/contract, and implies that the whole trend of civilization for four millennia has been for the authoritarian State to force society to return to being based on status and away from contract. This, however, is almost incidental to Keynes's goal, which is to assert without proof that "money" is whatever the State says it is.
On the contrary, as any lawyer or accountant should be able to explain, money is correctly defined as "anything that can be accepted in settlement of a debt." This is why private sector bills of exchange are known as "merchants" or "trade acceptances," and "bankers acceptances." Then, technically, all contracts are "money contracts," consisting of offer, acceptance, and consideration. Keynes simply performed some verbal sleight-of-hand by re-defining money as whatever the State says it is.
Reading carefully, however, we realize that even Keynes's abolition of the natural right of liberty and redefinition of money (money being an institution, as Irving Fisher acknowledged in The Purchasing Power of Money, based on the natural right of private property) is not the most astonishing thing in this passage. This we find in Keynes's declaration that, "[The State] claims the right to re-edit the dictionary
As far as Keynes was concerned, then, the State has the power to change the substantial nature of reality. This is something that even God cannot do, as reality is based on His unchanging and unchangeable Nature. There is no other interpretation that can be put on this passage. God, after all, as a perfect Being cannot contradict Himself; He cannot change, for change implies imperfection.
The Keynesian State, however, has the power to change God . . . at least, according to Keynes. This, as was the case with Thomas Hobbes and his characterization of the State as a "Mortall God," opens the door to pure moral relativism and the abolition of the whole of the natural law, and thus civil society based on contract, to say nothing of the establishment of the totalitarian State and the imposition of status as the basis for civil society.
This is probably because Keynes based his fundamental principles of political economy on the work of Walter Bagehot (Lombard Street), who, in The English Constitution (1867) lauded the political theory of Hobbes while denigrating Magna Charta and the whole concept of natural rights. It comes as no surprise that virtually every provision of Magna Charta, a charter based on contract, was repealed in the 19th century and replaced with legislation based on status during the long reign of what eventually evolved into Keynesian economics. Bagehot was also a social Darwinist.
This, then, brings us to the whole point of this series. We live in an age of almost complete moral relativism. Nowhere is this more obvious — or more damaging -than in the near-universal adherence to Keynesian economics. In Keynesian economics the State can do anything simply by changing a definition and forcing it on the citizens. The only possible course of action is to implement an economic system that relies on fundamental definitions of things that are consistent with human nature rather than some politician's or special interest group's wants or needs — and that means binary economics as applied in Capital Homesteading.
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