Future Schacht, XIII: Understanding Money

To understand the importance of Hjalmar Schacht, we have to understand money, and that means understanding property.  Money, as it is a medium of exchange of wealth and claims to (i.e., “property in”) wealth, is naturally an extension of and derivation from the concept of property.  Destroying the integrity of property therefore eventually destroys other human rights, as well as the currency, and even the concept of money.

Now, that's a crass materialist. . . .

The description of property as a human right requires a little explanation.  It has become all-too-common these days to hear people make a statement to the effect that, “I’m for human rights, not property rights,” as if property were a thing that had rights, rather than itself being a right.  The impression that such people wish to give is that they are interested in people, while others who talk about property and property rights are crass materialists and so on.

Another more-than-common error is to think of property as the thing owned.  This is common in every day speech, and perfectly acceptable . . . in every day speech.  It is not, however, technically correct, any more than "assault" — a legal term meaning in most cases putting someone in fear of harm, not the actual harm (that's "battery") — is technically correct in most every day speech.

To set the record straight, property — strictly speaking — is 1) the natural right every single human being on the face of the Earth has to be an owner.  This is specified in § 17(1) of the Universal Declaration of human rights, as well as the universal (natural law) prohibition against theft.  After all, if someone doesn't have the right to own something, how could it be wrong to take it from him or her against his (or her) will?

Kelso: "Ownership is control in all codes of law."

2) (And this is important) private property is the bundle of rights that define how an owner may use what he or she owns — the right to exclude others from its use, the right to use it as one wills as long as others are not harmed thereby (or one's self or the common good, for that matter), the right to enjoy any income produced by what is owned, and so on.  As Louis Kelso said, ownership is control in all codes of law.  Mere legal title means nothing if someone else gets all the income or can tell you what you can or cannot do with what is owned.  (Aside from the laws, customs, and traditions that prohibit your using what you own to cause harm, of course; that's not loss of control on your part, but a definition of how you can legitimately exercise control.)

Obviously, this understanding of property — private or otherwise — is neither socialist nor capitalist.  Capitalism says that it is based on respect for private property, but that is only for a relatively few people.  Capitalism is not based on respect for private property, but on a distortion of private property.

George: You take title, the State takes the income.

And socialism is worse.  It is based not on a mere distortion of private property, but on its abolition.  "But," says your georgist, Fabian, guild, social credit, etc., socialist, "that's not correct, because our type of socialism isn't really socialism — except when it is — because our system permits private ownership!  So there!"  (And don't forget that these and other socialists insisted — and continue to insist — that National Socialism isn't "real" socialism . . . except when it is.)

Wrong.  The key word there is "permits."  Socialism, even National Socialism, may allow private ownership (or, more accurately, custody) of things out of perceived necessity or expedience, e.g., as long as it serves the needs of Die Volk oder Der Führer, but it does not recognize the right to be an owner as absolute and inalienable in every human being, only in the abstraction of the collective, i.e., "The People."  Property is the right to own and the bundle of rights defining exercise of ownership, not the thing owned.  Permitting people to have custody of things for whatever reason is not respecting private property because the "right" itself, not just its exercise limited in some way for the common good, can be taken away at any time.  Private property is not an inalienable right in socialism.  In natural law, people have the right to own things just because they are people, not because they need them, especially if "need" is determined by someone other than the ostensible owner, e.g., a State bureaucrat, political boss, village council, mafia don, or schoolyard bully.

Thus, property is a human right.  It is not a thing itself, but the right to be an owner in the first place, and the bundle of rights that a person has over a thing.  When philosophers such as John Locke declared that everyone has a right to property, they meant that everyone has the right to acquire things over which they could exercise property, you have property “in” something, not something “as” property.  Once something is possessed, however, what can be done with it is limited by the necessity of not causing harm to other persons or their rights.

Sound money is always necessary

Establishment and maintenance of a genuinely sound currency requires this understanding of property, otherwise the currency soon ceases to mean anything.  Marx understood this, and assumed that money, along with the state and all property, would wither away after private property in the means of production was abolished.  He forgot that the communist and socialist systems did not abolish property, but merely concentrated it in the hands of a small State elite.  Thus, the necessity of a sound currency was retained, even though the best means to assure that soundness is officially abolished in communism and socialism.

Thus, Hitler made an extraordinarily wise, even prescient choice for Finance Minister and Head of the Central Bank.  He recalled the “Old Wizard,” Doctor Hjalmar Horace Greeley Schacht, from retirement.  Doctor Schacht was the man credited with personally bringing financial stability to the economic chaos following World War I.  He developed and implemented the emergency “Rentenmark” system, and put the currency once again on a sound footing.  He served the Third Reich from 1933 until 1939.  A famous photograph shows Doctor Schacht walking beside Hitler.

And then things started to go wrong. . . .

#30#