This basic process informs many details – freedom of expression, democracy and property rights being obvious candidates. It also has a very evident counterpart in economic history, namely that initially local economies have been compelled to open up to and coalesce with their ‘surroundings’. Thus one can see that local economies melded into regional and countrywide economies, that these eventually took the form of national economies (several of which behaved as empires) until, towards the end of the nineteenth century, they were bound to coalesce yet further into a single global economy.
This, the underlying fact and presence of a one-world economy, has been the cardinal feature of economic life ever since, despite the persistence of economic nationalism and even economic imperialism throughout that time. Such a condition, however, entails a fundamental problem that is both epistemological and geo-political: a single, world economy cannot be severally explained or severally operated. That means it needs to be understood in its own terms, that is to say, economically, and not in terms of how it might be used to serve other purposes – principally ideological or political. But what are those terms and can they be identified in and among the current, albeit competing explanations that otherwise prevail?
3.2.1 TWo STRAndS In hISToRy
This problem will not be noticed, let alone resolved, however, unless two strands of history, mistakenly now entwined with the economy, are discerned and given their proper status. One is the implication of the state at the moment that national economies arose – the idea that the state should have macro-economic responsibilities rather than private individuals collectively (not using the term in any soviet sense). This will not be resolved unless and until the rightful jurisdiction of the state is seen to be what Steiner calls the rights life* which for him moreover should remain nation-based. An example is property rights, on the clear enunciation and upholding of which economic activity depends.
The second is the transposition of freedom and responsibility from a spiritual or cultural key to an economic one. Individuation presupposes, even begets, the division of labour, the overarching fact that all economic life is ultimately the joint undertaking of humanity as a whole, with every individual included because of his comparative advantage, what he can contribute to society that no one else can. Understood in the first place not as economic concepts, but as images of mutual sovereignty, their true meaning is deeply historical, not merely technical. There can be nothing dismal about an economics that celebrates the entire family of man by celebrating the individuality of each member of it. This is where division of labour is leading us, to a world in which every human being recognises and hallows every other human being.
3.2.2 ThE ShELL oF A nuT
For such a history to make sense, however, one needs to have a feeling for how economic life is at bottom a spiritual event; it is whatever it is because of the image we have of ourselves. For Steiner (1996a) the matter was clear:
The economic life of a particular time, and the spiritual life of a particular time (the times are not quite identical), hold the same relation as a nut to its shell; the economic life is invariably the shell which the spiritual life has thrown out. It takes its cast from the spiritual life. Today’s abstract economic life is, therefore, the product of an abstract spiritual life. That is why today we are in an age of abstract thinking, of life-remoteness – unreal conjunctures and such things.
Individuation brings abstraction, and in an abstract civilisation, finance follows suit.
It reflects back the way we have become. If we would that finance were otherwise than it is, we need to envisage ourselves differently, not hold the mirror to account. This we will not be able to do, however, unless economic life and rights life are allowed their distinct, but interwoven jurisdictions. Nowadays and even more so in the future, just as a nation cannot go global except that it becomes megalomaniacal, so the economic life can no longer remain in the confines of nations, not even nations in cohort. Once this is understood the economy as a whole and its abstract representative, ‘the market’, will be seen to be the place in which the enormous diversity of mankind becomes conscious of itself but needs to do so on a global, universal scale. Diversity becomes in fact the ‘driver’
of economic life, in lieu of inter-nation trade. As a concept, diversity, of all kinds, ought to have a place in the economic heavens as exalted as division of labour and comparative advantage.
3.2.3 ExCESS LIquIdITy
Now – the period of the global financial crisis – is not the time to be financially Luddist.
But nor is it appropriate to press on regardless as if finance were the new deism. Finance is both hiatus and awareness, a yawning gap and the bridge across it, the vestige of outmoded meanings and the dawn of new ones. Like its little brother, arithmetic, it can link us back to Abraham, the father of arithmetic, as surely, presumably, as it can cast our minds equidistant forwards!
It is for this reason that, in terms of Steiner’s analysis, one can expect, as the crucial mark of our times, the phenomenon of burgeoning surplus capital. In that perspective,
a moment is bound to arise in history when there will simply be too much capital in the world for its (capital’s) own good. If one accepts Steiner’s thesis, or at least a clear implication of it, this is a foreseeable, predictable event. It belongs to the logic of economic history. The question that needs to be asked, therefore, is whether this is what is behind the presence in today’s world of ‘excess liquidity’, that being the other main phenomenon to which our various commentators drew attention.
The excess liquidity of today is not a phenomenon in the abstract. It is the crown or flower of processes that have been long in train, culminating in the financial liberalisation of recent times. Much of modern economic life is the way it is because it is predicated on the concept of free markets and free competition, above all competition in finance. The idea of financial liberalisation is to open, by financial force if necessary, all the markets of the world so that the cold wind of price-driven efficiency may blow freely through them.
This is the last stage in a long process intended to rid humanity of its ancient constraints, rigidities and inefficiencies. That is the logic of ‘outgrowing’ guilds, of enclosures, of undermining the power of unions, of lifting restraints in the movement of capital, and so many other aspects of Anglo-Saxon economic history. Like it or not, right or wrong, progressive or socially reprehensible, reformist or ruinous, once this has been achieved, so the argument runs, humanity will find itself in a brand new landscape in which the wisdom of the market will lead us forwards to our future. What that future is, none can, or should, tell. It will be revealed to us once we let go our preconceptions of or pretentions about it.
It is part of this philosophy and outlook to break down, remove or subvert all boundaries until the economic life of the world is fully open. But open to what in the end? Trade with non-terrestrial partners? If not, and the prospect seems slim or at least remote enough not to be relied upon for immediate cash flow purposes, then the worry is that the opening up of markets will lead to there being no boundaries, save those of the world as a whole. This is why the global financial crisis is an epistemological event: it leads us to an unbounded world, the match for which, presumably, has to be unbounded thinking. But what does that mean in fact?
3.2.4 FRom CompETITIon To CompETITIon
Not unsurprisingly, the literature on financial liberalisation, central bank independence, et al. is characterised by frequent recognition that supranational finance implies co- ordination and co-operation, rather than endless competition.
The more central banking operates apolitically, for example, the more it acts in the best interests of the economy it represents. This does not necessarily mean acting in competitive mode, so much as out of a sense of global economic partnership, or, to put it in more usual language, in the spirit of internationally co-ordinated monetary policy.
Although it was some 30 years ago, Gordon Richardson, when Governor of the Bank of England, gave a lecture in which he spoke clearly of this important dimension, using words that have lost none of their relevance. ‘It is, I think, difficult to believe that over the longer term so large a proportion of the world’s currency reserves will be willingly held in one national currency … There are two possible ultimate destinations of such a development. Either we move to a world in which there is a single reserve asset, but in place of a national currency we have a man-made multinational ‘outside asset’; or we move to a world in which there are several major reserve currencies …’ (1979: 13).
This is still the situation, only it is not clear what should play the role of ‘outside asset’. The idea harks back to Keynes’s ‘bancor’, but still the discussion remains predicated on a replacement national currency, such as the yuan instead of the dollar.
In a phrase reminiscent of Friedman’s earlier quoted paragraph, Richardson went on to say:
We live in a world … [in which] each individual nation will continually be attempting to carry out more or less specific monetary or exchange rate policies and is likely to have … a specific balance of payments objective. These aims and policies will not automatically be mutually consistent. At the same time there exists neither the safety valve of the asymmetric accommodation of the dominant single reserve centre; nor an agreed set of rules of the game, nor a general willingness to abandon one of the policy objectives, namely any management of the exchange rate. It does not require much imagination to see the dangers and potentialities for tension in so over-determined a situation… We should see that our best hopes of success are to accept, indeed to develop collaborative arrangements. (Richardson 1979: 15, 16)
Notwithstanding the difficulty in bringing it about, international collaboration in the field of monetary policy should not be deemed irrelevant. It is a clear concomitant of a globalised economy, witness the Labour Party’s (1995: 17) statement that ‘[t]rue national sovereignty will involve a sharing of sovereignty within the realities of the international economy.’ Indeed, and as discussed later, the widespread assumption that central banks should become independent and give prominence to price stability makes no sense other than as a homogenous – i.e. shared – approach. The more global the economy becomes, the more similar will be the approach to finance, with national differences giving way to international similarity and channels of communication becoming reversed. As Mervyn King (2000) notes, there was a time when ‘the traditional channel for conveying City opinion to the government was through the Governor of the Bank of England … [but]
this pattern of representation changed due to the internationalisation of financial services which led to the decline of “esoteric politics”.’
Much as a caterpillar changes into a butterfly, it is as if at the moment of its ‘triumph’
over ancient mores and practices, so competition changes into worldwide global co- operation – or at least a sense for it. In practice, this global dimension is often resisted or contradicted because, once there is only one economy (with, very importantly, its corollary of only one currency) how can competition between entities operate or even make intellectual sense?
Finance, it seems, is a phenomenon in which the way the world ‘works’ and the way we think about it coalesce. Most people, even professionals and academics, think via their national language, placing more reliance on the £ or $ sign than the numbers that accompany them in order to know ‘where’ they are. It is perhaps only foreign exchange dealers who stay forever ‘aloft’ or undomiciled, reporting only minimal taxation in some
‘offshore’ jurisdiction. In the foreign exchange markets to identify too strongly with any one currency would be to sport an Achilles heel or wear an Icarus wing. Either way, the mortality of the dealer would be all too obvious in the amorphous world of global finance, where not only do esoteric distinctions, masquerading as ‘products’, keep its various elements distinct from one another, but so does knowing when those distinctions are operative and when not.