Modern Money and the Rise and Fall of Capitalist Finance: The Institutionalization of Tusts, Personae and Indebtedness PDF
Preview Modern Money and the Rise and Fall of Capitalist Finance: The Institutionalization of Tusts, Personae and Indebtedness
Modern Money and the Rise and Fall of Capitalist Finance Modern Money and the Rise and Fall of Capitalist Finance examines the true nature of modern money and seeks ideas for an alternative economic system for a just society. This book suggests that adopting the ideas and institutions of a trust allowed personae to be combined with creditor-debtor relations and, by doing so, led to the evolution of modern money. This also helps explain why modern banking arose in England rather than continental Europe, by conceptualizing modern money as a trust and investigating the inseparable relationship between personae and modern money, because it is more than creditor-debtor relations—it takes the form of a trust. In explaining how the capitalist credit-money economy differs from previous economies, this book is a significant contribution to the literature on modern money, heterodox economics, and the philosophy of economics and finance. Jongchul Kim has critically examined the modern concepts of “person” and “property” and applied this critique to an understanding of money and finance. He is currently an associate professor in Sogang University, South Korea. Routledge Frontiers of Political Economy Globalization and the Decline of American Power The Political Economy of the American Fall Cyrus Bina Marx and Le Capital Evaluation, History, Reception Edited by Marcello Musto Permanent Economic Disorder Shahzavar Karimzadi Temporary Economic Crises Shahzavar Karimzadi Money and Capital A Critique of Monetary Thought, the Dollar and Post-Capitalism Laurent Baronian Modern Money and the Rise and Fall of Capitalist Finance The Institutionalization of Trusts, Personae, and Indebtedness Jongchul Kim Innovation, Complexity and Economic Evolution From Theory to Policy Pier Paolo Saviotti Economic Growth and Inequality The Economist’s Dilemma Laurent Dobuzinskis For more information about this series, please visit: www.routledge.com/ Routledge-Frontiers-of-Political-Economy/book-series/SE0345 Modern Money and the Rise and Fall of Capitalist Finance The Institutionalization of Trusts, Personae, and Indebtedness Jongchul Kim First published 2023 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2023 Jongchul Kim The right of Jongchul Kim to be identified as author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-0-367-51047-3 (hbk) ISBN: 978-0-367-51050-3 (pbk) ISBN: 978-1-003-05221-0 (ebk) DOI: 10.4324/9781003052210 Typeset in Bembo by Apex CoVantage, LLC I am deeply grateful to my parents, Yoo-ho Ja and Young-gil Kim, and two great teachers, Jonathan Nitzan and Ted Winslow. Thanks to their help and advice, I have been able to pursue my own research. The following chapters in this book reproduce my prior publications with some revisions. Chapter 1: Kim, Jongchul. “Money is Rights in Rem: A Note of the Nature of Money.” Journal of Economic Issues 48, no. 4 (2014): 1005–1019. Chapter 3: Kim, Jongchul. “How Modern Banking Originated: The London Goldsmith Bankers’ Institutionalisation of Trust.” Business History 53, no. 6 (2011): 939–959. Chapter 4: Kim, Jongchul. “Modern Politics as a Trust Scheme, and its Relevance to Modern Banking.” Journal of Economic Issues 47, no. 4 (2013): 807–826. This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2021S1A5A2A01061947) Contents List of Figures x List of Tables xiii Introduction 1 Persona, Property, Trusts, and Modern Money 1 Money Economy Versus Credit Economy 8 Structure of the Book 10 1 Money and Property 14 1.1. Analogy 17 1.2. Property was Created in the Image of Money 20 2 Person and Property—Mistaken Ideas 26 2.1. Is Locke’s Ontological Formula of “Person-Property” a Case of the Linguistic Structure of “Subject-Predicate”? 27 2.2. Locke’s Ontological Formula of “Person-Property” Creates a Peculiar Concept of Ownership Rights 34 2.3. An Analogy between Property, Slavery, and Money 36 2.4. Linear or Recurrent 39 3 The Origin of Modern Money—Modern Money as a Trust 44 3.1. Bills of Exchange and the London Goldsmith Bankers’ Notes 47 3.2. Methods of Maintaining a Fractional Reserve 53 Permanent Indebtedness & Liquidity 54 3.3. The Nature of the London Goldsmith Bankers’ Deposit-Taking 55 Economists’ Understandings of Goldsmith Bankers’ Deposit-Taking 57 3.4. Goldsmith Banking as a Trust 61 viii Contents 3.5. Transforming into the Capitalist Money Economy 66 3.6. Summary 66 4 The Political Economy of Modern Money in Early Modern Times: Indebted Personae and the Rise of Modern Money 74 4.1. Modern Banking as a Trust Scheme 75 4.2. Acceptance for the Payment of Tax 76 4.3. Modern Politics as the Constructor of Modern Banking 78 4.4. Modern Politics as a Trust Scheme 81 4.5. Representative Democracy as a Trust 86 4.6. Socialization of Debt 88 5 Shadow Banking in Neoliberalism 94 5.1. Money Market Funds and Propertization 95 5.2. Propertization and the Crisis of 2008 98 6 Person, Property, and Trusts: Revisited 108 6.1. Trusts and the Person-Property Formula 108 6.2. Modern Business Corporations as a Trust 110 The Nature of Shares 110 Social Irresponsibility and Inequality 113 6.3. Quantitative Easing as a Trust 118 7 The Fall of the Neoliberal Form of Finance and Its Predicaments 131 7.1. The Withering of Private Banking and Finance 134 7.2. The Inflationary Period 139 7.3. Demography and Globalization 143 7.4. Global Inflation 146 7.5. The Privilege of Being the World’s Reserve Currency 148 7.6. Effects of Quantitative Easing 150 7.7. Beggar-Thy-Neighbor and Global Inflation 156 7.8. Genuine Solution? 159 8 What is to be Done?: Cooperative Basic Capital and the Abolition of the Hybridity 163 8.1. Abolishing the Hybridity 163 8.2. Basic Capital as a New Method of Wealth Redistribution 166 Contemporary Proposals for Basic Capital 169 Basic Capital in Ancient Times 170 Contents ix Plato’s Klēros 170 Mencius’s Well-Field System 171 Breaking Down the Dichotomy between the Private and the Public 172 Cooperative Basic Capital 173 Duty to use Productively: Workers’ Cooperatives 173 Distinguishing Unproductive Debts from Productive Debts 176 Financing Basic Capital: Social Inheritance 177 Index 183
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