Money, Markets, and Sovereignty

Money, Markets, and Sovereignty

Benn Steil
Manuel Hinds
Copyright Date: 2009
Published by: Yale University Press
Pages: 304
https://www.jstor.org/stable/j.ctt1np9xt
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  • Book Info
    Money, Markets, and Sovereignty
    Book Description:

    Winner of the 2010 Hayek Book Prize given by the Manhattan Institute

    "Money, Markets and Sovereigntyis a surprisingly easy read, given the complicated issues covered. In it, Mr. Steil and Mr. Hinds consistently challenge today's statist nostrums."-Doug Bandow,The Washington Times

    In this keenly argued book, Benn Steil and Manuel Hinds offer the most powerful defense of economic liberalism since F. A. Hayek publishedThe Road to Serfdommore than sixty years ago. The authors present a fascinating intellectual history of monetary nationalism from the ancient world to the present and explore why, in its modern incarnation, it represents the single greatest threat to globalization.

    Steil and Hinds describe the current state of international economic relations as both unusual and precarious. Eras of economic protectionism have historically coincided with monetary nationalism, while eras of liberal trade have been accompanied by a universal monetary standard. But today, the authors show, an unprecedentedly liberal global trade regime operates side by side with the most extreme doctrine of monetary nationalism ever contrived-a situation bound to trigger periodic crises. Steil and Hinds call for a revival of the political and economic thinking that underlay earlier great periods of globalization, thinking that is increasingly under threat by more recent ideas about what sovereignty means.

    eISBN: 978-0-300-15614-0
    Subjects: Economics, Business

Table of Contents

  1. Front Matter
    (pp. i-viii)
  2. Table of Contents
    (pp. ix-x)
  3. ACKNOWLEDGMENTS
    (pp. xi-xii)
  4. 1 THINKING ABOUT MONEY AND GLOBALIZATION
    (pp. 1-10)

    The wordglobalizationhas a manifold paternity, but its modern coinage has been popularly ascribed to formerHarvard Business Revieweditor Ted Levitt, who in a 1983Reviewarticle argued that new technology had “proletarianized” global communication, transportation, and travel.¹ On a more visceral level, its popular tableau is captured in Rory Stewart’s travelogue of his walk across Afghanistan, one of the least globalized parts of the globe, immediately following the fall of the Taliban, in which he observes men in Herat unloading Chinese tablecloths and Iranian flip-flops marked “Nike by Ralph Lauren.”²

    Theideaof globalization, however, the notion...

  5. 2 A BRIEF HISTORY OF LAW AND GLOBALISM
    (pp. 11-34)

    Globalism—broadly speaking, the view that increasing economic and cultural interconnections across the globe are a positive development, to be advanced rather than resisted—has a much older and historically esteemed pedigree than is widely recognized. In the context of the contemporary debate over the legitimacy of globalization, particularly as it relates to the sovereign powers of states vis-à-vis individuals, the historical development of Western law has been very much consistent with globalist thought; in particular, the notion that individuals have certain natural universal rights that transcend the will of rulers

    As with John Micklethwait and Adrian Wooldridge, authors of...

  6. 3 THE ANTI-PHILOSOPHY OF ANTI-GLOBALISM
    (pp. 35-66)

    What unites the pro-globalization literature is the way in which its authors appeal explicitly to an established philosophy of liberal cosmopolitanism. As we illustrated in chapter 2, the roots of such thought are actually two millennia older than their tracts recognize, originating in the Hellenistic world of the late fourth and third centuries BC. The body of Stoicist political philosophy has deeply infused the development of Western law, two branches of which, Anglo-Saxon common law and the Lex Mercatoria, have organically reincarnated themselves as foundations for modern international commerce and finance.

    Anti-globalization writers, in contrast to their pro-globalization counterparts, do...

  7. 4 A BRIEF HISTORY OF MONETARY SOVEREIGNTY
    (pp. 67-106)

    Carl Menger’s account of the process by which money emerged, while wholly supported by the archaeological and historical evidence, appears strange to the modern mind, conditioned as it is to seeing money as a creation of states. This now-indelible association between money and states was first fashioned by powerful men 2,500 years ago not to promote economic activity, but to profit from it. And today the imposition of national monies remains one of the most potent tools available to governments to extract wealth from their populations and to exercise political control over them.

    Throughout virtually all of human history, up...

  8. 5 GLOBALIZATION AND MONETARY SOVEREIGNTY
    (pp. 107-150)

    In chapter 4, we contrasted the mythology and psychology of money. The powerful mythology surrounding money’s status as a timeless manifestation of state sovereignty is in constant tension with the psychology of its users, who in their buying, selling, saving, and lending behavior treat it entirely as a private asset.

    As a tool of state political and economic control, money needs to be mutable in value. In order for the state to use money to influence the way the national economy operates, central banks must be able to control the levers determining the rate of change of domestic prices (that...

  9. 6 MONETARY SOVEREIGNTY AND GOLD
    (pp. 151-197)

    Do countries need monetary sovereignty? Does ensuring national economic welfare require that governments have the unfettered power to produce money at will? In contrast to the ideas that prevailed before the 1970s, the mainstream of contemporary thought now says yes. In particular, the belief is widespread that when governments lack the power to produce money, either because countries are using a foreign-produced currency, like the dollar or the euro, or because money production is constrained by the need to acquire stocks of gold, as it was during the days of the international gold standard, the inevitable result is periodic deflation...

  10. 7 THE FUTURE OF THE DOLLAR
    (pp. 198-239)

    Unkind words about the U.S. currency from an Iranian president could normally be dismissed as political bluster, but in this case it was bluster with a disturbing kernel of truth to it. Over the course of 2007, states with large dollar holdings were becoming increasingly fearful about the dollar’s long-term global purchasing power, but they simply had less incentive to sound the alarm about it.

    A dollar was once redeemable for a fixed amount of precious metal, but has for four decades now been redeemable only for near-worthless metal—pennies, nickels, dimes, and quarters. It is valuable only to the...

  11. 8 THE SHIFTING SANDS OF SOVEREIGNTY
    (pp. 240-246)

    “There exists perhaps no conception the meaning of which is more controversial than that of sovereignty,” wrote L. F. L. Oppenheim, one of the founding figures of the discipline of international law at the turn of the twentieth century.¹ Sovereignty is a powerful and deeply emotive word. It has for centuries been invoked to defend inalienable powers of the state, internally and externally, even as the political organization of states has been turned on its head.

    The idea of sovereignty was first enunciated in rigorous form by the sixteenth-century political thinker Jean Bodin, whose aim was to bolster the supreme...

  12. NOTES
    (pp. 247-262)
  13. REFERENCES
    (pp. 263-276)
  14. INDEX
    (pp. 277-288)