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6. Rethinking money
Jean- François Ponsot
INTRODUCTION
Two recent phenomena invite us to rethink money. The first is related to
economists’ understanding of money. In light of the proliferation of recent
publications on the issue of money, this topic clearly remains an enigma,
even for economists. In this sense, the usual definition of money found
in economic textbooks is inadequate to grasp the fundamental nature
of money (Smithin, 2000; Ingham, 2004; Dodd, 2014; Amato, 2015).
According to the mainstream approach, money was invented in paral-
lel with the development of exchanges, to overcome constraints linked
to trade, and facilitate the expansion of markets. Yet, historical research
shows us that the origin of money is far more remote: money precedes and
determines the social order of trade (Dodd, 2014).
The standard approach to money advocates a purely economistic vision
by reducing it to three economic functions (unit of account, store of value,
medium of exchange), and claims that money can be considered neutral in
the long run. Yet, money is more than a purely economic instrument and
has effects on society as a whole, that is, it is not neutral. Therefore, the
study of money deserves to be thorough and to be enriched by the work of
other disciplines in the humanities and the social sciences.
The second phenomenon concerns itself with the increased enquiries
with respect to the utility of money in our contemporary societies. Citizen
initiatives have demanded from our political authorities the revision of
attitudes regarding the creation of money. Since the beginning of this mil-
lennium we have witnessed a proliferation of initiatives, the purpose of
which is to dispute the use of legal currencies in circulation. A multitude of
monetary innovations, taking different forms such as local complementary
currencies and crypto- currencies, have emerged to challenge the estab-
lished monetary order and reclaim the monetary object through alterna-
tive instruments. The enigma of money is therefore not the prerogative of
economists; it concerns all members of society.
This chapter brings to the fore some ideas that contribute to the current
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debate on this subject matter. For this and in order to measure its complex-
ity, we suggest reviewing money through three perspectives:
A macroeconomic perspective that allows for a more precise hier-
archical representation of monetary flows in contemporary econo-
mies. For this, the hypothesis of endogenous money advocated by
post- Keynesian macroeconomics is particularly relevant. According
to this approach, money and production are closely linked.
An institutionalist perspective that identifies how and why money
establishes a sense of belonging to a community. Here, the works of
the French Monetary Institutionalist School are particularly useful
for revealing the issues of confidence and trust in money, which ulti-
mately is nothing but a social link.
Finally, a political- economy perspective, which calls for treating
money in its human, social and historical dimensions, thereby allow-
ing us to explain money’s moral and political dimensions. In this
regard, money becomes a power issue and is subject to challenges
when it does not fulfil its role as mediator and becomes subject to
appropriation by some social groups.
These theoretical and epistemological questions nourish a deep reflec-
tion within the scientific community. In this regard, we consider a simple
question: can money help overcome financialized capitalism by putting
itself at the disposition of the so- called “real economy” and by meeting the
major challenges of our society?
This chapter is structured as follows. The next section analyses money
from three perspectives: the macroeconomic, institutionalist and political-
economy dimensions of money. In turn, this helps us show that although
money pre- existed modern capitalist societies, the recent development of
financialized capitalism has perverted the productive use of bank credit
and transformed money into a financial tool disconnected from any eco-
nomic activity. The third section analyses the proliferation of monetary
contestations and innovations in recent years, and argues that these can be
seen as strong and logical reactions to the “re- appropriatement” of money.
All these monetary alternatives ultimately share a common purpose: to
reclaim money as a “common”, in a failed monetary regime that is losing
its legitimacy. This raises the important issue of monetary sovereignty. The
last section therefore underlines the notion that the emergence of these
new monetary instruments encounters a recurring pitfall, namely the one
of a logical articulation of these monetary instruments together with the
existing monetary spaces.
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116 A modern guide to rethinking economics
MONEY’S THREE- DIMENSIONAL NATURE
“Lenin is said to have declared that the best way to destroy the capitalist
system was to debauch the currency. Lenin was certainly right. There is no
subtler, no surer means of overturning the existing basis of society than
to debauch the currency”. This quote, from John Maynard Keynes, is old
and probably apocryphal (White and Schuler, 2009, p. 213). Yet it perfectly
characterizes the ongoing evolution of the current monetary and financial
context. The global financial crisis that burst in 2008 has revealed, if proof
were needed, the limits of a financialized capitalism gasping for breath.
The variety of banking and financial reforms has not given rise to a new
monetary and financial order. In the absence of fundamental reforms in
this field, a number of monetary and financial initiatives, more or less
spontaneous, have given rise to new monetary instruments, which can
be called local or crypto- currencies, the most famous of these being the
bitcoin.
Now, can these monetary innovations contribute to a new monetary
order? Can they contribute to overcoming financialized capitalism and
provide a sustainable response to the challenges facing our society? To
answer these questions, it is necessary to remember that money is a public
good at the service of the community: it is a central institution to any
society, especially in capitalist societies where money and production are
narrowly linked.
Yet, the problem we encounter is that the conventional conception
of money forgets this institutional dimension. It is too often trapped in
its commercial representations and its systematic association with the
emergence of capitalism. According to this reductionist approach, money
was invented to overcome the constraints of barter, which then enabled
the development of commercial exchanges and the advent of capitalism.
However, historians and economists engaged in interdisciplinary research
show that this view is mistaken. Money is not the result of spontaneous
market innovations to solve the problems of the double coincidence of
needs posed by the barter economy, as the neoclassical economist Carl
Menger (1892) believed in the late nineteenth century. Money is an insti-
tution stronger than the market, and its historical origins are far more
remote. It precedes and determines the social order of trade (Dodd, 2014).
Unfortunately, today, we still find textbooks and encyclopedias per-
petuating this barter fable to explain the genesis of money, and economists
have a heavy responsibility in the dissemination of this economistic and
instrumental view. If we want to understand money in all its complexity, it
is necessary to go beyond a definition that reduces it to its three economic
functions: unit of account, medium of exchange and store of value.
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The research work of French institutionalists Michel Aglietta (see
Aglietta et al., 2016), Bruno Théret (2008), André Orléan (2011) and
Jean- Michel Servet (2015) falls into this perspective. These authors show
that money is social and political by essence or nature. Money is the cor-
nerstone of human society, both in the past and in the present. Money is
first and foremost a social relation, and then an economic instrument. At
national or community levels, money is an institution that connects, in a
sustainable manner, the individuals to each other and to the whole society.
Not only does money govern relationships between individuals, but it also
governs those of citizens with the State or with any other authority in their
community.
Money’s history is that of the dissolution and constitution of this social
bond, in a context of power relationships more or less marked depending
on the periods and of societies. In this sense, the monetary order is the
result of a social and political compromise for a given period; it repre-
sents a conception of the common good and the concept of togetherness.
However, no monetary order is immovable, as monetary history teaches us.
If it happens that society’s members no longer identify with this compro-
mise, then society as a whole enters a crisis.
This principle also applies internationally. International monetary rela-
tions are not limited to the exercise of the intermediary function in
international trade or of the reserve currency function accumulated in
central banks’ accounts. They rather reveal that money is a strong power
instrument, as evidenced by the present currency war and the ambitions of
China to internationalize the yuan in order to rival the US dollar.
Although anterior to modern capitalist societies, money remains a
fundamental institution of capitalism. Understanding societies’ rules of
mintage – that is to say, the distribution methods of payment – can reveal
a key dimension of money in capitalist economies, namely, its macro-
economic dimension. Here, money is in essence endogenous to the eco-
nomic system. This means that its quantity in circulation is determined
by the needs of the economic system and of economic activity, through
the process of money creation by banks. As Aglietta et al. (2016, p. 94,
our translation) explain, “[i]n modern economies, money appears in credit
operations granted by banks to finance production.” This mechanism,
specific to the banking function, is particular:
banks have a power of monetary creation ex nihilo, that is to say, without any
need for pre- existing resources or reserves. This money creation power, however,
is not unlimited. It is submitted, first, to the need to obtain repayment from the
borrower (hence the importance of assessing the borrower’s risk) and, secondly,
to prudential regulation that governs banking practices.
(Aglietta et al., 2016, p. 94, our translation)
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Beyond commodity exchange and capital accumulation, the dynamics
of capitalism relies therefore on the close relationship between money
and production, which is forged through bank credit. The increase in the
quantity of money is necessary to boost investment and production, which
generates additional revenues. This was precisely Keynes’s message when
he encouraged his colleagues to reason within what he called a “monetary
economy of production” (Keynes, 1933/1973, 1936/1973), rather than in a
real- exchange economy in which money is completely neutral. Today it is
Keynes’s followers, post- Keynesians, who best explain this endogeneity of
money (Monvoisin, 2013; Rochon and Rossi, 2013; Lavoie, 2014).
According to these authors, the essence of money cannot be understood
if one still considers money as being created by banks from preliminary
resources (according to the logic of “deposits make loans”), while it is pre-
cisely the ability of banks to issue money by granting credit that is at the
heart of the dynamics of capitalism. To be more specific, post- Keynesians
identify two levels of endogenous money supply. The first relates to bank
money, created endogenously in response to a request for funding. The
second level relates to the supply of liquidity (“high- powered money”) by
the central bank, which depends on the banks’ demand for liquidity: the
central bank has no choice but to accommodate the needs of the banking
system, otherwise it could trigger a liquidity crisis across the banking
system.
Capitalism has long obeyed this mintage rule, linking money to the
financing needs of production. The industrial revolution or the so- called
Glorious Thirty provide a perfect illustration of this kind of capitalism,
the industrial type, accompanied by bank credit as an engine of economic
growth. However, those seem bygone times. Not that bank credit has van-
ished. On the contrary, it has never been doing so well (in the two decades
preceding the global financial crisis, the volume of credit to the private
sector grew three times faster than nominal gross domestic product). But
it has changed in nature.
The development of financialized capitalism, from the 1980s, has per-
verted the productive use of bank credit and transformed money into a
financial tool disconnected from economic activity. Finance left to itself
generates an overabundance of credits detached from financing produc-
tive investment. Banks now prefer to grant credits related to speculative
operations that in turn fuel asset bubbles rather than financing investment
and production. As Adair Turner (2014, pp. 6–7) explained, “[m]ost credit
extended in advanced economies does not perform the function which eco-
nomics and finance theory describe. [. . .] A reasonable estimate suggests
that only around 15% of bank lending in the UK finances new capital
investment.”
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Three dynamics have contributed to the disconnection between bank
lending and economic activity. First, financial liberalization contributed to
the deregulation of banks and financial markets, thereby offering financial
opportunities unexploited until recently. Recall that all these reforms were
the result of political decisions endorsed by national parliaments from the
1980s, and not simply the result of a spontaneous evolution of the finan-
cial players’ practices. These reforms have also allowed the development of
new players in finance and credit. In particular, non- bank financial inter-
mediaries (shadow banking) helped increase the volume of unregulated
credit falling exclusively within financial goals.
The second dynamics relates to financial innovations: technological
advances in financial engineering and the need to better manage the micro-
economic risk in an uncertain world have fostered the growth of innova-
tive financial products, increasingly sophisticated yet destabilizing and
disconnected from the needs of economic activity. As a simple example,
let us point out the perverse effect of credit default swaps. These insurance
contracts, allowing the lender to insure against the borrower’s default risk,
have distorted the banker’s profession: the possibility to transfer credit risk
has prompted the latter to take more risks and even speculate against his
own client.
Finally, the dynamics of financial globalization has significantly increased
the communication and interconnection of national capital markets and
has facilitated the free movement of capital. This international financial
integration, coupled with an international monetary system centred on the
US dollar, caused an accelerated “deterritorialization” of monetary and
financial flows: the dynamics of capital is now global and every unit of
money generated can feed a transaction outside the space in which it was
issued. No wonder then economic actors, particularly public authorities,
feel dispossessed of money as an instrument of sovereignty.
MONETARY DISPUTES
As discussed earlier, money is social and political by essence or nature. A
given monetary order therefore is the result of a social and political compro-
mise within a specific period. However, as monetary history teaches us, no
monetary order is beyond being questioned or even removed, if society at
large no longer recognizes itself in this compromise. Money may be subject
to conflicts between actors and social groups, the aim of which is to distort
at their advantage their monetary rule, and especially their access to liquidity.
Highlighting the apprehension of money’s institutional and macro-
economic dimensions allows us to better understand the proliferation in
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120 A modern guide to rethinking economics
recent years of monetary challenges and initiatives to reappropriate money.
Since money is a common good at the service of society, the denaturation
of this first function or its capture by certain economic agents undermines
the monetary order and weakens society (Aglietta et al., 2016, p. 212).
Such is the meaning of today’s challenges that are striving to modify
the existing social and monetary organization and to contribute to a new
monetary order. These monetary disputes manifest themselves at all levels
of society: local, national, regional and international (Ould Ahmed and
Ponsot, 2015).
Monetary disputes, however, are primarily territorially anchored at the
local level through the recent boom of complementary local currencies.
These are alternative currencies qualified as being social or complemen-
tary, created by civil society and/or by local public authorities. They meet
a number of economic needs that are based on a critical political reflec-
tion about globalized financial capitalism. These alternative currencies are
experiencing a sharp rise since the 1980s, in both developed and developing
economies. They aim to promote a better social and solidarity integration
for the poorest populations through economic dynamics of local develop-
ment (Blanc, 2011). They are part of a rehabilitation movement, at the
local level, of money as a social link, which is an essential feature of money
that disappeared with the rise of individualism, financialization and glo-
balization, the proliferation of financial setbacks and scandals and so on.
By creating additional local currencies, the actors of civil society not only
seek to recover the money appropriated by finance, but also to raise the
monetary pillars of a new societal project (Blanc, 2011).
Monetary disputes can therefore also arise at the national level, and in
turn this raises the issue of monetary sovereignty. In the last two decades,
such disputes have primarily concerned emerging economies. Monetary
credibility was, in fact, the main challenge of the emerging economies’
monetary policies in the 1990s. The global financial crisis has forced
emerging economies to confront another challenge, namely that of mon-
etary sovereignty. In the context of a so- called currency war, emerging
economies and developing countries looked for measures that could be
implemented in order to protect themselves against the negative effects of
non- cooperative monetary strategies issued from centre countries like the
United States.
The relevance of this approach was even more obvious while new aca-
demic research came to consolidate it. For example, empirical studies
conducted by Rey (2015) confirmed the existence of a global financial
cycle that depends on the US Federal Reserve’s decisions, which generate
macroeconomic shocks in emerging countries, unrelated to their domestic
conditions and independently of the exchange rate regime adopted by
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these countries. This invalidates Mundell’s (1963) incompatibility triangle
and implies the following conclusion: the independence of a country’s
monetary policy is only possible with some capital controls. More recently,
the International Monetary Fund (2012, p. 3) also defended the introduc-
tion, “in some circumstances”, of instruments of capital control between
countries.
Another factor has challenged the issue of monetary sovereignty in
emerging and developing countries: the development of new economic
growth and development models that challenge the more traditional
export- led growth models and financial liberalization (Palley, 2011). In
turn, this prompted these countries’ governments to question the degree of
autonomy of their monetary policies and the effectiveness of discretionary
measures.
If today we are questioning monetary sovereignty in peripheral econo-
mies, it is difficult to do so with old analytical tools, for at least two reasons.
First, monetary sovereignty in the twenty- first century is different from
that of previous centuries. Today, the primary intention is no longer to
consolidate the power of nation- states within a national space, as was often
the case in the nineteenth and twentieth centuries. Rather, emerging coun-
tries are anxious to restore their monetary sovereignty, and do so mainly to
be able to absorb external shocks in a framework of financial globalization
and free capital movements.
In this sense, the monetary sovereignty of the twenty- first century does
not necessarily come in opposition to the “deterritorialization” of curren-
cies at work for decades. It is not focused, a priori, on the logic of “one
nation / one money” described by Cohen (2011). In fact, recent literature
also tends to strongly relativize this unicist or unitary vision of money.
For instance, Helleiner (2003) and Andrews (2006) show that monetary
sovereignty and the “international monetary power” do not necessarily
fall within the exclusive framework of nation- states with monetary unicity.
Claims for monetary sovereignty are also relevant for the euro area. The
debate on exiting the euro, often passionate, is a continuation of the euro-
area crisis and the sovereign debt crisis since the early 2010s. The euro is
an “incomplete currency” (Aglietta and Brand, 2013), has exacerbated the
structural differences between the euro- area member countries and has
made it difficult to activate effective crisis resolution policies. Two coherent
but radical solutions are then put forward. The first prompts to complete
the euro by adding to it a banking union, a federal budget and intra- zone
fiscal transfers. This is the federal solution. The other option denies the
very existence of the euro and urges member countries to appropriate
their monetary sovereignty by giving up the single currency. This is the exit
solution.
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122 A modern guide to rethinking economics
Finally, monetary disputes are at play internationally. The denunciation
of the US dollar’s “exorbitant privilege” is not new (Eichengreen, 2011).
But the currency war has implemented non- cooperative monetary strate-
gies, with little regard for their collateral effects on the rest of the world.
For instance, the US quantitative easing policy has had devastating effects
on emerging economies, by favouring large currency movements and
forming bubbles in financial asset markets. Moreover, the coordination of
exchange rate paths is no longer valid.
The dominance of the US dollar is also more and more challenged,
because it relies on an asymmetrical monetary system (Ponsot, 2016).
Unlike the United States, small countries, particularly emerging and
developing countries, cannot borrow at the international level in their
own currency. This is the so- called “original sin”: these countries must
borrow in US dollars, which subjects them to exchange rate risks, and
greatly constrains their financing needs. They must voluntarily accumulate
unreasonable amounts of currency reserves in US dollars, as a precaution,
to anticipate against financial crises and speculative attacks (Faudot and
Ponsot, 2016, p. 52). This process of reserve accumulation is very costly in
terms of economic growth (Rodrik, 2006).
This asymmetry also means that the distribution of power in interna-
tional monetary relations is not fair. In particular, the hierarchy of curren-
cies in the world system means that the issuer of the “top currency” has
the ability to delay and deflect the burden of adjustments to external bal-
ances (Cohen, 2011, p. 169). The weight of adjustments in case of external
imbalances is not equally distributed between surplus countries and those
in deficit. Deficit countries, especially developing economies, are forced
to adopt austerity policies and curtail domestic spending. This structural
adjustment imposes deflationary policies and competitiveness stimulus,
via a lowering of unit labour costs, thereby penalizing aggregate demand,
economic growth and employment (Stockhammer, 2007). The hegemonic
position of the US dollar structures the world economy in such a way that
the United States determines the international transmission mechanism for
global economic activity (Fields, 2015).
MONETARY INNOVATIONS AND ARTICULATION
OF MONETARY SPACES
All these monetary disputes ultimately share a common purpose: to reclaim
money from a failed monetary regime that is losing its legitimacy. The chal-
lenge is to develop a monetary instrument that can become “common”
(Servet, 2015), a virtue that has disappeared from the instruments used in
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the monetary order that is being contested. Yet, the emergence of these
new monetary instruments encounters a recurring pitfall: the logical
articulation of these monetary instruments together with the existing mon-
etary spaces. Two recent experiences of monetary innovations illustrate the
recurring tension between the need to create a new money and the need to
coexist with other currencies.
The first example is the bitcoin. Like many other crypto- currencies, the
bitcoin is a disembodied monetary instrument: it is a private monetary
innovation, detached from the concept of public good and disconnected
from any sovereign authority ensuring its liquidity and sustainability. It
maintains the illusion of a virtual community, even within the networks
of those who promote it. Yet, the bitcoin is neither based on a hierarchical
banking system overseen by a central bank nor on a clearing system that
would ensure payments sustainability. Completely decentralized, it is thus
unable to meet the liquidity needs of the economy by financing economic
activities. In case of declining economic activities, it is unable to afford
public stimulus actions.
The distribution of bitcoin is, by nature, highly inequitable: it favours
the first holders (“early adopters”) to the detriment of the last users. The
hyper- volatility of its price makes it unsuitable for anchoring forecasts and
sustaining payments. The bitcoin also cannot perform the functions of a
global public good, in contrast to the idea that it would provide a solu-
tion to the problems posed by the current international monetary regime.
The supply of bitcoin, fixed beforehand, cannot meet global liquidity
requirements.
The highly speculative character of the bitcoin is certainly not a stabi-
lizing factor for the current international monetary system. Holding or
hoarding it is even riskier as there are not guarantees of convertibility into
“official” money units by governments. And if transactions in bitcoins are
very secure, it is not necessarily the case for the storage of bitcoins. The
anonymity of bitcoin transactions (at least the difficulty to trace these
transactions) is a windfall for cybercrime and money laundering. If one
refers to the crypto- anarchists and libertarian theories that inspire the
bitcoin, it seduces its users as it gives them the illusion they have ownership
of money and get rid of the harmful interventions of the actors who are
supposed to exert control on money (States, central banks and banks). The
bitcoin then reveals its true nature: a “virtual anonymous ‘money’, anti-
bank, anti- state, anti- common” (Dupré et al., 2015, p. 109). It is not really
a solution to the problems of our time.
More recently, in 2015 the launch of a new Daesh currency, the gold
dinar, provides an even clearer illustration of the points of tension gener-
ated by the attempts to establish a new monetary order. By substituting
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124 A modern guide to rethinking economics
its money to the Syrian pound and the Iraqi dinar, the terrorist group
increases its grip on the occupied territories and prints an intended indel-
ible mark, with no possibility of turning back. It is emerging as a real State
with the sovereign right to mint its own currency. The gold dinar embod-
ies a monetary dispute not only over the region’s States but also over the
international monetary system dominated by Western powers. This is why
the gold dinar is backed by the precious metal, so as not to be at the mercy
of the “tyrannical and oppressive financial system” (Ait- Kacimi, 2015) of
Western countries and particularly of the US dollar. Daesh aims to estab-
lish a new Islamic world monetary order at the centre of which the gold
dinar would play the key role.
This new currency was created in reference to the currency in use during
the reign, in the seventh century, of the third caliph Abd al- Malik, the first
to have created coins with his image and verses from the Koran. This is a
golden age with which Daesh is striving to resurrect, constituting a range
of coins for everyday use. All these monies carry very explicit symbols: a
world map, future zone under Islamist domination, a minaret, the Al- Aqsa
Mosque in Jerusalem (the conquest of the Holy City being one of Daesh’s
ultimate goals).
CONCLUSION
Money is a common good. Refusal to recognize this primary function of
money or its appropriation by some agents jeopardizes this constitutional
order and undermines society. Today, money created by banks no longer
serves the primary role of financing economic activities. In Europe, owing
to the incompleteness of the euro as well as the imposition of austerity
policies associated with it, the European single currency fails to embody
a common collective project and a shared prosperity. It is therefore not
surprising to see the emergence of decentralized monetary initiatives to
reappropriate money by anchoring it to communitarian and/or ethical
principles, shared by its private users.
But beyond complementary local currencies, largely discussed, what
other avenues are worth exploring to finally put money at the service of
our society’s major challenges? How could one overcome the contempo-
rary financialized capitalism and give back to money a new real economic
value, both social and environmental?
The first field of investigation is the reform of banking and financial
systems. Today, bank money is diverted from its primary purpose, that is,
financing production. Rather than seeking to do without banks or ampu-
tate their money creation power, as advocated by an increasing number of
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Rethinking money 125
citizens and followers of “100 per cent money” adepts (such as “Positive
Money” in the United Kingdom, “Monnaie pleine” in Switzerland and so
on), it would be preferable to force private banks to reconnect with their
basic social vocation: financing economic activities and be at the service of
common prosperity.
The levers of such an enterprise are numerous: strengthening prudential
regulations, adopting laws that specify the policies and criteria of bank
credit to the so- called “real economy”, redefining eligibility requirements
of credit institutions with respect to banking licences and accreditation,
implementing social control of commercial banks, and so on.
The creation or enhancing of national and multilateral development
banks to finance real major public policies (as regards, for instance,
infrastructures, energy and ecological transition and innovation) is
another option that is increasingly popular in international organiza-
tions (Griffith- Jones, 2014; World Bank, 2015). National and multilateral
development banks are especially well suited to infrastructure financing,
as they can provide the long- term financing needed for infrastructure
investment to become profitable, given the large scale of the initial invest-
ment and the long amortization time. Furthermore, multilateral develop-
ment banks can offer finance at a relatively low cost, as they have very
high credit ratings (typically as high as and sometimes higher than their
member governments). Thus, they can borrow relatively cheaper on inter-
national capital markets and pass on that cost advantage to their borrow-
ers (Griffith- Jones and Kollatz, 2015). This alternative proposal contains
additional merits, such as redirecting economic growth regimes towards
the long term, contrary to what happens in modern capitalism guided pri-
marily by financial and short- term objectives.
The second field of investigation concerns Europe and the European
currency. The euro could embody a common collective project and shared
prosperity provided the single currency relied on a system of production
that is able to provide and distribute more efficiently and equitably the
goods and services for which money serves as counterpart. Obviously, the
euro is greatly weakened by its incompleteness and the devastating effects
of austerity policies associated with it. The relationship we have with our
communities through the existence of money depends on the trust or
confidence people place on the sovereign institution that unites and guar-
antees its values, principles and standards. The return of public policies of
full employment as well as the adoption of large projects with commonly
shared values (we refer of course here to the ecological transition) would
help consolidate the currently failing European monetary order. Without
strengthening confidence over cohesion and legitimacy of the values and
principles that underpin monetary order, the euro will inevitably lead to
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126 A modern guide to rethinking economics
political crises of great magnitudes. Monetary history teaches us, in fact,
that monetary crises are a corollary to political crises (Théret, 2008).
The last field of investigation constitutes reforming the international
monetary system. In our view, the establishment of a new international
monetary order would not only be more efficient in terms of develop-
ment and with respect to diminished global macroeconomic imbalances,
but it would also be able to contribute to the establishment of true global
climatic and environmental governance. Beyond the establishment of a
supranational currency, a project perfectly identified by post- Keynesians
(Rossi, 2015), one of the chosen options could be an international carbon
currency: by linking money to the major challenges of the energy transi-
tion, it would incorporate another more holistic modality, rehabilitating
money to the service of common good (Aglietta et al., 2016, p. 198).
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