Money cranks

Major C.H. Douglas
Money Crank

Economic crises always have a falling-out-among-thieves with  different capital sectors seeking advantage for themselves by fixing capitalism’s problem on others. Many of todays radical economists pin-point the central cause of the problems of capitalism is to be found in the sphere of the circulation of commodities - a financial banking and consumer spending crisis, rather than at the point of production, where the Marxist locates it. They seek  to solve the social problem of capitalist production without changing the existing relations of production. Currency reformers of the Ellen Brown and Positive Money type wish to save capitalism by making changes in the monetary system alone and  reform capitalism by an alteration in the monetary mechanism. They ignore the industrialist capitalist and concentrate their attacks upon the bankers. They  propose to socialize credit and leave the capitalists in control of industry. It is a dream of reform shrinking away  from any genuine revolutionary consequences  hope to attain their heart’s desire by legislative measures , as simply and easily as signing a decree. Their practical political programs reflect a timidity that trembles at the prospect of  revolution. They sincerely desire to abolish all the miseries of exploitation, but without upsetting the existing social relations of production and without compelling anyone but a handful of bankers to yield up their present privileges. We are assured banking reform is not socialism but ‘economic democracy’.

They find the scapegoat in the money supply and the credit monopoly of finance capital. They often “prove” the existence of “the banker’s conspiracy” by exposing the Federal Reserve. They insinuate that bankers deliberately instigate panics and crises. They do pay no heed to  credit crunch as a symptom and evidence that the crisis is already under way, instead of being the fundamental cause of its occurrence, and pass over the fact that bankers, like other capitalists, can only invest money where there is the prospect of profit. The financial magnates are as helpless as any other capitalist group to start or stop a general capitalist crisis, although they have induced temporary credit stringencies for their private purposes. They hold a basic belief that money is not (or should not be) a commodity, but a system of worthless tokens (fiat money). They mistake the superficial forms of modern money (its paper dress as currency or its phantom bookkeeping existence as checks) for its inner nature. They completely fail to comprehend the function of money in a commodity producing society, and particularly under capitalism. As the general equivalent of value, money is not only a commodity but the king among commodities, destined to reign so long as capitalism endures.

Nor do these currency cranks fully comprehend  that money is subject to all the laws of capitalism. Chief among these laws is the necessity of transforming money into capital, and using capital to appropriate surplus value. The financier accomplishes this by loaning money to the industrialist or the merchant, who, in their turn, appropriate their share of surplus value directly from the working class. The self-same capital is used for exploiting purposes by both groups of capitalists, and yet the new economists  condemn the bankers alone. Their position amounts to this: the capitalist may exploit the working class, but the finance capitalist must not exploit his brother capitalists.

At the bottom of it all is the fear of the small businessmen of the Frankenstein monster of  the Big Banks. The monopoly of credit is the means by which large corporations exploit the lesser capitalist groups. They charge the banking industry with the creation of debt although that process is only a special case of the continuous transformation of social wealth into private property under capitalism. First, the power of creating credit is to be taken away from the private bankers and vested in the state. Either by nationalization of the banks or the creation of the North Dakota State Bank model. The scheme is utterly utopian. If credit was nationalized, as it is for all practical purposes in many capitalist countries today, it would simply put a more powerful weapon in the hands of the monopoly capitalists who control the state, and be used, as it is in those countries, to protect the profits of national capitalists against foreign competition. It appears radical in form but proves to be reactionary in substance. Its propagandists  pander to all the confused prejudices of the impoverished ‘middle’ classes, providing a pseudo-socialist covering for their outspoken hatred of finance capital, their nationalism and, in many cases, their anti-semitism.

 The fundamental cause of capitalist crises is to be found in the antagonisms of capitalist production and this cannot be repeated too often until it eventually sinks into the minds of those who want capitalism with a humane face.