The Denationalization of Money: Embedded Neo-Liberalism and the Risks of Implosion

In: Social & legal studies: an international journal, Volume 12, Issue 2, p. 155-176

Abstract

Currencies, exchange rate mechanisms and monetary policy are intrinsically political. Throughout the 20th century they have been constantly renegotiated in response to periodic economic, social and political crises. Those who advocate the depoliticization of monetary policy through central bank independence, and the more radical denationalization of currencies through dollarization and monetary union, aim to bring that history to an end and quarantine money from the control of governments, permanently. Critical theorists tend to treat these three techniques separately. This article seeks to understand their common ideological premises through the writings of three prominent advocates: Kurt Schuler, Robert Mundell and F. A. Hayek. When all three monetary regimes are re-embedded in the social, economic and political context in which they operate, deep contradictions emerge. These manifest in different ways in different national contexts, reflected in examples as diverse as `convertibility' in Argentina and European Monetary Union. The article concludes that such regimes are ultimately unsustainable, and challenges the belief that global capitalism can thrive in a social, cultural and political void that attempts to quarantine itself permanently from the contradictions it creates.