Welcome to Money/Power

Where this newsletter comes from and where it hopes to go.

I’ve taught university and college courses every year since 1996, and throughout that time I’ve always set the same goal for day 1 of class: make sure everyone fully understands the title of the class and knows what it’s all about. That seems like an extremely modest goal, and sometimes it is, but at the least it guarantees that the students who showed up for the wrong class will know to drop. And often it takes the entire course to really make sense of what it’s all about. I suspect that will be the case here.¹

I’m a student and scholar of political theory and political economy who has spent a decade and a half trying to understand money. Like so many before me, I stumbled and fell deeply down the money rabbit hole: the more you read theories and histories of money the more you realize that most of them are not very good; you discover that, when it comes to money, most of what passes for common sense is just plain wrong. Like so many before me, I only crawled and dug my way out of that hole by writing a book that tries to explain money.

That book charts a path between – or, perhaps better, around – the two dominant theories of money. As a lot of people (though the group does not include authors of introductory econ textbooks) have known for a long time now: money is not a commodity. But we cannot allow the falsity of a “metallist” theory of money to fool us into buying the reductive idea that money is a fictional “group delusion,” or that money has value because the state says so.²

Money is a specific kind of social relation – namely, that between a creditor and a debtor. I’ll elaborate on these notions in one of my early upcoming posts, but here I want to connect it to the title and scope of this newsletter: “money/power.” Money neither comes to be nor resides in “the economic” realm, precisely because there is no such thing as “the economy.” Societies are made up of social, political, cultural, and economic relations and forces, and all of those forces partially determine, and are determined by, all of those other forces. We can only ever understand money as part of a capitalist social order. That’s the type of social order we all live in, and it has radically different economic forces than previous social orders (e.g., feudal, tributary).

This newsletter’s title intentionally indicates a deep debt to Michel Foucault’s writings about so-called power/knowledge. In clarifying his own archival investigations, Foucault came to some conclusions profoundly at odds with traditional concepts of power. In particular, he utterly rejected the “liberal” idea that knowledge could check power (by speaking truth to it). Power and knowledge are co-constitutive. They come into existence and perdure only in relations of mutual dependence.

Foucault only rarely spoke directly³ about what he called pouvoir-savoir – power-knowledge, and not, despite the title of a well-known and much-cited Foucault collection, power/knowledge – but when he did, he did so in such striking language as perhaps to justify the common references (in the English-language literature) to “power/knowledge.” Foucault introduces his idea by suggesting that we may need to abandon long traditions of thought whereby knowledge is precisely that which is free of the taint of power, or that which would itself stand outside of power and challenge it.

We should admit rather that power produces knowledge (and not simply by encouraging it because it serves power or by applying it because it is useful); that power and knowledge directly imply one another; that there is no power relation without the correlative constitution of a field of knowledge, nor any knowledge that does not presuppose and constitute at the same time power relations. These “power-knowledge relations” are to be analysed, therefore, not on the basis of a subject of knowledge who is or is not free in relation to the power system, but, on the contrary, the subject who knows, the objects to be known and the modalities of knowledge must be regarded as so many effects of these fundamental implications of power-knowledge and their historical transformations. (D&P, 27–28, emphasis mine)

In titling this newsletter “Money/Power” I do not mean to suggest that economic relations are dictated by politics (power relations) nor that economic conditions “determine” (in the strong sense of determinism) politics. To the contrary, I want to invoke money/power as what, in The Will to Knowledge, Foucault calls a matrix of transformation (99), the point de passage in which economic and political relations are constituted simultaneously.

If the above sounds abstract, rest assured that it drives at a very practical/material/concrete point. Here’s an example: the simplest way to understand the “nature” of money today is by grasping it as bank money. But bank money can only exist in the context of…well, the existence of banks.⁴ And to “be” a bank means to hold a bank charter and be subject to extensive regulatory scrutiny and control. No banks without politics. No politics today without banks (because no capitalist economics without money). A bank is neither a “political” nor an “economic” institution; it is thoroughly politico-economic and econo-political. Banks act within the matrix of money/power. This newsletter will explore some of the myriad puzzles and problems that arise therein.

While the title alludes to the broader conceptual framework within which I will work, the subtitle – “theory, money markets, and impersonal wealth” – means to map out the terrain that I plan to explore, and to indicate something of the ethos or orientation of those explorations. The first term signals that I will often take a deeply conceptual approach to the “money problems” I discuss here. But my version of theory is absolutely not analytical or ahistorical. Theory, for me, is but a crude translation of the Ancient Greek, theoria – a way of seeing, mapping, and making sense of the world. Theory comes from the world; it cannot stand outside it. One can thus only theorize from within history. This is how I understand Foucault’s line that “it is in discourse that power and knowledge are joined together.” “Discourse” is not text or language or writing; it is itself material, historical, substantive – a thing of the world.

My third term marks my distance from all the newsletters out there telling their readers how to manage their personal wealth or get rich quick. I’m interested in economic value as it is produced and reproduced, distributed and redistributed, across the entirely social order – impersonal wealth.⁵ In capitalist societies we naturally conflate wealth and money, but one of the many questions we need to ask about capitalist societies is how and why, within them, does money become the ultimate “form of value”? What does it mean that, for us (citizens of capitalist societies), “wealth” can be written on a spreadsheet as a single figure (net worth)?

That brings us finally to the most important, middle term. Both individual societies and the larger global economic and political order depend on money markets, wherein trillions upon trillions of dollars are exchanged each and every day. And yet, the vast majority of efforts to understand both democracy and “economics” today are conducted without any attention paid to those markets in money. Indeed, if you want to understand money markets your only source tends to be the world of finance: most of it obscure, most of it ideological, and even the very best of it requiring a great deal of translation for those who don’t already work in finance. This newsletter will repeatedly do that translation work, attempting to make sense out of money markets, and their significance for democracy and capitalism, in a broadly accessible language.

To close, here’s a preview of the possible menu of posts to come:

• Short post on money as relation of credit/debt

• Longer post (perhaps multiple posts) on the question, “What is a Bank?”

• Series of longer posts on “The Crypto Story” and why it matters

• Possible review (depending on reader interest) of the film Dumb Money, showing why its tempting narrative framing (little, good guys, versus big, bad guys) does much more harm than good when it comes to building a progressive financial politics

• Short, more polemical piece on inflation (hint: it’s bad for rich people)

• Interest rates!

• Down the road: multiple posts trying to reconcile 17th-century English coinage and minting practices with a robust credit theory of money

At the outset, I aim to distribute at least 2 newsletters per month, perhaps more. Please share this initial newsletter as widely as possible and encourage friends/family/colleagues/associates to subscribe. I welcome feedback and will attempt to steer the ship of this newsletter along a viable course suggested by readers.

Thanks for reading, and I hope you will subscribe and join me for the journey!

1. To quote from the old state of Montana highway-speed-signs, the “reasonable and prudent” option is to admit up front to my potential future readers: this newsletter will have footnotes. I’ll try to keep them to a minimum, and to construct every post such that they can be skipped, but one of the core principles of my thinking/writing (those two cannot be disentangled) is an absolute rejection of the notion that all writing should (or even can) be linear. Good writing cannot be turned into bullet points. If nothing else, perhaps the footnotes will flummox the summation efforts of future LLMs.

2. The “neo-chartalist” theory of money provides vast (vast) improvements over “metallist” theory, but as I will try to chart (pun intended) in future posts, its tendency to reduce money to a function of state power misses out on the very money/power relation that this newsletter plans to probe.

3. From my preliminary investigations, I currently believe the he also did so in a limited number of texts during a small window of time. That is, the hyphenated term first appears 3 times in the one key paragraph that I quote from Discipline and Punish (original French publication in 1975) followed by three scattered uses in the remainder of that book. There are then 3 more references in The Will to Knowledge (original publication in 1976). Neither later nor earlier books contain any uses of the term, nor do, conspicuously, any of the lectures or interviews from the mid-1970s. (The Macey translation of the 1976 lectures contains 4 instances of “power-knowledge”: the first one translates “de savoir et de pouvoir,” while the last three all translate savoir-pouvoir. My understatement of the day will be to say that exploring the difference between pouvoir-savoir and savoir-pouvoir, along with analyzing the choice by Macey to translate both as power-knowledge, lies well beyond the scope of this post.)

4. Which themselves exist relationally in the context of bank clearinghouses, and central banks, etc. As Anush Kapadia brilliantly demonstrates, “banks are social animals” (14).

5. Thanks to Alan Finlayson, who was wholly responsible for coming up with this idea and kindly gave it away to me.