You would have to be delusional to not notice that the idea of pegging the value of a currency to gold is promoted almost exclusively by political conservatives. They believe that when the government seizes control of the instruments of valuation– interest rates, bonds, exchange rates, currency– that it will tend to serve the interests of it’s citizens rather than it’s property owners. That is, it’s real goal is to stay in power, so it will tend to act in ways that can be perceived, by its citizens, to be in the interest of most citizens.
Sure that’s a characterization— I think Alan Greenspan thinks that only property owners are “real” citizens– but I don’t see it as being unfair. There are a lot of unspoken assumptions at work in this debate, not the least of which is the sense of entitlement the property classes have towards their own wealth. By god, it was never “appropriated”. It was earned.
The Marxists present an eerily coherent analysis of capital and markets as well. In some ways, the two schools of thought acknowledge the same reality– but have different goals. They believe in different entitlements. Property, to a Marxist, has no inherent value: labour does. Property is nothing more than a tool by which the privileged extort real value–labour– from the unprivileged classes.
Jeff Rubin is only concerned– in this column, at least, with preserving the value of property, it’s purchasing power, in the face of economic and social pressures to distribute wealth differently. You have to ask, what is the goal of preserving the value of property? To preserve wealth? Whose wealth? If your goal is an economic system that enables the strong and the privileged to accumulate wealth and power, then Rubin’s ideas make sense. But if your goal is the greatest good for the greatest number of people– it does not. It doesn’t even address that need. It doesn’t even comprehend the idea that such a thing is relevant. It is, by definition, an individualistic system that creates losers.
That is not to say that a system without incentives– pure communism– is a better alternative. But we have a system that works pretty well here in Canada, and it’s not pure capitalism. It’s really a mild form of socialism– health care, pensions, unemployment insurance, etc. The Americans right now have a harsher form of capitalism, but it’s constantly being perverted by powerful corporations who don’t play by the rules of competition, and a government that is shy about playing it’s part to preserve real competition.
What value does gold have? I don’t believe that gold– or diamonds, for that matter– has any inherent value at all. It’s value is, at its core, similar to the value of Enron stock: it is “worth” whatever you are willing to pay for it. But nobody claims to believe that. They all believe that there is something of real value behind that stock. Once investors realized that there was no real value there, Enron stock collapsed. Gold has an advantage over Enron: there is a limited supply of gold, and an unlimited supply of “investors” who believe it is valuable because… there is an unlimited supply of investors.
Our society produces more than enough goods to provide everyone who lives here a perfectly lavish lifestyle. But if you just redistributed wealth without some way of generating more value, society would soon collapse. That’s too bad, but it’s not human nature to work any harder than you have to.
So capitalism does a fairly adequate job of keeping the machine running. It wouldn’t shock me if some day we find a better way to do it.
If interest rates on bonds get too high, the Federal Reserve may just print more money and then buy the government’s own bonds at lower interest rates. People who believe in gold become apoplectic at the very thought of it.