I have often referred to E. C. Riegel as a “master of monetary truth.” His insight is astounding, his logic impeccable, and his expression eloquent. In this essay on Economic Democracy, he shows the way out of our present predicament an into a new world of peace, justice and prosperity. I urge you to read the entire essay but I don’t want you to miss his bottom line:
“Once a monetary science develops, it will no more be localized or nationalized than mathematics is today. There opens before the mind, therefore, the prospect of a universal monetary unit and system that will operate without regard for political boundaries. It will have no nationality or politics. None will be coerced to participate. None will be barred. There will be but one monetary language for the world, and a democratic monetary system will unite people everywhere in the universal freedom of exchange.” [emphasis added]
The End of Monetary Nationalism
Rising from tiny springs of rebellion in the consciousness of primitive men, democracy, like an ever expanding river, deepening and widening, has swept aside all the ancient forms of political government, and with them their pretenses of divine power and aristocratic preference. Its traditional service to humanity, however, has been only that of a negator of tyranny and presumption in the political sphere. In the future, it will be recognized and acclaimed for its more positive service in the economic sphere.
Under the constant challenge of democracy, the modern state has abandoned its former attitude of arrogance and now cloaks its undertakings in such flattering phrases as “democratic government,” “rule of the people,” “equality,” “welfare state,” and so on. These pretenses have been forced upon the state by the very failure of democracy as yet to assume a positive role in the affairs of mankind. The state is a positive organ and, as such, retains the initiative and leadership to which the people must turn for the “remedy” of this ill or that. Though the state is impotent to do more than change one economic ill for another, we cannot blame the demagogy of politicians for promising salvation from all the ills of mankind. This must continue, and the people must go on suffering under the delusion that they can resort to the political means of salvation, until an agency functioning through the economic means is supplied.
The ultimate accomplishment of democracy in the political sphere is the perfection of the rule of the majority. If this be all that democracy can deliver to society, the game is not worth the candle. It is little comfort to the individual, striving to express his personality, to know that democracy has wrested government from the hands of a few and placed it in the hands of a majority. Human aspirations for freedom can never be gratified as long as there is a veto power over self expression, whether imposed by a man on horseback or by means of the ballot box.
Yet the democratic state has no means of functioning other than by popular elections. That being so, the functions of the state must be limited to those public services which are desired by all. Consider the folly of undertaking to express the people’s will in all human affairs by an occasional election at which, in one confused shout, we sound our yeas and nays on a multitude of questions. At the same time, we select representatives to guess what it all means, and to divine from it how to execute our will on hundreds of issues that arise after we have given our confused “mandate.” Is not our boasted political equality but the equality of frustration? Can we have self-government, and at the same time delegate the power to govern? Are we indeed fit for self-government if we accept these delusive exercises as the processes of democracy? Can democracy offer nothing better?
Turn, now, from this sham democratic process offered by the state, with all its trappings of majesty, power, ritualism and futility, to a sphere in which real democratic expression obtains–so far as the state does not stultify it. This sphere of democracy has a true balloting system, whereunder every ballot is the clear and irrevocable mandate of the buyer through which he expresses his will, his aspirations, his freedom, and his personality. In this balloting system, elections are held every hour of ever day. Its voting booths are the market places of the world, its candidates, the goods and services offered by competing vendors. In this balloting system there is no tyranny by the majority. Every voter wins the elections. Whether he chooses the blue label, or the red, or the green, no one is denied his choice. Here every man is a king, and the economic constituency is made up of sovereigns in cooperation.
This voting system is the elective process over which the house of economic democracy must assert its exclusive sovereignty. It dispenses with the legislative process, for it is governed not by man-made laws but by a natural law that cannot be broken or biased by any man. This law, which provides absolute equity, is the natural law of competition, or, better, the law of cooperation, since it automatically rewards him who cooperates and withholds rewards from him who does not. The house of economic democracy requires no constitution and no executive or judicial mechanisms. These powers reside in the buyer, who exercises them by the simple criterion of self interest. As the whole consists of its parts, so the exercise of these powers by buyers in endless variety and circumstance compounds the social order in perfection.
Every power of the state must arise either by delegation from the citizen, or by usurpation. If we but give the matter a little independent thought, we can see that the money power can neither be delegated to the state as agent, nor exerted by it as principal. It can reside only in the same place where resides the productive power, and can be exerted only in association with the bargaining power. These powers belong not to the government, but to the individual; for he alone can produce wealth, and he alone can express selectivity and exercise the bargaining power in the market place. Professed money springing from any other source is pure counterfeit. It is a menace to the social order, which is utterly dependent upon the functioning of true money.
We all know that the rise in men’s living standards from primitive times to the present has come about through the specialization of labor, which is made possible by exchange, and that this in turn has been facilitated by the use of money. But do we realize that, without the guidance of the money-pricing system, we would lack all cue as to what products we should apply our specialized labors to? Production and exchange constitute a vast cooperative system wherein the cooperators are mostly strangers and usually remote from one another. Most of civilized man’s energies are devoted to the production of things for which he as an individual has no direct use. His only way of knowing that some other individuals have use for his product, is by the reaction of the market to his product in the form of a money price. The money-pricing system is the antenna of exchange, constantly keeping the cooperative mechanism responsive to demand and supply, by bringing together those buyers and sellers who at any given moment have mutual interests–and in the process regrouping and realigning those interests.
As we pass money from hand to hand, we give little thought to the delicate precision with which it preserves the equity of economic democracy and advances the social order. Every transfer of money registers an impulse on the market that changes the price of some commodity or commodities. These registered prices give the signal for more or less production of the commodities affected, thus keeping human energy, which is the generator of values, intelligently applied. This readjustment is in progress every moment of the day and night. This is the dynamics of social progress, constantly rewarding the efforts of those who conserve human energy and remain responsive to the buyer’s will, and punishing those who do not. If there can be omniscience on earth, here it abides, and it is this all-seeing eye that political planners would sacrifice for the blind directions of bureaucracies.
It is through the preservation and perfection of the monetary system that economic democracy will demonstrate its potential for human welfare. In this way it will avert the disaster that is now threatened by the attempt of the state to exercise a power it cannot command. The challenge is by no means difficult if we ignore the jumble of complexities that have been written about money. Let us forget the false premise of political money power. Let us endeavor neither to reconcile the irreconcilable, nor by some protective device to legitimize the illegitimate. The establishment of a nonpolitical monetary system is but an undertaking in accountancy.
In renouncing the political money idea, we abandon the idea of monetary nationalism. Trade is homogeneous; it knows no nationality, race, color, creed, or caste. Moreover, a truth is universal. Once a monetary science develops, it will no more be localized or nationalized than mathematics is today. There opens before the mind, therefore, the prospect of a universal monetary unit and system that will operate without regard for political boundaries. It will have no nationality or politics. None will be coerced to participate. None will be barred. There will be but one monetary language for the world, and a democratic monetary system will unite people everywhere in the universal freedom of exchange. [emphasis added]