Fintan O’Toole wins the Prestigious 2017 Journalism Orwell Prize for his Articles on Brexit

I’ve been a fan of Fintan O’Toole for many years and his Brexit articles are always very well worth reading. His analysis is generally excellent as is the quality of his prose. I was pleased to discover that at least two of  Progressive Pulse team, Richard Murphy and Ivan Horrocks, also hold him in very high regard.  In April, Fintan won the 2017 European Press Commentator of the Year prize for his work on Brexit and its aftermath.

He is also as of a few days ago the holder of the prestigious Orwell  2017 Journalism prize for his work on Brexit. (There are links to his articles on the Orwell Prize Page).

A more recent article in the New York Book Review “Britain: The End of a Fantasy”  is available here.

Here is a podcast interview which may be of interest; it is about a half hour long available here.

Well done Fintan and we wish you continued success.

A brief history of money

The following is an extract from the unpublished book:

Peoplons, Charmons and the Strange One: the uncertain science of economics

by C. S. Adams, Illustrated by Cohenbaum.

Tokens of exchange:

In the economist’s book of myths and legends, money was invented to solve the “double coincidence-of-wants” problem in a pair-wise economic exchange. Paul the baker wants a beer, but Mary the brewer already has a loaf of bread. Instead Paul gives Mary some gold coins or tokens which are exchangeable for something else later on. Problem solved.

The key property of a coin is not its intrinsic value – over time, gold was replaced by cheaper metals or pieces of paper. The key property is that the token is likely to be accepted as a unit of exchange for subsequent transactions. As Adam Smith writes in the Wealth of Nations, Book I, Chapter 4, Of the origin and use of money:

 … every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in a such a manner as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.

Smith goes on to explain why metals are a convenient substance for this exchangeable commodity:

Metals can not only be kept with as little loss as any other commodity, scarce anything being less perishable that they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation.

Although metals are a ‘convenient’ representation of the unit of exchange they are not necessary. In fact, it makes no sense to limit economic activity to the availability of a particular metal whose supply is limited. The double-coincidence-of-wants problem could just as easily be solved using any accepted token (see e.g. David Graeber‘s brilliant Debt: the first five thousand years). In the medieval era, when Paul the baker is served a beer and does not have anything to offer in exchange, he signed Mary’s book of accounts, or made a mark on a tally stick. After the beer is brewed and consumed, all that remains is a mark on a stick which records who made the beer and who drank it – a collective memory of credit and debt. The stick is split in two – a stock and a foil – such that both Paul and Mary have matching records. As they are a record of a debt, they acquire a value and may be accepted in exchange by a third party if everyone believes that one day Paul will pay. At the end of the year, Paul and Mary and everyone else tally up their stocks. By storing information about an unbalanced exchange, the tally sticks – something readily available with no prior value – become valuable, they become money.

A sculptural tribute to the historical significant of tally sticks can be found on the gates of the UK National Archive in Kew, near London. The tally stick model illustrates how money functions as information about an unbalanced pair-wise exchange where a good only went one way.  Money is simply a collective memory recording the fact that the balance of the origin pair-wise remains to be restored – it is a collective memory of a credit-debt relationship. Although this simple model can function at the level of a village where everyone knows Paul, scaling up to a whole country requires some additional structure. Fiat money is the modern equivalent of tally sticks – based on computers rather than pieces of wood and with an extra layer of institutional organisation. But just like tally sticks, fiat money has no intrinsic value – it’s utility is based on belief.

From tally sticks to Sovereign money:

At various points in history, the Sovereign took a particular interest in money in order to further their goals such as the conquest of new lands.

With assistance from the smartest guys in the room, the Sovereign concocted a money circuit to finance overseas adventures. In its simplest form the story goes like this: First, the Sovereign mints metal coins – Sovereign money – with the King or Queens head embossed on one side. This Sovereign money is used to pay soldiers that participate in the military campaign. In return for protecting citizens from foreign invaders, the Sovereign demands a tax to be paid in Sovereign money. The soldiers are the key link in the circuit. Someone in the family or community has to go and fight to ensure that the community has enough Sovereign money – effectively a tax credit – to pay the Sovereign’s man. When a soldier returns from war and offers a Sovereign coin in exchange for Mary’s beer or Paul’s bread they are more than pleased to accept, knowing that one day the tax man will call.

The invention of Sovereign money – the government’s spend and tax circuit – sold itself on the basis of security. It is not that different today. For the Sovereign’s spend and tax circuit to work, it needs to be carefully controlled –  alternative circuits break the loop and could undermine the value of Sovereign money. To function effectively there needs to be monopoly control of the money system. Although, the Sovereign’s Exchequer initially accepted payment in the form of tally sticks this creates complications – if taxes are paid in tally sticks there is no incentive to join the army and the primary money circuit is undermined. Their use was eventually banned in 1826. As part of Pitt the Younger‘s reforms of the money system, the office of the Exchequer was abolished on October 10th, 1834. Six days later government officials, decided to burn their stock of tally sticks and set fire to the Houses of Parliament. This event is recorded in two paintings by Joseph Mallord William Turner (London 1775–London 1851) that epitomise the Turner style. If you happen to be in Cleveland or Philadelphia you can see the originals.

From gold to fiat:

Throughout history there was a feeling that money should be linked to something substantial and durable, for example, a precious metal. At various times, a gold exchange standard was adopted and then abandoned.* After the second world war, the Bretton Woods system pegged most major currencies to the dollar which in turn was exchangeable for a particular quantity of gold – 35 US dollars per ounce. The gold standard locks national economies to a fixed exchange rate which can become too restrictive as their economic paths diverge. The gold standard was temporarily suspended by Nixon in 1971 and collapsed completely in 1973. Over the longer term it makes no sense to link the quantity of money to the quantity of any particular metal, or to tie different economies to a fixed exchange rate. After 1973, all money became fiat (let it be) money, whose value is based on confidence alone. Modern fiat money is like tally sticks except now the state has monopoly control over the creation of new money.

There is no particular evidence that either commodity money or fiat money has a particularly strong influence on trend growth, however, the switch from a gold standard to fiat money is fundamental, and part of the turmoil of the 1970s was a coming to terms with this. In the post Bretton Wood era, there is nothing to limit money creation apart from maintaining confidence in the unit of exchange – the belief that money is as ‘good as gold’. Even though the world changed dramatically in 1973, the perception of money remained the same, and at the microscopic level nothing appeared to change. Both gold and ‘let it be’ money only have the value we believe them to have, but whereas we cannot create unlimited amounts of gold we could create unlimited amounts of fiat money. To prevent this happening all money is created in the form of  debt, such that the amount of money is linked to future activity. However, a debt-based system of money is also not without problems but that’s another story.

*  For a history of the gold standard era between 1919 and 1937, see End of an Epoch: Britain’s Withdrawal from the Gold Standard, Michael Kitson, June 2012. pdf

Likely DUP Demands in supporting the May Government

As someone who grew up on the island of Ireland the DUP are well known to me as indeed are Sinn Féin. I find it saddening that the more centrist parties: the SDLP, Alliance and the UUP captured no seats in GE 2017. All we are left with is two parties  with significant links to paramilitary groups but with very different politics. Apart from the obvious (that SF are Nationalist and the DUP unionist), SF are in politics a socialist modern party but the DUP are ultra conservative with a 17th century mindset considerably to the right of the Tea Party in the US. They are Protestant fundamentalists if not supremacists. It is not however difficult, looking through their various manifestos and policy statements, to get an idea of their likely bargaining position and there is a list which has been compiled here.

I have broken the list down into areas which are less sectarian and may be possibly agreed to by the Tories and others which are unlikely to fly as they may be perceived as too extreme.

These seem possible:

These are less likely but are part of the DUP wish list:

  • An increase in the size and number of British military bases and installations in the North, with training and logistical units, and administrative departments permanently relocated from Britain.
  • The reinforcement of partition, in line with the DUP’s off-the-record briefings, and at odds with its public pronouncements about favouring a “soft” Brexit border around the Six Counties.
  • Restrictions on Sinn Féin, including the party’s access to the House of Commons and Westminster in general, with a loss of public-finances, as available to all other parties with elected MPs.
  • Tighter restrictions on immigration to the United Kingdom and on the rights of non-nationals to access employment, social welfare, education, health, and so on. In other words, a “Britons first” policy.
  • The end of the television licence fee in the UK with the gradual “reform” of the BBC, including partial-privatisation of the public service broadcaster, in line with the DUP’s opposition to the “liberal media”.
  • A diminution of the cross-party, intergovernmental Good Friday or Belfast Agreement of 1998. That is, the peace deal which effectively ended three decades of insurgency and counterinsurgency conflict in the UK-ruled Six Counties. In particular, a rolling back of “Dublin interference” in Belfast affairs, a key concession to the northern nationalist community and the government of Ireland under the Irish-British peace process.
  • The “Britishcisation” of the United Kingdom’s legacy colony through concessions to the Orange Order and others, with the removal of restrictions on disputed parades and marches, a greater use of UK flags and symbols in official buildings, signs and documentation, and the introduction of distinctly British public holidays.
  • Conversely, and as would be expected from a fanatically hibernophobic party, a drastic suppression of any outward signs of Irishness in public spaces, including the continued ban on the use of the Irish language in the UK-controlled regional courts, no equality for Irish-speakers through legislation and no recognition or funding of all-Ireland structures.
  • A block on any possible reunification referendum in the north-east of the country for the next five years, regardless of local political, electoral or demographic circumstances. (A unity plebiscite in the event of a fifty/fifty nationalist and unionist split in the contested territory is another foundation block of the Good Friday Agreement).
  • A “hands-off” approach by London towards the region’s supposedly unique cultural and social traditions. In other words, the British state facilitating the anachronistic fusion of Unionist politics and Protestant fundamentalism, an ideology which manifests itself in a militant opposition to Roman Catholicism, homosexuality, marriage equality, feminism, abortion and anything perceived as liberal or progressive within the confines of the Six Counties.
  • A de facto general amnesty for members of Britain’s Armed Forces and allied services, military, paramilitary and intelligence, for war crimes or acts of terrorism committed in Ireland during the historical conflict or “Irish-British Troubles” from 1966 to 2005.
  • The renewal of post-conflict arrests, detentions, prosecutions and imprisonments of former Irish republican insurgents despite the carefully negotiated commitments given to the Republican Movement two decades ago by Britain in order to end the “Long War”.
  • The establishment of a so-called “IRA Victims’ Fund” to channel tax-payers’ money to persons injured or otherwise effected by the military campaign of the Irish Republican Army. A majority of these compensation payments would inevitably go to Unionist communities in the north of Ireland, particularly to former members of the British forces, including allied pro-UK terror gangs, or their families.
  • The allocation of funds for predominantly unionist neighbourhoods and constituencies, funnelled through state and DUP-associated organisations, including terrorist-influenced bodies loosely affiliated to the party. Some of this would be used to fund loyalist community groups, bands, the Orange Order and so-called “Ulster-Scots” advocacy groupings.
  • Greater impediments to visits by the President of Ireland.

I hope this gives some insight into their mentality. They were the only party in Northern Ireland to be pro Brexit and were, and possibly still are the recipients of very some very dark money. They are worried, their instinct is to  “circle wagons” in a crisis and they seem unable to reach out to the Nationalist community. They are not stupid but fully understand the demographics are against them as in Figure 1; as Catholics are far more likely to be Nationalist than Unionist and easily outnumber Protestants in the younger age groups. My fear is that whereas these policies may be very attractive to their core support base they will alienate the Nationalist community. The may see this hung parliament as a golden opportunity to shore up their increasingly fragile position. It seems however the Torys think they have no place to go so very few of the DUP demands may be implemented.


The undisclosed importance of the Barclays Bank prosecutions

Amid the seeming surprise of the Serious Fraud Office opting to prosecute Barclays Bank personnel (at last) there is one particular aspect that we should try to draw attention to.

The BBC says that Barclays may have ‘given’ the money to Qatar to buy its own shares. If Barclays had the money in the first place there would presumably be no reason to give it to anyone – they already had it!

But Barclays didn’t ‘give’ it, they created it.

What should become crystal clear in the prosecution is that Barclays could create the money only by making a loan.

Barclays didn’t have the money but they could create it as a loan for a willing party – out of thin air.

Indeed Professor Richard Werner has always maintained that this is exactly what happened.

The serious Fraud Office obviously thinks along the same lines. Let us hope the fact that it is a criminal trial does not prevent the public from learning that this system of money creation is going on all the time and creates 97% of money in the economy.


Where to now with Brexit?

I was in Dublin at the weekend; nothing unusual about that, it is my hometown and I go back regularly. On this occasion it was the 40th reunion of my UCD class of ’77. I know that I move in circles where everyone is both successful and well educated so their opinions may not represent a true cross-section of the Irish population however a few things were evident:

Continue reading “Where to now with Brexit?”

Fire – how did it come to this?

The devastating fire in North Kensington must have had us all thinking of 9/11. And yet this was a preventable, (in all likelihood) accidental fire in what is supposed to be the fifth richest nation on earth.

Personally I feel deeply ashamed that such an appalling inferno, in which at least 17 people perished, can happen in 2017 and in municipally owned housing in one of the richest boroughs in the country.

Continue reading “Fire – how did it come to this?”

Labour has got to hurry

There is no time to waste when you’re a real alternative government – and that is what Labour has now become.

But they need to sort out their EU strategy. They already seem to have said that they want to have the same benefits outside the customs union as inside it (which seems a tad unlikley) but they too, seem to have bought the meme that free movement of people is a problem. Immigration may have been on Nigel Farage’s infamous poster but it wasn’t on the ballot paper. So the idea that the Brexiteers were all voting against immigration is purely speculative.

Continue reading “Labour has got to hurry”

Progress post election- where now?

It used to be said that there are two sorts of Tory voter: the millionaires and the misguided. Now we must add a third to that – the Hard Brexiteer, though some of them are definitely in the misguided category too. It is sad that this bizarre combination is capable of winning elections but it is.

So after Labour’s encourging but still losing result in the 2017 election it is apparent that progressive campaigners are left with two tasks that require prompt attention, especially when another election within a year is certainly possible.

1.Get the voting and constitutional system changed to more accurately reflect the actual votes cast.

2.Teach MP’s, the media and the electorate where money comes from.

This is a very tall order so we have to prioritise. Whilst still a considerable challenge I’d say that money is the easier of the two.

So, we need to write to the mainstream media – I for one complain to the BBC whenever I can when they fail to challenge phrases such as ‘money is short’. I’ve already asked my MP to enquire of the Chancellor where money comes from. It took six months to get a reply and a Treasury minister replied saying I’d asked a question on monetary policy. Even my MP was unhappy at the response and said, if he was re-elected, he would ask again. (He has been, so I’m going to have another go!)

Whilst the true souce of money is an underlying theme on Progressive Pulse, I’m still trying to expand the Jargon Buster – all help gratefully received!