The Daily Telegraph ran an obituary yesterday for a man who seems to have been almost the archetype of the corporatist economist.
I must stress that I never met Sir Donald and I am certainly not claiming that he did not love his children, or was not kind to small animals. It is just that he seems to have fit a certain patten of economist.
When Rab Butler (British finance minister at the time) produced a plan in 1952 (“ROBOT”) to stop trying to rig the value of sterling on the exchange markets, who leaked the private plan he had been trusted with? Lord Charwell (Sir Donald’s boss) and who worked to rubbish the plan (Sir Donald himself).
I have no great affection for fiat money. But if one has such a thing one should not try and rig its value in terms of other currencies – such efforts just lead to crises after crises.
Not that Sir Donald even had any real affection for maintaining the “strong Pound” in terms of the American Dollar. Sir Donald supported devaluation in the 1960s – it was allowing the market (i.e. buyers and sellers – there being no such thing as metaphysical ‘market forces’ separate from the choices of actual buyers and sellers) to determine the value of the currency (in terms of other currencies) that he seems to have objected to.
Sir Donald got many of the honours and jobs one would expect to come to a man of his type (head of the National Economic Development Council and so on), and the change of government did not harm him.
No, Sir Donald just went to work for the Labour economics minister (George Brown) working on a “national plan” to “plan the economy”.
Later Sir Donald went to work for the Confederation of British Industry, which (like the old Federation of British Industry) can normally be expected to support ‘moderation’ (i.e. statism).
With economists like this, who can blame the public for the lack of knowledge?
It would appear that a careful study of the works of the favoured economists of their time would just leave the public more misguided in their opinions than they already are.
I would be happy to be corrected in my opinion of Sir Donald’s working life – but I suspect that I have not been misled by the obituary.
‘Planning the economy’ hmm.. didn’t Hayek give us the stark consequences of planning economies some 60 years ago in the Road to Serfdom?!?!
It seems that some will never learn that planning is not necessary! I may be 22, but the dangers of planning are blindingly obvious. If only someone in Government would realise that…
All money is fiat money. Sterling only has value because people act ‘as if” it is valuable. You can’t eat it, other than jewelry and some minimal electronics, silver is a pretty useless commodity in and of itself. The same with gold. They have no intrinsic value in and of itself.
[Gold in particular. It is rare, very durable, but so mallable that it cannot be used in tools or instraments, or construction. It has no utility other than as something shiny to wear, coating on electrical contacts, and, because it is so worthless for anything else, despite its inability to rust, makes a perfect medium of exchange.]
Value is more in the connection between the object and the person evaluating it, than in the object itself. What the thing can do, or what the person can accomplished with it, well, that differs from person to person, and from circumstance to circumstance. Nothing has value unless you decide that it does.
Look all we are really talking about is shiny lumps of metal. Useless for most anything except as pretty trinkets, or money.
Wow, you scared me for a moment – I thought you said Ronald McDonald was dead.
Quite right about Hayek (although I am a Mises fan myself).
As for the point about fiat money.
Well money does not have to be based on fiat – fiat, command, order. As in “you must only hop using your left leg” or “you must pay taxes using ….”
As Carl Menger pointed out a commodity (or commodites) can evolve into being money by being chosen by people over time (without government order).
Yes indeed something only has economic value if people think it does (for example people may all choose to starve to death – in which case food would have no economic value).
However, this does not really effect the case here.
I know that sometimes (including me) are sometimes lose in the language and write “fiat” when they mean “non commodity” money – and I am sorry that we do that.
However, (again) there is a connection of sorts. People are unlikely to choose bits of paper with certain pattens on them as money – unless there are orders (fiat, command) involved somewhere.
What nomally happens is that a commodity (or commodities) starts to be used as money, and then paper documents are used to represent quanities of this commodity in a vault somewhere.
Then bankers (or othersuch) try and play games – issuing more documents than they actually have commodity in the faults (for some reason this is not considered fraud), leading to a boom-bust cycle.
And, of course, the government gets involved – leading to fiat money. Money based on fiat (command) and (in the end) not even “based” on any commodity.
So whilst fiat money and non commodity money are different things – in practice they are closely linked.