by Felix Martin
The Greek suspicion of the lack of limits to acquisitiveness, to ambition, and to what people will do to fulfil them, shows that this debate is not modern at all. And the Greeks’ greater proximity to the invention of money gave them a different perspective on it. It is neither markets, morals, nor man himself that is the problem: it is money. It is the particular set of ideas and conventions that make up the most precocious social technology ever invented that is the source of this lack of limits. Life in monetary society, the Greeks understood, inextricably involves a commitment to the idea of universal economic value, to conventions of calculating that value, and to the possibility of its decentralised transfer from one person to another. It is precisely these ideas which distinguish it from earlier ways of organising social and economic life. And once these ideas have been admitted, the rest follows automatically. Since there is no intrinsic limit to economic value, there is no fixed point of reference in monetary society. It is from this set of ideas that the constant imperialism of markets, the ceaseless carousel of status competition, and the insatiability of the desire for money flow.
From this prognosis of the inevitable consequences of allowing money free rein flowed the Greeks’ conclusion that far from being a viable—even an ideal—mode of organising society, money was in fact self-contradictory. Aristotle adduced the story of Midas as the mythical expression of nominalism: the fact that economic value is a social contrivance rather than a natural property. Monetary wealth, he argued, differs from an abundance of real, useful, physical things like food or firewood precisely in this respect: it only has value—indeed, it can only exist—in society. Take away its social context and one would quickly discover that money is wealth “of such a kind that a man may be well supplied with it and yet die of hunger, like the famous Midas in the legend.”10 But the myth is also a cautionary tale. Money and its value rely on other people: but it is precisely Midas’ ability to turn everything to gold—the universal application of the idea of economic value—which ends up isolating him from everyone else. So there is a paradox at the heart of money. It is a social technology which depends on other people. Yet it is a social technology which isolates us from other people, by transforming the rich and varied ecology of human relationships into the mechanical and monotonous clockwork of financial relationships.
The tragedies of Aeschylus, Sophocles, and Euripides—which form the pinnacle of classical Greek art and thought—are endlessly absorbed with exposing the flaws in this extravagant undertaking. Time and again, the tragedians present protagonists who yearn for, and achieve, money and power—but at the cost of isolation from their community and their family. On some of the most terrible occasions, the connection to money’s inexorable logic is made explicit. When, in Aeschylus’ treatment of the famous myth of the Seven Against Thebes, the protagonist Eteocles finally resolves to go out and fight his own brother for their inheritance, the chorus beg him not to. It will be, they warn, a duel to the death between flesh and blood—“a sin against the natural order that will never fade”—and all for the sake of money.11 “Cast out the root of this evil desire!” they plead.12 But Eteocles explains he cannot help himself. The curse of his father, he says, is whispering in his ear a piece of advice—advice that captures everything that the Greeks most feared about monetary society: “profit first, the natural order afterwards.”13
Money’s ability to deliver personal freedom—from traditional social obligations, even from family obligations—was an exhilarating prospect. The Greeks knew that as well as anyone today who has had to endure the wrong end of the class system or the miseries of a stifling family hierarchy. Its promise to do so without destroying the stability and security created by these ancient institutions of political and personal security sounds almost too good to be true. And in the end, as the self-destructive heroes of the classical tragedians and the foolish Midas alone amidst all his gold testify, it is.
THE SPARTAN SOLUTION
In ancient Greece, this scepticism about money was not just idle philosophising: it was the stuff of live political debate. In the immediate aftermath of money’s invention, the contrast between monetary and traditional society was a stark one. Where money’s negative social and political consequences were felt to outweigh the positive ones, dissatisfaction spilled out from the symposium and the academy to the council chamber and the battleground. And although it was the exquisitely cultured artists and thinkers of Athens who articulated the most sophisticated critique of monetary society, the most visceral and negative practical reaction came from Athens’ great ideological opponent, Sparta. In one sense, this was no surprise: Sparta was a martial, totalitarian state, clearly made of sterner stuff than the self-proclaimed “school of Greece.”14 Indeed, to some contemporaries Sparta’s constitution seemed dangerously fanatical. This was a state, after all, in which special officials exterminated babies deemed insufficiently strong to cope with Sparta’s militaristic ethos, and then subjected the survivors to strict indoctrination from the age of seven. Children were separated from their families from the age of twelve and the institution of the family was actively suppressed in favour of communal living in military-style messes and unquestioning obedience to the state for both men and women. There was, most unusually for the ancient world, legal equality of the sexes; but there also existed a rigid caste system in which an underclass of peasants were subject to the most barbaric terrorisation by the true-born elite.15
But to many ancient thinkers it was precisely this ultra-disciplined civic life, steeped in convention, tradition, and blind prejudice, that made Sparta what one eminent historian has called “the most important historical model of an ideal society.”16 The Spartans themselves certainly thought so. The fact that their constitution had survived, allegedly unchanged, for more than four centuries was in their eyes irrefutable evidence—evidence amply corroborated by their victory over Athens in the defining war of the late fifth century BC. It is hardly surprising, then, that Sparta’s reaction to the undesirable aspects of money was more extreme than that of her democratic rival. After all, what use could the ideal state have for a social innovation like money? Was not the truest freedom the sort guaranteed by membership of one’s mess, one’s tribe, and, ultimately, the Spartan state? And what was stability if not a constitution unaltered for four hundred years? The conclusion was obvious: the ideal state had no need of this invention. Confident in the perfection of its traditional social architecture, Sparta eschewed the use of money. So when, at a critical juncture in the Peloponnesian War, the Spartans won a decisive victory over Athens’ ally, democratic Mantinea, they added a third and novel humiliation to the usual ancient practices of razing the defeated city to the ground and forcibly resettling its surviving inhabitants. They abolished the use of money. In a sense, this strategy of obliteration was the most enlightened part of their policy. Eradicating money was merely bringing Mantinea into line with the ideal state that had just defeated it: perhaps the earliest known example of post-conflict international development assistance.
The Spartans believed that the only real way to master money’s defects was to get rid of it and to revert to traditional society. It is a strategy for dealing with money’s shortcomings that has proved periodically popular over the centuries. In the ancient world, even Athens’ greatest philosopher, Plato, expressed his admiration. Whilst he stopped short of abolishing money altogether in his utopian Republic, he ordained that money should be strictly regulated, subject to rigorous exchange controls, and should not be used at all by the highest caste of citizens.17 But on its own terms the rationale for the Spartan strategy has always made perfect sense. If society’s non-monetary institutions were well enough designed then money would be obsolete. Of course, it is always possible that, no matter how perfect a state’s institutions, its irritatingly imperfect human citizens might mess everything up. As a result, the Spartan strategy has proved most popular in those traditions which believe mankind to be fundamentally good—with the Western, so
cialist tradition foremost amongst them.
In the sixteenth century, Thomas More had the inhabitants of his island of Utopia bring their goods to shared warehouses and then take in turn whatever they needed, “living in common, without the use of money.”18 The seventeenth-century Quaker and economic pamphleteer John Bellers, meanwhile, acknowledged that money had its uses and attractions—but also looked forward to a world without it. “Money in the body politick is what a crutch is to the natural body, crippled,” he explained, “but when the body is sound, the crutch is but troublesome.”19 And in the nineteenth century Karl Marx and Friedrich Engels were swift to point out that what had been troublesome in the early days of the commercial economy was positively dangerous in the era of fully fledged industrial capitalism. To them, money meant economic freedom—but in the capitalist sense of bourgeois entrepreneurs being free to exploit proletarian workers rather than the socialist sense of everyone fulfilling their human potential. Money meant the impersonal and inhumane relations that hold together the economic machine in bourgeois society—leaving “no other nexus between man and man than naked self-interest, than callous ‘cash payment’ ”—in place of the natural and human relations that would characterise the socialist paradise.20 Money as it existed in capitalist economies was antithetical to the ultimate objectives of the communist project—and in the coming socialist paradise, money, therefore, would serve no purpose.
Like Plato, however, the one communist regime of the twentieth century that actually tried to implement the Spartan solution to money found it rather harder than expected. As a result, they adopted a second generic strategy instead: a strategy not of abolition, but of containment.
THE SOVIET SOLUTION
Ostap Bender, the roguish hero of Ilya Ilf and Evgeniy Petrov’s 1931 satirical novel The Golden Calf, is a desperate man. The first decade of the Soviet Union has left him distinctly nonplussed. He has discovered that he is constitutionally unsuited to the new order. “I have had some serious differences with the Soviet regime over the last year,” he confides to a fellow con-artist: “They want to build socialism. I don’t. I’m bored by building socialism.”21 Bender’s ambitions in life are much simpler, and more mundane. He just wants to get rich, and, if at all possible, move to Rio de Janeiro. To do so, he needs to find a millionaire and defraud him of his wealth. If only he lived in the West this would be a cinch. “There, millionaires are popular figures,” Bender muses: “Their addresses are known. They live in large houses somewhere in Rio de Janeiro. You go straight to see them in their house and there, in the hall, after the initial greeting, you take their money.”22 The trouble is, he lives in the Soviet Union, where “[e]verything’s hidden, everything’s underground.”23 Still, where there is money, there must be millionaires: “[s]ince there are currency notes in circulation,” he reasons, “there must be people who have lots of them.”24 The challenge is simply to locate one.
With the help of a motley band of associates, this is what Bender proceeds to do. A suitable black market tycoon is quickly identified—a tight-fisted old railway clerk called Koreiko who has accumulated an impressive fortune through schemes ranging from speculation in government medical consignments during a typhus epidemic to siphoning off food supplies destined for famine-ravaged regions. Koreiko turns out, however, to be a shrewd operator himself, so that actually extorting the money involves a long series of preposterous adventures. In the end, having endured an unspeakably long railway journey into the heart of Soviet Central Asia, Bender succeeds in confronting the old miser at the grand opening of the new trans-USSR railway. There, he threatens to reveal Koreiko’s crimes to the Party unless he pays a cool million roubles. Koreiko finally concedes defeat and hands Bender a suitcase filled with banknotes. It is the moment for which the con man has waited all his life: he is ecstatic. Koreiko’s reaction, ominously, is more sanguine.
Bender soon finds out why. He offers to treat the demoralised Koreiko to dinner at the finest restaurant in Moscow, but when they try to catch the train back to the capital, they are refused seats because they are not part of the official delegation. Undeterred, the newly minted millionaire Bender heads for the local airfield, where he has spotted a plane about to leave. This, too, is not available, however: it is a “special flight” reserved for use according to the Plan. In the end, a group of passing Kazakh nomads are the only ones who will take their roubles, and the two plutocrats are reduced to travelling back by camel. They have no more luck with lodgings. In one town, they are told that all hotel beds are already allocated to a congress of visiting soil scientists; in another, to the construction workers building a new power station. Eventually, Bender is forced to resort to “what he used to do while the possessor of empty pockets. He began assuming false identities, such as engineer, medical officer, or tenor … to get a room.”25 The million roubles he lusted after for so long have turned out to be virtually useless—since in the command economy, there is virtually nothing for them to buy. Everything he dreamt of—smart transport, luxurious accommodation, fine food—is allocated by the Party and the Plan.
Ilf and Petrov’s frustrated hero was a victim of the second generic strategy for fixing money’s failings: the strategy of containment. In the period of so-called “War Communism” immediately following the socialist revolution in Russia, the young Soviet Union had attempted the more radical Spartan solution of abolishing money completely.26 “In a socialist society,” the Commissar for Finance had explained in a bashful apology made to the inaugural All-Russian Congress of the Council of the National Economy in 1918, “finance is not supposed to exist, and therefore I beg to be excused for its existence and for my own appearance here.”27 The new regime had lost no time in working to spare the Commissar any further blushes. Within two months of the revolution, all banks had been nationalised; within three, all public debts annulled. In June 1919, the All-Russian Central Executive Committee ordered the Commissariat of Finance “to endeavour to establish moneyless settlements with a view to the total abolition of money.”28 By the end of 1920, the Commissariat reported that it was well on its way. In financing the ongoing civil war between the Reds and the Whites, the Commissariat boasted, it had been solicitous in making “free use of the money system.”29 Its officials therefore looked forward confidently to the ancillary benefit this was sure to produce of “a progressive depreciation and finally a complete disappearance of money.”30
More pragmatic elements were sceptical, however. No less an authority than Vladimir Ilyich Lenin warned against the Spartan strategy. Even Marx and Engels, he pointed out, had advised that the achievement of true socialism would take time—and that during the transition, money, the greatest weapon of the bourgeois class, would remain necessary as the means of co-ordinating activity and trading with those benighted countries not yet blessed by revolution. “When we are victorious on a world scale,” he had reassured the Party, “I think we shall use gold for the purpose of building public lavatories in the streets of some of the largest cities of the world.”31 But in the meantime, he warned, money would have to be retained. “When you live among wolves,” he reminded his audience, “you must howl like a wolf.”32 Belatedly, the new regime had grasped the wisdom of this advice. The most noticeable result of the Commissariat of Finance’s well-intentioned efforts to debauch the currency was a spectacular collapse in agricultural and industrial output. By early 1921, a dramatic reversal was under way. A completely revised monetary policy was unveiled at the 9th All-Russian Congress of Soviets in December of that year. Its first priority, it soberly announced, was the “transition to a stable monetary unit, which is absolutely essential for the trade turnover among the smaller units of the economy.”33 Banks were back. Money was not to be abolished after all.
The world’s first communist society was skewered on the horns of a fundamental dilemma. A socialist economy organised by capitalist money and finance was an oxymoron. But the experience of War Communism had proved that the abolition of money was,
at least for the time being, a pipe dream. It would be necessary to devise some kind of compromise. Money would have to continue to exist—but with strict limitations imposed on its powers. This was to be the essence of the Soviet strategy: achieving the containment of money by reducing its ability to deliver freedom and increasing its commitment to ensure stability. It was a strategy that sought, in other words, a partial reversion from monetary to traditional society. Of course, the values and hierarchy to be protected from money’s assault, and given priority over it, were not those of the feudal Russian society that had come to an ignominious end in October 1917. They were the political priorities of the revolution. Money was to be dammed and canalised so that rather than flooding indiscriminately into every corner of society as it did in capitalist countries, it would henceforth flow only along those channels beneficial to the progress of socialism. Money would become, as Lenin’s successor Stalin put it, “an instrument of the bourgeois economy which Soviet power has taken into its own hands and adapted to the interests of socialism.”34 The result was the financial hall of mirrors in which Ostap Bender found himself trapped.
In practice, this Soviet strategy of containment was achieved in two ways, both of which gathered momentum from the end of the 1920s. The first was the relegation of money and finance to second place in all economic decision-making. Priorities were set by the Plan, and neither it, nor the system of centralised management introduced to implement it, were defined in monetary terms. It was physical quantities and technological coefficients that occupied first place. The role of money was to keep account, not to control. The annual company budget was known, significantly, as its techpromfinplan—its technical, trade, and financial plan—with finance deliberately bringing up the rear. The leading place in the company was to be occupied by an engineer or technician. The finance function in enterprises was little more than an exercise in bookkeeping, and the powerful figure of the Western CFO was unknown. The emasculation of the financial sector itself was even more extreme. The job of banks was not to screen projects for financing and monitor loans once granted. It was simply to create money to order as soon as a payment instruction had been issued from an engineer’s desk. The process was automatic. The ultimate aim was to ensure that by starving it of personnel and denying it responsibility, money could interfere with the Plan’s organisation of the economy as little as possible.35
