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The hidden assumption upon which the Euro relies for its survival

What is money? An elementary economics textbook will usually characterise money as a store and unit of value and a medium of exchange. In other words, money is money if it allows for a conversion of the value of one good (say hours worked or physical commodities) into a recognisable standardised form (such as pounds and pence), if it allows one to effectively save goods that are otherwise un-storable (again, such as hours worked) and if it can be used to eliminate the need for simple bartering; rather than needing to find that special someone who is looking to swap their chickens for my lemonade, I can simply look for someone selling chickens for money and someone else looking to buy lemonade with the same.
This concept of money sees it purely as something functional. Money, by this characterisation, is merely understood in terms of its usage. All there is to money on this reading is an instrument enabling exchange, storage and valuation. And it is money seen in this light that makes single currencies such as the Euro seem a jolly good idea. After all, if money is just a means of exchange, a purely functional device, then for economies that trade together to use the same money makes sense; the very argument that supports the use of money in any local economic system, supports the use of the same type of money across related economic systems. The benefits from combining two or more separate currencies are similar to those from electing to use money instead of bartering for example.
But is there more to money than the textbooks suggest? Does a paper currency have any intrinsic rather than merely instrumental value? Consider for example the claims often made in support of retaining the pound sterling rather than adopting the euro. From sections of the press, giving up the pound is claimed to be giving up a way of life, an ancient fact of British tradition, a rich fiscal heritage and even as providing an insult to the Queen herself. This does not tally with a purely functional understanding of money in the strict sense. If money is just a medium of exchange etc., there is no room for sentiment. And this is often offered in response to assertions that the pound has some intrinsic value over and above its functional purpose; surely it matters not one jot whether the Queen’s head appears on the currency rather than some Scandinavian bridge or pseudo-Hellenic ruin? The currency is just an instrument used in trade, they claim; it has no meaning beyond this.
This presumption belies the euro. The idea that a currency is nothing more than a device to facilitate trade. It deprecates the idea that a currency has any intrinsic meaning over and above this utilitarian definition; it dismisses the longevity of any particular currency as irrelevant sentimentality. But this ignores the importance of the emotional attachment that people might form to a currency, however irrational it might seem. And this is something supporters of the euro have wilfully ignored to their cost.
For now we see what happens to a currency which has no longevity to speak of, nor to which any of its users have formed any meaningful emotional attachment. We see continual threats and insinuations intimating the abandonment of the currency by disgruntled stakeholders. It is all but inconceivable that any user of the pound sterling such as say Wales or Cornwall might consider departing and minting their own currency. Or that California might abandon the US dollar, to satisfy its own short term fiscal interest. Is this simply due to the strong political union that exists between these places and those with which they share a currency? Possibly, but surely there is also an intrinsic attachment to the currency itself that prevents the question even being asked in the first place. The hidden assumption belying the euro is that no currency has any intrinsic value in itself; all that matters is that the political union is strong enough to withstand exogenous shocks and trading partners show fiscal responsibility so that the currency is protected. Even as the adequacy and truth of these latter propositions appears increasingly contentious, it is the former supposedly harmless assumption that might be the euro’s final un-doing. For it is the intangible and non-functional value of a currency – its value to its users for its own sake, its long-standing and its history which prevents the nuclear option of abandoning the currency ever being an option at all. Sentimental attachment to a coin or note may seem quaint and reactionary to European ‘progressives’. But perhaps as far as money is concerned it is an existential qualifier the euro fatally lacks.

The Metaphysics of Markets

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