When Money Itself Comes to Represent Nothing: Baudrillard or Austrian Economist?

(This post is especially for my friends who are reading William Gaddis’s The Recognitions right now.)

Post-structuralist trickster or stuffy monetarist? You guess:

If modernity is characterized by loss of the sense of the real, this fact is connected to what has happened to money in the twentieth century. Everything threatens to become unreal once money ceases to be real. […] That fact is ultimately to be traced to the biggest counterfeiter of them all–the government and its printing presses. Hyperinflation occurs when a government starts printing all the money it wants…. Inflation is that moment when as a result of government action the distinction between real money and fake money begins to dissolve. […] Money is one of the primary measures of value in any society, perhaps the primary one… As such, money is the central source of stability, continuity, and coherence in any community.

Source below the fold:

Paul A. Cantor, “Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics,” The Review of Austrian Economics. 1994, vol. 7, issue 1, pages 3-29.

Amusingly, Cantor places money in the spot traditionally occupied by God in onto-theological metaphysics. Cantor recognizes this, but not with any irony:

A glance at the back of the American dollar bill shows two phrases: “United States of America” and “In God We Trust.” Somehow our  money is connected to our political and even our religious beliefs. Shake a people’s faith in money, and you will shake their other faiths as well. This problem has become particularly acute in the twentieth century, because ours is the age of paper money, money that has to be taken on faith alone.

How is paper money different than gold or other commodity-backed currency, again? Which is worse: the faith in the US economy, or the accretion of value in ostentatiously useless hunks of gold?

If one follows this logic through, what then is deflation and recession? Is it the retrenchment of fundamental community values? The restoration of stability and coherence?

For all my disgust, I think this is a pretty good literary analysis of the Mann story from which it takes its opportunities to decry marxian humanist projects. Mann does a great job of describing the psychological toll of economic contraction in the Weimar Republic, and Cantor teases these descriptions out and lines them up for our consideration. Cantor’s only mistake is to conflate psychological disruption for evidence of a lost or corrupted metaphysical certitude:

In the world of inflation, reality begins to attenuate.

But Cantor really does want to be Baudrillard, extending his hyperrealist critique from transactional media to communication media, like telephones, record players, and movies:

The telephone is an example of how the modern communication media create an illusion, the illusion of immediacy. […] Seeming to make music from the whole world simultaneously available, the gramophone creates a false aura of cosmopolitan sophistication and thus adds to the sense of cultural relativism. […] In the illusory world fostered by inflation, an image on a screen now works to shape a man’s desires.

Cantor concludes that Marx was right: when the foundation of value dissipates, “All that is solid melts into thin air.” Yet at the same time he maintains that even as it dissipates, a society’s relationship to its currency is going to be writ large in its relationship to other values, such that the real foundation of culture in currency remains even when the currency itself becomes “hyper”: hyperinflated, hyperreal.

In a strange way,  one may say that Foucault, Derrida, and the other poststructuralists are right; they have evolved a philosophy appropriate to the Age of Inflation, the age when money itself comes to represent nothing, and hence all representation becomes problematic.

Of course, they’re still wrong, because money really does represent something, even when it doesn’t:

The mistake occurs when these philosophers universalize their limited historical experience, and see the world brought about by Keynesian economics as co-extensive with human life in general.

Here’s an honest question for Cantor or anyone who would defend him: how can we be sure that it is the post-stucturalists who illegitimately generalize their experiences, and not the monetarists? Is life with target inflation publicized by the Federal Reserve really less certain than life in feudal barter economies or early industrial bubble-and-bust economies when every business cycle was another Great Depression? And do you really want to fetishize commodities as much as you’re doing? (via)

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