Monetary Realities

Realities Under the Monetary Economy

by Paul J. Dejillas

Professor of Anthropology

Once upon a time there lived an old woman who had a number of hens, ducks, and geese. She used to send her little daughter to the meadow every day to take care of the ducks and geese.

But she had one goose that she never allowed with the others. This one had a little house and yard of its own. It was such a wonderful goose that the old woman was afraid of losing it.

Each day this goose laid a large golden egg. The woman could hardly wait for the new day to come, she was so eager to get the golden egg.

At last she said to herself, "I will kill the goose and get the gold all at once."

But when she had killed the goose she found that it was just like all the other geese.

In her haste to become rich, she had become poor.

Moral: Greed destroys the source of good.

One day a countryman going to the nest of his goose found there an egg all yellow and glittering. When he took it up it was as heavy as lead and he was going to throw it away, because he thought a trick had been played on him. But he took it home on second thoughts, and soon found that it was an egg of pure gold. Every morning the same thing occurred, and he grew rich by selling his eggs. As he grew rich he grew greedy; and thinking to get at once all the gold the goose could give, he killed it and opened it only to find nothing.

Greed oft o'er reaches itself.

oday, convenience and practicality are the name of the game. We want to live a life that is convenient, a life that provides a minimum amount of freedom, decency, and peace, and at times a little of luxury. Paradoxically, in spite of the convenience and practicality that money offers, it has not provided man even with the minimum of decent and peaceful existence. Today, we are living in a world, experiencing a process of globalization, characterized by the following:

·         Alienation to the fruits of one's labor,

·         Economist view and attitude of man,

·         Dehumanization or de-personalization triggered by today's sophistication of science and technology,

·         Secularization and materialism brought about by too much faith on material wealth, power, science and technology,

·         Division of man into extremely rich and extremely poor,

·         Division of the world into creditor and debtor, and

·         Division of the people into producers and consumers

   Man today continues to live in abject poverty, earning just enough to barely survive. He has found no more time to devote to rituals, attend religious ceremonies, and develop himself fully because he is now working 16 hours a day to earn the much-needed money to feed his family and pay his monthly debts. Failure to earn money means his family starving and his creditors running after him in courts.   Man becomes very much preoccupied with earning a living, continually experiencing financial problems that give him stress, tension, anxiety, mental anguish, frustrations, and depression.

   Automation has forced new work ethos, new work attitudes and views on man that are entirely foreign to us in the developing countries. Today, the process of mechanization is telling the farmer to replace his buffalo with a computer and to learn the corresponding skill requirements, work attitude, and work style (Dejillas, 1988:24). Automation is forcing the farmer to adjust to the pace and speed of the machines and computers that require production and sales quotas. Work as a result becomes a breeding ground for fatigue, mental stress, personal instability, torture, and harassment.

Today, the workers interact with machines and computers that do not understand human language and have no life of their own. Filipino farmers still prefer their carabaos and cows. They do not want to abandon their dogs and cats in favor of high-tech security-alarm systems? The type of working relationship promoted by today's brand of industrialization is becoming highly individualistic, mechanistic, disruptive, and alien to us in the Third World.

Moreover, the kind of lifestyle brought about by the advent of multinational corporations and globalization has alienated man from the fruits of his/her labor. Man works for money, but money comes to him in trickles because much of it goes to the company he works for and circulates mainly at the top echelon of society.

Man used to work to produce goods for his consumption. The goods produced by man are an extension of his personality. He identifies with the good, he values the good, or the good is valuable to him. Today, he is made to work to produce goods for others. In return, he receives his monthly salary. It is money that goes to him, no longer the goods that the worker produces. But he does not value money as much as he would value the goods he made had these been given to him. As a result, he freely uses money, he spends it all without any attachment at all. Money is not an extension of his personality, the goods - yes.

HOW DID ALL THIS come about?

Historical Development

Historically, the development of the economy even in Asia is a very complex phenomenon. The Asian economy has been regarded as indigenous to the people in the sense that it is propelled by popular practical wisdom and traditional religions such as Buddhism, Confucianism, Hinduism, Islam, and folk religion.  Through colonization and subjugation, however, Asian countries have pursued industrialization along the capitalist, socialist, or mixed type of economies. China, Vietnam, and North Korea pursue their modernization process along the framework of socialist development, while South Korea, the Philippines, Taiwan, and other Southeast Asian nations have followed the capitalist road of modernization (Bock, 1993:12).

What used to be people-centered, family-based, culture-based, religion-based type of economy became subjugated and overwhelmed by foreign economic development models introduced by transnational corporations and supported by military power and giant international economic institutions like the World Bank, International Monetary Fund, and the Asian Development Bank. People no longer participate in decision-making, left out when sharing the fruits of production, and not consulted in securing the life of the community and society.

Transnational corporations and transnational churches control not only the production, marketing, and distribution, but the financial resources of the weak Asian nations. Economic development becomes no longer people-oriented, but state-centered or Vatican-oriented or oriented towards the insatiable desire of foreign investors for profit and power.

Religion is the East's greatest asset. But somehow, rather than restoring the proper meaning of the world that is propelled by a monetized economy, it has learned to somehow adapt to the demands and culture of the monetized economy. Churches and religious institutions have become ambivalent in their stance on many issues like gambling, attacking it as immoral but at the same time accepting donations from gambling institutions and gambling lords discretely. The Churches have become both attackers and protectors of the monetized economy.

All money leads not only to America and Japan, but also to Rome. The ordinary man is forced to live to the kind of life demanded by his colonizer and his creditors. He is forced to comply with the conditionalities imposed by multinational corporations and international financial institutions on the government and on our domestic banks, which in turn pass these conditionalities on to the ordinary man.

The ordinary man lives daily fulfilling the terms and conditions attached to his loans and debts, terms and conditions required of his work, as well as terms and conditions demanded by his landlord for renting his place.

Let me highlight some of the stark realities prevailing under today's monetary economy. In trying to view these realities, let us be guided by a framework. As apostles of an interdisciplinary institute, you are called upon to view reality not only from the economic point of view, but also from the political, social, cultural, and even religious perspectives. Cosmic anthropologists may go beyond by looking at the interconnectivity of things.

Widening Income Gap

According to the United Nations, of the world's total population, the top 20 percent hold 83 percent of the world's wealth and the bottom 20 percent only 1.4 percent. There is glaring inequalities all over the world. Only 10 percent of the population controls 72 percent of all capital.

McLaughlin and Davidson (1996:337) cite statistics indicating that the United States, which has six percent of the world's population, consumes 30 percent of the world's resources. According to them, the American people suffer "from a multitude of 'diseases of excess' that occur in many wealthy nations---overeating and attendant diseases, high stress, addictions of all kinds, pollution, the garbage disposal crisis, the recent problem of 'infoglut' (information overload), and most significant, the existential crisis of trying to find meaning life through endless consuming and accumulating (often palliated with drugs)."

Joagland (1999) observes that the global economy created in the 1990s by the spread of markets, information technology and more open trade has yet to prove that it distributes its fruits more evenly than did the system of the Cold War era. He fears that the Internet may connect a world in which the rich still get richer and the poor get poorer---only faster.

McLaughlin and Davidson (1994:327) presents a disturbing picture of one "well-to-do, overfed, overweight Westerners parading to reducing salons or plastic surgeons to remove excess fat and another of destitute children in Brazil foraging all day through mountains of garbage, looking for something to eat, along with homeless people begging and searching for food in American cities." According to them, poverty is indicative of the people's unconcern for others.

Our land is a land of contrast. The ever-widening income gap is reflective of a culture of the oppressed, of the exploited, and manipulated. It is a reflection of the culture of divisiveness and poverty. At the same time, the continuing gap between the rich and the poor is likewise a reflection of today's religiosity and spirituality that give more emphasis on the spirit and transcendental dimensions of development, and its abhorrence to matter as well as non-involvement on structural transformational works. Economic and political involvement is for the laity, as the cliché goes. There is separation between the Church and the state.

G. Davies (1996:596) is still optimistic when he says that "despite the magnitude of the problem, the gap between the rich and poor nations should not be unbridgeable" since, according to him, "if all countries of the world were arranged in ascending order [of wealth] there would be a continuous gradation from the poorest to the richest without any perceptible gap---more like beads on a string rather than shaky stepping stones across a stormy river." This indeed offers sound prospects for sober optimism, even among economists.

Mounting World Debt

The debtors are perennially bedeviled by weak currencies or low-quality money, wracked by inflation, and aggravated by a rapidly expanding population wanting to have a share of its already meager, limited, and even depleting resources.

All this is happening because the value of money and the level of prices can be manipulated to the advantage of a few. This is the politics of money. Recent history gives us the following account during the time of Roosevelt as recounted by Weatherford (1997:6).

Roosevelt nationalized gold and made it a crime punishable by arrest and imprisonment for an American citizen to hold gold bullion or coins. Those people who voluntarily surrendered their gold … received compensation of $20.67 per ounce in paper notes.

One year after confiscating the privately owned gold, on January 31, 1934, the federal government devalued the paper money from $20.67 to $35.00 for each ounce of gold. Thus, everyone who had complied with the law and exchanged gold for paper lost 41 percent of the gold's value. The change in the official price of gold increased the nominal value of the government's gold hoard and thus allowed it to issue an additional $3 billion in paper currency.

In March 1972, the U.S. government officials devalued the dollar again to $38.00 per ounce of gold and then to $44.22 the following year. The Swiss government said: "Enough is enough." Beginning on January 24, 1973, it no longer supported the dollar with gold. Other nations quickly followed and they were successful.

This is happening to our economy today. A few years back the dollar was pegged only at $1.00 to P26.00, today it is at P56.00 or so. So, we need to pay more in pesos. This is monetary transaction at the global level. Add the amount of interests imposed on our debt, and you will understand why our debts keep on mounting even if we are not borrowing. At present, more than 30 percent of our total budget is reserved for debt servicing.

See what the dynamics of money can do to poor countries like us? This is the politics of money, empowering only those who are already empowered. The Swiss government finally opposed America's autocratic control over the value of the gold. Can we---in the conjunction with other Third World who are heavily indebted---do the same by simply refusing to pay all our debts? Or, perhaps a more mild approach, can we not pay our foreign debts in terms of real goods and services?

G. Davies (1996:29-30) notes that the history of money is one of unceasing conflict between the interests of the debtors who continually seek to enlarge the quantity of money and the interests of the creditors, who seek to maintain or increase the value of money (quality). Third World countries are most often the biggest debtors in the world today. They are not only divested of their precious natural resources, they have also become perpetually indebted to the outside world. Third World economy becomes preoccupied not only with survival, but also with paying their continually increasing debts to the world's giant financial institutions.

Third world debts are reflective of the culture of indebtedness and mendicancy of many developing countries, which is in turn expressive of its life of dependency and total deprivation. State visits by Third World officials are essentially "begging" missions triggered by their country's extreme poverty, poor social infrastructures, inadequate basic social services, and attracted by the power of money in transforming highly developed nations.

McLaughlin and Davidson advance another dimension of foreign debt. They maintain that foreign debt is also "taking money and life from future generations, who will find their options severely limited as they are required to pay for the credit-spending binge of the current generation" (1994:326). Debt is "a symbol of the excessive and ever-growing desire for all types of goods and resources by people everywhere" without consideration to the ecological future of humanity.

Drastic changes need to be instituted to restructure our global monetary and financial system. If borrowing money is indeed unavoidable, one major aspect that needs to be looked at is the practice of charging interest rates on the use of money, which we all know today is getting extremely usurious. The other aspect is in the area of currency exchange rates, which in Asia has been erratic and unstable in the past few years.

Global Armaments

According to the New Internationalist (April 1988), more than a quarter of the world's scientific research and development (R&D) budget is spent on defense and over half a million scientists are currently engaged in the development of new military weapons (UNESCO, Impact on Science on Society, No. 145, 1985).

U.S. spending on military research is soaring. In just 10 years it has gone from $13 billion to $47 billion per year. The Strategic Defense Initiative (Star Wars) research program alone costs $3.900 billion a year. This sum could provide primary school education for 1,4000 children in Latin America, that is more than the entire child population of Nicaragua.

One average nuclear weapon test costs $12 million - the equivalent of training 40,000 community health workers in the Third World (Ruth Leer Sivard, World Military and Social Expenditures, 1987-88).

Arms build-up is reflective of the people's culture of aggression, violence, fear, suspicion, and mistrust, manifesting itself nationally in terms of ethnic war, religious war, regional conflicts, boundary or cross-border conflicts. It is also expressed in corporate battles and war expressed aggressive spending, aggressive advertisement, and so on.

Arms build-up is also a reflection of the desire of nations for control of world power. On the micro level, it is expressed by citizens who are arming themselves for protection against terrorism, street violence, kidnapping, and robberies, which are increasing because of poverty and unemployment.

A culture of aggression and violence ignites the proliferation of security agencies, "goonstabularies," and the corresponding spread of illegal firearms. It broadens the knowledge and expertise in the production and manufacture of arms and nuclear weapons. Formerly, the skill for producing chemical weapons is a monopoly of the state (e.g. Russia). Today, unable to derive continued sustenance from the State, Russian scientists are making their expertise available even to individual terrorists. It is feared that the Third World War will be triggered not so much by today's ethnic conflicts as by individual terrorists who are now capable of sowing violence simultaneously in various strategic places of the globe---airports, electricity and power, media and communications, banks, military camps and arsenal. 

The monetary economy is indeed a fertile breeding ground for the stockpiling of arms and nuclear/chemical weapons.

The Asian Crisis: 1997-98

The Asian financial crisis of 1997-1998 is a glaring demonstration of the inadequacy and weakness of today's global monetary system. Numerous studies on the Asian currency crises have pointed out common factors for the crisis (Ito, 1999:2): overvaluation of currencies; too high short-term capital inflows; and too high foreign currency denominated borrowings among banks.

Most analysts attribute the main cause of the Asian crisis to factors that are economic in nature. Much of the money in Asia comes from foreign inflows, which are affected by swings in exchange and interest rates. They are designed for short-term investments only and could immediately be pulled out of the market given the slightest disturbance. According to this view, the Asian economic crisis is a liquidity crisis, it is an acute crisis of lack of cash. If so, then, it stands as a concrete proof that there are some fundamental flaws to today's monetary and financial models.

Peter Drucker correctly observes that the Asian financial crisis is the result of "the emergence of the symbol of economy---capital movements, exchange rates, and credit flows---as the flywheel of the world economy, in place of the 'real economy'---the flow of goods and services" (1987:3).

Others, however, attribute non-economic causes to the financial crisis, e.g. weak political governance, the desire for quick cash inflows even if these are on a short-term basis only, social unrest, and the creditor's fear that they could not be repaid. The other causes include weak bank and non-bank supervision, mismanagement of foreign reserves, "crony capitalism," and weak corporate governance.

Causes and Effects

I HAVE TRIED TO VIEW the above global realities from the viewpoint of economics, politics, sociology, and culture. In some instances, the religious dimension has been raised. The discussions are summarized in tabular form on the last page of this lecture notes.

The religious dimension needs to be discussed and developed further. In addition, the perspectives of cosmic anthropology need also to be highlighted and integrated into each or some of the dimensions.

Nonetheless, from our limited discussion one can already detect that there is something wrong with the monetary system operating in the market. Today's models and theories only tend to widen the gap between the rich and the poor.  Ramirez (1993:20) rightly points out that "there is anomaly in the money system," since "it has spawned organized greed, widening the gap between the rich and the poor, between the urban and rural areas, between the one-third world and the two-third world."

By quoting Dr. Ramirez, I am not alluding that money is the cause of all our sufferings today, or that money is the "root of all evil." What I want to point out is that there is indeed something wrong in the creation, use, and circulation of money. Specifically, there is control and distortion in allocating and appropriating money. Money has not been oriented towards man's total development. Worse, it has spawned the rise of values and attitudes that are personalistic, exploitative, and destructive to life and to our environment---the kind of values and attitudes which existing models of today's monetized economy have generated.

   In general, the realities under today's monetary system have their structural and moral or ethical dimensions. To view realities from only one dimension is rather simplistic an approach and will not provide a holistic view of realities. After all, money is not only an economic medium. It is also a political, social, cultural, and even religious instrument.

Reflections

   THE WEAKNESSES AND LIMITATIONS of the underlying assumptions and beliefs of today's monetary models and theories need to be unmasked and discarded in favor of new paradigms that truly respond to the full and total development of each and every man.

   There are important non-quantifiable issues that do not enter into the existing monetary models. The importance that monetarists give on the economic dimension of money seems to be an over-simplification of the multi-dimensional faces of money. Davies (1996:xvii) in fact says, "economists, especially monetarists, tend to overestimate the purely economic, narrow and technical functions of money and have placed insufficient emphasis on its wider social, institutional, and psychological aspects." ###

Assignment

For the next lecture, we will be discussing mediated economy in the context of a globalizing world. Globalization is today spreading like wildfire across countries all over the world undertaking transactions. For their own benefit, the students are encouraged to read one article under the List of Readings in Lecture 5 of the syllabus.

List of Readings for the Next Chapter

Bartley, Robert, Irving Howe, Giovanni Sartori, Charles Frankel, Michael Mandelbaum, and Edward Shils. 1978. The Relevance of Liberalism. Boulder, Colorado: Westview Press. Research Institute on International Change.

Berger, Suzanne, Constance Kurz, Timothy Sturgeon, Ulrich Voskamp, Wittke. 2001. “Globalization, Production Networks, and National Models of Capitalism – On the Possibilities of New Productive Systems and Institutional Diversity in an Enlarging Europe.” Globalization and Production Networks. SOFI – Mitteilungen Nr. 29/2001. 9 ff.

Bhagwati, Jagdish. 2004. In Defense of Globalization. New York: Oxford University Press.

Blackman, Sir Courtney. 2002. “The Free Market in the Context of Globalization: Myth, Magic or Menace.” Central Bank of Barbados. 

Chang, Lan-Hung Nora, John Lidstone & Rebecca A. Stephenson. 2003. “The Many Faces of Globalization.” Session Proceedings, 10th Pacific Science Inter-Congress: Globalization in the Pacific and Asian Regions – New Perspectives in the 21st Century. www.pacificscience.org/pdf/guamintro.pdf.

Chua, Amy. 2002. World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability. New York: Doubleday. 

Dossani, Rafiq. 2004. “Services Off-Shoring to India: India’s Position in the Supply Chain.” In “Global Production Systems and Employment: New Realities, New Options.” ILO. Expert Round Table Discussion. October 5-6, 2004.

Friedman, Thomas L. 1999. The Lexus and the Olive Tree: Understanding Globalization. NY: Farrar, Straus and Girox.

Gray, John. 1998 False Dawn: The Delusions of Global Capitalism. NY: The New Press.

Gilpin, Robert. 2000. The Challenge of Globalization: The World Economy in the 21st Century. Princeton, NJ: Princeton University Press.

Held, David and Anthony McGrew. 1999. “Globalization.”  https://www.polity.co.uk/global /globocp.htm.

David Held and Anthony McGrew, and David Goldblatt and Jonathan Perraton.   “Researching Globalization.” https://www.polity.co.uk/global/research.htm and

Ian Vásquez. 2000. “The Return to a Global Economy.” This essay appeared in Ideas on Liberty (November 2000). https://www.cato.org/research/ global/vas-0011.html.

IMF. 2002. “Globalization: The Story Behind the Numbers.” Finance & Development. A quarterly magazine of the IMF. Vol. 39. No. 1. March 2002. https://www.imf.org/external/pubs/ft/ fandd/2002/03/picture.htm. Accessed on December 29, 2004.

IMF Staff. 2002. “Globalization: Threat or Opportunity?” https://www.imf.org/external/ np/exr/ib/2000/041200.htmLechner, Frank J. and John Boli. 2000. The Globalization Reader. Malden, Mass.: Blackwell.

Izote, Flor de. 1995. "Globalization." El Salvador in Perspective. Vol. I, No. 4, July-August, 1995.

Lechner, Frank J. and John Boli. 2000. The Globalization Reader. Malden, Mass.: Blackwell.

Meylan, Johann-Albrecht. 2003. “Towards a narrative theological orientation in a global village from a postmodern urban South African perspective.” A doctoral Dissertation. Can be accessed at https://upetd.up.ac.za/thesis/available/etd-06232004-084622/unrestricted/01chapter1.pdf.  Accessed June 1, 2006

Micklethwait, John and Adrian Woolridge. 2000. A Future Perfect: The Challenge and Hidden Promise of Globalization. New York: Random House, Inc.

Mittelman, James H. 2000. The Globalization Syndrome: Transformation and Resistance. Princeton, New Jersey: Princeton University Press.

O’Connor, David E. 2002. Demystifying the Global Economy: A Guide for Students. Westport, Conn.: Greenwood Press.

Sachs, Jeffrey. 1998. “Unlocking The Mysteries Of Globalization.” Foreign Policy, Spring 1998. https://bss.sfsu.edu/fischer/IR%20305/Readings/unlockin.htm

Soros, George. 2002. “On Globalization.” Public Affairs, a member of Perseus Books Group.

Steger, Manfred B. 2003. Globalization: A Very Short Introduction. Oxford: Oxford University Press.

Tabb, William.  2001. The Amoral Elephant: Globalization and the Struggle for Social Justice in the Twenty-First Century. New York: Month Review Press.

Walker, Gordon R. and Mark A. Fox. 1996. "Globalization: An Analytical Framework." Indiana Journal of Global Studies. Vol. 3, Issue 2 (Spring).

Weisbrot, Mark. 2000. “Globalism for Dummies.”  Harper's Magazine May 2000, pp. 13-18. [CP]