Law trumps economics, or should.
The gold standard embodies this principle. It codifies how value is to be measured without valuing any particular thing. It is directly, precisely analogous to setting up other systems of weights and measures by law, such as gallons to measure volumes of liquid, fahrenheit or celsius degrees to measure temperature, feet or yards or meters to measure length, pounds or grams or tons to measure weight.
You would think that “weights and measures” would not be the kind of thing to arouse passions, but you would be wrong. Controversy has attended daylight savings time. But it would be fair to say that this happens only among a very few people. Most people are content with any convention of weights and measures that is imposed by law as long as it is neutral and consistent.
Somehow, money was “liberated” from the application of weights and measures and one result has been the rise of modern economics as a stand alone “social science” with highly specialized and highly opinionated practitioners. Prior to the 20th century economics was mainly a subset of political philosophy. People like Hume and Locke and Aristotle speculated about things economic as part of wider subjects in which they were engaged.
So one problem with restoring the gold standard is that it’s a threat to the entire modern economics profession, which has become so important that it not only has prominence in elite universities, but through the practice of central banking is surely the most powerful component of government. Such power is rarely given up voluntarily.
It is perhaps unsurprising, then, that you’re not going to find a lot of support for a gold standard among economists. There are a few largely marginalized advocates, like Antal Fekete, who used to haunt places like Princeton but has long since been banished to Newfoundland.
If economists are opposed to a gold standard at least partly for reasons of self interest, whither lawyers, then? Since the gold standard is an assertion of the rule of law over the nitty-gritty of economics, you might think that lawyers would be its natural advocates, if only to enhance the prestige of their own profession. But again, you would be wrong. Lawyers as a group may mouth platitudes about the rule of law, but individually and collectively, and perhaps counter-intuitively, are no more enamored of the rule of law than anyone else. Although they should be: one of the reasons people hate lawyers so much is that the reality is so far from the ideal. The sense of disappointment is more profound, because the sense of betrayal is more acute. We should all support the rule of law – but especially lawyers.
The rule of law is a higher order value and aspiration. It is a very difficult thing to achieve in practice, especially if people feel justified in gaining advantage with little or no regard as to how. Where that mindset prevails, the rule of law is very unlikely to be a reality, since it has no natural friends. In a very important sense, embracing the rule of law is precisely to forsake advantage and privilege; yet in reality, anyone who actually does this – as opposed to just talking about it – is regarded as a fool.
In the end, then, we don’t want a gold standard because we value the prospect of gaining advantage and hold out the hope that it will be us who gains it, and not someone else. But the way this pans out is that a few people gain advantage first and then consolidate their position more and more until not only is the real advantage is held by a tiny sliver of the population, but the differential in the advantaged vis-a-vis the remainder becomes this unbridgeable chasm.
When it reaches that point – as it surely has, I mean I’m sure the reader recognizes that this is as much parable for our times as it is the elucidation of principles – you would think that the 99.9% who are basically left out would see the wisdom of the rule of law where no one has an advantage.
And again, you would be wrong.
What the vast bulk of the 99.9% think of at that point is not a restoration of the rule of law; rather they are driven by resentment of the .1% who have gained the advantage and wish only to take the advantage for themselves.
So they don’t want a gold standard. They want “money” that they can just issue, because they are “sovereign” or something. Or they don’t really want to change anything at all, except personnel: put me in charge, not that other guy. Give me the advantage. It’s my turn.
It is an irony, a paradox: the more extreme the imbalances become, the more obviously the circumstances cry out for a restoration of the rule of law, the fewer supporters it has, until ultimately there are no supporters and the rule of law is abandoned entirely. The .1% live behind fences and huddle with their possessions, fearing the masses. The masses turn violent – against the .1% when they get the opportunity, but also against each other when the rage has no place else to go.
So you see, the gold standard is the rule of law, and the rule of law is important. But the rule of law does not fall in your lap and give you its benefits by itself when you don’t want it. You must ask for it and work for it and – very difficult – submit to it. You must change your heart.
You can do that at any time, and so can anyone else. And there is yet time, so there is yet hope. Let’s not fuck it up.