In the last chapter [“Common-Law Politics,” ch. 2 of Common-Law Conservatism] we characterized contemporary conservatism as “State of Nature Conservatism.” That holds true for politics; it also holds true for economics. Contemporary conservatism is fundamentally flawed here in the same way that it is in political theory. For there exists an economic counterpart to natural-rights theory, and it is saddled with the same core problem-set. It seeks a reality behind the purported facade of convention – of civil society, private law, and sovereignty – in the same way that natural-rights doctrine seeks to dissociate civil authority from life, liberty, and property.
The propensity of which I speak was definitively enshrined by Adam Smith in his epoch-making work, An Inquiry into the Nature and Causes of the fiealth of Nations. Smith sought to establish a new paradigm at the heart of the budding science of economics, in order to counter the influence of mercantile thought which to that point had dominated public opinion and government policy.
Smith’s target was the ostensible mercantilist equation of wealth and money. As he understood it, mercantilism pursued national wealth by accumulating money in the form of bullion; this was behind the age-old restrictions on the exportation of gold and silver, and led to the pursuit of a favorable balance of trade, in which exports exceed imports, thus keeping gold and silver in-country.
Smith disputed this equation of wealth and money. In his view, the wealth of nations consisted not in money but in actual productive capacity, the ability to produce goods and services. His goal was to establish the primacy of free trade as a principle of international relations, but in order to do so he delivered a hostage to fortune. For, like the natural-rights theorists who sought to refound rights and liberties on a basis beyond convention, Smith sought to refound free trade on the state of nature. As we shall see, this would provide Karl Marx, and collectivists after him, with the basis for their own critique of capitalism.
With this theoretical basis, Smith posited false dichotomies which at best confuse the issue. Firstly, in order to combat the alleged mercantilist position to favor the producer over the consumer, he asserted the primacy of consumption over production.
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
But the whole notion of favoring one of these over the other is chimerical. For consumption and production are two sides of the same relation, and they each depend equally on the other: one cannot consume without first producing (or someone producing for him). Jean-Baptiste Say expressed the idea succinctly in what is known as Say’s Law: supply creates its own demand. Which is to say, supply, or production, and demand, or consumption, are two sides of one and the same equation.
This truncation has beset economics ever since. It has led to the focus on distribution, and the efficiency thereof through the market process, while relegating production to the status of “production function,” as a sort of black box, taken for granted. Smith’s emphasis on the division of labor being limited by the extent of the market is an expression of this fixation. The size of the market certainly is an important aspect, but only one aspect, in determining the division of labor.
One false dichotomy leads to another, to wit, Smith’s definition of wealth in which he opposes money to goods. Here again, Smith is attacking an alleged mercantilist falsehood, the equation of wealth and money, to which he opposes productive labor resulting in goods as the true content of a nation’s wealth.
The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour, as much as what we acquire by the toil of our own body. That money or those goods indeed save us this toil. They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.
Money is merely representative of the underlying reality, which in Smith’s view is the labor expended in the production process. Labor is the source of the value we attribute to marketable goods, and wealth is the sum total of such goods.
Smith here followed John Locke, who attributed, as we have seen, the origin of property to labor. Locke did so because in his view labor was ultimately the source of economic value.
…[S]upposing the world given, as it was, to the children of men in common, we see how labour could make men distinct titles to several parcels of it, for their private uses; wherein there could be no doubt of right, no room for quarrel.
Nor is it so strange, as perhaps before consideration it may appear, that the property of labour should be able to over-balance the community of land: for it is labour indeed that put the difference of value on every thing….
Here again, Smith is simply adapting the Lockean state of nature understanding of civil society to economics. Money is something added to the economic process in order to facilitate it, but it is by no means essential to it: barter could just as well take place, albeit certainly with attendant inconvenience.
Excepting Say, the labor theory of value was shared by all the classical economists including Karl Marx, who in fact derived his critique of capitalism precisely by assuming it. Essentially, since labor is the source of all value, capitalists in their accumulation of profit were appropriating surplus value which by right accrued to the laborers. Marxism would eliminate this inequity by eliminating the capitalist, so creating the workers’ paradise.
In response, a new school of economic thought arose, the so-called neoclassical school, which while sharing Smith’s conviction of the importance of free trade to the wealth of nations parted ways with him with regard to the doctrine of economic value.
The neoclassicists substituted the principle of marginal utility for that of labor as the basis of economic value. That is, they exchanged the objective approach, in which value is considered to inhere in labor, for the subjective approach, in which the appraisal of economic actors is made the source of value. “The meaning goods have for us, which we call value, is merely transferred. Originally, only need-satisfactions have a meaning for us, in that the maintenance of our life and our welfare depends on them; as a logical consequence, however, we transfer this meaning to those goods the disposition over which we are conscious of being dependent upon for the satisfaction of these needs.” Value is rooted in the satisfaction a good yields, not in the labor used to produce that good.
But that is as far as they got. Neoclassicists too shared Smith’s conviction regarding the primacy of consumption and efficient distribution via the market as the subject matter of economics. For them as well, money was a superfluous albeit useful addendum; true economic science involved getting behind the “veil of money” to the real substrate of concrete goods.
This agenda became explicit in the work of Eugen von Böhm-Bawerk, one of the founders of the neoclassic “Austrian” school of economics. Böhm-Bawerk is interesting in that he penetrated to the very core of the issue, only decisively to turn aside from the appropriate course so as to persist in the error of state of nature economics.
The motivation behind Böhm’s investigation was righteous indignation. Economists had been smuggling a new category into the ranks of economic goods, namely “rights and relations” (German: Rechte und Verhältnisse), in response to the veritable asset explosion of multiplying forms of credit and goodwill, forms which appeared exponentially to have increased the total wealth.
The chief instigator of this revolution in economics was the Scot Henry Dunning Macleod. Drawing upon his experience in the real world of banking and finance, Macleod had come to the conclusion that it was not material goods at all that constituted the subject matter of economics, but the rights to those goods. “As Jurisprudence is the Science which treats exclusively about Rights, and not about Things, so Economics is the Science which treats exclusively about the Exchanges of Rights, and not the Exchanges of Things.” The fiestern system of private law had led to the multiplication of forms of rights, each exchangeable, each with monetary value in its own right; and for Macleod it was absurd that economists continued to ignore the existence thereof.
Now the question at issue is no trifling one. The property afloat in this country in bills of exchange, bank notes, and bank credits alone, is upwards of £600,000,000, and the question is, Whether this is a real and independent value, or only a myth? All Political Economists, from the days of Turgot, maintain that it is nothing, a mere nonentity, that it is of no more value than the paper it is written on. We, on the contrary, maintain in opposition to the entire body of writers in France and England, from Turgot to Mr. John S. Mill, that it is a real value, that is a separate and independent value over and above, and perfectly distinct from money or commodities, and we have the most perfect conviction that we are right.
Macleod was aware that the criticism of his view centered on the charge of double-counting, of asserting the existence of an economic good on the one hand and a separate right to that same good, an IOU of one form or another, as being itself likewise an economic good. Böhm-Bawerk expressed the objection this way: “One may summarize the conditions upon which Macleod’s doctrine is based in the following two statements: 1) When A lends a dollar to B, B possesses in this dollar a corporeal good valued at one dollar. 2) In the right of obligation to the return of the dollar lent, A possesses an immaterial good with a present value likewise approaching a dollar, and which is not identical to the material dollar.” If this is true, says Böhm, then indeed, “credit creates new, previously non-existent goods, and the goods-doubling power of credit would truly be a miraculous fact, albeit still a fact.” But this cannot be; for it is to count the economic good and the right, of which the economic good is an object, as two separate goods. “Today there can be no doubt that the chief principle [der Hauptsatz] of this doctrine is erroneous [ein Irrsatz]: the double-counting made here with the credited object and the right directed to this object, or made with obligation and debt, is all too obvious.”
Back in 1858, in his Elements of Political Economy, Macleod had already retorted to criticism similar to that made by Böhm in 1881:
Now, who can deny that the present value of a debt, payable at some future period, is a separate and independent value? It is a marketable commodity, it may be bought and sold like a pound of sugar, and the money that is paid for it does not represent it any more than the money represents any commodity that is exchanged for it…. Now, what is a Bill of Exchange? It is nothing but a debt payable three months after date, say; and that debt has a present and separate value, quite independent of the money that will ultimately pay it. Now, when we affirm that credit is capital, we mean nothing more than this, that operations take place where one or both sides of the transaction are debts. That sales of goods and services occur, where a “promise to pay” forms one side of the transaction. A proposition, we presume, which no one in his senses will deny. We make no assertion involving the stupid blunder that the same thing can be in two places at once.
Apparently, Böhm (and others) had been misreading Macleod, asserting that he counted both the economic good and the right attached to that good as two separate economic goods. This is not what he was doing; rather, he was consistently making the attempt at replacing “goods” with “rights” as the material of exchange and thus of economics.
But Macleod’s language sometimes added to the confusion. For example, in the Elements of Economics he writes “On the Three Species of Wealth or of Economic Quantities.” These comprise, firstly, “Material or Corporeal Things… such as lands, houses, money, corn, timber, cattle, and herds of all sorts, jewelry, minerals, and innumerable things of this nature which can be bought and sold, and whose Value is measured in money.” Then comes “Immaterial Wealth,” including personal services (“A person may sell his Labour or Services in many capacities for money, such as a ploughman, an artisan, a carpenter, or as a physician, an advocate, an engineer, an actor, or a soldier: and when he receives a definite sum of money for such Labour or Service its Value is measured in money, as precisely as if it were a material chattel” – thus, Adam Smith’s labor, Say’s immaterial products of labor and services, Senior’s knowledge. Thirdly, “Incorporeal Wealth,” consisting in “vast masses of Property which exist only in the form of abstract Rights, quite separate and severed from any material substances, which can all be bought and sold, and whose Value can be measured in money, exactly like that of any material chattel.” Therefore there are “three distinct Orders of Quantities which can be bought and sold, or exchanged: and therefore which satisfy the definition of wealth.”
Here Macleod lines up things, services, and rights as three different forms of wealth, instead of being clear that all three categories are forms of rights. The confusion becomes complete when he enumerates the forms of exchange that may take place:
- The exchange of a Material thing for a Material thing.— Such as so much corn, cattle, or land for so much gold.
- The exchange of a Material thing for Labour or a Service.— As when gold or silver money is given as wages, fees, or salary for services done.
- The exchange of a Material thing for a Right—as when gold money is given in exchange for the funds, or a Copyright, or Bill of Exchange.
- The exchange of Labour for Labour—as when persons agree to exchange one kind of Labour for another kind of Labour.
- The exchange of Labour for a Right—as when wages or salaries are paid in bank notes.
- The exchange of one Right for another Right—as when a Banker buys a Bill of exchange, which is a Right, by giving in exchange for it a Credit in his books, which is another Right.
This is inexcusable. For in the same book, only ten pages further down, Macleod states, as quoted above (p. 45), that it is rights, not things, which are exchanged, and which can be divided into three categories corresponding exactly with the aforementioned list: “Corporeal or Material Property or Rights,” then “Immaterial Property [or rights],” lastly “Incorporeal Property [or rights].”
The confusion of putting rights and objects of rights on a line is what led Böhm-Bawerk to launch his criticism. It was not Macleod who fell into his error, though, but others who while professing to see the error of Macleod’s ways nevertheless persisted in their own. For his part, Böhm resolutely stuck with the Smithian doctrine of goods, broadly understood as the products of labor – material things and personal services – as the substance of exchange, rejecting Macleod’s rights-based approach absolutely.
For this reason Böhm failed in his attempt to develop a satisfactory theory of interest, to which he devoted two massive volumes. He simply could not come up with an original rationale for, as Aristotle put it, money begetting money, and was forced to make interest a derivative concept, with profit-generating capital goods – for him, the true underlying reality – somehow being the source of it.
Since then, neoclassical economics as a whole has failed to come up with a satisfactory theory explaining either money or interest. This is due to its principled decision to view goods as the proper subject matter of economics, while consigning money, indeed the entire sphere of “incorporeal property,” to a derivative category, nonessential to theory.
Keynes was aware of the problem, and in his own way set out to fix it: by turning it on its head. Instead of goods being original and money derivative, he made money to be original and goods to be derivative. Money, which could be created ex nihilo by the government (truly a godlike entity in this regard) could of itself generate productive capacity. Keynes thus advanced a proposition reversing Say’s Law: to wit, demand creates its own supply.
The reality which Macleod perceived was that the universe of rights transforms and multiplies wealth. The material substrate of wealth is not the same thing as wealth, and without the panoply of rights through which the material substrate is mediated in an economy, that material substrate is left unproductive, at a subsistence level, at least for the mass of men. This is why tribal and feudal societies anciently, and socialist societies in modern times, could never get farther than a minimal level of productivity.
The reality of the situation has only recently been laid bare, in the work of Gunnar Heinsohn, Otto Steiger, and Hans-Joachim Stadermann. Their work demonstrates the truly unique character of the property regime. They show that property is not just there: it is a quality attaching to things only within the legal context, the context of private law.
Heinsohn and Steiger for the first time harness the distinction between possession and property for the benefit of economic theory. This legal distinction is unavailable to economists who either are unaware of or who refuse to recognize the fundamental importance of the legal sphere to economics. Possession concerns the actual goods and services, the level of use, while property concerns the invisible layer of titles and obligations enabled by the human will, capable of obligating itself to future performances – the basis for the entire regime.
Obligation serves a dual purpose, that of meeting needs for which things are not appropriate (services, works) but beyond that securing for the future things themselves, by means of the human will. The significance of obligation is not so much to make possible services or the communication of things – this can be achieved by mere factual performance – but much rather that security of the future exist, partly by making possible a present performance or communication without damage and hazard, and partly through which the future possession of an object is secured in a manner often not afforded even by continuous possession.
This distinction is what Marx and others were groping after in their distinction between use-value and exchange-value. In terms of the common-law order as described in the first chapter of this book, the distinction pertains to the internal and the external dimensions, respectively, of the associations comprising the society. Use – the possession dimension – is group-internal, while obligation – the property dimension – is group-external. The distinction is fundamental. The one involves the exploitation of the good or service; the other, the capacity, as it were, to exploit the exploitation, by means of pledge upon which credit is based, above and beyond the exploitation of the good.
Economically, therefore, property is the result when obligation is added to possession (possession + obligation = property): obligation being the capacity to promise, which in turn leads to the capacity to burden, to encumber, to collateralize property, which enables the receipt of credit while retaining possession, and thus use, of the property involved. All other functions of property are already contained in possession. Therefore, in the property regime the object of property can be retained, and so exploited, while also collateralized for credit. This “having one’s cake and eating it too” is what enabled the explosion of wealth lauded by Macleod and so inexplicable to Böhm-Bawerk – whose response, in principle, was of the same ilk as Aristotle’s to the idea of interest.
Behind this capacity for wealth generation is a phenomenon which Heinsohn and Steiger have labeled property premium: “…a non-physical yield of security which accrues from property as long as it is unencumbered and not economically activated. The premium allows proprietors to enter credit contracts, and is a measure of the potential of individuals to become creditors and debtors.” It is precisely the establishment of a regime of secured possession, of ownership “against all the world,” through the umbrella of sovereignty and the instrumentality of private law, which generates this property premium, this “non-physical yield of security.”
The cornerstone of the entire property regime is money, which is liquidity – the means for discharging debts. The system runs on credit and debt and the settlement of agreements establishing those credit-debt relations; such settlement is realized through the institution of money. Money therefore is anything but adventitious. Without it, economic activity cannot advance beyond the most primitive stage.
In this system, the money issuer is the bank, which is the institution that reaps the property premium. Banks transform property into money, or, in Steuart’s memorable phrase, they engage in the “melting down” of property into “symbolical” money (Follow the Money, p. 149).
Why would anyone issue money in the first place? For the money, of course. Because by doing so, the issuer transforms the property premium in his property into interest; he can charge interest for the money he issues.
The recipient of the money – the debtor – promises to repay the sum borrowed plus interest. Furthermore, in order to receive credit he encumbers his property as collateral for the sum received. This too is a giving up of property premium, albeit for a different end, not to earn interest but to gain liquidity – the fabled “liquidity preference” – while keeping control of the property concerned.
This is the core of the property regime, and the engine of economic growth. “The metamorphosis of property premium into a charge of interest owed by a debtor in every credit contract is at the root of capitalism’s envied accumulation and technical progress in the same manner as the non-metamorphosis is at the root of its deplorable crises.”
Valuation as a market function is part and parcel of this same money-issuing, credit-generating process. Valuation is not first attained through the process of buying and selling, but through the process of encumbering, collateralizing, and issuing money in credit contracts. This is because credit contracts, not sales contracts, are original; sales contracts follow after.
Property titles are always transferred in creditor-debtor contracts in which both creditor and debtor are proprietors. These contracts are divided into mere credit contracts and sales contracts. In the former, claims to property are transferred but not claims to possession, rights to the physical use of goods or resources. In the latter, claims to property are transferred uno actu with claims to possession. Sales contracts are always subordinated to the credit contracts whose fulfilment they serve.
The issue itself forms the original valuation, for money is issued in terms of the value of the collateral. The property put up as collateral receives its valuation in the credit contract through which money is obtained.
Valuation being inherent in the issue of money, it is not dependent on the previous valuation of any commodity but instead is the source of the valuation of commodities. Contemporary goods-based economic theory, viewing money as the “most marketable commodity” (Carl Menger’s formulation), usually views the precious metals, preeminently gold, as the standard by which to value everything else. But this is to put the cart before the horse; and, viewing things from this angle it is easy to understand Stadermann and Steiger’s impatience:
Hundreds of years of “value theory” tradition make it difficult to understand that investigation into the origin of the value of economic goods is not a scientific question. Economic science has difficulty divesting itself of that medieval insistence on investigating the substance of things in order, in the manner of natural science since the Enlightenment, to pass over to investigating the relations between economic phenomena. For this it requires no classical or neoclassical value mysticism. The value of economic goods is measured in differentiable money units in no other way than temperature is in various degree scales. Establishing a currency unit is an act just like establishing the Celsius scale for the measurement of temperature. Why the temperature difference between two aggregate conditions of water is divisible in one hundred equal intervals cannot be answered scientifically. Not only three but a thousand, yea innumerable foundations were possible for measuring temperature; it is only convention that made use of the decimal system of 100 sections for the scale.
The value of things is not inherent in certain things in order to serve as the basis for the valuation of everything else. Valuation is a matter of convention and agreement: it is an affair of common-law functionality.
In the early stage of the property economy, money is issued by private entities, property owners able to issue a valid currency to meet the need for liquidity. Soon sovereign entities assume the role of issuers of money, and the rationale for doing so is eminently a common-law rationale, for at bottom money creation is valuation confirmed by the sovereign in response to demand, either by courts upholding contracts – in the case of private issue – or by itself issuing money, by proxy, through a central bank on a property basis.
The sovereign originally took over the role of coinage from private credit banks. “Once coin existed, governments of ancient city states tried to make a gain – seigniorage – by monopolizing the mints and paying their debts with state coins.” But they often confused the issue by succumbing to the temptation of resorting to state money (in which the state creates money for itself in exchange for its own IOUs) rather than sticking to the discipline of property-backed money.
Modern central banks – when properly run – are based on the basic principle of property-backed money. Contrary to popular belief, itself fueled by Keynesian dicta that the state can and ought simply create money ex nihilo, central banks only issue money against marketable assets, both by buying them and by accepting them as collateral against repayment. They form the cornerstone of the modern two-tiered banking system, in which central banks deal only with commercial banks, who in turn deal with the borrowing public.
In this system, there is a threefold basis for the issue of money. Firstly, there is the property of the end user put up as collateral when borrowing from the commercial bank. Secondly, there are the securities collateralized by the commercial bank to receive funds from the central bank. Thirdly, there are the assets purchased by the central bank in exchange for its banknotes, constituting its reserves. Each of these asset levels must comprise marketable securities, so as to maintain the value of the currency. They cannot be mere government IOUs, unless these themselves are marketable as well.
The property-based economy appears to be the logical result of progress in civilization, from tribal to feudal to capitalist society. How then to explain the tremendous drawing power of the alternative form of social order, itself viewed by its proponents as the progressive solution to the problematic situation brought into the world by capitalism? For from the perspective of the property-based economy, the collectivist alternative is merely another form of command-based society of the same ilk as feudalism, based in possession rather than property. The solution to this conundrum can only be sought at the level of the spirit, for it is a spiritual problem, requiring a spiritual solution. We turn, then, to the topic of common-law religion.
[Adapted from Common-Law Conservatism: An Exercise in Paradigm Shifting (Aalten: WordBridge, 2007), ch. 3]
Is it entirely coincidental that The Wealth of Nations was published in the same year, 1776, as the Declaration of Independence?
Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book IV, ch. 8, para. 49.
Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, ch. 5, para. 2. Emphasis added.
Locke, Two Treatises of Government, “Of Civil Government,” vol. II, chap. v, §§. 39-40.
Menger, Principles of Economics, ch. 3, §. 2b, p. 107. The translation is mine, from the original German text; the Dingwall/Hoselitz translation (James Dingwall and Bert F. Hoselitz, trans., Principles of Economics, New York: The Free Press, 1950; online edition, The Mises Institute, 2004) is simply too imprecise to be of use here.
The Elements of Economics, v. I, p. 151. Macleod was a great believer in highlighting via boldface print.
Elements of Political Economy, pp. 325-326.
Rechte und Verhältnisse, p. 11. Again, the translation is mine; the Huncke translation (“Whether Legal Rights and Relationships are Economic Goods”) is imprecise.
Rechte und Verhältnisse, p. 11.
Rechte und Verhältnisse, p. 10.
Elements of Political Economy, p. 325.
Elements of Economics, pp. 138-140.
Elements of Economics, p. 141.
Elements of Economics, pp. 151-152.
cf. Böhm-Bawerk, “Whether Legal Rights and Relationships are Economic Goods,” pp. 37f.
This is the subject of De Soto’s important book, The Mystery of Capital.
Heinsohn is a sociologist, Steiger and Stadermann are economists. Their work ought to earn them the Nobel Prize in economics someday. Beyond the works listed in the bibliography, the following should be consulted: first and foremost, the seminal work: Heinsohn and Steiger, Eigentum, Zins und Geld: Ungelöste Rätsel der Wirtschaftswissenschaft [Property, Interest, and Money: Unsolved Mysteries of Economic Science], fourth, revised edition. Marburg: Metropolis Verlag, 2006. Furthermore, Stadermann and Steiger, Allgemeine Theorie der Wirtschaft: Band 2, Nominalökonomik [General Theory of Economics: Vol. 2, Nominal Economics], Tübingen: Mohr-Siebeck, 2006; Stadermann, Das Geld der Ökonomen: Ein Versuch über die Behandlung des Geldes in der Geldtheorie [The Economists’ Money: An Essay Regarding the Treatment of Money in Monetary Theory], Tübingen: Mohr Siebeck, 2002.
Stahl, Private Law, p. 95. Emphasis added.
Heinsohn and Steiger, “The Property Theory of Interest and Money,” in What Is Money?, p. 82.
Heinsohn and Steiger, “Property Titles as the Clue to a Successful Transformation,” in Verpflichtungsökonomik, p. 210.
Heinsohn and Steiger, “The Property Theory of Interest and Money,” in What Is Money?, p. 82.
Stadermann and Steiger, Schulökonomik, p. 15.
Recall the comprehensive formula of the common-law order, ch. 1 above.
State money (“fiat” currency – see note 47 below) is a perversion of this principle, not an expression of it.
Heinsohn and Steiger, “The Property Theory of Interest and Money,” in What is Money?, p. 86.
“The concept of state money has led Keynes to recommend ‘government printing money’ to finance public expenditure against unemployment. The concept has also survived in mainstream monetary economics where money is defined as a public debt. This view reflects periods in the history of monetary systems in which governments frequently circumvented the labourious process of pledging good securities for the issue of money, by allowing non-marketable state debt to be transformed into money proper. However, such an issue of money has more often than not disturbed, and sometimes even destroyed, money systems.” Heinsohn and Steiger, “The Property Theory of Interest and Money,” in What is Money?, p. 87.