A single world currency?
Having jumped on the ideological bandwagon of globalisation to the extent that he feels a world federal government is immanent, John Roberts considers the issues that arise when considering the creation of a world currency.
There has recently been some suggestion of the need for a global
currency, and the discussion that ensued seemed to show certain
difficulties in coming to grips with the question. That was probably
because the first essential of any currency, if
it be not of full value, i.e. gold, silver or some other desired commodity,
is trust. That
trust in the value of the circulating currency must be felt by users in the
authority, be it a bank, a government, or even a private concern.
That is why a hand-written IOU issued by someone who is trusted by the recipients can be used among consenting adults as currency and why the prettiest printed currency-note will be refused if people suspect the bank of being on the point of bankruptcy. Or worse, very often, if they think that the government in power is likely to default on its debts. Which is why such countries as Russia today are subject to periodic fears of sudden and rapid inflation, that lead to waves of panic and consequent economic chaos.
The point about all these rather elementary facts for the world at large is that no global currency could function unless and until an issuing authority - international bank or other institution - had the confidence thoroughout the world that its currency would be sound. In the present circumstances, it is not likely that any institution merely underwritten by the United Nations would secure that confidence. How else could it be gained?
The alternative might be that one country - with only the United States in contention at present - could provide the stability and financial strength to offer the backing for a currency. And indeed that is very much what has occurred in past years when the almighty dollar has functioned at times as a quasi-global currency, although it was then largely excluded from the area controlled by the Soviets and from China, with a fifth of the world's people. But the manipulations of the US government of other institutions and countries in order to maintain American interests and the obvious disadvantages to other economies make such dominance extremely suspect and unacceptable.
Hence we come to the need for an alternative. That could only be a strong, acceptable and financially sound ... world federal government --- that would have to rely on the democratic support of the majority of the people of the world. And it is likely that the last area of their consent that the diverse peoples of the world will give is such an institution is economic and financial. They may well accept the need for government to ensure an end to war and international violence. Whether that will automatically lead them to wish to surrender their power to decide economic issues affecting their own lives may be doubted.
Because a capitalist system that relies on 'enlightened' self-interest on the part of those who live in a free market has one or two defects, of which the most glaring is the tendency to increasing difference between the richest and the poorest. That characteristic will probably prevent any world federal government getting full agreement to a world currency without a commitment to a degree of equalization of wealth that will be unattractive or repugnant to the rulers of our global economic and financial system, who have never shown themselves notably generous to the poor and oppressed.
The lessons of the European Union, where after thirty years of groping for a closer union and a more equal sharing of wealth, the move to a common currency is still not assured, are instructive. Clearly the world as a whole is far less united and far less politically ready for a similar change. So it is likely that a world currency, with its concomitants of greater economic and financial equality, will be the last stage in the process of global unity, not one of the first.
Taken from the John Roberts World News Letter