This Article Will Cost You Five “McElroys”

October 21st, 2011   Submitted by Wendy McElroy

Occupy Wall Street (OWS) is exploding like a force of nature into the streets and around the globe. Libertarian anarchists are deeply conflicted in their responses to the protest, because the movement’s message is deeply flawed and often cacophonous.

One of the voices rising from the pavement is that of libertarian-leaning Chris Savvinidis, whose entire message can be summed up in three words: “End the Fed.”

Or it can be expressed more eloquently, as Savvinidis does himself in a YouTube video that is going viral. Savvinidis proclaims,

A whole continent wide cannot control a federal government with a banking system that prints money like it’s paper. You can’t even call it money anymore. Gold is money. Silver is money. Green dollars are not money. They’re using inflation as a hidden tax to fuck the people.

Prices go up. Do your wages go up? No. My wages didn’t go up. But prices went up, gas goes up, milk goes up, trades go up. How am I supposed to live? And this is all because our government prints too much money, starts too much wars, so they can sell their tanks, their guns, their missiles. That’s all America exports is guns, missiles, and tanks. That’s it. We need to bring production back to America. End the Federal Reserve.

Within OWS there is now a submovement called Occupy the Fed. On October 7, hundreds of people marched from the Financial District of New York City to the Federal Reserve Bank, chanting “End the Fed, Occupy the Fed.” One news source reported,

Many “free market” activists have been spending time at Occupy Wall Street protests talking about the dangers of allowing a private corporation to centrally plan the U.S. economy. They use government to socialize their investment losses.

My hands will be aching and numb before I stop applauding these protesters. But in the spirit of constructive criticism, I suggest they flesh out their message to include a truly anarchist theme that is rarely explored by today’s movement: the right of every individual to create his own currency.

This theme is too complicated to explain on a poster or to shout through a megaphone to a milling crowd; thus, it is inappropriate for a march or protest. But in the articles and video commentaries that are beginning to surround Occupy the Fed, the movement would be well-advised to stress the positive free-market alternative to what is now a negative government monopoly.

Getting Back to Private Currencies

American libertarianism was dramatically different in the 19th century than it is today. A key difference is economic theory. The 19th-century radicals have been justly criticized for their economic weaknesses, but little has been written about their strengths. One strong point: they placed a heavy and almost primal emphasis on the right of every individual to create their own currency and to circulate it to all willing takers. It was a natural right. The quintessential individualist anarchist, Lysander Spooner, stated in his work Constitutional Law Relative to Credit, Currency and Banking (1843),

To issue bills of credit, that is promissory notes, is a natural right.… The right of banking, or of contracting debts by giving promissory notes for the payment of money is as much a natural right as that of manufacturing cotton.

Any discussion of American libertarianism’s 19th-century economic policies must begin with a caveat and explanation. Radical individualists like Benjamin Tucker, editor of the influential periodical Liberty (1881–1908), are sometimes called “cranks.” Overwhelmingly, such libertarians rejected capitalistic practices like the charging of interest or rent. Instead, they embraced a labor theory of value.

First and foremost, however, they advocated a “society by contract” and explicitly refused to prohibit contracts with which they disagreed. In short, they would not have imposed their economic views through law. Thus, interest and rent would have existed in a society of their making and, presumably, it would have spread due to market forces.

Although it may sound bizarre to modern ears, the 19th-century libertarians believed “capitalism” would be swept away by the “free market.” Thus, the prospectus of Ezra Heywood‘s labor journal the Word (1872–1890,1892–1893) read, in part, “The Word favors the abolition of speculative income … [n]ot by restrictive methods, but through freedom and reciprocity.”

As long as 19th-century libertarians championed contract and the free market above all else — and they consistently did — the impact of their economic errors would be minimal. Murray Rothbard once described the predictable outcome:

The anarchist society would … lead to much “harder” money than we have now. Without the State to create the conditions and coercions for continued inflation, attempts at inflation and credit expansion could not succeed on the free market.

But, again, there was one economic issue on which the 19th-century movement was superb: namely, the right of every human being to issue his own money.

Today, this focus is reflected in ventures like Bitcoin, a privately maintained digital-currency-exchange system. And, certainly, pivotal theorists like Rothbard argued for private currencies, denominating his own theoretical money in “Rothbards.” But few voices within modern libertarianism single out private currencies as an issue central to human freedom. Even hard-money zealots usually push for a return to the gold standard rather than the elimination of legal-tender laws and a pure return to private currencies.

By contrast, Tucker argued that nothing was more important to freedom than destroying the monopolies created and maintained by the state. The most destructive monopoly and, therefore, the most important to destroy, was legal tender and the banking system.

For part 2 of this article, see “Libertarian Experiments in Private Money.”

19 Responses to “This Article Will Cost You Five “McElroys””

  1. Mike ReidNo Gravatar says:

    That Savvinidis guy sounds like a faithful minarchist to me — for now. Let’s see how long that lasts after this election ends the same way they all do.
    I’m looking forward to having his fervor on our side.

  2. JustSayNoToStatismNo Gravatar says:

    I cringe when I hear “states’ rights”….

  3. HReardenNo Gravatar says:

    Heard of States Rights Gist?

  4. brian barberNo Gravatar says:

    I have been advocating a local currency for over a year to apply to Hawaiian Islands where I live and called I am fine tuning the concept as I write this to incorporate the coop principle to be joined by willing participants including the business community and common folk who want to keep their business local. I also have the domain name which is pointed to the website and is ready to develop in California as well. Any willing participant entrepreneur types and/or brainstorms out there with ideas?

  5. Thanks for the comments all. H.R. always good to see your posts. Brian…good luck with your local currency. Are you aware of the private bank that was run by Anthony Hargis? If not, you should really google him. Anthony was a pioneer. Cheers…and I’ll check in later to respond to comments.

  6. Greg LilleyNo Gravatar says:

    Nice article and nice link to Seth King’s article. I don’t suppose you have a Bitcoin address do you?

    BTW, I worked for Anthony Hargis for a short time in 1980.

  7. Greg LilleyNo Gravatar says:

    Glad to hear it. I sent a donation last night.

  8. LinuxNo Gravatar says:

    I don’t get the title of the article, it seams rather strange.

    • Greg LilleyNo Gravatar says:

      The article is about private currencies, so if Wendy McElroy had her own private currency and chose to call one unit of it a McElroy, she might choose to quote her price for the article in terms of her own currency.

  9. Scott BieserNo Gravatar says:

    I suspect that in a free money system we will have a mix of currencies, with each locality having a preferred “local” money, and in larger cities, various private trade associations with their preferred barter tokens. But for continent- or world-wide trade, for historical reasons, people will most likely turn to gold and silver (and perhaps also copper) as the most trusted and convenient exchange media. Personally, I like the terms “augrams” and “silgrams” for gold and silver gram units, respectively, and use these in the future-fic I’m currently writing.

    • HReardenNo Gravatar says:

      Do you believe that when one travels from one community to another they will need to exchange money that they have for the locally used money the way one does when traveling internantionally? What a pain that would be. Imagine if one lived in NH nesr the border of Maine and every time they crossed into Maine they would have to exchange money they use in NH for whatever is used in Maine. Perhaps in the end a few types of money would beconme the dominant ones used the way the Spanish Milled Dollar did in the 18th century.


  10. Thanks for the comments all. Greg: Thanks for the gentle nudge. I will be setting up a Bitcoin account over the weekend. HR…during the pre-Civil War days in American, the Bechtel (I think this is the spelling) gold coin became standard money across the continent with over a million of them estimated to be in circulation. Contracts from R.I. to California specified payment in that particular coin. So the free market really does ‘solve’ the need for a widely accepted currency. Like Scott, I think it would be based on various metals.

  11. BTW, I hope everyone likes the second (and last) part of the article. It is, by far, my favorite part of the piece.

  12. John ZubeNo Gravatar says:

    A long free banking bibliography and a long free banking A to Z file of mine are on
    Both need still many further such entries to come as close as possible towards completeness. publishes many of such titles.