Compendium: Devaluation and Revaluation (Pt. II of II)

In the first half of this SMP Compendium entry, it was established that the Currencies pegged to the Work-Standard have the Price of Geld affected by the Value of Arbeit. If the Financial Regime of a Socialist nation-state has its Central Bank devalue the Price of Geld, the Central Bank will also be devaluing the Value of Arbeit. ‘Value of Arbeit’ is of course the same “Quality of Arbeit” (QW) discussed in the Compendium in “How Arbeit is Converted into Geld.” Inversely, if the Central Bank revalues the Price of Geld, it is also revaluing the Value of Arbeit at the same time. ‘Price of Geld’ can be interpreted as the “Quality of Geld” (QM).

The Central Bank is able to devalue and revalue in that particular manner because of the Work-Standard’s preference for Fixed Exchange Rates as opposed to Floating Exchange Rates.  As discussed in the Compendium entry “Exchange Rates and the Impossible Trinity,” there is something counterintuitive about how Geld and Arbeit become applicable to the Impossible Trinity. But when it becomes apparent that this is the result of the properties of the Work-Standard, the manner in which Devaluation and Revaluation functions is understandable. 

Decisions pertaining to the Devaluation or Revaluation of the Currency will originate from the State and its people, the Totality. The manner in which these decisions emerge will be distinctly tied to Council Democracy. The State may propose it formally at the State Council and Economics and Finance Ministries. The Totality may propose it to the State Commissariats of Wages and Prices, where it is immediately brought to the attention of both the State and the Central Bank. In either case, the decision boils down to whether the Quality of Arbeit will or will not change along with the Quality of Geld.   

Furthermore, the final paragraph is relevant to the topic:

The question of whether to impose controls on the movement of Currencies across international borders is a technological one inasmuch as it is also financial and political. The Work-Standard provides justifications for imposing controls on monetary flows and deterring them, offering greater flexibility in terms of monetary flows for the State. This means that the State will always be the final authority in deciding the rate at which its Currency enters and leaves other countries. It would entail greater synchronicity in controlling the flow of Geld and Arbeit and by extension the concurring movement of goods and services. Put another way, overcoming the Impossible Trinity is akin to advocating for alternatives to the “Free Trade Agreement” (FTA) and the rules of international trade since Bretton Woods.

The manner in which the question over the movement of Geld across international borders is highly suggestive. It implies that the movement of Currency flows will always be correlated to the concurring movements of goods, services, and laborers. The Arbeit that the nation contributes and the Geld which the nation generates from its Arbeit are closely intertwined. People who voluntarily work abroad, outside the terms of a Real Trade Agreement (RTA) between governments, are considered as working for another nation-state. Their physical absence in the nation-state as its citizens prevents them from contributing any Arbeit.  

Part of this can take on the form of economic migrants emigrating from their nation to earn Kapital by doing menial jobs abroad. A phenomenon similar to economic migration is immigration, where people decide to live and work in a different country. The significance of the need for Real Trade as opposed to Free Trade is also evident here as well. 

The demographic decline in the developed world and the brain drain in the developing world represent two halves of another problem. The developed world expropriates the Life-Energy of the developing world because the young people living in the former have neither the drive nor the means to build lasting communities of families. The consequences have led to growing anxieties among nation-states over the integration of newly-emerging national minorities. Nativism and Xenophobia will flourish under those economic and financial contexts.  

A similar issue has to do with “Kapital Flight” and “Tax Evasion” that pertain to Kapital and its owners abandoning a nation for another favorable to Kapital itself. There is the possibility for a similar flight of Arbeit and Geld to occur due to a higher than normal Attrition Rate or, in the context of this Compendium entry, the Central Bank opting for Devaluation. That can happen if the Socialist nation-state in question is a developing country still industrializing and dependent on harvesting natural resources as a major part of its Total Economic Potential. 

In all of these circumstances, the State needs to be able to reserve the necessary authority in deciding what is permitted to travel across its borders. That includes the people who decide to cross international borders out of economic considerations as opposed to political ones. Such a power is already employed as part of a trade policy, and the same is true for immigration policy. Outside of Real Trade, the solution cannot always be a monetary or a fiscal policy. It is as much a legal one as it is a political one. 

Categories: Compendium, Politics

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