Economic History Case Studies: The Work-Standard’s “Geldoperation”

It can be argued that The Work-Standard is in many respects an attempt at realizing what Johann Gottlieb Fichte described as the “Geldoperation” (Money Operation) within his philosophical book on Economic Planning, The Closed Commercial State. This book from the turn of the 19th century remains a revolutionary text even today because, prior to the Work-Standard, nobody has been able to realize anything close to fulfilling the conditions outlined by Fichte. The German word “Geldoperation” is actually fitting for a indirect allusion to the Work-Standard because of how the “Operation” can be traced back to the Latin word “Opus,” whose meaning is comparable to that of Arbeit within the context of Roman Catholicism.

In essence, this “money operation” involves the creation of an alternative currency standard which is neither Bimetallism (like the Bretton Woods-era Gold Standard) nor Chartalism (like the Post-Bretton Woods Debt-Standard). The goal of realizing any true Command Economy and Council Democracy with its own version of Economic Planning requires the establishment of this alternative currency standard. The Currency itself will in turn enable everything else to become possible since Technology cannot do anything on its own without a proper Artform that reflects a specific design philosophy.     

The characteristics of the “money operation” are described as being capable of replacing Kapital and Schuld as the basis behind the Financial Regime, and the elimination of the need for any proposed returns to the Gold and Silver Standards.

The first requirement from Fichte is that material itself has to be easily put into circulation by the Financial Regime’s Central Bank. To quote Fichte’s own description:

“As for the material from which this new money should be manufactured, I will at present say only this much. Lest it offend the imagination of the people [Einbildungskraft des Volkes], this material must not have been previously familiar to them in any context, having become known to them now for the first time with the new Geld. And from now on it must only be used for Geld. It is material for Geld and nothing else than material for Geld, and the people need know nothing more than this. For keep in mind that the gold and silver in circulation should be exchanged for this and brought back into the hands of the government. If now, say, paper or leather or any other material already familiar from before and already possessing a determinate intrinsic value is made into money, the unthinking public will then ask: How can this little piece of paper or leather be worth my good money, and how can they demand that I sacrifice the latter for the former?”

The Intent here is that the Geld has be backed by something that is operates in tandem with Geld and can be perceived as being superior to Kapital. It has to be something that is tangible, but it was virtually unknown to everyday people prior to its issuance since nobody thought that it could form the basis for any Currency at all.  

“There is, to be sure, no sense in these words: since the silver piece in itself is worth just as little to me as this piece of paper marked by the state. The bushel of grain that I need, however, is worth something to me. And from now on, I no longer will obtain this for the piece of silver, but rather for the piece of paper. And if things were reversed, so that gold and silver, previously merely valued as goods according to their intrinsic value, are now introduced as Geld and offered in exchange for the paper money that had been exclusively in circulation, the same public would still ask: How then can this piece of silver be worth my good paper? Yet this public has now already become accustomed to holding gold and silver in such high esteem. This habit should be indulged, and we must not do violence to it by using a material for this new Geld that is at present valued less than gold and silver. The public now knows absolutely nothing about this material, and thus has no idea what it is worth. The government tells the public that this material has such and such a value, and the public need do nothing more than trust the government, just as before it had trusted the general opinion about the value of gold and silver. And it will actually turn out to be so in experience that a certain piece of this material is worth a bushel of grain or the like; or in other words, that one obtains the latter in exchange for the former.”

The new Geld should commend itself to the imagination even more than the old. It should strike the eyes as beautiful. What sparkles and shimmers is much sooner believed to be of great value.”

The second and third requirements is for the Currency to be put into circulation as cheaply and as simply as possible. It also has to be able to have built-in anti-counterfeiting features, preventing anyone from simply claiming to have more Geld than they actually have. That includes ensuring that its intrinsic value depends on itself having a relationship with Geld. If the Financial Regime were to rely on this object alone, its intrinsic value will not be worth as much as actually trading it for Geld or vice versa, implying an ease of convertibility and availability.   

The manufacture of the new money should cost the government as little as possible of the previous world currency, since it will need this for other purposes outside of the country that shall be discussed farther down. The new Geld must have as little true intrinsic value as possible, since all that is actually useful should be used as much as possible as a thing and not as a mere sign. For the reasons indicated above, it must be impossible for either another man or another government to counterfeit this new Geld. Every possible form—and thus, in the case of money, everything that is a feature of the mold from which it is cast—can be counterfeited. If this material is to be inimitable, it must be impossible either to reduce it to its constituent parts by artificial means, or hit on it by trial and error, or for it to be betrayed through the accounts of others. Some essential constituent part of the compound must be a state secret.”

Fourth and fifth requirements pertain to the Currency’s Value having a Hard Peg and its Price set and enforced by the Financial Regime, which is the Central Bank and the Council State. Here, the Money Creation process is limited insofar as the Central Bank cannot arbitrarily expand or contract how many units of currency are there in existence. Creation of new units of currency is dependent on whatever the Geld is pegged to.   

The government must ensure for all time the value of the money distributed by it—viz., the value with respect to goods that it attains at the time of its introduction. It will thus be necessary to introduce, together with the national currency, fixed prices for goods, calculated according to the principles set forth above, and to continually maintain these fixed prices. The government will solemnly agree to forever renounce the right to increase the quantity of circulating national currency arbitrarily and for its advantage, either by accepting equivalent goods in exchange for newly created money or by using it to pay salaries and defray other expenses. It will cover public expenses with the fixed yearly taxes that are drawn from and returned into actual circulation.”

The sixth requirement is that whoever decides to implement such a Currency or intends to innovate further on the concepts and ideas outlined above, they need to accept everything described above. Everything described by Fichte is intended to operate as whole greater than the sum of its parts. Anyone who decides to implement a Financial Technology accommodating the Currency needs to be created by its financial engineers with this particular design philosophy in mind.   

From what we have said it is clear that the system set forth here, should it ever actually be carried out, must either be accepted or rejected in all its parts, and that no government may, say, merely undertake the described monetary operation as a convenient means of enriching itself, while omitting to close off the commercial state, regulate public commerce, fix the prices, and guarantee everyone’s state of existence—regarding all these as burdensome occupations while at the same time even reserving for itself the right, at the first occasion that it should again need money, to mint and put money into circulation at its pleasure. Such a way of doing things would cause property to become insecure and give rise to immense disorder, very quickly bringing the people to feel despair and outrage against a thoroughly unjust government.

A state that has been organized entirely according to the principles set forth, as we will see even more clearly farther down, can never end up in a position where it would need or even desire an arbitrary increase in the quantity of circulating money as a means of enriching itself.”

And the seventh and final requirement is that if this Currency has to be implemented all at once. It cannot be implemented as “Monetary Reform,” to be done over the course of years or decades. Fichte was adamantly insistent about this matter since its implementation does not require insurrection, coercion, reform, regulation or even bans on civilian ownership of foreign currencies:

The actual introduction of the new Geld must happen all in one stroke, although the effectiveness of this one stroke will be increased through preparatory regulations that can be applied just as well toward some other goal. There is no need here for severity, bans, or penal laws, but only for a very easy and very natural provision. In one moment, through this provision, all silver and gold will become completely useless to the public for every purpose save exchanging it for the new national currency, whereas the new national currency will become completely indispensable even just to live.”

The implications here should be obvious. Any nation that adopts such a Currency will be granted tremendous economic and military power to not only become self-sufficient, but also wield enough clout to create a more Hamiltonian Federalist, Prussian, or Bolshevist world order. Whoever arrives at this new Currency later will benefit less by failing to support that first nation sooner, whereas any nation with an “Incentive” of opposing its implementation have everything to lose.         

The fulfillment of such a Currency, Fichte maintained, will not be a simple affair. The analogy chose to describe the difficulty was the analogy of “trying to find the Holy Grail.” Put another way, only the purest of heart will ever conceive such a Currency and express a conscious deliberation in wanting to realize it. The real secret to this Currency, if one is not familiar on how to find the Holy Grail, is to realize that the secret exists in plain sight and within one’s midst. That secret is of course the concept of Arbeit (Work). To quote the English translator’s “Interpretative Essay” of the book in 2013, Fichte argued that Geld (Money) serves as:

[T]he crux of the history of the present—the point where its different tendencies (its different histories) cross. Through the transformation of Geld, its transubstantiation from Gold to a yet unknown substance issuing forth from the secret chambers of the government, born not of nature but of human ingenuity, a new history is born; a history that is neither tragic, nor allegorical, but eschatological. The death and resurrection of Value, its recreation in an entirely new substance, is, as it were, the political corollary of Christ’s Advent. The philosophical politician could only follow Christ, doing as Jesus would do, by abolishing World Currency [Read: Kapital]. It is through this act that secular history becomes open to the possibility of the future announced through the life and death of the Messiah.”

Fichte, the translator’s essay continues, invokes the religious analogy to make a point about Currency in general. Every Conception of Currency, even the Work-Standard, rests on the belief that it has Value and that its Price serves as a reflection of that same Value. But unlike other Currencies, what the Work-Standard has in common with what Fichte had in mind. The true Value for any Conception of Currency is neither decided by the Financial Market nor is it decided by a Central Bank (as in MMT and Monetarism) nor dictated by the algorithms of a Blockchain (as in Cryptocurrency). Its real Monetary Authority belongs to the people who govern and control their own State, what I have specifically chosen to designate here as the “Totality.” The Value is shaped by the cultural, social, traditional, legal, political, historical, environmental, and other factors which cannot be exclusively financial or economic. The national economy, like the financial system, do not exist as isolated entities but as part of the Nation. The State governs it democratically, setting and enforcing its Price at the behest of the Totality.

“The new money is indeed nothing less than the rebirth of the state: its passage from death into life. The existence of world currency, and the at once exploitative and chaotic relations that follow from this, brings history to a point of crisis. While this crisis imperils the realization of the true goals of mankind, it opens up a possibility. The money operation, which transforms money from world currency to national currency, destroying it as the one but bringing it back to life as the other, is at the same time the death and resurrection of the state. In Fichte’s words:

‘It is clear that in a nation that has been closed off in this way, with its members living only among themselves and as little as possible with strangers, obtaining their particular way of life, institutions, and morals from these measures and faithfully loving their fatherland and everything patriotic, there will soon arise a high degree of national honor and a sharply determined national character. It will become another, entirely new nation. The introduction of national currency is its true creation.’”

Categories: Economic History

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