| Abstract: |
The case for monetary simplification and unification has been made since the
middle of the nineteenth century. It rests on four principal arguments
;reduced transaction costs; establishing credibility; preventing bad policy in
other states; political integration via money. In this paper we argue that the
case for monetary integration is becoming increasingly less persuasive. In
making our case we posit a different concept of money to the one that underlay
the nineteenth century discussions which we term "Newtonian" since it was
based on the assumption of a single reference external to the state reflected
in the definition of value in terms of precious metals. In the twentieth
century, views of money have shifted to a more " Einsteinian" or relativistic
conception. Measures of value that move relative to each other are helpful in
terms of dealing with large shifts in relative prices that affect different
countries very differently. In the current age of globalization, "Einsteinian"
money is capable of accommodating shifts that were politically destructive in
the " Newtonian" world. |