Essay/Chapter 3. Features of a «scientific» monetary system

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Chapter 3. FEATURES OF A «SCIENTIFIC» MONETARY SYSTEM


1. Measurement and metric systems
2. Measuring units
3. Measuring procedures
4. Measuring documents


From all that we have seen in Chapter 1, on how the monetary systems were at origin and how they should be now, a fundamental affirmation can be inferred: the nature of all the monetary systems is that of a metric system for measuring the exchange value in the market of specific goods.

From all that we have seen in Chapter 2 on how the monetary systems have been transformed and how they are now, a fundamental verification can also be inferred: the present monetary system is not a good metric system, but rather a confused and confusing system.

In the following chapters we shall submit the necessary reform of the monetary system in course, the necessary processing and introduction of a rational and informative monetary instrument-document, included within the framework of a pro-scientific[1] monetary system.

We shall then carry on with the description of how these features are worked out in the case of a monetary system.


1. Measurement and metric systems

Measuring is one of the most important acts in any «scientific» research which is to be tried out.

A «scientist», after carefully and thoroughly observing the phenomena he is studying, gives out one or more hypotheses, which later will have to be compared with reality through the preparation and realization of suitable experiments.

But experiments —which are a voluntary and controlled modification of reality, in order to obtain the results foreseen by the hypothesis at stake— imply capturing as exactly as possible the reality experimented and its variations and modifications, so that its comparison with the data foreseen by the hypothesis be as close as possible.

To attain this accuracy, this faithfulness to the reality of the observed phenomena, we use quantification, through measurements, of the above phenomena. Quantification is a means of obtaining data which improves the approach to reality, but besides it does it in an objective way.

Quantification of phenomena —or, better, of each one of the pervalences[2] considered in the phenomena— is an unavoidable condition of any experimental «science».

For quantification we use an instrument which is the metric system, an number of conventionalisms and measuring proceedings which allow us to observe reality under a quantitative aspect.

It must be pointed out that the quantitative representation of reality does not give us any truth —because quantification is a purely abstract convention and invention of man. But on the contrary it allows us to get near to reality with objectivity and, as a consequence, with effectiveness. Becausee the working out of quantitative laws on phenomena is the basis of the action and modification on our behalf of the above phenomena —a modification which we call technical—.

So any «science» must have available suitable metric systems for measuring and quantifying the pervalences it wants to study.

Physics, for example, has systems for measuring pervalences, such as length, density, time, temperature...

And on the contrary, the market science which we call Mercologics, has no suitable metric system for measuring one of its fundamental pervalences: the exchange value on the market of the existing specific goods. The monetary system must be this system, but at present it has none of the unavoidable conditions in order to fulfil effectively this function.

Every pro-scientific metric system must consist at least of the following elements:

  1. one measuring unit, rigorously defined, completely abstract and conventional.
  2. one measuring system to allow in practice the act of measuring: that is to allow to count how many defined units are contained in a specific, observed, phenomenon.
  3. one measuring document to leave documentary evidence of every measuring act carried out, in order to be able to make an overall analysis and statistics.


2. Measuring units

The measuring units we work out to measure a given pervalence of a specific phenomenon, are completely abstract phenomena, and their invention is completely arbitrary. The only condition is that their definition be very exact and accurate.

For example, the unit of length is the metre; this may be defined as «the distance of the ten millionth part of the square of the earth meridian».

In mercologics, the fundamental pervalence which we want to measure is the exchange value of specific goods; the measuring unit of this pervalence is the monetary unit, which gets different names in every State, as each of them defines its own monetary unit (the same as in ancient times every country defined its own units of length, weight, volume...).

But the monetary units are a very special type of measuring unit, which are not stable. In fact, the exchange value of the specific goods is not always the same, it is not identical in different situations of time and space. The distance between Barcelona and Madrid is always the same; but the exchange value of a liter of wine changes, in time and space, in terms of a very complex number of causes, which we are not going to study here.

Since the reality it wants to measure is variable, the monetary unit is also variable: there is no outer invariable constant with respect to which the value of the monetary unit may be defined, so that the definition of this unit is not fixed, but evolves with respect to the changes in the exchange values of the specific values it measures.

Moreover, the monetary unit cannot be defined with respect to one only privileged merchandise, but, in a given geographic space, it must be defined with respect to all the goods which circulate in the time period under consideration.


3. Measuring procedures

After a measuring unit whatsoever has been defined with rigorousness and precision, it is necessary to invent the way to carry out in practice the measurement of specific phenomena concerning anybody.

Carrying out a measurement is nothing more than counting the number of abstract units contained in any specific phenomenon.

In the case of length units, everybody knows the tape measures, the rulers, and so many instruments and measuring techniques, which make up the measuring processes.

In the case of monetary units, the only imaginable system to carry out the measurement of the exchange value of a specific merchandise, is the exchange itself, the free exchange-monetary contract carried out between two market agents. It is the freedom of the market play which creates prices and salaries attributed to each specific merchandise (produced or producing, respectively), at the same time while a sales-purchase act is being carried out.

Prices and salaries are mixed forms, specific-abstract, which issue from every measuring act, from each comparison between the specific merchandise to be measured and the abstract monetary unit in the free market.

And, paradoxically, it is from the whole prices and salaries fixed in a given time-space that we can, through an operation contrary to that of the fixing, define the value of the monetary unit in this time-space. Since the value of the monetary unit —called currency— is only its average purchasing ability in every given time-space.


4. Measuring documents

The only unavoidable condition for any pro-scientific metric system, is that any measuring act carried out be well documented, both with respect to verifying its validity, and with respect to be able, later, to use the elementary results obtained in analyses and statistics of the subject observed.

So every measuring act of the exchange value of any specific merchandise —that is, every elementary trade exchange— must be fully documented.

As we have already seen in chapter 1, in a rational monetary system, this documentation is automatically carried out through the monetary instruments or the monetary documents. In fact, the monetary instruments-documents are instruments because they are used to improve exchanges; but they are also documents because they record and save the trade act carried out through them.

The basic conditions which must be demanded from a serious documentation are two: first, that every measuring act deliver its own document; second, that this document be thorough, that is, it must contain all the meaningful facts which converge in the measuring act carried out.

And it is in this respect that the present monetary system fails: because it absolutely lacks a suitable documentation.

In the monetary system in force the monetary instruments consist mainly of coins, pseudo-bank notes and bank currency. But all these instruments, instead of documenting the acts of measurement-exchange in which they are used, are of an essentially antidocumentary nature. Rather than documenting, it may be said that they hide reality, because of their features of:

  • dynamism: they do not document one only elementary trade operation, but they are used in a number of exchanges, they circulate on the market for an indefinite time period, and carry out their role in an unknown number of elementary exchanges. Because of this permanent mobilty, the present monetary instruments are un-scientific because they are fundamentally un-statistic. There is no possibility of drawing statistics with such uncontrollably dynamic realities.
  • uniformity: the present monetary instruments are all of them identical; they only change with respect to the number of monetary units they represent. But they do not supply any indication as far as specific details of every elementary exchange, where they take part, are concerned. They do not say what has been exchanged, nor how, nor when... This uniformity is also unscientific because it is un-analytic. There is no possible analysis of the complex and flowing trade reality, without an exact and detailed documentation of every elementary act carried out.
  • anonymity: finally, the present monetary instruments are anonymous, that is, they do not inform on who are the agents of a trade exchange or of a given social-monetary act. Therefore they do not allow to allocate responsibilities to the monetary agents. In this sense, the monetary instruments in force are, besides, un-scientific and anti-justicial, because they allow to carry out all sorts of monetary activities without leaving any personalizing and responsibilizing trace.

The three un-scientific and anti-justicial features of the present monetary instruments we have just mentioned are to be applied mainly to the pseudo-bank notes, where they are quite evident.

Now, the bank currency (mainly current accounts, but also many other kinds, more or less known by the layman), even if apparently it does not meet these features —for example, it is usually nominal— it is also essentially anti-documentary, because, if it does supply some documentation on the acts carried out through it, this is a bank secret. Moreover, it may become at any time pseudo-bank notes, so that its trace completely disappears.

If the present monetary instruments are the denial of what we have indicated as a monetary instrument-document, we need, as a consequence, reconsider the monetary instrument in a position to constitute the effective guarantee of an exact and fully documented measurement of the exchange value of each and all the goods existing on a given market.

Documenting exactly and precisely every free act of market-monetary exchange is the only way of attaining the transformation of mercologics into an experimental «science». And it is also the only way of achieving, because of the monetary clarification and transparency obtained, the transformation of the corrupt present society into a society more free, responsible and just.



Notes:

1. By pro-scientific we mean «that it admits science, that it is thought keeping science in mind» (science in the restricted meaning which we have mentioned in our introduction).

2. A pervalence is a «privileged value» inside the phenomenon, that is a feature, a dimension, an aspect... of the phenomenon, which we are especially interested in observing and studying.