Would it be possible, in a society constituted as ours is, to
replace the agency of money by another agency which would have its
advantages without its inconveniences, and which could be considered as
theoretically perfect,--in other words would it be possible to replace
the agency of money by a system which would be the final expression of
possible improvement in this matter and the definitive point to which
social economics ought necessarily to tend? This is the subject which
we propose to consider.
The paper _Social comptabilism and proportionalism_[A] which was the
starting point of the Institute of Social Sciences of Brussels, was
necessarily done in a premature fashion, the subject being regarded
from too general a point of view, so as to be harmful to a true
explanation of «comptabilism» properly so called. It laid itself open
to criticism and lays itself open still; it does not satisfy all those
who wish to go deeply into the question. On these accounts we deem it
our duty, after what the Institute has already published with reference
to it, to return again to the subject, limiting ourselves to purely
monetary and account-keeping grounds, and an exclusively theoretical
explanation of the conception which, connected as it is with the
inductive researches of our fellow workers we have submitted to their
consideration.
In the first place let us examine into the use of money in society, and
to whom it is of use; we will next consider if it is indispensable.
Money presents itself to us as being an indispensable instrument for
effecting transactions which are not mere acts of barter, and it
presents itself also as having rendered possible,--and this is of
capital importance as the sequel will show,--the registering, the
writing down or account-keeping of the transactions, if one may so say,
which barter did not permit.
Money is exclusively of use to those who enter into commercial
transactions. Thus a man who could sufficiently provide for himself
in everything without any such transactions, would not have to make
any use of money; a landed proprietor may have a considerable fortune
and have only a small monetary need, whilst a merchant whose fortune
may be much less will find himself in a very different situation: for
the greater part of his fortune consisting of merchandise, continually
renewed, and consequently engaged in circulation, his monetary need
will be considerable. It may therefore be said that the need of money
is proportional to the need for commercial transactions.
Beyond what we have just pointed out, has money fulfilled, or does it
fulfil any other purpose? We shall see.
If, from the beginning, we could have had a system allowing us to
exactly register transactions, would money have been indispensably
necessary? In a word, is money in point of fact the particular element
in such transactions which caused the writing of them down, or, in
reality does not its use hide an agency entirely independent of money?
Let us examine this.
But we cannot do so without offering as a necessary preliminary a few
words in explanation of the term «transactions», which we have already
used and which will continue to be employed in this paper to the
exclusion of the word «exchanges».
In our opinion exchange properly speaking,--true exchange and free
from the alloy of any foreign element whatsoever, has never been
anything but barter; and as soon as the system of barter was left and
that of money entered upon, the exchange system was rather abandoned
for another system quite different, than that one form of exchange
was simply substituted for another form of exchange. And if we have
continued afterwards to make use of the word «exchange» it is due more
to the force of habit than in order to define the actual condition of
things.
What in reality fundamentally characterises barter, is that it is an
exchange, carried out on the spot, of goods immediately usable by
the two parties, each of them giving one usable thing in order to
enter into possession of another; whilst that which fundamentally
characterises the operation of selling and buying, by means of money,
is that it constitutes an exchange of goods carried out on the spot,
of which one form only can be immediately used by one of the parties,
the other party obtaining not a real thing but an instrument by which
he will be able to procure it. So that the party who has received
the money, the seller, has only thus obtained a _power_ to make
subsequently an inverse operation, that is a purchase where and when
it pleases him. The operation of selling and buying is then nothing
less than the _exchange of a thing for a power_. But can we still make
use of the word «exchange» to define such an operation? We do not
think so, and it is for this reason that we substitute for it that of
«transaction.»
The word «exchange» has continued to be employed after having quitted
the system of barter to enter upon the system of buying and selling, by
means of money, just as the expression «money» has continued to be used
to describe bank-notes, which are only paper having the power of money,
as money is an instrument having the power of «things.» Thus we have
here an example of the general rule, that the evolution of ideas and
of facts, is always more rapid than that of the words which represent
them.
Our opinion with regard to «exchange» will be found all the more
justified since it will be seen later on that the power conferred by
money upon the seller does not exclusively belong to the monetary
system, but that it can be obtained, and that theoretically it always
could be obtained, in quite another way, without exchanging anything,
without having anything to do with money, by simple entry, registering
or writing down of figures on paper which is not exchanged, but which
remains in one's own hands.
Let us now come back to the question.
We proceed to show that the relative value of things is independent of
the unity of value chosen, and that the transactions can be registered,
written down, abstraction made of the real, actual value of the
material support which has served to fix this unity.
In a general way and within possibly narrow limits, very different and
variable according as the case may be, given the existence in actual
society of fortunes and desires of all degrees of importance, one can,
in principle, admit that theoretically, the value _v_ of a thing or
of a certain quantity of goods, is proportional to the average _d_
of the desire to possess it, which the men demanding it have, either
on account of its use, or from any other reason, multiplied by the
number _h_ of these men and divided by the number _o_ offered of this
thing; these three factors _d_, _h_ and _o_ not being probably in other
respects determinable with precision.
We shall then have for the formula of value:
_v_ = _u_ × _dh/o_
_u_ being a coefficient of proportionality depending on the unity of
value adopted.
It will be seen that the term _dh/o_ represents in reality the account
of the conditions of the supply and of the demand at the moment and at
the place where the value is determined[B]. In substituting E, we have
a new term expressive of the value:
_v_ = _u_ × E.
The relatively fixed value of the precious metals has made it possible
for the unity of value to be determined on and easily represented by
means of a certain quantity of metal, and the actual monetary system is
the result, the value of all things having been henceforth expressed by
means of the monetary unity identifying itself with the unity of value
determined on. But it may in consequence be remarked in looking closely
into this, and it is important to do so, that this result has been
reached not because the thing: «metal money», has made its appearance,
but because thanks to it, a common denominator of the value of things
in general has been employed which did not exist before.
Now, as we shall see, this common denominator does not of necessity
remain invariably tied to the thing, money, or more generally to any
sort of material support which has served to define it at a given
moment. Once fixed it may be considered independently of this support;
becoming thus a permanent quantity in time and space, taking in
consequence the character of a common measure of the transactional
value of things and being employed as a unity of measure of that
value[C].
In reality this hypothesis could only be made when there was no such
thing as money, and a system of barter exclusively prevailing, those
engaged in making transactions might have said to themselves. «Let us
choose a common denominator of the value of things that we may write
down our transactions, and not be any longer obliged to carry on the
exchange of usable things when we do not want them, let us take for
example the value of a kilogram of wheat here at ... to day, the ... as
common denominator and let us calculate directly the value of all other
things by this unity.
»Evidently every other thing would be worth as many times this unity as
we see men would give kilograms of wheat to possess it, and thus the
numerical value of things would be easily established.
»Let us agree further in future always to express the value of things
by this initial value of the kilogram of wheat, _a value which has
only existed during the preceding operation, and which strictly can
only have existed for an indefinitely short time, but which can be
considered as absolutely permanent_, and apart from any necessity of
occupying ourselves with the variation of value undergone in time and
space by the kilogram of wheat itself.»
It will result that if _v'_ is the value of a thing at any period and
at any place of which the originally fixed value was _v_, the relations
will be:
_v_ = _u_ × E _v'_ = _u_ × E
whence: _v'/v_ = E'/E and _v'_ = _v_ × E'/E
that is the value _v_ of a thing at any time and place is equal to its
initial value simply multiplied by the proportion of the terms which
represent the conditions of the supply and demand at the two periods
under consideration.
Let us note, that, as it should do the formula _v'/v_ = E'/E shows that
the unity is eliminated when the point in question is the estimate of
relative values.
It is needless to say that we do not insist on the practical
possibility of the determination of the coefficients E and E', which
intervene in the preceding formula. We have in effect said that the
factors _d_, _h_ and _o_, do not appear to us determinable; we limit
ourselves simply to showing here, the theoretical possibility of the
system.
What is important to remark is that in proceeding, as we have just
pointed out, in all estimates of value and in consequence in the
registration of all transactions, the variation in the value of the
material support, corn, metal, etc. of the unity adopted does not
intervene in any way.
It will be further seen and we would insist on this point, that the
common denominator of the value of things takes in this system, by the
fact of its invariability, the character of a common measure; that it
can in consequence be taken as unity, and considered in an abstract way.
In fact this unity served once in a certain place and at a given moment
to fix the initial value of things. From that moment it separates
itself from the material thing which served to define it, which has
momentarily represented it, and which has served as a support in our
mind to effect the operations necessary to the relative fixing of the
value of things. These operations made, it is of little consequence if
the value itself of the kilogram of wheat varies, as is the case with
the value of every thing else. Its initial value was for ever fixed, it
can be taken as absolutely permanent and immutable,--the fundamental
condition which a unity of measure ought to satisfy.
In like manner original values of all kinds are equally constant
quantities and anyone from among them might be taken as unity.
In due course the actual values of things alter; varying continually,
and it is the same with the kilogram of wheat or with any support
whatever that has served to define the unity. The new values will
always express themselves numerically by means of the fixed unity,
although that has ceased to have a material representation. In
practice the new numerical values will be obtained very easily; from
the theoretical point of view they are fixed by means of the formula
already given:
_v'_ = _v_ × E'/E
a formula which by the way, shows that if it happened that for anything
at any moment and at any place, the elements _d_, _h_ and _o_ took
values such that the term (_d'_ × _h'_)/_o'_ should return to a value
equivalent to its initial value (_d_ × _h_)/_o_, the value of this same
thing would again become identical with its initial value.
This formula shows that the value of things is only relatively to be
taken for it varies ceaselessly, shifting to as great a degree as
supply and demand itself, just as human desire often does,--it is only
mathematically fixed in time and space, we would again repeat for an
infinitely short period.
This being so it is evident that it becomes possible to put down in
writing all transactions by means of the unity determined on. And if
this writing down of transactions can be made under a legal form,
that is, can be carried out under conditions which have the effect
of conferring on the seller a _legal right_, corresponding to what
the thing is worth to him who acquires it, and here we enter into the
conception of «social accountancy», it becomes useless, superfluous and
even harmful to make a material use of the thing representing the unity
of the value adopted.
It is thus that from the beginning, from the very time barter is
abandoned and it is no longer necessary to give a kilogram of wheat to
obtain possession of a thing, that at that very moment a writing down
would confer on the holder of a thing a right representing a value
equivalent to it and permitting him to effect under the same conditions
new transactions.
If things can thus take place, it will be seen how absurd it becomes to
persist in the custom of representing materially a unity which should
be detached from the support which has served to define it at a given
moment, and which no longer appears as anything but an abstraction
permitting in a homogenous manner the arithmetical representation by
figures, of the value of things, relatively and individually. This
abstract unity ought to be detached from every material tie.
On the other hand, it becomes evident that money does not in the least
constitute the indispensable element for effecting transactions. And
if at the distant period to which the introduction of money goes
back it had been possible to tell beforehand that transactions could
be written down in a simple but legal manner, after having fixed as
above indicated the numerical value of things by the use of a unity
essentially invariable, an enormous error in principle would have been
committed if to the unities admitted as estimates of value had been
given, as is actually the case now, a representation of them in gold
and silver,--the franc, the mark, the pound sterling.
The usage of money has taken from the unity of value that character of
invariability which it ought necessarily to possess.
This unity being associated in point of fact with a real article of
merchandise, society has been exposed either to want, or to have
too much of the matter thus become the indispensable element of
transactions, to suffer in fact monetary contractions and dilations,
the results of the traffic which necessarily takes place, results
which, for a nation producing the precious metals, like the United
States does, may possibly end in disaster.
A confusion must necessarily be brought about between the conventional
fixed value attached to pieces of gold and silver money and the actual
variable value of the very matter of those pieces. The conventional
value of a piece of silver corresponds to the value we have called its
initial value, and we have seen it was possible to preserve to that
initial value the character of absolute permanency. But how can its
invariability be assured if a material support is given to it open to
incessant fluctuations of value resulting from all the speculations to
which what ever can be bought and sold is submitted?
The very fact of the association of the unity of value with an actual
marketable article takes away all stability from the base of our
estimates of the value of things. If the price of any commodity,--for
example, some article of food or manufacture,--rises in comparison with
what it was 50 years or a century ago, it is often asked whether the
augmentation is real or only apparent and due to the diminution in the
value of the metal which supports the unity: it results clearly from
what has been advanced that the variation in the value of metal goes
for nothing if, _it be well understood that the quantity of money in
use is supposed to remain exactly proportioned to the needs of the
transactions_. But when monetary contractions take place, the implement
necessary in transactions is wanting, the value of things in general
falls, for those who are engaged in making transactions offer their
goods at a reduced price to get the monetary implement without which
they cannot effect their operations. It would evidently be the same
if this implement instead of being in gold or silver, was in wood or
paper; and still the same if it was represented only by comptabilist
unities.
Directly it is conceded that man must make transactions then, if an
implement is indispensable to that end, be that implement paper or
comptabilist unities, he will make sacrifices to procure it and will
for this object part with some of his wealth, and therefore the value
of things will in a general way fall. While if this implement is
in excess, that is if there is monetary dilation, as excess of the
implement is of no service to the great bulk of those who transact
business, who only want what is necessary to effect their transactions
and nothing more, it will be found that the value of things cannot be
affected by this as it is in the preceding case.
We would say that if this implement is in paper, or represented by
accountancy unities, its excess would do no harm, nor have any effect
on the value of things, when in the contrary case as we have just seen,
this value would fall. But if it is in gold or silver and instead of
being stored up in the iron safes of the banks it circulates amongst
those who transact business, these last will seek to get rid of it, not
because as in the preceding case it is a mere implement of transaction,
but as a valuable metal, and in consequence of withdrawal of this kind
the value of things will be raised.
When we say that the value of things in general would rise in a case
of monetary dilatation occurring in the way we have put it, and that
it would fall in the case of monetary contraction pure and simple, it
is because we are allowing that the supposed want or excess of money
would make itself generally felt amongst those engaged in transacting
business. If it only affected a special class of such persons, if
gold or silver were only wanting or only circulated amongst them, it
is needless to say that the rise or fall in prices would only affect
the commodities in which their special property exactly consisted.
We believe it right to attempt to give as logically deduced from the
preceding formulas this note of precision in a rather complex question,
which, as we think, has not always been rightly looked at, and that, in
consequence of the fact that in money, a marketable article of variable
value, is associated with a unity which ought to be invariable.
In our epoch of exact science and profound insight into phenomena and
things, it is no longer possible to err on the very basis of a question
of an interest so general and so vital as this relating to the monetary
system. The suppression of such a defective instrument as money and
its substitution by a mere simple writing down of transactions,
but legally guaranteed,--a system which we have entitled «Social
Comptabilism» demands the study of every economist who wishes progress
independently of any dogma, doctrine or party. The time is at hand in
which by the force of circumstances it must be carried into effect in
highly civilized countries. Germany, almost entirely educated to-day,
should have no reason to oppose its adoption, if she saw clearly the
advantages which social comptabilism presents and the difficulties and
inconveniences which would disappear on its use. It would be a great
error to imagine that any kind of economic revolution is necessary
to establish it. In Belgium M. De Greef[D], in his «_Essais sur la
monnaie, le crédit et les banques_», has shown how simple, logical
and profitable it would be to approach it by rapid strides resting on
the fundamental principle of «social comptabilism»,--the guarantee
of property. M. H. Denis[E] in his work on the «_Organisation et le
Fonctionnement du service des chèques et des virements à la Caisse
d'Epargne postale de l'Empire d'Autriche_», shows how such comptabilism
has been already approached in what chiefly relates to deferred
payments, in a great country, which although it does not generally lead
the way in progress, seems to have correctly apprehended what relates
to the machinery money masks and wrongly represents.
We shall only add one more observation in justification of the way we
look at the matter, it is that in our country there is in principle at
the present time in the financial organisms patronised and guaranteed
by the State, all that is needed to realize «social comptabilism».
Does not the National Bank of Belgium, as well as the Bank of France,
among our neighbours to the west, issue bank notes,--and from our point
of view, these notes represent unities of comptabilist value--to all
those who offer them sufficient guarantees. In exchange for a deposit
of securities, or for well known signatures, paper is obtained, notes
equivalent to metal money:--this is already on the road to social
comptabilism.
In place of that, let these banks issue notes, counters--only possible
to be used once--or rather bankbooks containing leaves or fractions
of leaves, or squares having a meaning equivalent to that of notes
or counters, or able in some way easily to realize that meaning, and
which would be simply obliterated in case of transactions accomplished
and the working of comptabilism is fully seen although only at the
threshold of the system.
Let the State then enlarge to the utmost degree possible the power
of these banks to issue such notes or cheque books; let these be
authorised to accept mortgages, deposits and all guarantees from
third parties or others, whether directly or more indirectly by the
intervention of other public organisms appointed to the work, or even
analogous private organisms, of a solvency secured beyond all doubt;
let this issue be made for any amounts, however small; let these
establishments be even authorised to issue notes similar in form, but
blank, or account-books to people without means and only usable on the
understanding that all that results in connection with them is at the
risk and peril of those transacting business, and we have arrived at
comptabilism complete and definitive, even to the point of suppressing
the copper coinage.
It is evident that in this way society as it is at present organised,
can demonetize the precious metals and establish social comptabilism
without in principle having to make any revolution whatever in its
present position, it has only largely to increase a portion of its
machinery, already existing and in full swing. To sum up, it is a
question of a simple change in the machinery of transactions and all
society is interested in the realization of such a progress purely
mechanical and functional, which moreover has no connection with any
doctrine, opinion or party, and is no new invention whatever.
In conclusion, and at the risk of repeating ourselves, in order to
explain our idea under all its forms, and to render it accessible to
every mind, we think we cannot do better than to recapitulate it in
formulating some articles which set forth in principle the basis on
which legal arrangements could be made on the hypothesis that the
legislative power should determine suddenly to decree the application
of «social comptabilism» such as we have defined it in basing it on
the guarantee of property, on the employ of account books, with debit
and credit entries, and on the use of a stamp or punch to inscribe or
obliterate figures.
The articles recapitulate the essential principles of the reform
from a point of view wholly general, the only one in this notice we
have proposed to examine, leaving for the present absolutely out of
consideration details of application which have to be studied and which
might vary infinitely.
It is needless to say that we by no means believe that a reform like
this can be realized at once, we rather think that it will come by
stages, as is always the case in every fundamental change relating to
any established order of things.
The intermediary phases would probably be the adoption of the system of
comptabilism already in operation in Austria, principally for defered
payments, as it is explained in the work of M. H. Denis, already cited
(it would be only necessary to add to this system the guarantee of the
State, based itself entirely on the guarantee of individual property,
in order to enter into the plan of «social comptabilism»), and on the
other hand, a large extension of the issue by the State of paper money
for that which concerns current payments as proposed by M. De Greef (it
would suffice to add the system of stamping as equivalent to signature,
the limitation of the use of paper to a single operation, and its
regular return to the Accountant's Office, for to make such reforms
equally a part of the plan of «social comptabilism»).
Articles setting forth the principles of an organic project.
1.--From ... the monetary system shall be replaced by the comptabilist
system.
2.--The National Bank shall become a comptabilistic establishment,
commissioned to deliver to individuals, to societies, etc., account
books, divided into leaves and squares having a certain significance
for the credit, and leaves and squares having a certain significance
for the debit, in which the signification of the transactional
operations effected, and which at present involve the use of money,
shall be stamped[F] respectively to the credit and debit of the
account-books of each of the operators in account unities equivalent to
the actual franc.
3.--The accountant-general will deliver either blank account-books,
or account-books having a certain sum inscribed to the credit of the
account-book.
4.--The transactional operations inscribed in a blank account-book will
be effected at the risk and peril of the operators. Every-one will be
able to obtain such an account-book.
5.--Contrariwise, the transactional operations inscribed in a credit
account-book will be made under the guarantee of the National Bank, but
only in so far as they concur with the sum inscribed to the credit of
that account-book.
6.--Every-one can obtain credit account-books, for a certain sum,
either in mortgaging some corresponding property in favour of the Bank,
or in offering to it the guarantee of a third party, who should have
agreed to a similar mortgage, or ...
7.--An account-book out of use or obliterated, or of which the
sum appearing to its credit is exhausted, will be returned to the
accountant-general; should such returner of an account-book have a
balance, then the accountant-general will open an account in the
official books, and enter this balance to that account.
8.--Every individual whose account-book balance is to his credit will
be able to obtain credit account-book for a maximum sum equivalent to
this balance, if he offers a corresponding mortgage either as before
stated, on an existing property, or on property he may acquire by means
of the sum thus inscribed to the credit of his account-book.
* * * * *
What has preceded shows how simple, unobtrusive, passive is the part
played by the accountant-general.
The books containing the figures signifying what transactions have been
effected either to the credit or debit side, with the figures attached
identifying those who have made the transactions, are remitted to him.
He adds up the credit and debit account and, if there is a balance,
enters it to the account of the possessor of the account-book. That is
all. If he comes across mistakes or errors, he rectifies them, notably
if he discovers that the statements of the account-books do not agree
with the corresponding statements of the account-books of those whose
transactions appear there.
The accountant-general acts as a piece of machinery would act. He is
a recorder of figures, _a registrar of balances_. If there are no
balances to enter he does not even make a registration, and is then
only a _legal witness_ of transactional operations. No more is asked
of him in order to arrive at the suppression, pure and simple of the
monetary system.
But from the day in which the comptabilist system becomes legal to
the exclusion of the monetary system, from the moment in which each
individual has his personal account introduced into the registers of
the accountant-general, his _transactional life_ is henceforth, and
for ever, represented on the one side by the mortgages and guarantees
that he furnishes in order to obtain comptabilist unities, on the other
hand by the balances of his account books that the accountant enters
successively and indefinitely to his account. If the whole fortune of
each person were treated in such a manner, and it is this we foresee
must be the legal situation in the definitely social state (having
for sole tax the succession duty, etc., etc.), it is plain that the
true function of the accountant-general would be that of recorder
of the state, of the shifting social position of each person, the
determiner of the diagram of his active, relatively effective life.
Each individual would thus have the stereotype of his effective social
life cast; each social being would have his effective life formulated,
if one may so speak, _by relation_, always by relations, nothing but by
relations--to that of all the rest, but in figures, and yet again, in
nothing but figures. And herein is seen clearly the fundamental error
or profound confusion of those who believe there can be any other thing
in the social problem which occupies us than what has just been stated;
of those who imagine that capital or fortune must be able at _every
moment_, and not eventually, in the sole end of utilising the metal for
itself, to be represented by its equivalent in gold or silver; of those
who persuade themselves that the words capital and fortune represent
anything else than _relative_ social power of action or enjoyment which
it is sufficient to record, to make public, purely, simply and legally,
as we propose, in order that it may be absolutely guaranteed to each
person.