Global Promissory Notes: Exploitation in the Global Financial System

• In Event: Wealth, Markets, and Plutocracy

Abstract

Scholars of global justice often claim that the global economy is exploitative. This paper presents an account of the distinctive kind of exploitation perpetrated in the global financial system (GFS). Following recent scholarship in global economic justice, I assume that exploitation is a joint violation of both an interactional and distributional claims. I argue that states have unique interactional and distributive claims as participants in the global financial system. The joint frustration of these claims constitutes exploitation. The two claims I develop are grounded in an analysis of the nature and normative significance of money and finance. Rather than viewing money primarily as a medium of exchange which facilitates market transactions amongst private individuals, we should instead view money primarily as promissory notes and means of payment. Obscured by orthodox treatment of the subject in economics, this latter interpretation casts money as a way of accounting for a practice of reciprocal promise making and demonstrates its integral role in constituting states’ political authority. When this interpretation of money is placed in the context of global finance, it provides the grounding for states’ special interactional and distributional claims as participants in the global financial system.

States have claims to just treatment pertaining to their capacity to issue and manage their own currency. This claim is grounded in the constitutive role this capacity plays in establishing political authority. States also have claims to fair distributions of liquidity and risk in the GFS, owing to the norms of reciprocity underlying the promissory nature of money. Powerful states who issue “hegemonic reserve currencies” exploit other states in the GFS by undermining their monetary capacities and in turn producing unfair distributions of liquidity and risk.

Section 1 establishes the basic assumptions of my approach to exploitation and the role of states in global justice. Section 2 provides reasons to treat the global financial system as constituting circumstances of justice. Section 3 compares two competing views of money and its normative significance vis à vis finance. There, I defend the ‘promissory’ view of money. Section 4 marshals the promissory view in defense of distributive and interactional claims states have as participants in the global financial system. Section 5 connects the distributive and interactional claims to descriptive features of global finance, which demonstrates the unique kind of exploitation at issue. Section 6 sketches some benefits of the view and responds to objections.

Author

• Stefan Mikael Eisenberg Macleod, University of Toronto