Money as a Hierarchical System: Legal and Economic Perspectives

This Thursday is the first event of the Modern Money Network’s fall schedule , titled “Money as a Hierarchical System: Legal and Economic Perspectives.” The event features UMKC Economics Professor Randall Wray, Barnard Economics Professor Perry Mehrling, Harvard Law Professor Christine Desan, and Columbia Law Professor Katharina Pistor, discussing their respective theories of money and finance. Last year the same organizer created a series of panel discussions entitled “Modern Money and Public Purpose” and this can be seen as a direct follow up to that. This year there will be a stronger focus on the “The Law-Money Nexus” which in my mind is a welcome pivot and one that fits the issues Naked Capitalism covers so well.


There will be a few one-off events that are affiliated with this series that will happen throughout the year. For example, I’m moderating an event on monetary policy implementation on October first here at the University of Ottawa. I would highly recommend that you check out these events as they happen (you can go in person or watch the livestream). I will be posting videos of the talks as they become available.

Below is a video from last year’s series that focuses more on legal and historical scholars of money. It is not only quite interesting but I think is representative of the kind of issues that will be discussed Thursday (Desan was a speaker at that event as well)




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  1. allcoppedout

    Thanks Nathan – a wealth of information in the links. I haven’t seen much legal consideration in the area before and liked Christine Desan’s point that the mess is man-made and thus in our hands to unpick.
    My own focus is that we can do something else with money and ensure we get rid of poverty and go green. I’d like to see more debate on what we can do in the future rather than reminders of historical bits and pieces. Money is clearly being sequestrated in Cyprus, Ireland, Greece and Poland – but we could do this in a massive way with super-wealth and the dismantling of financialisation,economic rent burdens and debt. The guys on the panel in the video were too tame for me. The issue is about using labour resources, paying labour well and doing what we should do. Money should serve that and otherwise you should lose it. I’d love to see some legal consideration of such a demolition of excess.

    1. Saddam Smith

      IMO, the nature of money’s emergence and ascendance – from whatever conditions were necessary for it to emerge (e.g. private property and the right of disposition, the ambitiously expanding state, etc.) – define to a large degree what it is, and thus by extension what it does. For me, expansion (aka growth), mirrored in interest/usury, is one fundamental element of the nature of money.

      Another is (economic) scarcity, which encourages competition and thus generates the classes which are characteristic of the state. Money creates markets (which also require economic scarcity) and markets excel at creating products that reflect, further encourage and cement the rich/poor class-based divides that are a logical property of the state. (Very brief, but you get my drift I hope).

      So… If money/markets/state/property are scarcity-based social processes, how can we effectively deal with economic poverty within their remit? Can money/market/state/property be changed such that ‘it’ is abundance-based? If we cannot do that, I do not see how we can deal with economic poverty effectively, as the entire dynamic is set up to create poverty (even if by accident).

      What sort of thing do you envisage for money?

      1. from Mexico

        It seems to me an interesting area of investigation would be three-pronged:

        1) The nexus of money and spirituality

        2) The nexus of money and materiality

        3) The nexus of money and violence.

        It seems like all three, for instance, have become inextricably intertwined in the Syrian conflict, as Gail Tverberg alludes to here:

        5. Need for America to prove its might, to maintain the US dollar’s reserve currency status.

        Without the reserve currency status of the US dollar, America cannot continue to run a big balance of payment deficit importing large quantities of oil. This is important, because the world’s total oil supply is not growing much (Figure 7), regardless of price. If America is forced to consume less, more oil will be available for the rest of the world.

        I would add that none of the first three great global hegemonic empires to arise since the advent of capitalism — Spain, Holland, and Great Britain — were able to sustain their financial power and military power after their preeminence in economic power had been lost. Can the fourth great capitalistic empire, the United States, break the mold?

        1. Saddam Smith

          I would say the question now is whether or not humanity can break the civilisational mold of perpetual (quantitative) growth (or control-based ascent).

          I find your three nexuses interesting. For me, money is first and foremost about control; it arises from measurement (e.g. unit of account and binding credit-debt relationships) and justice (weregild), which are all outgrowths of hierarchically organised efforts to establish social cohesion and inhibit/end the pre-state’s fissiparous tendencies.

          1) Spritiuality is about dissolution of the ego, the recognition that it’s not about me, thus, in a way about the opposite of control.

          2) and 3) seem connected, as they are about self-protection in a universe charactised by fundamental mercilessness and scarcity (which gives rise to the need to control the Enemy Other, the Out There that threatens to kill you/us), and thus are far more closely linked with the nature of money.

          1) (Again) When it comes to religion (as opposed to spirituality), we have the birth of the state and thus 2) and 3).

          IMO, the tricky trick is to have our complexity-specialisation cake and eat it too.

          Can humanity establish and sustain a new paradigm and attendant institutions that permit the de-growth of the materialist economic sphere of control and fear-based hierarchy, and the concomitant quality-based growth of, say, the commons and more distributed and transparent political and power processes this requires?

          If yes, what has to happen to money (a creature of the ‘old’ paradigm) to allow this to take root and flourish?

          I like Professor Franz Hoermann’s “information money” (Informationsgeld), but his writings on it are German…

          1. from Mexico

            I’m not sure I agree with the late Classical ideology which “ended with a dualism in which it saw the universe as an evil material world opposed to a good spiritual sphere” (Carroll Quigley, The Evolution of Civilizations).

            And if one believes in evolution, then one must also explain how human spirituality evolved by purely materialistic means. The way I see it, evolutionary theory struggles to do this, and this is so even if we accept the validity of multi-level selection theory. After all, human spirituality, at its best and in its most cosmic manifestation is truly transcendent and can give meaning to existence quite independent of the vicissitudes of the individual, the family, the tribe, the nation or even the community of mankind.

            I too find Professor Franz Hoermann’s notion of “information money” intriguing. And if one does a web search, there is quite a bit by him in English, such as this lecture:


            1. skippy

              It should not be forgotten what the first use of money was to empire… War~ endless War…

              Skippy… with a baptismal birth like that… well.

            2. Glenn Condell

              ‘I would add that none of the first three great global hegemonic empires to arise since the advent of capitalism — Spain, Holland, and Great Britain — were able to sustain their financial power and military power after their preeminence in economic power had been lost. Can the fourth great capitalistic empire, the United States, break the mold?’

              Could their failure, if primarily economic in nature, be partly down to the trickle-up narrowing of profit to elites that characterises the progress of capital, and which necessarily reduces aggregate demand? If so, there doesn’t much scope or hope for the US to break the mold. Eisenhower’s more equal and more robust US maybe, not Obama’s.

              I like Hoermann’s ideas too (and what an endearing fellow he seems, he looks like a sort of Teutonic Clouseau) – they neatly combine Steve Keen’s endogenous bank keyboard credit with Ellen Brown’s public banking and money creation.

      1. skippy

        Anything – One – pro slavery negates the rest of its ideology.

        skippy… you can see why the Empire had little problem with it… eh.

        PS. BTW who payed for the title Messiah?

        1. F. Beard

          Your default condition is negation – Jesus came to set you free and give you eternal life. Take it or leave it. But you’ll be considered very stupid if you leave it.

          1. skippy

            Its in Cannon black letter which I’ve pointed out clearly, refute. Your freedom is an illusion, more like a self inflicted lobotomy to negate suffering as a slave and at the same time validate the master class, he both givith and takith submission thingy.

            skippy… What can’t answer the Messiah question. I thought you were a biblical scholar or is more of a case of ones hand blindly stirring the Kool-aid.

            1. F. Beard

              As far as I can tell, the Master class has the same problems as any other humans:

              1) They are mortal.
              2) They have sinned.

              If they don’t deal with those problems then they aren’t very smart, are they? And likewise, neither are you if you don’t.

              Don’t get the idea that God will drag you into Heaven; He’s already done the heavy lifting. If there’s still a problem, it’s on our end, not His.

              1. skippy

                Slavery is codified in both the original old and new cannons T or F?

                Who payed for the title of Messiah, with what, for what, where did they come from and what deeds enabled them to do so?

                skippy… veracity… beardo… veracity enables freedom… cough… the ability to choose… deception is the thief’s tool… light vs. darkness thingy.

                1. Glenn Condell

                  You two should go on the road together as a double act. To believe or not to believe. Skip has the questions, beardo the answers. Separate hotel rooms, natch.

                  I can’t go to the place FB inhabits any more than you can Skip, and will resist with plenty of snark any attempt by true believers to shoehorn my thinking into their neat little trammels, but sometimes I wonder whether ‘belief’ is actually more like a self-healing amalgam of hope and a more practical method for dealing with life (and death) than the despair a true secular accounting seems certain to produce. In other words a tacit agreement with oneself to employ a grid or template of moral and behavioural guidelines with which to more successfully negotiate the shoals. Maybe it’s selective in a Darwinian sense – do ‘glass half full’ types, fortified by ‘faith’, propagate more than clear-eyed sad sacks?

                  1. skippy

                    If it was not the precursor to so much murder… I would happily shut my gob.*

                    If those that proclaim divine communication would show – all that resides – within its bound… before mental contracts are witnessed. *

                    If it did not provide so much friction to discovery or ham fisted attempts to continually enfold discovery in to its bounds ex facto. *

                    When someone or group can construct a belief that does not fracture into 40 thousandish separate cults and accelerating, that does not ultimately end in blood thirst, for other core believers in the same gawd or others. *

                    If 90% of all human civilizations collapse do to environmental degradation, it would behoove us to understand the foundational myths behind that problem. What core tenants did they share and where did this ultimately lead them, in light of other witnessed collapses. What blinded them to the bloody obvious.

                    With all do respect Glen… if you treat humans like kids – consumers… how can you complain… when they act like one.

                    Skippy… the commenter has been called out – so many times – on – factual inaccuracy – its willful poisoning of the well stuff. Yet at the end of the day who’s the one making threats… seriously.

                    1. Glenn Condell

                      Yeah, it does have some serious flaws, agreed, but given the vast plurality of others we share the planet with have some form or other of this mindset/affliction/gift, we have to try to make some accommodation with them as they should us. In the end, with our deepest apprehensions of the world routed to different foundations we can never agree, so the only option left would seem to be manners, respect in the form if not in the mind, let alone heart.

                      ‘When someone or group can construct a belief that does not fracture into 40 thousandish separate cults and accelerating, that does not ultimately end in blood thirst, for other core believers in the same gawd or others.’

                      Coals to Newcastle I’m sure but Emo Philips’s ‘best religion joke ever’ is apt here:


                      ‘With all do respect Glen… if you treat humans like kids – consumers… how can you complain… when they act like one.’

                      Most of the kids I know act better than adults, until they become one.

                    2. skippy

                      @Glen Condell…

                      The physical reality contravenes any of that, hence the bloody obvious statement, factual evidence vs glue used to hold reality at bay.

                      And I will repeat. Illuminating historical fact is not, by any means, an act of threat or personal harm. Historically that has been their forte.

                      “Most of the kids I know act better than adults, until they become one.” – Glen.

                      Anecdotal first person observation that does not accurately reflect reality see:

                      May 18, 2013

                      TEENAGERS aged 15 to 19 are Australia’s most dangerous people, new figures from the Australian Institute of Criminology showing violent crime is highest among this group.

                      Teens are responsible for a disturbing number of bashings, robberies, abductions and sexual attacks and 17-year-olds are the worst offenders.

                      The figures were released as part of the annual Australian Crime: Facts & Figures report.

                      The report showed the rate of assaults in the 15-19 age group was 886 per 100,000 people in 2011, compared to a rate of 85 per 100,000 for offenders aged 55-59.

                      Robberies and extortion in the younger age group were committed at a rate of 115 per 100,000 people.

                      Sexual attacks were most prevalent among 15-year-olds, with 64 offences per 100,000 people. This compared to 18 per 100,000 in the 60-64 age group.

                      Demographer David Chalke said easier access to alcohol, the prevalence of video games and changing family structures were to blame for high rates of crime among teens.

                      “If you go back 20 years, the availability of alcohol was much less. It was a lot harder for under 18s to get booze,” Mr Chalke said.

                      “Now it’s a whole lot easier for them to get juiced up and that may be a significant contributor.”

                      On families, Mr Chalke said parents working longer hours and having fewer children had resulted in bored teens turning to crime.

                      “Video games have also created a culture where violence is the norm,” he said.

                      Criminologist Emmeline Taylor, who will next year head up the a criminology degree at the Australian National University, said teens had been prone to violence for quite some time.

                      “Across Australia and universally, the trend shows there is a sharp incline in criminal behaviour in early adolescence,” Dr Taylor said.

                      Justice Minister Jason Clare said that while the report showed there had been some progress in tackling crime, with a general decrease in crime levels, there was still “a lot more work to do”.

                      “The Federal Government recognises the need to support young people who are at risk of falling through the cracks of society and putting them on the right path and this is why we have invested $40 million into a National Crime Prevention Fund which allows local communities to work together to recognise local problems and develop local solutions,” Mr Clare said.

                      The report also shows that knife crime remains prevalent across the country. Almost half of all Australian murder victims in 2011 were killed by a knife and knives also represented 49 per cent of the weapons used in armed robberies.

                      The report also showed fraud committed on credit and charge cards continued the trend of previous years by increasing.

                      Indigenous Australians were also 18 times more likely to be jailed, at a rate of 2276 per 100,000 people, compared to 125 per 100,000 for others.

                      skippy… I detest romanticizing… cognitive impediment… seriously how can one belief have so much blood on its hands… and pretend other wise for enrollment.

                      PS. What a show… the Breathers in DC can’t throw the Gawdless meme at Russia anymore… that’s what really flummoxes them… it was their go to… always a home run with the fans… make them stand up and cheer for blood strategy… its almost funnier than your joke!

                    3. Glenn Condell

                      ‘TEENAGERS aged 15 to 19 are Australia’s most dangerous people, new figures from the Australian Institute of Criminology showing violent crime is highest among this group.’

                      Can I weasel out of that one by calling the above ‘young adults’ rather than kids? I guess I meant littl’uns, like my 8 yo boy, who has only just entered the foothills of deceit, or rather the recognition of the possibility and potential benefits of deceit. I hope he doesn’t turn into one of the youth your quote describes but the best upbringings can turn out the worst people, and vice versa.

                      The two biggest issues affecting young people today are that (1) the world’s wealth has been sequestered in tax havens by global elites, impoverishing the governments of the nations the kids live in so that they grow up with indebted parents in (relatively) impoverished circumstances with limited scope for changing those circumstances (or even imagining different ones), eg the immoral debt they amass to be educated.. and (2) the breakdown, under internet and mobile device pressure, of the sort of ‘boring’ human activity we were lucky enough to grow up in the twilight of – reading, joining, holding conversations, protesting, etc. They still happen but a much greater % of us at the same age had read at least a dozen books. My daughter and her friends have struggled to finish one in the last 3 years. Text for Yr 11 is Mice and Men, 102 pp, next yr it’s Gatsby 165pp. It surprised me that she is doing a fair bit of poetry, until I remembered that generally poems are short.

                      If you don’t know anything you can’t achieve anything, or change anything. And you develop an inferiority complex which tends to work itself out as an ego defence mechanism which pretends to glory in ignorance and evince contempt for knowledge and reason (ie, ‘chavs’)

                      This combo of knowing at some level you have had your birthright stolen but not really knowing how, or even what that birthright should have looked like, underlies a lot of this apparently inchoate anger.

                      But hey, they could just be punks. I have to admit that some of the worst behaviour I ever saw from a late teen cohort was in Double Bay one night after the movies – 1% territory, our future judges and captains of industry, destroying public facilities as if trying to prove they could be just as antisocial as their poorer confreres out west.

                    4. skippy


                      None of what you wrote above has anything to do with the original topic and I’m completely aware of everything you point out, as I’ve done the same around here. But, being pedantic… kids are not normally associated with children, although I get your drift.

                      4 kids (2B-2G) whom I am responsible for… unleashing upon a world. Year 12 to 4 and its one of the reasons I’ve not gone back to work, too raise human beings and not widgets, whilst trying to upgrade my life style.

                      skippy… 15 odd years ago I was repetitively engaged in my social outing by the well heeled downunder… isn’t great America is the world police now… to wit I would reply… be careful for what you wish for… the looks mate… the looks… for all its imperfections it was a better place… before the onslaught on neoliberalism… I watched in horror… on going IMO…

                      PS. First shout is mine… if’en we meet.

  2. RanDomino

    All money systems are hierarchical systems and anything which has one, or any other form of quid-pro-quo exchange, will necessarily lead to capitalism and tyranny. Trying to ‘fix’ capitalism is rearranging the deck chairs on the Wehrmacht.

    1. F. Beard

      All money systems are hierarchical systems and anything which has one, or any other form of quid-pro-quo exchange, will necessarily lead to capitalism and tyranny. RanDomino

      Not necessarily. Shares in Equity (common stock) is another way to implement private money and one that shares wealth and power at the same time that it consolidates capital for economies of scale.

  3. psychohistorian

    Money could be a neutral sort of system if it were totally Sovereign instead of mostly private, built by inheritance and ongoing accumulation of property/money.

    Are you going to talk about inheritance and the current private ownership of everything including money?

    Are you going to talk about Sovereign money and the pro/con of it and our current mostly private money system?

    I hope the conversations are useful and look forward to them.

  4. zygmuntFRAUDbernier

    The Legal System allows for Over the Counter Derivatives. The Legal System has very complex systems of taxation, very complex systems for bankruptcy,etc. The Legal System has a feature called “prosecutorial discretion”, and in the US, US Attorneys serve “at the pleasure of the President”: a better system would allow firing of US Attorneys “for just cause”, which means that the firing must be justified in writing and backed-up by relevant rules, regulations and laws. Companies can have parts in dozens of countries, each with its own legal system. Then, there’s the US Office of the Comptroller of the Currency, and what it says about itself:

    1. craazyboy

      The “About the OCC” tab section is the enlightening part to read. Will certainly quell any doubts you may have that the OCC has been “missing in action” for many, many years.

  5. bob mcmanus

    “1) The nexus of money and spirituality

    2) The nexus of money and materiality”

    The classic is Georg Simmel’s The Philosophy of Money still being read.

    A more recent riff on Simmel is Phillip Goodchild’s The Theology of Money

    In post-modernism or whatever you have Bataille

    I really liked Koji Karatani’s Architecture as Metaphor quite short but very dense.

  6. craazyman

    In Renaldo Cortez Vilinza’s “Philosophy of Money: a Materiality and Ideality: An Inquiry into the Ontological Foundations of Metaphysical Substantialism”, Epic Press, Spain, 2011, he argues that money is both real and unreal and that whether it is one or the other depends on not only the time of day but the position of the sun. When I read the book, I was almost in a continuous state of disbelief, until I thought about it and had a bottle of wine, then I realized he was right. It’s only 300 pages, thankfully, and most of them are understandable and the ones that aren’t, you can just ignore them. In fact, you can ignore all of it and make up your own theory. That’s more fun, probably.

    1. craazyboy

      I blame everything on alpha males. But then in watching our State Dept lately it looks like Girl Power females are on the rise, but they are just as bad.

      BTW: These presentations were so bad I almost started crying while I was making breakfast and listening to as much of it as I could stand. But what can you do. No Thusday morning NFL Football yet.The only thing worse than listening to economists talk about money is listening to lawyers trying to get up to speed on the subject.

  7. Susan the other

    Glad to hear there is another MMT forum. Desan was interesting. Very basic story she told which answers questions about how labor was the original capital and was made into a liquid form of capital by promises (tokens) that were originally a stable currency because they were time constrained. And being time constrained the money tokens could not be hoarded. So capitalism as we know it is a perversion of the original intent of money? This explains government bonds to this day, and their discounts, but it doesn’t explain paying interest on top of discounted interest – isn’t this collecting double interest? Taking too much away from the underlying value of the debt which value can be traced all the way back to someone’s labor? And in their double-taking they then just stuff tokens in their mattress until they can find someone desperate for money who will sell their firstborn? You know – “modern capitalism.”

    1. anon y'mouse

      the “presentation” portion is just slightly over 1 hour. the questions take up a lot of time, because no one appeared to know how to use their microphone.

      so, if you’re looking for the meat of the thing, it isn’t that long.

  8. clarence swinney

    9-30-1981–997 BILLION
    9-30-1989–2857 BILLION
    9-30-1993–4411 BILLION
    9-30-2001–5807 BILLION
    9-30-2009–11929 BILLION
    9-30-2013—17,000 BILLION

    REAGAN—-997 TO 2857= + 1860=186%
    BUSH I——2857 TO 4411=+ 1554=54%
    CLINTON—4411 TO 5807=+ 1397=32%
    BUSH II——5807 TO 11929=+6122=105%
    OBAMA——11,929 TO 17,000=+ 5,071=40%

    Careful how Conservatives deceive
    They use numbers from January 21 of inauguration to inauguration of replacement
    For example—They give Bush II credit for Debt up to 1-21-09 (10,632)Watch them.
    His eighth budget ended 9-30-09 (11.929)not 1-21-09(10,631).

    In fairness, one must deduct that amount created by the replacement president during
    the 8 months after old one left office.

    Obama has to take credit for about 100B of Bush 11,929 from the amount he spent on auto bailout and stimulus in that 8 month period.

    So Bush II was responsible for 11,829–not 11,929. Big deal!
    We have 14,000B income and tax 3800B. We must concentrate on Revenue,
    A 50% effective tax on top 10%.

  9. Saddam Smith

    I could not agree more from Mexico.

    As Charles Eisenstein puts it, “Matter is what we can see of spirit.”

    I believe all these ructions and crises — the end of capitalism, the end of growth, etc. — are all manifestations of the fading of the creative potential of the Newtonian/Cartesian worldview. As we move into a new paradigm, the old institutions just can’t cope, and money is a lynchpin institution. The money system is struggling to stay valid, but it cannot.

    Thanks for the link. I didn’t know there were others interested in Prof. Hoermann out there. He’s such an odd chap. A genuine nutty professor, but with truly invaluable insights.

    (It may prove that this is a repeated comment. Something funny happened while I was typing, the page refreshed, and all my fine work disappeared…)

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