The Enigma of Money (eBook)

Makoto Nishibe, Graduate School of Economics and Business Administration, Hokkaido University

Preface 5
Acknowledgments 8
Contents 9
Chapter 1: The Enigma of Money: If We Understand Money, We Will Understand Economy 13
1.1 What Is the “Economy”? 13
1.2 Plural Visions of “Market”: Market as Metaphor 14
1.3 “Economy” Is a Living Thing 14
1.4 If We Understand Money, We Will Understand Economy 15
1.5 The Enigma of Money: A “Thing” or an “Event”? 16
Chapter 2: Is Money a “Thing” or an “Event”? Reconsidering Money and Market 18
2.1 Money and Okane 18
The Okane Story 18
Anything Can Be the Material of Money 19
Religious and Psychological Functions of Money 20
2.2 What Is “Market”?: Modern Economics Neglects Money 21
No Money, No Market/Commodity 21
Fictitious Markets in Modern Economics: What Is a “Concentrated” Market? 22
A Real Market: What Is a “Distributed” Market? 24
Bilateral Transactions Are Basic in a Real “Distributed” Market 24
Hicks’ Classification of Markets: Flexprice and Fixprice Markets 26
2.3 How Distributed Markets Work: Stock Markets and the Electronic Bazaar in the Real State of Affairs 27
How “Price” Is Determined 27
Market Price Fixing in Stock Markets: Itayose and Zaraba 28
The Stock Market as a Model of General Equilibrium Theory 30
Electronic Markets Two Decades Ago 31
Face-to-Face Trades and the Market for Lemons 33
Money Turns a Thing into a “Commodity” and a Place for Trading “Commodities” into a “Market” 35
2.4 The Principles of Generating Money 35
Is Money the Same as Language? 35
Love and Barter Have Something in Common 36
When Money Comes into Existence 37
A Generative Model of Money 37
Imitation of Others’ Wants Brings Money into Being 39
Diversity in Money 41
Negative Possibilities with Money 41
2.5 Robinson Crusoe and Stone Money on Yap Island 42
The Story of Robinson Crusoe Tells How Hard It Is to Escape from Money 42
“Economy” Without a “Society” 44
Stone Money on Yap Island 45
Anything Can Be Money 45
Chapter 3: Money as “The Self-Fulfillment of an Idea”: The Difference Between a Bank of Japan Note and Bitcoin 47
3.1 Why Talk About Money Leads Us into a Circular Logic 47
Four Functions of Money 47
The Differences Between Money and Commodities 48
Money as the Emperor 49
Talk About Money Quickly Ends Up in a Circular Logic 49
3.2 Thinking About Money Through “The Emperor’s New Clothes” 49
A Ten Thousand Yen Bill as a Self-Fulfilling Idea 49
Money and the Story of “Emperor’s New Clothes” 50
The Emperor Is Great, Even If He Is Wearing Nothing 51
Access Gift and a Ten Thousand Yen Bill 51
The Self-Fulfillment of Custom 53
The Self-Fulfillment of Expectations 54
Reality Is Strong When Built by Custom and Expectations 55
3.3 Yenten as Pseudo-money 56
The Yenten Incident 56
Yenten as a Ponzi Scheme 57
Pseudo-Money by Means of a “Prepaid Payment Instrument” 58
Penny Auction 59
3.4 What Does Bitcoin Tell Us? 60
Bitcoin: A Crypto-currency 60
Problems with Bitcoin 62
Bitcoin Spreads Out 63
Bitcoin and Free Software 64
Bitcoin Points to the Future: Denationalization of Money and Competing Currencies 64
3.5 What Does the Informatization of Currency Mean? 66
Two Currents of Money: Toward Informatization and Creditization 66
Credit Money and Credit Creation 66
The Essence of Money Is Suggested by These Two Currents 67
When Money Changes, Markets Will Change 68
Chapter 4: The Disease Haunting Money: The Relation Between Money and Bubbles 69
4.1 Humanity’s Desire to Synchronize Creates Bubbles 69
The Word “Bubble” 69
The Heisei Bubble 70
What Is a Bubble? 70
Humanity’s Selfish Desire to Synchronize with Others Creates It 71
Bubbles and the Theory of Evolution 72
4.2 A History of Bubbles 73
The Tulip Bubble 73
Why Tulips? 74
Tulip Mania Accelerates 74
The Peak of a Feast Is the Beginning of Its End 75
A Man Named John Law 76
Law’s Alchemy 77
Law’s Magical System 77
Stock Mania in “La Compagnie de la Louisiane ou d’Occident” 78
The End of Law’s System 79
The South Sea Bubble Company: Originator of a Bubble 80
A Shady Company = A Bubble Company 81
Geniuses Fooled by Bubbles 82
4.3 Bubbles as a Self-Fulfilling Idea 83
Money and Bubbles Have Something in Common 83
The Sunspots Theory 83
Illusion and Reality 84
4.4 Soros’ Bubble Theory 85
Soros’ “Reflexivity” 85
Eight Stages of Bubbles 86
The Contagiousness of Bubbles 87
Chapter 5: Why Is Capitalist Economy Unstable? On Hyperinflation and Speculation 89
5.1 The Disease Haunting Capitalism Is Hyperinflation 89
When Money Breaks Down 89
Even If Money Vanishes, Another Money Will Emerge 89
5.2 The Difference Between Investment and Speculation 90
Bubbles and Speculation 90
A Beauty Contest 92
5.3 The Future of Money, the Future of Markets 92
Marx’s and Keynes’ Views on Money 92
Is Money Possible Without Booms or Bubbles? 94
Three Advantages and Three Shortcomings of Market Economy 94
The Focus Is Only on the Market’s Shortcomings 95
Money and “Trust” 96
Chapter 6: The Crisis of Capitalism and the “Quality” of Money 97
6.1 The Meaning of Occupy Wall Street 97
6.2 Symptoms of the Crisis of Capitalism 98
6.3 The Crisis in the United States and Japan 99
6.4 The Quality of Money and Its “Freedom to Evolve” 100
6.5 What Kind of Money Will Be Chosen and Survive? 102
Bibliography 103