Blogs: Ralph J. Benko
Professor David Beckworth is an assistant professor of economics at Western Kentucky University in Bowling Green, Kentucky. His interests are not limited to Running, Marathons, Basketball, Softball, Krispy Kreme Doughnuts, Vegetarian Foods, Family, Nature, Travel, and God.
Dr. David Beckworth courtesy of wku.edu
He also, among other things, is the author of a highly regarded blog, Macro and Other Market Musings. Along with Prof. Scott Sumner, author of a blog called The Money Illusion, Prof. Beckworth widely is considered one of the leading academic proponents of the monetary theory called NGDP targeting.
Prof. Beckworth devoted a long essay in the February 10th issue of National Review, with a shorter reprise of his thinking on March 5th in Macro and Other Market Musings to writings of Lehrman Institute founder and chairman Lewis E. Lehrman on the classical gold standard contained in Money, Gold, and History. As Prof. Beckworth is a significant public intellectual and lead proponent of a rival theory, this conversation is very welcome.
Prof Beckworth presents an argument that "The Gold Standard Was An Accident of History." He observes:
Though the classical gold standard of 1870-1914 did work relatively well, the history of gold as money is far more nuanced than portrayed by Lehrman. ... "That the U.S. gold standard was an accident of history and that its longest unchallenged, continuous run was only a quarter of a century suggests the question: Was it was the gold standard, per se, that created the long-run price stability of the 18th and 19th centuries, or was it a deeper political and institutional commitment to price stability?" I go on to make the case that it is not price stability per se we want, but monetary stability. I argue that is best accomplished by stabilizing the expected path of total dollar spending growth.
This writer, as well as Lewis E. Lehrman, come to the very different conclusion, buttressed by abundant evidence: the gold standard was very much part of a complex and sophisticated political process rather than an accident. Moreover, it respectfully is submitted that there is abundant nuance to Lehrman's arguments both in the book reviewed and presented in many other venues.
Prof. Beckworth's claim of lack of nuance appears to reside in the partial elision of the role of silver in the deep history of the gold standard -- as established by savants such as Copernicus and Newton and as practiced. The role of a subsidiary precious metal in the monetary system presents, at this point in history, as of mostly academic interest. It thus has not attracted extended attention in Lehrman's, or this writer's, writings.
The really important nuance, it is submitted, is in making the distinction between the classical gold standard and the gold-exchange standard, such as that of Bretton Woods. This is a critical nuance which Lehrman addresses meticulously.
Of far greater significance, however, than the stated concern over the relatively short shrift given by Lehrman (and this writer) to the debates about bimetallism, is the respectful tone with which Prof. Beckworth addresses Lehrman's analysis. This respect is of acute contemporary significance: both NGDP targeting and the gold standard are two of the six monetary regimes enumerated for study in the Brady-Cornyn Centennial Monetary Commission.
Prof. Beckworth's gracious acknowledgement that "the classical gold standard of 1870-1914 did work relatively well" strikes a tone worthy of a scholar and a gentleman. That portends well for the quality of debate that will be conducted by the monetary commission, when established. Such a commission assuredly would give Prof. Beckworth and Prof. Sumner the highest visibility venue to date in which to present their case for NGDP targeting. It therefore is to be abundantly hoped that the establishment of such a commission will enjoy their, and their allies, unequivocal support. May the best policy win!
For readers unfamiliar with the concept, NGDP targeting it as described by the Wikipedia, as "A nominal income target is a policy conducted by a central bank that targets the future level of economic activity in nominal terms (i.e. not adjusted for inflation). The central bank could target Nominal Gross domestic product (NGDP) or Nominal Gross domestic income (GDI) and use monetary policy, including conventional tools such as interest rate targeting or open market operations and unconventional tools...."
Momentum for a Centennial Monetary Commission empirically to study the effects of various monetary regimes, including but not limited to the gold standard, continues to build.
On January 24, 2014, at its winter meeting, the Republican National Committee unanimously adopted a resolution urging:
"the relevant Subcommittee and Committee Chairmen in, and the Leadership of, the United States House of Representatives to give H.R. 1176 priority consideration, including bringing it up for a vote at the earliest convenient moment during this Congressional Session;" "Members of the United States Senate to take action in support of the introduction and prompt consideration of companion legislation as a critical agenda item;" and that "all appropriate measures by political and civic leaders are undertaken at the earliest convenient moment in support of, and on behalf of the enactment of legislation, in substance similar or identical to H.R. 1176, to determine the best way to maintain the purchasing power of the United States dollar."
One of the themes for the Akan gold counterweights is the electric mudfish.
Image courtesy of AfricanMasks.info
Spark From The Deep by William Turkel has this to say about the fish upon which this counterweight is modeled:
The electric catfish also played an important role in the west African kingdom of Benin, which flourished in what is now southern Nigeria between the twelfth and nineteenth centuries CE. Animals were frequently depicted in the sculpture of Benin, where they were used to represent the overlapping boundaries of the human, nonhuman, and supernatural. The "mudfish" had a prominent part in this iconography. The attributes of different African catfish were combined into a chimera or composite that could variously discharge electric shocks, sting with venomous spines, and breathe and "walk" on land. In its latter capacity it served to exemplify utility to humankind. The "mudfish" is the freshest, most robust and most delicious of all fish and is considered very attractive and desirable," the anthropologist Paula Ben-Amos wrote. "It represents prosperity, peace, well-being and fertility through its association with the water, the realm of the sea go, Olokun." Some catfish aestivate in the mud of dry streams, breathing air until the rains seem to bring them back to life. This aspect of the mudfish made it a symbol of power and transformation.
One need not lean on superstitious or pre-modern thought to appreciate how apt was the use of the image of a mudfish to serve as the model of a counterweight for gold. History shows that the gold standard, too, recurrently has brought prosperity, peace, and well-being to humanity.
Gold, empirically, has done so better than any other currency systems tried from time to time. And, to wax slightly rhapsodic, there are many signs that the gold standard's own period of estivation now may be coming to an end.
The scale counterweights for measuring gold from the Ashanti of Africa are beautiful artifacts. This writer possesses a number of them.
Image courtesy of Africard.ch
The Wikipedia describes these weights this way:
Akan goldweights were used as a measuring system by the Akan people of West Africa, particularly for weighing gold dust which was currency until replaced by paper money and coins. They are referred to locally as mrammou and the weights are made of brass and not gold. Used to weigh gold and merchandise, at first glance the goldweights look like miniature models of everyday objects. Based on the Islamic weight system, each weight had a known measurement. This provided merchants with secure and fair-trade arrangements with one another. The status of a man increased significantly if he owned a complete set of weights. Complete small sets of weights were gifts to newly wedded men. This insured that he would be able to enter the merchant trade respectably and successfully. Beyond their practical application, the weights are miniature representations of West African culture items such as adinkra symbols, plants, animals and people.
Scholars use the weights, and the oral traditions behind the weights, to understand aspects of Akan culture that otherwise may have been lost. The weights represent stories, riddles, and code of conducts that helped guide Akan peoples in the ways they live their lives. Central to Akan culture is the concern for equality and justice; it is rich in oral histories on this subject. Many weights symbolize significant and well-known stories. The weights were part of the Akan’s cultural reinforcement, expressing personal behaviour codes, beliefs, and values in a medium that was assembled by many people.
Anthony Appiah describes how his mother, who collected goldweights, was visited by Muslim Hausa traders from the north. The goldweights they brought were "sold by people who had no use for them any more, now that paper and coin had replaced gold-dust as currency. And as she collected them, she heard more and more of the folklore that went with them; the proverbs that every figurative gold-weight elicited; the folk-tales, Ananseasem, that the proverbs evoked." Appiah also heard these Ananseasem, Anansi stories, from his father, and writes: "Between his stories and the cultural messages that came with the gold-weights, we gathered the sort of sense of a cultural tradition that comes from growing up in it. For us it was not Asante tradition but the webwork of our lives."
There are a number of parallels between Akan goldweights and the seals used in Harappa. Both artifacts stabilized and secured regional and local trade between peoples, while they took on further meaning beyond their practical uses.
Given the power of culture over politics, even in a modernistic utilitarian age such as ours the propensity for gold and its artifacts to take on "further meaning beyond their practical uses" can be said to represent a modest additional factor in favor of the gold standard. "Central to Akan culture is the concern for equality and justice." So, too, should these be central to ours.
The Grover Cleveland Library's website features both President Cleveland's progressive nature...
Campaign Poster, 1888, for Cleveland-Thurman ticket,
courtesy of Wikipedia
... and his confident support for the gold standard.
Grover Cleveland, a progressive in the truest sense of the word.... was the last of the Jeffersonian presidents (1885-1889, 1893-1897). Before that, as Mayor of Buffalo, he helped fight the corrupt political machine, or “ring” as it was then known, and its patronage and pork barrel politics. In a campaign speech, he said, “It is a good thing for the people now and then to rise up and let the office holders know that they are responsible to the masses.” Cleveland was so successful fighting the machine that he was elected Governor of New York in 1882. Cleveland’s Jeffersonian philosophy as President was described by historian John V. Denson:
Cleveland stood for sound money and the gold standard, and he was opposed to the protective tariff. He advocated the increased respect and sovereignty of the States as a check on the power of the central government. Cleveland generally supported the ideas of a limited federal government and the strict construction of the constitution, a free-market economy, and the separation of banking from government.
Certain prominent, doctrinaire, left-leaning public intellectuals show relentless hostility to the gold standard. That said, and as President Cleveland demonstrates, there is no inherent tension between progressive political ideals and the gold standard.
Indeed, the gold standard's ability to foment a climate of equitable prosperity may be as crucial to the effectiveness of social democrats as it is to classical liberal republicans. It is a policy option by nature as appealing to Democrats as to Republicans.
As Cleveland himself once said, "I would rather the man who presents something for my consideration subject me to a zephyr of truth and a gentle breeze of responsibility rather than blow me down with a curtain of hot wind."
BY RALPH J. BENKO: