re: Danby seminar

[Gernot Kohler <gernot.kohler@xxxxxxxxxxxxxxx>]

This is with reference to Colin Danby's online seminar paper, entitled
"Money in an International Framework".
    I am looking at the Danby paper from the perspective of global
political economy. From this perspective, Danby's main theme is eminently
welcome -- namely, the theme (1) that national economies are situated in
an international institutional structure which exhibits a hierarchical
pattern (pecking order) and (2) that money (its value, flow, use and
effect) is affected by that global institutional structure. There is an
empirical correlation between a nation's position in the global pecking
order (stratification system) and the "hardness" (value, stability) of
that nation's currency. (GDP/capita of a country correlates with the
deviation from PPP of that country's currency. -- See, e.g., Chenery). In
other words, money is non-neutral with regard to the global power-wealth
structure. Money has a global center-periphery structure (postulate). I
find it very interesting, therefore, that Danby takes this issue into
monetary theory, criticizing a "nationally compartmentalized" (Danby)
view of money. It may even be that Danby merely scratches the surface of
the tip of a hidden iceberg, namely: the way in which the existing
international monetary system lowers and distorts the values of
poor-country currencies seems like the scam of the century, with profound
effects on national economies and their interactions, as well as on the
entire global economy.

(As an aside, I found Danby's reasoning easier to follow in his separate
case study of Mexico, which contains more historical-factual material.)

Since I have been speaking out for the use of the global level of
analysis ("mega level"), I appreciate the innovativeness of this paper,
even though I am not a qualified judge of its details. What keeps
economists so glued to the nation-state? There are, according to some
estimates, 14 trillion U.S. dollars worth of investment founds out there
in the hands of global investors -- funds which do not stop at any
national border. This suggests that money is a global, not a national
phenomenon, like the weather, ozone hole, etc.

Regards,

Gernot Kohler
Oakville, Canada