A few decades ago, there was a drive by governments across the world to deregulate everything to do with finance. We’ve all seen the consequences that this has had on us all with investment banking, derivatives and the destruction of building societies (and their international equivalents) which were transformed into the least cautious of all the banks.
But there are other, less well-known, elements of the free market extensions that can and do have major implications for national sovereignty over our economies. One of those is the now well-established system of free floating currencies. Related to this is the abolition of exchange controls.
Some economists claim that there is a casual link between free floating currencies and the regular global recessions that have struck. I would not claim to be qualified to comment on that idea, but we have seen what happens when governments decide to intervene in the value of money at times when the market value is going in the wrong direction. In 1992 the Conservatives led the UK into a humiliating policy change when currency speculators piled in to make a profit out of “betting against the Government”. And that is currency speculation: betting, but in a way that can bring down an economy.
We’ve allowed a powerful sector of our financial sector to develop that doesn’t fund industry, investment or construction. It generates billions out of profiting from uncertainty surrounding the value of the most basic units of exchange. And as I’ve pointed out before, billions of pounds, yen, roubles or petrodollars do not get spirited out of nowhere: they can ultimately be traced back to us the public. The people who have their savings and pensions in the currencies they toy with. The people whose jobs depend on businesses operating in the global economy using the currencies they can inflate into uncompetitiveness. The people whose governments rely on the currency speculators to have confidence in exploiting them sufficiently.
Some things are best not left to market forces. I think the value of money is one of those, for if we don’t face a problem now, it is only a matter of time. It is fundamental to the sovereignty of a nation state that they be free to ward off financial vultures in the event of, say, a national emergency. Let us reintroduce a system of controls on the relative value and trading of currencies, restoring democratic control of our money. Though this is easier said than done, we will have a more secure future as a result.