Finance, War, and ‘Humanitarian Intervention’

In view of disturbing hypotheses about the incentive structures of finance-led capitalism, this chapter begins by considering the synergies between finance and that ultimate form of injustice, war. It goes on to examine critically the standards of argument appropriate for recommending military intervention on humanitarian grounds. A particular concern is that sufficient epistemic due diligence should be done with respect to any such case. Given the ascendancy in recent times of a widely held ‘liberal’ belief that humanitarian intervention, and even regime change operations, can quite often be justified, the counter-argument is also considered. In fact, it is argued that protecting people might be more effective if it involved less confrontational methods of discharging humanitarian responsibilities. The chapter closes by reflecting on intriguing similarities and connections between ideas of using military means to humanitarian ends and ideas about money in the global financial system being serviceable to such ends.

Financialization and the ‘Real Economy’: an Ecological Perspective

Financialization can be criticized for undermining productivity in the ‘real economy’, and this chapter examines that criticism from an ecological perspective. Viewing the economy not only as a set of institutionalized practices, but also as material interaction with the natural world, one appreciates how processes of financialization can inhibit productivity without necessarily inhibiting ecological destructiveness. From an ecological perspective, a ‘real economy’ of tangible processes and assets can clearly be distinguished from monetary conventions of accounting. This is a sharper distinction than is drawn by some orthodox economists because it is more alert to the relevance of the profit motive operating in businesses in the ‘real economy’. Profits have no necessary correlation with productivity, and can sometimes even be achieved by liquidating or exhausting productive capacities.

Constituting Finance as a Global Public Good: the Scope of the Challenge

This chapter proposes some parameters for constructive thought regarding institutions of a more just and sustainable world order. Currently, an institutional system involving a global constitutionalizing of private corporations’ rights utilizes the power of nation-states to serve interests at odds with those states as protectors of peoples. A global elite can use legitimately constituted states to extract benefits from their domestic law enforcement capabilities while escaping any burdens of support for those states. Accordingly, the path towards a globally just and morally cosmopolitan normative order, with finance as a properly public good, might conceivably lead through initial strengthening of some powers of sovereign states rather than their further dissolution. Certainly, such constitutional questions as that of the appropriate relationship between a central bank and the political government of a state need to be carefully examined, especially in view of how politically unaccountable is the international banking system.

Can Benign Leverage Be Relied on to Make the World More Just?

Some moral and political philosophers have argued that a duty of the affluent to relieve global poverty can be discharged by transferring an amount of money that is relatively small in global terms. This is to rely on an effect conceptualized in this chapter as benign leverage. The assumption that benign leverage can achieve global justice implies that current international institutional arrangements are imperfectly just, not fundamentally unjust. Somewhat paradoxically, however, the more successfully the leverage is used in order to benefit the poor, the more difficult it may become to achieve further success or even to consolidate gains already made. Given that the leverage effect depends on the existence of significant inequalities, one should consider carefully the conditions that must pertain for it to operate and how just they may in fact be.

Money for Justice?

Recent debates about global justice have featured various proposals to make the world more just by means of transferring money. Their assumption is that just purposes may be achieved by applying, in a global context, the kind of redistributive fiscal policy that has proven capable of supporting social justice within the context of a welfare state. In global or international contexts, however, that assumption may not be warranted. In the absence of global political institutions and a single global currency, it would be premature to make policy commendations whose effectiveness would presuppose their existence. Additionally, there is a problem that the value of taxes, even if successfully raised and transmitted, can be subject to volatilities in financial markets. Attention should be directed to the institutional conditions required for global taxation as well as for the governance of global finance more generally to ensure it is in the public interest.

Introduction

Introducing the themes of the book, this chapter emphasizes that while we are aware of money’s powers, most of us do not generally reflect on how it comes to have these or how they are governed. The first part of the book examines the challenges presented by a global financial system that tends to impede real productivity, exacerbate inequalities, undermine ecological sustainability, and incentivize warfare. The middle chapters consider how recent proposals by political philosophers of modest institutional reforms to achieve global justice through redistribution could be thwarted by the workings of finance in reality. For the problem, as investigated in the later chapters, is that the institutions of the private profit-driven global financial system have been organized more quickly and completely as a normative framework for global order than any political arrangements aimed at promoting public interests in justice and sustainability.

Conclusion

This concluding chapter sums up the key arguments of the book and indicates questions for further research. It emphasizes that the existing international institutions did not come into being through any constitutional process and are not necessarily suited to achieving what is best for people or planet. Hence proposals of modest reform of the emerging global institutional order may not be a sufficient basis for meeting the imperatives of our age. The financial system needs to be constrained to track more realistically the sense of proportion to be discerned in the natural order of things and in the idea of a rough equality of every human being. The challenge, viewed as a normative objective of global justice, is to supplant the current implicit and private constitution that facilitates the rule of finance globally by arrangements whose immanent purpose is to support the achievement of justice, sustainability, and peace.

What Is the Good of Money?

This chapter considers what kind of thing money is, and, particularly, how to conceptualize it as ‘flowing’ from one place to another. A further question is what kind of good this complex thing is. We know money can be regarded as an economic good, but economic goods are of a variety of kinds. In its different forms money can function differently for different purposes, any adequate account of which would have a sociological dimension. For money is available to be used only on certain terms as set by those who control the institutions. Thus the question of ‘where money comes from’ is also of notable normative significance: money is a product of complex social arrangements and normative orders grounded in deep-seated power relations. Powers to create money and to control the conditions of its creation are powers that people have good reason to want subject to legitimate political authority.

The Good of Finance and the Critique of Financialization

This chapter considers the valuable social purposes that finance can in principle serve and how the processes referred to as financialization may undermine the good functioning of finance. When that happens, the practices internal to finance develop according to the logic of internal profit-seeking rather than supporting what the activities in the rest of the economy and society more widely are intended to achieve. The financial system operating globally today can be criticized in three major respects: it hampers economic productivity, undermines distributive justice, and drives ecological irresponsibility. Yet although economic productivity may be compromised by financialization, financialization itself might be seen as an adaptation to problems within the economic system. Hence it may be that the problems associated with financialization cannot satisfactorily be tackled (through steps to improve governance of the monetary system) without addressing the problematic tendencies in the productive economy itself.

The Monetary Constraints on Tax Justice

This chapter assesses the hypothesis that a global shift of economic relations in favour of the poor could precipitate a countermovement of asset values in the opposite direction. Some theorists of tax justice have already highlighted a need to impede illicit financial flows, but the further problem identified here is that such flows are not necessarily illegal. ‘Shadow banking’ is so integrated into the global financial structure that licit and illicit flows are intermingled. An especially problematic result is the generation—particularly through the creation of various financial derivatives—of illusory forms of liquidity. These destabilize the financial system, undermining productive economies and ordinary people’s livelihoods. Thus global finance is overrun by ‘mad money’ that is backed by little real collateral but has a very real capacity to increase indebtedness. The monetary system should be brought under accountable political control for justice to be possible in relation to global finance.