The Old Allure of New Money by Robert J. Shiller
During the Great Depression of the 1930s, a radical movement, called Technocracy, associated with Columbia University, proposed to replace the gold-backed dollar with a measure of energy, the erg. In their book The A B C of Technocracy, published under the pseudonym Frank Arkright, they advanced the idea that putting the economy “on an energy basis” would overcome the unemployment problem. The Technocracy fad proved to be short-lived, though, after top scientists debunked the idea’s technical pretensions.
But the effort to dress up a half-baked idea in advanced science didn’t stop there. Parallel with Technocracy, in 1932 the economist John Pease Norton, addressing the Econometric Society, proposed a dollar backed not by gold but by electricity. But while Norton’s electric dollar received substantial attention, he had no good reason for choosing electricity over other commodities to back the dollar. At a time when most households in advanced countries had only recently been electrified, and electric devices from radios to refrigerators had entered homes, electricity evoked images of the most glamorous high science. But, like Technocracy, the attempt to co-opt science backfired. Syndicated columnist Harry I. Phillips in 1933 saw in the electric dollar only fodder for comedy. “But it would be good fun getting an income tax blank and sending the government 300 volts,” he noted.
Tuesday, May 22, 2018
I apologize in advance for the electricity pun
Unsurprisingly insightful work from Robert Shiller on the enduring allure and almost inevitable failure of radical new forms of money. The whole thing is very good, particularly the section on the euro (thanks to Bitcoin, no longer the worst currency idea of the past 50 years) and this section on the technocracy movement of the 1930s. I had no idea that the period produced not one but two proposals for energy-based currencies (or should that be, current-based currencies?). I definitely need to add this book to my reading list.
Posted by Mark at 9:00 AM