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Cultures of Monetarism
Jane I. Guyer, September 30th 2008

(Papers and links listed at the end)

The last quarter of the 20th century saw a rise in theoretical devotion and
political commitment to a theory of the place of the state in national economies that
is termed “monetarism”. Over the past nine years, I have written eleven papers on
aspects of popular economic culture, in West Africa, the United States and
elsewhere, as people have responded to the changed rhetoric and altered conditions
in public life.  Nine are reproduced below. Four of these remain unpublished. Monetarism changes the terms, and even the possibility, of a transparent and accountable exchange between democratic publics and their
elected representatives about “the economy” that does not differ in kind from the
same difficulty in autocratic political systems. My argument has been that this is not
due in the first instance to venality, corruption, greed and so on. There is a real
conundrum for political life that is implicit in the theory itself.

To quote the authoritative New Palgrave Dictionary of Economics:
“Monetarism is the view that the quantity of money has a major influence on
economic activity … and that the objectives of monetary policy are best achieved by
targeting the rate of growth of the money supply” (Cagan 1989: 195). Through
judicious intervention by the central bank, the “demand function for monetary
assets is claimed to be stable in the sense that successive residual errors are
generally offsetting and do not accumulate” (Cagan 1989:1989). Markets tend to
equilibrium, with distortions caused mainly by monopolies or information
imperfections. With these assumptions about the working of markets, and with
money management capacities such as the setting of interest rates vested in (in the
U.S. case) the Chairman of the Federal Reserve Bank, “monetarist thought puts
primary emphasis on the long-run consequences of policy actions and procedures. It
rejects attempts to reduce short-run fluctuations in interest rates and economic
activity … as generally inimical to the otherwise achievable goals of long-run price
stability and maximum economic growth” (Cagan 1989:203).

Policies about the institutional architecture of national economies follow
logically from the theory that monetarism can be more successful than taxation and
government spending for moderating inevitable swings in the markets and for
stimulating economic activity. Dismantling taxes, regulations and entitlement
spending programs is an entailment of this theory. The new space opened up is
expected to foster the innovation on which capitalist growth depends. “Because no-one
knows which venture will succeed, which number will win the lottery, a society
ruled by risk and freedom rather than by rational calculus, a society open to the
future rather than planning it, can call forth an endless stream of invention,
enterprise, and art.” (Gilder 1981: 296). Fluctuations are “market corrections” that
contribute to growth by promoting innovative responses.
One of the great intellectual architects of monetarism, Friedrich von Hayek,
was quite frank in his assessment that suffering could ensue during some market
corrections, but he argued that this was greatly preferable to alternatives.

Reasoning from experience can be, he wrote “an incomplete and therefore
erroneous rationalism” (1944:205). “If in the long run we are makers of our own
fate, in the short run we are the captives of the ideas we have created” (1944:2).
Writing from the European experience of state power in World War II, he advocated
“submission” to market forces as the better of two evils. Hostility to the past and its
lessons, hope for the future, and a belief in human ingenuity – whether devoted to
goods or to financial instruments – imbue the explanations of monetarism that are
offered to the public.

For an anthropologist, the rise to prominence of this theory is a challenge to
understand how “the people” - the citizens, the ongoing institutional actors, the
creators of life in the everyday - understand the theory whose terms now shape
their lives they and how they respond to the conditions it creates. This takes effort,
since the nexus of ideas about “tax and spend” creates a particular kind of
democratic conversation: “I give the government taxes from my earnings therefore I
have the right to assess for myself and to be consulted about the services they spend
the money on.” Monetarism does not invite a democratic conversation of this sort.
The terms, the topics and the arenas for engagement have to be changed. Hence
what most commentary depicts as an “ideological” onslaught alongside the policy
shift. People might respond to these new terms: for example, the “ownership
society”, the “freedom to choose” (Friedman and Friedman 1980), the insertion of
faith into the weathering of fluctuations and the constant reference to growth over a
long run future. But we are called on not only to hope for this future, but also to simply
weather the inevitable fluctuations along the way.

There are no obvious grounds for popular debate about these terms and
conditions. Do we ask the Fed Chairman to explain to us, to listen to us describe our
own situations? Since he is not an elected representative, he can choose – as
Greenspan did – to remain quite silent while in office. So what do governments and
people say to each other, especially when conditions fluctuate more widely than is
comfortable? Von Hayek was rigidly opposed, on principle, to governments
responding to special pleading. So what do we all say and do? Those of us who work
in Africa and other areas of the world which came under the “Washington
Consensus” version known as “structural adjustment”, saw this conundrum
emerging as early as the 1980s. We watched various situations develop, thinking at
the time that they were largely attendant on African particularities: military rule,
structural adjustment and the capacity and willingness of Africans to operate on a
do-it-yourself basis, avoiding dealing with the government as much as possible.
There was also the technical competence of central banks to follow what are
undoubtedly important judicious management guidelines for monetary policy,
regardless of political and economic philosophy, and the obvious difficulty of
applying any financial policy to “small, open economies” based heavily on one or
two commodities whose price fluctuates widely from year to year on global markets.

It was initially a surprise, then, to see some of the same gaps in the public
conversation when they started to emerge in the United States soon after the
millennium. In a paper entitled “The Craving for Intelligibility” (a quotation from
von Hayek) I traced out the public debate in Nigeria from the early 1980s to 1997. It
started with intense demands by the public for definition of terms, passed through
an adversarial stand-off over patriotism on one side and survival pragmatism on the
other, ending up in what I termed “cacophony and silence”. Although clearly the
politics and the economic structures differ in our own case, some of the parallels in
the public economic debate were startling as they emerged, especially recourse to
justifications of present troubles in terms of the “long run”. The parallels in
discourse and in public hostility have only intensified since I wrote that paper in
2005. So having worked on the history of money in West Africa, I turned my
attention to the various similar situations as they turned up in our own lives and
used my knowledge of West African economies to sharpen acuity about the
“popular” side of our own economic life. I tried in all cases to stay focused on the
anthropological question of how the theory was being articulated and how public
culture was changing in tandem. Critique of the theory itself can be inferred, but this
is neither my expertise nor my purpose. Monetary policy is always crucial and
esoteric. Rather I have turned my attention to simply understanding the vast
tectonic shift in economic culture that its recent prominence has entailed, and to
extract the entailments of monetarism as an economic theory from the much vaster
question of “neo-liberalism”. I find the latter too inexact a term for the tracing out of
logics, resonances and causal chains that might find parallels from case to case.

This was not, however, an organized empirical research project of
comparative cases, structured as a series from the outset and investigated using
field methods. It has been a series of explorations of particularly puzzling
phenomena as they moved onto our radar screens, using theoretical and secondary
sources. I did not think of them as one body of work until around March 2008, when
the current U.S. financial crisis started to intensify. The following papers were
written for conferences and presentations between 2001 and the summer of 2008.
Some are published, so the pdf versions are attached. Some are under copyright to
forthcoming publications, so I include the official abstracts and references, and
would be able to send hard copies on request.

Cagan, Phillip. 1989. Monetarism. In J. Eatwell, M Milgate and P. Newman (eds.) The
New Palgrave: Money. New York: W.W. Norton, 195-205.

Friedman, Milton and Rose Friedman. 1980. Free to Choose. A Personal Statement.
New York: Harcourt Brace.

Gilder, George 1981. Wealth and Poverty. New York: Bantam Books.

Hayek, Friedrich von. 1944. The Road to Serfdom A Personal Statement. New York:
Harcourt Brace.

Guyer Papers relative to Cultures of Monetarism

2001 Paper for the American Anthropological Association Meetings

2001 "The Life Cycle as a Rational Proposition, or "The Arc of Intermediate Links."

2004 “Loopholes.” Paper for the African Studies Association Meetings.

2005 “Confusion and Empiricism: Several Connected Thoughts” Christianity in Africa.
Essays in Honor of J.D.Y. Peel Toyin Falola (ed.) University of Rochester Press,

2005  “ “The Craving for Intelligibility”. Speech and Silence on the
Economy under Structural Adjustment and Military Rule in Nigeria.” In Steven
Gudeman (ed.) Economic Persuasions. Oxford: Berghan Books. With LaRay
Denzer. Pages 97-117.

2005 “When and How Does Hope Spring Eternal in Personal and Popular
Economics? Thoughts from West Africa to America.” Paper for the conference
on Hope in the Economy, Cornell University.

2006  “Composites, fictions and risk: towards an ethnography of
price. In Market and Society. The Great Transformation Today. Edited by Chris
Hann and Keith Hart. Cambridge University Press. Pages 203-220

2007 “Prophecy and the Near Future: Thoughts on Macroeconomic, Evangelical and
Punctuated Time.” American Ethnologist 34, 3: 409-421

“And Further: a rejoinder.” American Ethnologist 34, 3:447-450.

2008 “Cash Economies.” Paper for the conference on Rethinking Economic
Anthropology. A Human-Centered Approach. London.

2008 “The Eruption of Tradition? On Ordinality and Calculation.” Paper for the
conference on Number as Inventive Frontier, Johns Hopkins University.
Published  2010 Anthropological Theory 10, 1-2:123-131.

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