Monday, August 08, 2011

Tocqueville: God vs. Gold as Guarantors of Value

My annual Theory Camp is reading Tocqueville's Democracy in America.

Tocqueville says that the American conception of democracy (in his day, anyway) rested on a widespread belief that God is the guarantor of the trust and commitments that a democratic people make to one another. He thought that, from society's perspective, the particulars of religion did not matter so much as the fact that nearly all believed.

In other words, democracy depends on something outside of democracy itself, some source of fixed and absolute value.

It strikes me that this is what "goldbugs" think the gold standard does for money. They think gold is something that stands outside of the money system, some source of fixed and absolute value.

Except that God really does have the capacity to guarantee the value of a society's values. Gold, on the other hand, has no intrinsic and absolute value. The only "value" that gold has comes from the money system itself.

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