Galtland Index

Hoppe on Special Drawing Rights

4 min read

Hoppe on Special Drawing Rights

In Hoppe’s monetary-political frame, IMF-issued Special Drawing Rights are not a neutral accounting convenience but one concrete step in a post-1971 drive toward a world paper currency and a world central bank — the monetary half of the state’s tendency toward world government.

Monetary imperialism

Hoppe argues in The Economics and Ethics of Private Property that a state has a natural interest in extending its counterfeiting power over ever-larger territories — what he calls “monetary imperialism” — and, just as a state tends to expand its borders and absorb rivals toward the limit of world government, it tends to make its own paper currency the world currency, controlled by its own central bank. The two interests, military and monetary, complement each other.

The obstacle is that a purely voluntary international counterfeiting cartel is unstable: with no enforcement agency above the states, members defect, because joining the cartel harms the stronger, less inflationary state to the benefit of the weaker, more inflationary ones. Military dominance is what makes the cartel viable. Once one state is hegemonic, Hoppe argues, it can extend its exploitative reach over other territories without further war, through “more sophisticated (i.e., less visible) means” than conquest.

A new currency with a new name

In Hoppe’s account the deepest resistance to an international currency comes not from states or economic elites but from the general public, whose nationalism the states themselves spent centuries cultivating. The workaround is to avoid asking the public to adopt the dominant state’s money by name. Instead a new currency with a new name is created, defined in terms of the existing national monies and slightly overvalued against them, so that — by Gresham’s law — it gradually drives the national monies out of circulation without arousing nationalist or anti-imperialist sentiment.

SDRs as a concrete step

Special Drawing Rights are Hoppe’s leading example of this template in action. Created by the IMF and defined initially against sixteen and later five leading export nations, they fit the pattern exactly: a new unit, with a new name, defined in terms of existing monies and issued by an international body rather than a single national treasury.

The creation of Special Drawing Rights (SDRs), defined initially in terms of sixteen and later five leading export nations, and issued by the IMF, was a move toward a one-world currency and a one-world bank under U.S. domination.

— Hoppe, The Economics and Ethics of Private Property

Hoppe discusses SDRs alongside the European Currency Unit (ECU) and the Trilateral Commission in his post-1971 account of parallel pushes toward the same end: a world paper currency — a future “phoenix” issued by a U.S.-dominated world central bank such as the IMF or the BIS — and, ultimately, world-wide control not only over counterfeiting but over taxation and legal regulation. The one constraint he identifies as capable of stopping the sequence is a change in public opinion toward sound money, 100-percent-reserve banking, and antistate vigilance.

Place in this wiki

The claim is narrower than a theory of international monetary law, and it is a strong, contestable reading: SDRs and the ECU can also be explained, more mundanely, as responses to exchange-rate volatility and the demand for calculational stability — a motive Hoppe himself acknowledges before subordinating it to the imperial one. Its value here is to tie the wiki’s central-banking and fiat themes to a concrete institution, and to show how Hoppe folds money into the same centralizing logic that, in the evolution of the state, drives political units toward ever-larger scale.

See Also

Sources

Graph View

Backlinks