A Chartalist Critique of John Locke's Theory of Property, Accumulation, and Money: or, is it Moral to Trade Your Nuts for Gold?

Abstract

The focus of this paper is John Locke's theoretical defense of economic inequality. It is well known that Locke identified labor as the original and just foundation of property. Succinctly, Locke's was a labor theory of property. Now, while Locke saw private property as legitimate, he proposed that the state of nature within which people interact is part of a social system that is regulated by distinct rules that limit accumulation. There is nothing in Locke's initial argument that allows for unbounded accumulation and consequent inequality. The justification for unbridled accumulation comes later, and rests squarely on Locke's treatment of money as a non-exploitive institution. For Locke, money allows unlimited accumulation while still adhering to the rules he established to govern morally correct behavior. In this paper, we challenge Locke's position by contrasting his exchange-based view of money with the debt-based or Chartalist theory of money. We demonstrate that when money is properly conceived, Locke's own moral strictures regarding property are violated, and his theoretical defense of the accumulation process is undermined.