Coins on the cheap, or Economic illogic

‘Coins fall victim to the cuts’ was the headline in the Morning Star, while the Daily Mail had ‘Coins on the cheap’. The Royal Mint, they reported, is to use cheaper metals in order to save £10m a year. Everyone else (except oddly the Luton and Dunstable Express) ignored the story, but it stuck in my mind—nothing demonstrates quite so ironically the economic illogic of the cuts regime, because the saving will cost the vending machine business many times that amount.

We forget that money has to be manufactured. Not the electronic money of speculative capital movement which comprises 95% of daily turnover in the foreign exchange markets, but the cash in our pockets. The fact is there’s something strange about money: it doesn’t have a price of its own. If I give you a fiver for five one-pound notes, we both still have the same value—even if the material value of the coin has depreciated. (Which means, by the way, that if money is a commodity, then it’s a peculiar one, because the object itself doesn’t cost us anything as such; so we forget it’s actually a manufactured product.)

So how much does it cost to make it—and who pays for it? The answer was buried in the small print of the government’s spending review: HM Treasury, of course. But it seems that the cost of copper, used to produce the traditional cupro-nickel coins, has become ‘volatile’, because strong demand from developing economies such as China and India has led to big increases in the metal’s price. So the new coins will be made of cheap steel covered with nickel plating, and will not only be cheaper to make, but should also last longer, remaining in circulation for 25 to 30 years.

But although the move will save taxpayers money, the new coins are 11% thicker than the old—1.9mm instead of 1.7mm—so the vending machine industry is going to face a huge bill to adapt all its machines to recognise the new coins. Estimates put the cost at anywhere between £42m and £100m. There are more than 400,000 machines that need to be modified. They include parking meters, so local councils will also have heavy costs to bear (except Wandsworth, where you can already pay with your mobile)—just when they’re being faced with cuts of as much as 9 per cent. Either Council Tax will have to go up, or something else will have to be cut—most probably the local arts.

A day or two ago Vince Cable told undercover reporters from The Telegraph that ‘the problem is not that [the cuts] are Tory-inspired, but that they haven’t thought them through’. Own goal, I’d say, since Vince himself is the man in charge of the university cuts-and-fees débâcle, which is also going to cost rather more than it’s going to save, and is already causing great disruption.

You don’t have to be an economist (probably better if you aren’t) to see these measures as profoundly irrational. It’s patently clear that this government is driven by wholly ideological motives, as indeed an academic colleague involved in lobbying against the new university funding arrangements confirmed. A senior civil servant in Cable’s own department had told him that the politicians said they didn’t want evidence-based arguments. Which is why they dismiss independent economists like Blanchflower, Krugman, Soros and others, calling them deficit deniers and refusing to engage with their analysis of why massive deficit reduction is the wrong thing to do even from a good capitalist’s point of view. And it’s why students and activists are out on the streets and swarming on the internet—because there’s clearly no way of debating with this government on the basis of reasoned discussion.

The mainstream media, especially the BBC which has been cowered into compliance, project the fear and paranoia of the political class and its sponsors and allies, but a new factor has emerged in the rebirth of the rebellious political imagination, fostered by the levelling nature of the internet.[*] It feels like the regeneration of the anarchism which was always present in the tradition of popular struggle, only to be suppressed by orthodox communism. As the long snow-lit nights now begin to shorten, one waits quietly for the new year, and its anarchist greening.

[*] See 2011: The year political activism and progressive politics goes open source at Left Foot Forward.


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