Almost two years ago I recorded a podcast with Tomás Mandl on his book Modern Paraguay: Uncovering South America's Best Kept Secret. If you have been following me since then you might already know that Friedrich Nietzsche’s sister moved to Paraguay with her husband to start a new German Colony to advance Nazi ambitions of Aryan supremacy. Perhaps, you already know that Alfredo Stroessner, the military dictator of Paraguay for 35 years (the longest Western Hemisphere Cold War dictator apart from Fidel Castro), gave Paraguayan citizenship to Josef Mengele, the infamous Nazi war criminal (“Angel of Death” in Auschwitz) and refused to extradite him.

Yet, on my first visit to Asunción last week none of that was on my mind. What was striking was the total absence of any aesthetic coherence of the city.

In a previous post, I talked about what I consider the spectrum of the Deepness of cities. In my view, cities can be economically developed but lack depth. Another mental model I use for my proxy of development when traveling is what I call aesthetic Coherence.

Trying to explain a mental model is always a bit fuzzy, but I mean something like this:

1. How well-planned does the urban design of the city feel?

2. How similar are the building designs in specific neighborhoods?

3. How well-marked and maintained are roads and pedestrian walkways?

4. How closely do street signs follow a specific design language?

In my mental model, a city like Madrid or St. Petersburg has high Coherence. But a city like Phnom Penh (Cambodia) or Kochi (India) has low Coherence.

If you walk around Phnom Penh or drive through Kochi, you will see a demure 1-story concrete building painted white next to an aggressively neon-lit 3-story building in brick and concrete with 4 different colors. Both were on a road without properly maintained pavement. This is a fairly common scene in developing countries in Asia. I am sure you have seen skyscrapers in Manila next to slums.

What this means is that private individuals can build however they please because there are no urban planning rules to follow, nor any government-imposed development master plan. We can argue how good or bad this is, I am just pointing out it is something you see.

What was surprising to me is how closer Asunción is to the southeast asian side of Coherence. I did not expect Asunción to remind me so much of Phnom Penh.

This was the view from my hotel room. It was actually (one of?) the nicest hotels in the city. The building itself, inside and outside, was quite elegant. I even found out that the King of Spain and the President of Panama recently stayed there. If you know me, this is apt indeed.

But it goes to show how even the nicest buildings in Asunción are usually just surrounded by dilapidated ones.

This is a common detail everywhere around the downtown areas. There is no real urban planning; private investors just build where they see fit. This dire lack of system-wide (public sector-led) urban planning could be seen in the fact that, generally, the government of Paraguay spends way less than any other Latin American country.

Problems with a Lean State?

As a percentage of GDP, government expenditure in Paraguay is around 19%, which is way below the South American average of 29%. In fact it is the lowest. Interestingly it is similar to Cambodia, also at 19%.

Given the big image above, I did not expect the city to have so many modern high-rise buildings like these:

So why? Is it a strong and expanding middle class?

If you know anything about Cambodian urban development, you would guess no.

But let’s think about that.

With a population supposedly around 7 million, Paraguay’s per capita GDP (nominal) is just around $6,276 USD. And only around 15% of the population have a tertiary level of education.

From my podcast, or elsewhere, you might know that about 62%-67% of all jobs in the country are informal. Only Peru and Bolivia have higher rates of informal jobs. In fact this informality in the labour market, coupled with Paraguay’s extremely low tax capture policy, means that government revenue is heavily limited. In a population of around 7 million, only around 300,000 people file taxes and contribute to the government tax collection base. Why does only 7% of the country pay personal income taxes in Paraguay?

Firstly, similar to Panamá, Paraguay only taxes Paraguayan‑source income. So then, foreign salaries, dividends, or portfolio returns are generally exempt from domestic taxation. Curiously, personal income tax as a whole was only introduced in 2012.

Secondly, demographics. Of the 7M total population, around 3.5M (15-65 years old) are in the labour force. But given the high rate of informal labour (hence do not pay taxes or social security contributions), the active formal labour force is just about 1.2M people.

Thirdly, Paraguay has a tax gate. That is, only those persons making over $11,000 USD gross income annually even need to file taxes. So, given these details, the National Directorate of Tax Revenue in Paraguay has noted that only 296,691 people meet all of these criteria to file taxes. Are you surprised by this?

In terms of total tax revenue, personal income tax only accounts for 6%, while VAT accounts for 52%. Yet, the VAT rate is just 10%.

This means that Paraguay has the lowest VAT rate in Latin America. Well below Argentina (21%). This is a main reason why many Argentines and Brazilians travel to Paraguay simply to shop (usually for commercial purposes). This is deepened by the fact that there are two large Free Trade Zones near the borders with Argentina and Brazil. You will not find many leisure tourists in Asunción. When I spoke to Paraguayans, they often confirmed that it’s mostly Argentines and Brazilians who come to the city to buy products, not to explore and enjoy.

Going back to the middle class consumption point. If only around 300,000 Paraguayans make up the domestic personal income tax base then it’s perhaps not a local middle class that is buying and renting the new modern high rise apartments in Asunción.

Indeed, 70% of the new housing supply is acquired by foreign investors as a capital preservation strategy. They are not bought by locals. These are often investors from Argentina, who, according to some data, account for 70% of all foreign investors. They buy the apartments and then rent them out. But to who?

Usually, foreigners who go to Paraguay for work purposes or new residents who take advantage of Paraguay’s quick and easy residency scheme and citizenship program. And the fun part is that these rental contracts are usually in dollars! Not the local currency (the Guaraní, PYG). Of course, Argentines buy property in Paraguay and prefer to receive dollars in rent.

So there is another part to this. Yes, foreigners are buying more and more property in Asunción, but why is that property being developed there in the first place? This is not simply a matter of demand creating supply. There is an interesting story on the supply side, too.

Whose Incentives?

Paraguay has a special set of regulations established with Law 60/90, approved in 1990 with various amendments since then. The basic premise of this law is that for approved projects (which was updated to include real estate) over $5M USD, the developers are exempted from most taxes, including: 0% customs duty and 0% VAT on importing capital goods and on buying locally made capital equipment; 0% withholding tax on interest/commissions paid abroad and 0% tax on dividends & profits from the project for up to 10 years. Since 2024, the project baseline has been raised to an investment of at least $13M USD for these exemptions to kick in.

On top of all of these, if you build real estate buildings in Asunción specifically there are additional tax breaks from Municipal Ordinances on top of Law 60/90. So developers have really attractive incentives for building in Asunción and attracting foreign buyers. There are even some more tax breaks if you sell more than 40% of your building units on pre-sale.

All of this is why you have modern high rises near to roads like this in walking distance from the presidential offices. Low coherence.

There is a lot more that I could say about Paraguay. Like how the War of the Triple Alliance (1864-1870) resulted in the death of 70% of adult men in Paraguay, giving the country the highest male-mortality proportion ever reliably documented for a nation-state in modern warfare. Yet, the general population of Asunción is quite attractive. Or I could talk about why Paraguay has one of the largest Mennonite communities. Maybe on why it takes an ungodly amount of time to receive your food when you order it in any restaurant? Perhaps in another post.

If you do not speak Spanish then you will have a hard time doing anything. But if you do speak Spanish, the Paraguayan accent sounds phenomenal and the people are disarmingly kind.

Tyler once pointed out that a common question in Paraguay is “¿Con factura o sin factura?” I can now confirm that everywhere I went, I was asked this.

Show notes

We’re back and this time from sunny Panama, with a familiar message: The Barbados Dollar needs to go! We sit down during the 3rd day of the CPSI Panama Progress Tour (the first of its kind) to discuss the merits of dollarization for the Barbados economy. It’s no coincidence we chose Panama, a country which itself has been dollarized since 1904! Financial integration with the global community, freedom to conduct business abroad, and much tighter fiscal responsibility on the part of local government are just a few of the benefits the isthmus enjoys. Barbados too could experience the advantages of switching to a globally recognized and accepted currency.

Recommended

• Why Panama Dollarized - CPSI Deep Dives

• Trinidad Should Dollarize NOW - CPSI on YouTube

• Notes Towards Caribbean Dollarization (I) - CPSO Deep Dives

Subscribe now

Full Transcript

This transcript was automatically generated by AI and lightly edited by our team. We don’t catch every error, so if you spot one, send us a message/email via shem@cpsi.org.

Shem: Rasheed.

Rasheed: Hi Shem.

Shem: Before me, I have two currencies: one internationally accepted and one stranded within the 166 square miles of Barbados. Which one would you like?

Rasheed: Is that a trick question?

Shem: Yes.

Rasheed: US Dollar..

Shem: You would've been insane if you had picked the Barbados dollar, but today we're here to discuss a topic that is pretty much integral to the CPSI, which is dollarization.

Yeah, we've already covered the dollarization of Trinidad and Tobago and the objections, and we're gonna do something very similar for Barbados. Namely, we're gonna tackle the objections that people both within the island and more, how do you say, educated individuals might have against abandoning the Barbados dollar and just fully switching over to the United States dollar, the greenback.

One of the first objections people have is it's gonna give the United States too much power.

What do you have to say to that?

Rasheed: That is, I think, maybe the most common objection we hear. Right. I think that's one of the most, yeah. Yeah. One of the most. Honestly, I am not sure why people believe this.

I ask them "Exactly what mechanisms do you think change it to give you more power if we are dollarized?" Of course, no one has the answer. I think it should probably be the answer itself. If you can't respond to the question, means it's probably not relevant. I will try to answer the point somehow to explain why people think that. So the basic idea is people believe that currency equals power. There's some truth to that. However, as you mentioned Barbados' currency is only valuable within the geographical, not even larger, but just the geographical confines of Barbados where as the USD has a global reach.

But here's the question. If you are in Barbados and you also send money to Canada or the US people don't know how it works. So if you're sending money from Barbados to New York, you are actually using US banking channels. Barbados banks don't have any reach outside of Barbados whereas US banks do.

So right now, given that you require what we call correspondent banks in the US, to handle any transaction you want to do, your company, or your government wants to do outside of Barbados, there's already substantial linkage. That's why when we talk about Dollarization, we don't mean going from 0% dollarization to 100% dollarization.

It's more like 95% dollarization to 100% dollarization. That 5% gap is just essentially the thing in your bank account you call dollars. Just don't call it the Barbados dollar, just call it US dollars. So it's divided by two, done. So having dollarization from 95% to 100 percent doesn't give the US any more power than it already has.

Maybe we say, "Oh, the US shouldn't have that kind of power now." But that's the world we live in. We don't, we don't have some fantasy world apart from where we are now. So right now the US can have substantial leverage over Barbados or any economy in the world by blocking a bank's access to its US domestic banks right now. You don't need to have a US dollar to do that because you have to access the US market right now through any kind of global transaction as a person or a company.

So no, dollarization doesn't give the US any more power than it already has.

Shem: One of the tie-in fears to the whole US power thing is that the US can weaponize the dollar. And to be honest, the conversation around the BRICS has finally reached the Caribbean with people going, "Maybe we could escape US influence and the US' ability to manipulate your economy by switching to a currency that everybody else is using like the BRICS."

Rasheed: But everyone else isn't using it. Because guess what? A BRICS currency doesn't exist. There's no BRICS currency. Never happened. It will never happen in any concrete way. And that's why the BRICS discussion is always so odd to me. There literally, literally, Shem is no BRICS currency.

What are we even talking about when people ask this question? It's a complete "Imagine if the world was-" Okay, but it isn't. As a Barbadian enterprise, your invoices for international trade are priced in US dollars. Your exports, and imports are priced in USD, and the correspondent banking you use to get money out of Barbados and any anywhere in the World is in US jurisdiction via US dollars. The reserve account of the Barbados Central Bank and the Barbados government is in Bank of America in US Dollars, in the US. This idea that you can somehow absolve yourself of US interaction is just a fairy tale. And the BRICS is just a new version of the fairytale.

It's not a valid argument at all.

Shem: So what about a regional currency? People don't seem to realize that even within the Caribbean trade with Trinidad and Tobago Jamaica, they're still using the US dollar. But sometimes they'll look at an example of a smaller block within the region, such as the EC, to justify us moving to something like a Caribbean dollar.

What's your opposition to that?

Rasheed: So when you are importing things into the Caribbean. Which you still have to do because unfortunately, small countries can't produce everything they need to survive. If you want salmon from Norway, you can't get it from Saint Lucia. If you want French wine you can't get it from Saint Vincent. You'll have to import, and the majority of imports are still going from outside the Caribbean and they'll be priced in US dollars.

So even if you have a regional currency like the Eastern Caribbean Currency Union, they still need to use USD for most of their goods. When they're buying goods from Panama, buying from the US, from China, no one in China wants Eastern Caribbean dollars. They want USD. So it is not actually a feasible option.

Many years ago, back in the 1990s, there was a plan to have a Caribbean currency, but that was just based on bad economics and it failed, you know? Many of the economists at that time actually have given up on that idea. Because they realised, "oh, you know what? "We actually have a common currency. It's called the US dollar."

Why create some new abstraction? That's all it would be. It's an abstraction of the USD. With some extra Central Bank layers and different regulations, it's not useful. So a common Caribbean currency or a common Caribbean sub-currency has no real practicality in the world.

Shem: And what about the cultural argument? We grew up with seeing Grantley Adams, Errol Barrow, all these icons of Barbadian history on the money. What happens to them? Some people think we lose a bit of our heritage if we give up the images of history, the images of culture that we have in the form of our money.

What do you think about that one?

Rasheed: When you go to Courts (a local furniture store) to buy a sofa and use your CIBC credit card, which national hero are you portraying?

Shem: Visa.

Rasheed: That's the answer. People make this argument, but they themselves primarily use debit cards or credit card bank transfers. So I'm like, okay. It's not a bad thing to say, but look into yourself, and tell me which currency or which form of money you use.

You use your credit card. So you already say "Grantley good luck, peace". Okay, let's just give some more freedom. Let's tell Grantley "Time well spent. I see your name on the airport as I leave to go to Miami. But we don't need to have it on a paper currency that we masquerade in the country. No, I think people make that point, but they themselves don't agree with what they're saying,

Shem: Rasheed, your answer was literally "Just search your heart. You know it means nothing. The same look that Barrow's giving you constantly when you spend that 50. That's what we're giving you right now."

Now finally let's look into how Barbados would undertake such a conversion.

How long would it take? How hard would it be? Would there be chaos? So if tomorrow we decided, "Right, let's pull the trigger on this. Let's go ahead and switch to the USD." What is the process?

Rasheed: Okay. People think it will take a long time or years. I think it'll take two days.

The government of Barbados in conjunction with the commercial bank and Central Bank will say, "Hey, on this particular day at midnight, we will divide all the bank accounts in the country by two." Why? Because Barbados has a fixed exchange rate for many years with the USD.

Legally speaking as per the Central Bank Act it's actually fixed to USD. Before it was actually fixed to gold. But they reformed the act under Auntie Mia, and it's 50 US cents to one Barbados dollar officially speaking.

So the Barbados Dollar only exists as a clone of the USD, even in our laws also. So what you do, you divide all the accounts in the country by two, and you are again 95% dollarized, and that's one computer operation, database operation. We are done, primarily speaking. The small extra percentage will be things like cash.

How would that happen? So Barbados has something called reserves.

Shem: It's the pile of US dollars that the government is sitting on, like the dragon in the Hobbit.

Rasheed: People think that. There is no pile because there are no dollars. It's just an account in a US Bank. So it's a number on a screen in Bank of America in the US that correlates to something called treasury bills from the US Treasury.

I think when the calculation was done, Barbados has about 300 million US dollars worth of bills, cash bills in the country at any moment in time. And our reserves in the US are about what, 2 billion or so?

A bit too high actually, but different conversation. So what you do, you just convert 300 or so million of that reserves into cash in the US and then have that cash shipped to Barbados. The same way you ship any kind of Barbados bills from Canada or England. And then you give it to the banks and as you go and deposit your USD cash into a bank account, the cash goes into the bank account as Barbados currency.

Again, it just is a number on the screen, so we're done. But if you go pull the cash out again, instead of giving you a Grantley or Errol, they'll give you a US 20 or whatever.

Shem: A Jackson, a Benjamin.

Rasheed: There you go. That could be a very slow process.

You could always say, "Barbados' based currency will be legal forever." But if you want to get the USD cash all the time, go to the bank and get out. For example, in El Salvador a country that is dollarized since 2001, 2002. They technically still have the domestic currency as legal tender. But the people just decide, "I actually prefer to have USD in my hand because it's more useful outside the country. It's more stable. I have more trust in it."

And it's also a thing Barbadians do. A Barbadian would say, "You know, we shouldn't have US dollars, we should keep our local currency." At the same time, they would try to get USD and put it under the mattress to be safe. That's true. My mother did the same thing.

Shem: Mine did too.

Rasheed: Exactly. So we say one thing and we do something else. Over time, as you deposit your money out and withdrawal from the banks, it would just be USD filtering through the system.

It could be a few months or so on, but that's kind of irrelevant because the bulk of dollarization happened months ago by just defining all the accounts by two in the country.

Shem: And finally the last smaller concern. What if we need more bills? Is it easy for a country to go, "Hey, US mint or treasury, we kind of need some more bills? Can we have some more?" Is that a thing that we can do? Have more sent over in case we need more circulation?

Rasheed: You just convert some of your reserves into cash and send it back. There's no restriction. See, America does not have counter controls.

So there's nothing actually keeping the system stuck. You can always have new bills if you want. Panama, which we're in currently has been dollarized for over a hundred years. Panama has a bigger economy than Barbados, magnitudes, bigger, more trade, more commerce, more buildings, more construction, more everything.

They never had to issue dollars.

Shem: Alright, now that we've gotten the objections outta the way, let's talk about a few of the benefits. Let's really bring it home and give a reason why we would want Barbados dollarized, not simply out of ease of use because the dollar is so ubiquitous. But why would a country like Barbados switch to the US dollar in the first place?

Rasheed: Freedom. That's the answer. Freedom as a Barbadian citizen, after working very hard, earning money in Barbados. The government tells you, "You are not allowed to do with your money while you please legally." So you work in a bank, you work in a restaurant, in Barbados and you want to send some money overseas to your family.

You want to buy some Amazon goods because you can't buy them here in Barbados. The government tells you, "Okay, if you do that, we're gonna tax you an extra 2%, plus extra VAT, plus the conversion rate not in your favor.

Also, make you beg us. To submit an online form to get some permission to actually access the foreign exchange that you worked a whole month for. I don't really see the point of that. Barbadians don't understand. It's actually not a normal thing. Here in Panama, if you want to buy something from Miami, you just buy it.

There is no government interaction at all. Barbadians have stock call syndrome. They think this is normal behavior. This is not normal behavior at all. The idea you have a limit, of 10,000 in Barbados, begging the bank for some more money.

Those things don't exist in Panama. That's not a concept. You can send it in, and out. So freedom for your own hard-earned money is actually the basic premise now.

Shem: So freedom. I'm all about freedom. But what benefit does it bring to the country as a whole?

Because we know that the Barbados government can use the Barbados dollar to do things it really shouldn't. Such as, make more of it outta thin air. Would switching to the US dollar stop that?

Rasheed: So this is the idea of fiscal credibility, fiscal responsibility. So right now, Barbados Central Bank again, and the government, same thing.

They would just create money based on nothing, which, has pros and cons. But in this case, they would say, "Okay, well we want to spend some more money." Or the biggest issue. "We want to pay more public wages, although we aren't actually earning more money." But they just create the money out of nothing and just give it to the people.

And then those people want to go and access USD, so you have a crunch and so on. Then you have inflation. If the Barbados government does not have access to creating Barbados is currency that means they have to be forced to be more prudent when it comes to government spending. Which on a whole could even mean less taxes for Barbadians.

Shem: Alright then, so what you're telling me is switch to the US dollar, freedom from my spending, responsible restrictions on government spending ... profit.

Rasheed: I always say Dollarization is not panacea for like perfect economics, but it's a very, very crucial aspect of doing good policy if you're a small open economy.

Shem: Alright then I think we've just about covered everything of course in the comment section of this video. Feel free to leave your questions and your comments and your scathing remarks on why we should be keeping Barrow on our all of our bills. You know, 'cause people do tend to hold him in some very high regard.

Rasheed: My comment is that if your only objection to Dollarization based on all the banks we discuss, is that I want to see Barrow once a year, I think we've won the argument.

Shem: Freedom. (throws pile of US one-dollar bills into the air)

Tune into more from the CPSI.

On the 2nd of January 2025 the Spanish government approved one of the most far reaching legal reforms of the last two centuries. After many years of attempts, the new law comes in the same year that Madrid will begin construction of its new City of Justice (La Ciudad de Justicia ), a massive complex set to occupy 470,000 square meters — making it the largest courthouse in the world. In this blog I will explain why the new law is such a big deal and explain why Madrid has chosen to invest so much to increase the efficiency of its judicial system.

First you need to understand some key details about the political-administrative structure of Spain. The state is divided into what are called Autonomous Communities (Las Comunidades Autónomas or CC.AA, for short), each with its own governmental assemblies and executives. There are 17 of these Autonomous Communities along with 2 small Autonomous Cities named Ceuta and Melilla, both of which are located with in land area of Morocco.

The Community of Madrid is divided into 179 municipalities. Everyone knows the City of Madrid but do not be confused by the naming duplication. The City of Madrid is just one of the 179 municipalities within the Community of Madrid.

The map below shows the City of Madrid in the center of the Community of Madrid.

As can be expected, there is a wide variation in population size between the municipalities within an Autonomous Community. On one hand the City of Madrid with a population of around 3.5 million residents is a single municipality. On the other hand, the Municipality of Madarcos only has around 50 residents.

In the administration of the judicial system, the basic unit of organization is called a judicial district (Partido Judicial). The municipalities of the Community of Madrid are grouped into 21 of these judicial districts.

The Municipality of Madarcos, mentioned previously, is 1 of the 42 municipalities that fall under the judicial district of Torrelaguna. Within this judicial district, the total population is around 33,257 residents. Perhaps unsurprisingly, the City of Madrid forms its own judicial district.

Now, what is strange about the judicial system of Spain is that each judicial district has their own sets of Courts of First Instance (Juzgados de Primera Instancia). Moreover, each of these courts only have a single judge — all functioning as discrete units, each with its own staff and resources.

Let’s break this down a bit more without getting too caught up in the organizational details. Each of the 21 judicial districts each have their own trail courts for family matters, small crimes, commercial matters and so on. So at a very minimum you would expect there to be 21 courts for family matters, 21 courts for commercial matters, and so on. But this is exacerbated by the fact that a “court” at this level has only 1 judge. If there was a “court” that had 7 judges then it would mean that a matter can be allocated to one of the 7 judges. But if a court only has 1 judge then you can see how everything can be extremely inefficient.

And shockingly this is the case. Because of this single-judge structure, the judicial districts together have 130 Courts of First Instance, 54 Criminal Courts (Juzgados de lo Penal), 34 Administrative Courts (Juzgados de lo Contencioso Administrativo), and so on. All of the different Autonomous Communities have a similar judicial organization.

This way of organization dates back to a law from 1870 when the system was first designed (Ley provisional sobre organización del Poder Judicial, de 15 de septiembre de 1870) and with some reforms made in 1985 (La Ley Orgánica 6/1985, de 1 de julio, del Poder Judicial). Even with the 1985 reforms the basic 19th century structure of first instance courts was kept. In any case, this is sufficient background detail.

In the last few years, the Government of the Community of Madrid, has been working to centralized the first instance courts in key locations to optimize of the delivery of justice.

One substantial improvement done by the Community of Madrid in 2019 was to organize 97 courts of first instance into three adjacent buildings. But this is just a part of the larger plan.

The further centralize the courts, the government of Madrid has approved plans to build a new judicial complex that will cluster all major court activities within the Community of Madrid. It has been dubbed the City of Justice. It will unify a total of 27 judicial headquarters now distributed throughout the city. Between 10 and 13 buildings will be built.

Currently, the largest courthouse in the world is Justice Palace in Istanbul at around 300,000 m2. Given the ambition of City of Justice to be around 470,000 m2 it will easily take the top spot.

The City of Justice was first envisioned in 2005 by the former President of Madrid Esperanza Aguirre (PP). But finally achieved Budget approvals by Isabel Díaz Ayuso (also from PP) and her absolute majority in the Madrid parliament. Ayuso has frequently emphasized that an efficient and independent judicial system the key to the liberal prosperity of Madrid (I discussed her on my podcast).

This amount of space is also 61% larger than the aggregate of all courts currently existing in Madrid. Also, the plan also includes additional land so the City of Justice can grow over the next 40 years to always be able to deliver services efficiently without being constrained by space. This is particularly interesting since the government of Madrid expects their population to steadily increase over that time. This is actually born out by recent data — mostly from Latin American immigration.

But something big just happened that will allow Madrid to further accelerate its plans to make its judicial system more efficient.

Right after the year began, on January 2 the national government approved a watershed reform of the judicial system. So comprehensive that I did not even think countries were still capable of getting these laws approved in a national parliament.

With the approval of LO 1/2025 (“on measures regarding the efficiency of the Public Justice Service”) the entire structure of single-judge courts that have specific legal foci that I explained above has been dissolved. They will be replaced by multi-judge courts with sections that have different specializations.

According to the new law each judicial district will have one Tribunal of First Instance (Tribunal de Instancia), which functions as a collegiate body containing multiple specialized sections. This represents a fundamental shift from individual judicial units to an integrated organizational model.

Moreover, the reform also introduces greater flexibility in territorial organization. While the previous system rigidly confined each court (Juzgado) to its designated territory, the new law allows sections of the Tribunal de Instancia to extend their jurisdiction beyond their judicial district, even across provincial boundaries (for Autonomous Communities with provinces) within the same Community High Court of Justice region. This flexibility enables more efficient resource allocation and specialized expertise sharing.

The new law affects the entire nation of Spain and not just Madrid. I have only focused on Madrid to give concrete examples.

Furthermore, the law provides sweeping reforms to enable the use of digitization of legal proceedings and alternative dispute resolutions (ADR). Even going so far as providing preferential tax treatment of awards that arise from ADR. Unfortunately, this quick blog cannot detail all of the great reforms within this law.

The digitization aspect is particularly exciting. It would be possible to have a smaller justice office in a more rural district that has an online interface with the main court complex, meaning that persons will not always have to travel long distances for court. Remember that Spain has many sparsely populated districts.

So, because of the new national judicial organization law, the City of Justice in Madrid will be able to double down on its judicial clustering by enabling an unprecedented freedom of optimizing legal and administrative resources across courts of first instance to make full use of economies of agglomeration.

Yet again, this is how Madrid wins.

Subscribe now

Madrid is the only former empire city that has retained its cultural, political, and ideological dominance. It is the only place you can go to experience the Hispanic world at once. Politicians in Latin America visit Madrid to campaign. Political parties in Spain, all headquartered in Madrid, have branches across Latin America. I find that if you visit Madrid for the first time it can often be overwhelming to the point of paralysis.

Since I live in Madrid I’m going to list some of my favorite spots that I usually go to. Friends don’t let friends eat in Plaza Mayor. If you, like me, actually enjoy going to public lectures and art galleries on your vacation then these recommendations are for you. This is aimed at people who want to experience more of the deepness of Madrid on a short trip — say around four days.

The Golden Triangle of Art (Prado, Thyssen, Reina Sofía)

This is the nickname of an area of Madrid where you find the three most famous art museums in Spain: Museo Nacional del Prado, Thyssen-Bornemisza Museum, and Museo Nacional Centro de Arte Reina Sofía. All of them are a pleasant walking distance from each other. While all have massive exhibits (each with many thousands of pieces) I recommend visiting all in one day as they act as context fillers for each other. In one day of indulgence you will see Goya, Velázquez, Holbein, Cranach, Picasso, Dalí, Rafael, Ribera, Murillo, Joan Miró, and literally hundreds more. I recommend starting with Thyssen, then Prado, and finish at Reina Sofía. Pace yourself.

Bosco de Lobos

You can walk here from the Golden Art Triangle. This is one of my favorite spots for Italian food in Madrid. Lunch or dinner. It is located within the College of Architects of Madrid. Given the intense dining out culture of Madrid I strongly recommend making a reservation in advance. Also keep in mind, that in Spain almost no restaurants are open between the hours of 4pm and 8pm — and Spaniards typically start dinner around 9:30pm.

Fundación Juan March

In a deceptively unimposing building Juan March specializes in contemporary Spanish abstract art. But beyond the art exhibitions which frequently change, their building in Madrid also hosts plenty of exceptional musical concerts throughout the year as well as fantastic public lectures on varied topics from medieval art to German musicology to economic history. Everything is also broadcast on their YouTube channel. Also, if you are looking for a place to just sit and read or chat with a friend about the best Dalí painting, the Juan March building has a nice café downstairs and in the garden. It’s walking distance from my house so I usually visit here often. All exhibitions, showcases and lectures are completely free. Do explore their website too — lots of free digital archives.

Teatros del Canal

Outside the tourist core of the city there is massive complex of different performance halls - Red hall, black hall, green hall, crystal hall, etc. From the pictures I can let you guess where these names originate. I mostly go here to watch dance performances. This is because the Centro Coreográfico Canal is also located there. The performance schedule is surprisingly packed - but with so many halls you would expect that! It is not just dance, though, you can find performances of opera, flamenco, and of course chamber music.

Roostiq Madrid

Recommended for dinner. They focus on high quality farm to table meat. Make sure to start with the torreznos (an elevated version of the tradition Spanish pork snack). You must finish with their Basque Cheesecake. I am not being hyperbolic when I say this will be the best cheesecake of your life. I have taken friends here and some even went as far as saying they can no longer eat another cheesecake.

Sala Equis

This is a fun bar and hangout spot that used to be an erotic cinema. But it still shows movies — the more tame kind, with a focus on the indie variety.

Fundación Rafael del Pino

One of my favorite auditoriums for public lectures in the city. They specialize in broadly classical liberalism themes. If you want an engaging session on Spanish politics from a more empirically driven center-right perspective this is often the best place to go. Usually you just have to email to Foundation to signal your attendance for them to put you on the guest list — and the sessions are free. Most of the events are in Spanish but they also have invited speakers in English. I saw Deirdre McCloskey there last year. In fact, Bryan Caplan from George Mason University will be giving a lecture there in March.

La Casa de la Arquitectura

Spain is not just Gaudí. The architectural beauty of Madrid is one of the most commented on features of the city. This new space is one of the very few that opened after I moved to Madrid. The core exhibit titled La construcción de un país (Construction of a Country) has a focus on architectural projects in Spain since the end of the dictatorship (roughly post 1978) until the present. It features around 60 works. They also have a video podcast (with some recordings opened to the public) where they discuss the more philosophical aspects of architecture in Spain.

Teatro Real

This is where you go to experience opera on a grand stage. They do the standard repertoire as well as more contemporary works like Nixon in China. Once a year they host “the week of opera” where they have screenings and performances outside in the plaza. A fun point I’ll mention here is that there is a metro stop next to Teatro Real named Ópera and in the station they usually play opera music. The space also has shows on ballet, flamenco and chamber music in smaller rooms. My first opera for 2025, here in a couple weeks, will be Idomeneo.

Auditorio Nacional de Música

I am an unabashed classical music enthusiast who lives in walking distance from the main symphonic hall in Madrid. Of course I perhaps spend more time here than I care to admit. But it is worth it. Sala Sinfónica is the big hall for larger performances. There is also Sala de Cámara for chamber music. Unlike other symphony hall elsewhere, almost every day there is something being performed, sometimes multiple per day — many of them free. The most popular performance series is organized by Ibermúsica. Every season they bring renowned international orchestras, soloists and conductors. These shows are unfortunately usually sold out well in advance of the event. How? Because people like me buy season tickets to the entire series. I’ll be seeing Dudamel and Mäkelä here this year as part of Ibermúsica.

Teatro de la Zarzuela

In simple rough terms a Zarzuela is the Spanish equivalent of a German Singspiel. The genre is hardly known outside of Spain and parts of Latin America. It focuses on folk themes of Spanish culture. Substantial aspects of it originated from Madrid and Teatro de la Zarzuela has focused on these performances since the 1850s. Indeed, I was not aware of this genre before I moved to Madrid but I have come to deeply enjoy it — especially if you have the context.

Coque

Ran by the three Sandoval brothers, it is a Madrileño restaurant to its core. It has two Michelin Stars and three Repsol Soles. They go deep into gastro research to a point of obsession. For example, with the Institute of Rural, Agricultural and Food Research the worked on recovery of native fruits and vegetables of the community of Madrid from the study of their DNA. Or in collaborating with the Higher Center for Scientific Research they developed “egg hydrolysis” techniques to obtain egg products with unique textures such as a fresh cheese from the egg protein. After being so disappointed in the blandness of many so-called high dining, Coque rejuvenates you. It lives up to the idea that I first heard in a podcast with Tyler Cowen and Mark Miller that food is the ultimate intellectual experience.

Some Quick Notes

1. You do not need to speak Spanish to enjoy Madrid. But if you speak Spanish you will get a whole lot more out of it.

2. Do not visit during August. I repeat: do not visit during August. Not only is it scorching hot but essentially everything is closed for summer break.

3. The metro system is excellent. There is great article by Works in Progress on why. But it is also an extremely walkable city. I’ve not seen my metro card in weeks.

4. I’ll probably add more recommendations to this list if there is demand for that. There is no shortage of intellectual activities in Madrid.

Subscribe now

Este ha sido el primer año completo que he vivido en Madrid. A principios de 2024, tomé la decisión de obligarme a mejorar mi comprensión del castellano. En esencia, esto significó una inmersión extrema. Asistí a un curso intensivo de nivel avanzado que consistía en seis horas diarias entre semana durante dos meses, y encontré un profesor particular para dar clases todos los días de la semana. Convencí a mi marido panameño para que me hablara principalmente en castellano. Además de todo esto, decidí volver a la universidad para estudiar derecho, completamente en castellano. Como consecuencia de esta inmersión tan disparatada, prácticamente todo lo que he leído este año ha sido en castellano.

Esto fue extremadamente frustrante dado que antes me enorgullecía de mi capacidad para leer rápidamente. Pero en castellano me lleva considerablemente más tiempo leer la misma cantidad de texto. Día tras día, me obligaba a traducir ensayos sobre la dolarización, estudiar sentencias del Tribunal Constitucional, y escuchar conferencias y debates en YouTube sobre las interpretaciones jurídicas del Artículo 168 de la Constitución española, entre otras cosas. No fue para nada una experiencia agradable.

Junto con todos mis viajes, el resultado fue que no alcancé la mayoría de mis objetivos de escritura. Espero redoblar mis esfuerzos en la escritura en 2025.

El descubrimiento más importante para mí este año fue la vasta, profunda y rica literatura en castellano centrada en las filosofías del liberalismo. Antes desconocía por completo esta rama del liberalismo. La mayor parte de esta literatura nunca ha sido traducida al inglés.

• "La libertad es respeto recíproco" de Alberto Benegas Lynch (h)

• “Autopsia del socialismo” de Alberto Benegas Lynch (h) y Gustavo D. Perednik

• “La trinchera de letras: la batalla cultural contra la libertad y el conocimiento” de Juan Soto Ivars

• “La llamada de la tribu” de Mario Vargas Llosa

• “La rebelión de las masas” de José Ortega y Gasset

• “Liberalismo: una nueva y profunda evaluación del pensamiento liberal” de Pascal Salin

• “La casa del ahorcado: cómo el tabú asfixia la democracia occidental” de Juan Soto Ivars

• “Lecturas de economía política” de Jesús Huerta de Soto

• “La cultura de la libertad: el poder transformador del liberalismo” de Carlos Rodríguez Braun

• “Libertad o igualdad: por qué el desarrollo del capitalismo social es la única solución a los retos del nuevo milenio” de Daniel Lacalle

• “Por qué soy liberal: o por qué el liberalismo es la mejor forma de garantizar el progreso de todos los ciudadanos” de Diego Sánchez de la Cruz

• “Borges y la economía” de Martín Krause

• “Una revolución liberal para españa: anatomía de un país libre y próspero” de Juan Ramón Rallo

• “Liberalismo a la madrileña” de Diego Sánchez de la Cruz

La siguiente parte significativa de mis lecturas de este año se centró en la política, la historia y la economía españolas. Estos fueron los libros que más disfruté o que me parecieron más interesantes para entender el contexto.

• “Me gusta la fruta: la historia de cómo Isabel Díaz Ayuso se erigió en bastión del antisanchismo y cambió a la derecha española para siempre” de Cristian Campos [Ayuso es miembro del Partido Popular y es la actual Presidenta de la Comunidad de Madrid. El PP es considerado como un partido de centro-derecha en España]

• “Soberanía: por qué la Nación es valiosa y merece la pena defenderla” de Jorge Buxadé [Es diputado en el Parlamento Europeo por Vox desde 2019. Vox es caracterizado como un partido de ultraderecha en España.]

• “XIII: la otra familia del Rey” de Lucas Montojo Sánchez

• “Contra la mayoría: cómo la democracia genera la tiranía de la masa” de Jano García

• “El camino hacia la dictadura de Sánchez” de Federico Jiménez Losantos

• ‘Madrid: A New Biography’ by Luke Stegemann

• “La justicia en el Estado de partidos: dependencia político-judicial española desde la Transición hasta Ruiz Gallardón” de Pedro M. González

• ‘A Millennial View of Spain’s Development: Essays in Economic History” by Leandro Prados de la Escosura [Si alguien que está leyendo esto lo conoce, por favor háganmelo saber, me gustaría entrevistarlo en mi podcast]

• ‘Kingdoms of Faith: A New History of Islamic Spain’ by Brian Catlos

• “Extremadura: afán de miseria” de Víctor Chamorro

Como mencioné anteriormente, comencé un grado en derecho en España. Debido a esto, he tenido que leer muchos libros sobre historia constitucional. En realidad no necesitaba leer tantos libros sobre estos temas, pero como no crecí aquí, sentí que necesitaba más contexto. Verán, en España gran parte del debate político gira alrededor de la Constitución de 1978. Me parece que incluso más que en los Estados Unidos ocurre este fenómeno. Esto se debe en gran parte a la historia reciente de gobierno autoritario que terminó solamente en 1975 cuando murió el dictador Franco, y comenzó la transición hacia el actual estado democrático — conocida en España como "la Transición".

Probablemente escribiré más sobre esto el próximo año. Mientras tanto, estos libros me resultaron sumamente interesantes.

• “Inédito sobre la Constitución de 1978” de Manuel García-Pelayo

• “El guionista de la Transición: Torcuato Fernández-Miranda, el profesor del Rey” de Juan Fernández-Miranda

• “Teoría de la constitución” de Carl Schmitt [Sorprendentemente, muy relevante para la teoría jurídica española]

• “Por un Estado de derecho” de José María Gil Robles

• “Teoría pura de la República” de Antonio García-Trevijano [García-Trevijano es un teórico fundamental para la Nueva Derecha española, llegando incluso a influir en el líder de Vox.]

En este blog escribo mucho sobre el revisionismo de la historia imperial, particularmente sobre cómo la administración imperial británica hizo mucho bien para el imperio, específicamente en el Caribe. Me sorprende gratamente que exista una literatura paralela en castellano sobre los beneficios que el Imperio Español aportó al mundo, con un fuerte énfasis en las Américas.

• “Colonias para después de un imperio” de Josep Maria Fradera

• “Lo que América le debe a España: El legado español en el Nuevo Mundo” de Marcelo Gullo Omodeo

• “La nación imperial 1750-1918” de Josep Maria Fradera [Solo he leído aproximadamente el 20% de este libro. Tiene alrededor de 1300 páginas, y es verdaderamente una obra magistral. Me llevará bastante tiempo terminarlo. Pero hasta ahora es extraordinariamente valioso.]

• “El Imperio Británico” de Manuel García-Pelayo [García-Pelayo publicó esta obra en 1945. Años después, en 1980, se convertiría en el primer Presidente del Tribunal Constitucional de España.]

También he leído bastante sobre la política argentina este año. Pero eso lo reservaré para otro ensayo.

Algunos otros libros que disfruté este año pero que no encajan en las categorías anteriores.

• “Panamá: corazón del imperio español” de Juan Ángel López Díaz

• “Los diálogos” de Jorge Luis Borges y Osvaldo Ferrari

• “Mahler” de José Luis Pérez de Arteaga

• A Counter-History of French Colonization by Driss Ghali

• The First Global Village: How Portugal Changed the World by Martin Page

• “La deshumanización del arte e ideas sobre la novela” de José Ortega y Gasset

Una última cosa: no es un libro, pero recomiendo encarecidamente la miniserie argentina “Nada”. Es la serie más divertida que he visto en mucho tiempo.

Es algo extraño de admitir, pero me propongo dedicar considerablemente menos tiempo a la lectura el próximo año. Retomaré mis proyectos de escritura estancados e impulsaré otros nuevos.

Subscribe now

If you start by thinking about the architecture the Louvre Abu Dhabi. It is designed to pay homage to the ocean.

It can be approached by land or sea. The French architect, Jean Nouvel, aimed to design a space that could encompass the grand theme of a palace of civilizations distributed by time and place.

In an interview, Nouvel explained his thinking behind the design:

When I started working on this project, I did not know it would be the Louvre, but that it would become a museum of civilizations—the plural of this word is important. I wanted a strong symbol, an immediate dialogue, a powerful spiritual dimension.

I then wanted an architecture that resonates with the history of the place by providing a direct echo in Arab architecture, but one that equally addresses universality. It is this synthesis that must be found.

And because architecture is an art, it would be quite mysterious, alluring enough to tempt the public to get lost and to go seek his or her own answers.

The centrality of water immediately reminds me of a paritcular philosophical concept of the Barbadian poet Kamau Brathwaite known as Tidalectics. The details of this would require a deep diversion into Hegelian dialects but this is not the place for that. The core idea I want to bring up here of Tidalectics is the poetic notion of how the ocean transfers human history across the globe. And therefore if you give prominence to the ocean in an artistic work, then you give a sense of universality to humanity.

So then, just from the building we already get a sense of the main theme being curated.

The permanent exhibit is even more explicit.

The prevailing theme is pluralism — a hat tip towards Western themes of Liberalism.

Showing that human civilizations across time and space have their own unique majesty but also there is a meta-majesty that comes through when you think of modern humans being able to inhabit and benefit from the confluence and knowledge that our different cultures can offer.

You see works from European, Chinese, Malian, and Mexican civilizations juxtaposed together. It forces you to think about the universality of humanity rather than the distinction of separate geographies.

Religion is also brought into this universal theme. Many rare and striking works of Christianity, Judaism, and Islam are brought together to show the theological congruence of the three. They even highlight a single category called Ahl al-Kitāb (People of the Book).

It is not surprising that religion takes a center stage in an important artistic institution in Abu Dhabi. But the way in which Christianity and others are given such prominence was a pleasant surprise to me. You would be hard pressed to find such expressions of religious primary and universality in major art institutions in the West today.

It shows that the curators were encouraged to be serious about universality. Throughout the museum there are these large windows that show the ocean around the museum with quotes etched on them. One that stood out to me that I thought truly represents the ambition of this gallery: “Art is the shortest path from man to man”.

There was even a section highlighting the importance of the founding of the United States of America, via the boldness and strength of a portrait of George Washington. (Random aside: the only country Washington traveled to outside of North America was Barbados - where I’m from.)

There is of course a lot more I could show and talk about from the exhibits. But I will highlight just one more. The final exhibit.

When leaving the permanent exhibition you are confronted with perhaps one of the best art-world pairings I have seen in a while - I audibly gasped when I saw it.

Since we should all be familiar with the work of Cy Twombly, I don’t have to explain it much here. But juxtaposing his abstracted art-writing with 4000 year old figurative wall engravings from Arabian shepherds is perhaps the apex of what an art curator can do. How can you not be optimistic about the future when you leave the exhibition?

V.S Naipaul would perhaps be confused to see this in the Middle East — but he would surely smiling.

Subscribe now

In my mental model of urban experience, I like to think of cities as having a spectrum of Deepness. Cities with abundantly developed cultural venues and highly talented people have a higher level of deepness. Generally, I think a highly developed and robust cultural scene (broadly conceived) is a secondary effect of decent economic prospects.

To be more explicit:

1. A restaurant scene where chefs are praised for being experimental.

2. A performance scene so overflowing with talent that it is possible to attend several world-class quality classical music shows every night of the week if you want to.

3. Numerous well-funded multi-story art institutions (galleries, museums, etc.) exist.

4. There is a density of people large enough that at any time of the night, there is a buzz of some commercial (not simply partying) activity.

5. A city that takes up disproportionate space in foreign art.

6. Globalized (transnational), diverse cultures are accessible in the fullness of their expressions.

There are a few cities that have a high level of Deepness. I have been to many cities that I expected to have a high level of Deepness but instead, I was really disappointed in this element. Dublin is a striking example of this failing.

If I were to make a Top Five list based on places I have lived in or traveled to, it would be this:

1. London

2. New York

3. Madrid

4. Tokyo

5. Mexico City

If I were to create a Top Ten list, I would easily include Manila and Paris. With some reservations, I might also include Shanghai.

Last week, I visited Buenos Aires, Argentina, for the first time, and I was surprised how easily it fit into my Top Ten list of City Deepness. I will write more about Buenos Aires soon.

How deep do you think your city is, really?

Leave a comment

Note: I used to write a fair amount about Cambodia - long story. I wrote this short piece in 2018 but decided to republish it here. I also wrote a book chapter on monetary policy in Cambodia. It is not commonly known that Cambodia is de facto dollarized. I’ll be writing more about dollarization in Cambodia in the near future.

In a recent opinion article, Nobel Prize Economist Robert Shiller - whom I deeply admire- wrote that “eliminating money was impossible to do” and no Communist state was ever successful at abolishing money. He is uncharacteristically wrong on both counts. During the three years, eight months, and twenty days of anguish and calamity that characterized the demented regime of the Khmer Rouge in Cambodia, the Communist leadership demolished the Central Bank with explosives and abolished all use of money.

I met Bou Meng in Phnom Penh on a recent visit. He is a former Cambodian prisoner of the Khmer Rouge in S-21, the notorious torture center - now a genocide museum. When asked about this period, he remembers Riel banknotes “scattered on the ground like pieces of litter.”  

Subscribe now

Cambodia is the only country in the modern era to have had money, had that money abolished, and then had money reinstated. Shiller, in the article mentioned previously, mentioned—without detail—that Marxist Communism supported the idea of societies without money. This, of course, is correct. But I should emphasize that Marx went beyond just supporting the abolition of money. It was central to his philosophy. 

The Cambodian experience of a society without money has been discussed before here and here. But these authors only mention in passing that the leaders of the Khmer Rouge, namely Saloth Sar (Pol Pot), Son Sen, Khieu Samphan, and others, potentially sought to follow strict Marxist doctrine regarding money, which led to the abolition decision. They did not explicate exactly what the Marxist doctrine is and why it was considered so integral to a strict and absolute application of Communism. In this blog, I shall offer an explanation of the Marxist origins of the Khmer Rouge’s non-money policy.

The leaders of Democratic Kampuchea became devout Marxists after ingesting the works of Marx and Mao while they were in their early twenties at a university in Paris. The young leaders were among the first Cambodians to go to Europe for higher education. During their time at university, while being taught about Marxism by their professors, Pol Pot and Samphan became active members of the French communist party since the French communists, at that time, supported an independent Cambodia. 

Samphan, who later became Head of State during the Khmer Rouge regime, wrote his PhD dissertation on applying Marxist economic theory to specific problems of Cambodia while at the University of Paris. He argued that Cambodia was being exploited by capitalist countries like France. This fueled Cambodia’s dependency on France since its products were exported to France, and the local economy did not have the ability to grow in a significant way. Samphan argued for an “inward focused” development policy for Cambodia; meaning that the country should be able to become self-sufficient if it cuts ties with capitalist countries. This was the economic thinking that was present in the Khmer Rouge leadership from early on.

When they ultimately gained power after seizing control of Phnom Penh from the Lon Nol regime - after Lon Nol completed a coup against Prince Sihanouk - the Khmer Rouge wanted to show the world, but primarily the Soviet Union and China, that the little country of Cambodia could be the world’s purist site of Socialism. 

Pol Pot, according to Sheridan Prasso, was very critical of those larger nations for deviating from their Marxist ideals:

Looking at Socialist countries that have had their evolutions already and examine their ways of living, we see that there is collectivism, but not in ways of living, which remain individualistic in many cases. For example… [the Chinese] still have monthly salaries; they still have money to spend. In this way, every person thinks only of saving money to spend on food to eat his fill, to buy clothing and so on…. Standing on these observations, we will not follow this path at all. We will follow the collective path to Socialism.

Mao Zedong had considered abolishing money in China during the Great Leap Forward but did not do so because of the potential for social upheaval. Similarly, in the Soviet Union, Stalin regarded the abolition of money as a kind of deviation from the revolution.[1] In both instances, the bastions of Socialism only flirted with the Marxist principle of a moneyless society, but neither of them concretely implemented that policy.  

Since the Khmer Rouge did abolish money, the question may become: Were they the ones to strictly follow Marxism? Or, in other words, was Democratic Kampuchea the only true Marxist state? The answer to this requires looking at what Marx thought about money and why it was central to his socialist principles.

It may seem obvious to search Das Kapital for Marx’s ideas on money, but I think those ideas are more explicit in his earlier works that build up to Das Kapital. Marx’s first concrete treatment of the money question was made in Grundrisse der Kritik der Politischen Okonomie (Fundamentals of Political Economy Criticism), or simply Grundrisse, 1858. And earlier still did Marx begin to show his anti-money philosophy in a short essay he wrote in 1844 titled ‘The Power of Money.’

However, to understand Marx’s view of money, it is necessary to understand that labor was the core of human life for Marx. His oft-maligned - and rightly so - labor theory of value claims that the products of human labor - commodities - do not in themselves have real value. Commodities only derive value from the labor that goes into their production. However, per Marx’s view, in capitalist societies, people tend to believe that commodities themselves have value while disregarding the value of human labor.

If people subjugate labor to commodities, human life (“Gattungswesen”) itself is subjugated to commodities. He considered this a perversion of human relationships since it obscures the real essence of society. In Marx's worldview, capitalists aim for the production of commodities. That is why those capitalists divide people into cogs of the grand machine of capitalism. That division of labor was a curse brought upon humans only to optimize the efficiency of commodities production. 

The “working class” was the means of the capitalists to further their wealth. Marx then claims that people began to forget that their labor produces true value. This amnesia is caused by the tendency to price commodities and exchange them for other commodities using money. Money places an exchange value on commodities that is too far abstracted away from the human labor (the “true value”) that went into these commodities, leading to a persistent dilution of the value of human labor. 

Marx saw money as a tool of distortion and separation. He argued that a person’s individual abilities, skills, and the rewards they gain from meaningfully contributing to society can be artificially altered because he can use money to gain things that he may not deserve by his own merits or his social relationships with other men. 

Money implies the separation between the value of things and their substance. Money is originally the representative of all values; in practice this situation is inverted, all real products and labours become the representative of money. [Grundrisse]

When I read these statements from Marx, they always remind me of the Christian theological doctrine of the demon. The term demon is an adjustment of the Latin daemon, which comes from the Greek daimon, originating from Proto-Indo-European dai-mon (“to divider”) of the root da (“to divide”). In the early Church, and still present in Biblical exegesis, particularly reading Paul’s letters to the Romans, the demon symbolizes, and is the root source of, separation: man from man, man from nature, and ultimately man from God. 

It seems that Marx divorced the concept of separation from demons and wedded it to money. All of the human failings that Christianity attributes to demons, Marx attributes to money. 

Marx contends that without money, people would need to cultivate “real” attributes in themselves instead of “merely” buying them. If money can bypass some personal failing, then this is a perversion of society because it distorts human relationships. 

“Do not I, who thanks to money am capable of all that the human heart longs for, possess all human capacities” Does not my money, therefore, transform all my incapacities into their contrary?.” (Manuscripts, 1844)

From here, Marx used this curious “rationalization” to propose that money is the ultimate agent of separation in society:

“If money is the bond binding me to human life, binding society to me, connecting me with nature and man, is not money the bond of all bonds? Can it not dissolve and bind all ties? Is it not, therefore, also the universal agent of separation?”

For Marx, money is de-monized. There can be no true and pure Socialist nation without the abolition of money. In quoting Boisguillebert in Grundrisse, Marx proclaimed t“money is the hangman of all things, the moloch to whom everything must be sacrificed, the despot of commodities.” Money was not a by-the-way contention of Marx; it was fundamental, if not central, to his entire critique of the capitalist mode of production.

Pol Pot understood this. He wanted to build a society of such pure Socialism that people worldwide would pilgrimage to Cambodia to see the reality of an ideal Marxist society. The decision to abolish money may have been the root of many of the Khmer Rouge’s evils. Without money and effective trade, there is no possible freedom. 

Phillip Short has made the point that even in North Korea, people had little money; they were paid wages. They were able to retain some choice as to how to manage their life; though how little choice it was. But that minuscule area of free choice - buying something for your children to eat - did not exist anywhere in Cambodia. Pol Pot succeeded in what other Marxist leaders did not dare do. 

Cambodia had no money, private property, or trade during the Democratic Kampuchea period. This is almost wholly unknown to most Western-trained Economists. The rationale for this result was not a deviation from Marxism but rather the strict application of its elements. 

Notes:
[1] Prasso, Sheridan T. “Money and Monetary Policy in the Soviet Union, 1945-1964.”

Subscribe now