Counterpoint to Martin Barnes' Theory ''

Money makes the world go round," went the song from The Threepenny Opera and it does. But the theory of money is often misunderstood. Many of us think of money as a thing, as a constant, as capital, as something that can be preserved. We forget that money is not a thing. It is a promise a promise amid a chain of other promises. And if any part of that chain breaks and cannot be replaced by some stronger action or force, or replaced within the chain itself, then all the promises are broken. Money is now shrinking on a global basis, and shrinking very drastically because we are doubtful that the promises can be kept.

Old ideas are abandoned only when they have proven faulty, and surely many of the premises of the international monetary system have given a resounding signal that they are no good. Despite the work and the money spent in studying global economics, we know very little. Largely, we are studying old, outmoded precepts. We can do no harm by accepting the challenge to use complexity to find new ones. When we incorporate the principles of complexity, we have a chance, just a chance, to understand this adaptive world better.

For example, the conventional IMF view of development says that sound policies tight money, balanced budgets, flexible labor markets will attract capital, boost exports and help promote non-inflationary economic growth. Indeed, much of the work of the IMF is offering macroeconomic policy advice that politicians can sell as their own, and promoting microeconomic reforms that might otherwise be politically unacceptable. A complexity view, in contrast, suggests that economies are not necessarily homogeneous and that growth can come in many forms: through internal demand as in China as well as through exports as in the Asian tigers prior to the crisis.

There is an idea on the part of developing countries that prescribed behavior democracy, human rights, environmental concerns will lead to cheap, long-term money. It is quite possible that the advice of the post-war period for development of war-ravaged areas was good for the early days of developing markets, coupled with large amounts of money when none other was available. But it may be that growth, at whatever cost, is more necessary. And post-war Japan under General MacArthur and Chile under Pinochet were hardly paragons of democratic virtue. The advice prescription from complexity is to adapt to the times.

The financial collapse in Russia has further lessons. The IMF has come to be viewed as global lender of last resort during a liquidity crunch, though this role was not spelled out at Bretton Woods. And the crisis has shown the institution to be no longer effective on the global scene. It is out of money, with the US Congress, among others, refusing to give it more, and it is unable to stop the flow of crisis from Asia to Japan to Russia, potentially back to China, Eastern Europe, and maybe even back to the United States. The system is broken and it seems unlikely that we can fix it at the same time as we are putting out fires. Building a new "international financial architecture" is a global issue and it will take a global