To pursue this notion of 'value' I have followed the politico-economic 'trajectory' of 'capital' from its objectified phase (industrial capital) to its 'liquid' phase as 'finance capital' and to its need for MOBILITY, as 'capital flows', across national boundaries. In its 'flight' from country to country and currency to currency, finance capital tends..."to vote with its feet". In other words NOT ONLY does finance capital go where 'investment' or 'profit' opportunities are, BUT ALSO it penalises those countries or nation-states that offer the less favourable conditions for capital accumulation.
AS A RESULT, freedom of capital movement allows capital TO UNDERMINE individual nation-states and to limit their political autonomy and power. Finance capital has maximum leverage in a regime of fixed exchange rates, because its 'flight' forces nation-states into fiscal contraction with immediate consequences for employment, wages and growth.
THIS is what happened under the Gold Dollar Exchange Standard of fixed exchange rates erected at "Bretton Woods". This system collapsed because the ability of the US to meet its burgeoning deficits by printing dollars ("it's our currency and YOUR problem") meant that other participants (Europe and Japan) were left with imported inflation.
It was the collapse of 'Bretton Woods' in 1971 that resulted in a new regime of flexible exchange rates occasioned by violent 'finance-capital' speculative movements of 'hot money' that demolished fixed exchange rates whose RIGIDITY did not allow 'nation-states' to adopt flexible economic policies within their national boundaries.
AND HERE IS THE CRUNCH! The collapse of fixed exchange rates - that is, the fixed ratio of exchange between CURRENCIES - raised the entire question of whether the NATIONAL TERRITORIES over which 'nation-states' exercised 'sovereignty' through their 'currencies'....were 'OPTIMAL' in terms of the POLITICO-ECONOMIC EFFICACY or APPROPRIATENESS of national economic policies....in the face of "hot money" capital flows and 'speculation' against those currencies!!
To make this all-important point EXPLICIT, the question arose of whether 'nation-states' ought not to RE-DRAW THEIR BOUNDARIES to avoid monetary and financial crises!!
And THIS is where Robert Mundell (with timing and geniality reminiscent of Keynes) came up with his epochal studies on "optimal currency areas" (OCAs). Mundell's theoretical reflection was the most insightful, genial and supreme monument to the newly-asserted POWER of "financial markets"....TO DEMAND NEW BOUNDARIES FOR NATION-STATES, that is to say, TO DETERMINE THE FORM OF POLITICAL COMMAND OVER FORMERLY 'NATIONAL' TERRITORIES!!
I AM SURE YOU WILL ALL(!!) AGREE that IF this thesis is CORRECT or merely plausible, it revolutionises the entire way we interpret capital flows or financial markets! I will continue with a brief conclusive reflection on OCAs and "international co-ordination" in my final contribution when I will attempt to link all this back to....the beginning. And 'the beginning', of course, is always...VALUE.