Race to the Bottom

"Today we see considerations of the value of money driving all other considerations into the background in both domestic and international economic policy. We are not very far now from a state of affairs in which 'economic policy' is primarily understood to mean the question of influencing the purchasing power of money. Are we to maintain the present gold-content of the currency unit, or are we to go over to a lower gold-content? That is the question that forms the principal issue nowadays in the economic policies of all European and American countries. Perhaps we are already in the midst of a race to reduce the gold-content of the currency unit with the object of obtaining transitory advantages (which, moreover, are based on self-deception) in the commercial war which the nations of the civilized world have been waging for decades with increasing acrimony, and with disastrous effects upon the welfare of their subjects." - (Source: Ludwig von Mises, The Theory of Money and Credit, 1953, p.18) 

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In today's text, Ludwig von Mises mentioned a kind of "race" and "war" related to monetary system. I think such race and war did not stop in his time, but have been continuing to the 21st century. They might have changed in external forms, but the susbtance remains the same. I see the relevance of the text in relation to a popular idea in our time, the reality of the so-called "race to the bottom". 

Today, the concept of race to the bottom is understood in different ways. In Financial Times, it is defined as:

"The situation in which companies and countries try to compete with each other by cutting wages and living standards for workers, and the production of goods is moved to the place where the wages are lowest and the workers have the fewest rights."

This is not the kind of race I see in reading Mises' text. The race that Financial Times describes pertains to a situation related to competition, the reduction of "wages and living standards of workers", and the transfer of goods and services to areas "where the wages are lowest and the workers have the fewer rights." To me, such definition paints a negative impression of those who are perceived to have authority in reducing the salary and the living standards of workers. The definition fails to account the source of the reduction of wage and living standard, which the Mises' text can provide. 

Another definition of "race to the bottom" is given by Wikipedia:

"The race to the bottom is a socio-economic phenomenon in which governments deregulate the business environment or taxes in order to attract or retain economic activity in their jurisdictions, resulting in lower wages, worse working conditions and fewer environmental protections. An outcome of globalization and free trade, the phenomenon may occur when competition increases between geographic areas over a particular sector of trade and production." 

In this definition, Wikipedia is more specific than the Financial Times in identifying the kind of situation where this race is taking place. Wikipedia is clear in describing this race as a "a socio-economic phenomenon" and adds four more ideas to competition, lower wages and "worse working conditions". These are "deregulation", "fewer environmental protections", "globalization", and "free trade". Again, this definition fails to explain the root cause of lower wages and worse working conditions. 

The above definitions are consistent with the dominant intellectual framework in our time, which is anti-free market at its core. In the case of our text, the kind of race Mises was describing was related to the reduction of "the gold-content of the currency unit." We do not have this kind of race in our time for currency these days are no longer connected to gold. What nations are doing now is they are competing with each other in devaluing their own currencies. And since nothing backs up these currencies except the governments themselves, our race at present is far worse than Mises' time. 

Mises saw that during his time the act of nations to race with each other in reducing the gold-content of currency was economically disastrous. Today, since all currencies are no longer connected to gold, would it not be logical to say that the continuation of the existing monetary system is more economically disastrous? 

Nations pursued the above race to attain transitory advantages. They include boosting the export industry, restricting import of foreign goods, easing the financial burden of local companies with big debts, preventing the fall of wages, and maintaining the prices of goods and services. For Ludwig von Mises, this pursuit is based on self-deception for in reality by doing this, nations are engaged in "commercial war," which is economically disastrous to their citizens.