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What good is money? My own thoughts about money are hopelessly contaminated by my economics education and my time as a professional in budgeting and finance. That is, my own take on money has a certain theory-ladeness of observation that might make me see it in a different way than the citizenry in general, and there is a danger that I could take my own knowledge for granted. But I am also a Philosopher, and I want to think about money in more than the economic and finance dimensions. So I asked my wife this morning what she thought about money. She said that she understood that modern society did not have a realistic alternative, but that money was on the whole a corrupting force that diminished more valuable aspects of human life by causing us to dwell on the acquisition and use of money for its own sake. This sentiment is common I suspect, and I can’t help but sympathize with it myself, as I was not always an economic thinker.
My wife’s analysis of money is reminiscent of French Philosopher Jean-Jacques Rousseau’s Romanticist critique of the Enlightenment’s fixation on the benefits of commercial progress. His take on money was that it had taken over from virtue as the method of evaluating the worth of individual’s in society, and it had increased the disparity of wealth, creating poor people by process and thus also lowering their moral worth in the new paradigm. Rousseau argued that commercial pursuits diminish human relationships and cause the confidence in civic life to breakdown. He said, “What will become of virtue when one must become wealthy at any cost? Ancient politicians spoke incessantly about mores and virtue; ours speak only of commerce and money.” (Rousseau) This anxiety about money expressed by my wife and Rousseau is captured in the idiomatic iteration that it is the proverbial root of all evil. Money is almost never blamed for the root of all goodness.
What is money then? Money is dollar bills, change in your pocket, a direct deposit added to a balance line in an online account viewed through the screen of a smartphone, or perhaps even gold. But these are just examples of money, iterations of only some of the many possible forms that money might take, more appropriately termed currency. The longest serving currency, used across China, India, and Africa, was cowry, the conch shells of sea snails. The physical, or virtual, forms of money are important and this does constrain the realm of things that might be used as currency. For example, we would not want to use items that are too abundant, too scarce, too variable, grow too fast, or are too easily replicated. The American currency in 2012 takes a combination of forms, but the really basis for its value is not the forms, but the full faith and credit of the American people. Our money has value by fiat and trust.
Given that money can take many forms, what is the essence that relates these forms? Money is best defined by its function, or more precisely, its functions. Money is a medium of exchange, a store of value, and a unit of account. The institution of money has even more profound significance when considered as a shared social agreement, a way for the members of society to continually interact with each other through commercial exchanges by the mutual trust in a medium of exchange. The function of money is so fundamental to human social construction that it will emerge spontaneously, such as the trading of cigarettes in prison camps.
Despite the seeming necessity of money, some of my friends, the most liberal and anarchistic of them to be sure, regard the accumulation of money to be so evil, so destructive, that we would be better off retreating to a barter system. This really does seem to be the only alternative to money, if we desire an economic system that allows for any property and trading whatsoever, and not more adventurous alternatives such as communal allocation or apocalyptic marauding. The problem with a barter system is that it does not allow for the multiple coincidence of wants in society. A good way to imagine this problem is to try and come up with all the possessions and/or services that you might be able to exchange each month in order to pay all of your bills. How would you pay for your mortgage or rent, your power bill, your mobile phone bill, and how would you fill up your gas tank, if each of these exchanges required an exchange of goods and services without a shared medium? Barter, and payments in kind, can have a place and time, like when the better alternative of money is not available, but for modern societies to have vibrant economies with a diversity of goods and services there needs to be a medium of exchange and store of value.
Negative feelings about money are not unfounded, but I think they are confounded. The lack of money is associated with poverty, the quest for money with greed, the concentration of money with corruption, a surplus of money with inflation, a deficit of money with deflation, and the accumulation of money with conspicuous consumption, pecuniary emulation, the loss of virtue, equality, and ascetic humbleness. Money enables and encourages avarice. But money also encourages trade, charity, diversity and self-fulfillment. Since money is also a unit of account, we use it to measure our commercial interactions, and this has a tendency to associate it with a great many human phenomenon, seemingly reducing those rich experiences to monetary values. In those uses of money for which the ends are good, we tend to see money as tainting them or diminishing their meaning, and in those uses of money for which the ends are evil, we tend see money as enabler and instigator. We often fail to recognize, or take for granted, that it is money which enables the noble pursuits of parallel self-fulfillment, and the lack of money would result an evil reduction of our own personal potentials.
In honor of the Easter holiday I will leave you with Jesus’ take on wealth:
Jesus said unto him, If you will be perfect, go and sell what you have, and give to the poor, and you shall have treasure in heaven: and come and follow me. But when the young man heard that saying, he went away sorrowful: for he had great possessions. Then said Jesus unto his disciples, Verily I say unto you, That a rich man shall hardly enter into the kingdom of heaven. And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God. (Matthew 19:21-24)
Jared Roy Endicott
