MONEY

The term money derives from the Latin moneta, meaning mint or coin, and is most often defined as a medium of exchange and measure of value. Even from its earliest use as a replacement for barter, money was often a technologically produced metal coin and thus associated with developments in the science of metallurgy and metal technology. In the Nicomachean Ethics (350 b.c.e.), Aristotle (384–322 b.c.e.) offers a first glimpse of the ethical implications of money as technology when he rejects moneymaking as the proper end of human life on the basis that it has only instrumental value. With the rise of modern scientific economics came efforts to formulate monetary policies for states, and the use and management of money became more closely associated with science, technology, and normative issues. All this is underscored by the German philosopher-sociologist Georg Simmel (1858–1918) who identifies money as the pivotal technological tool that paved the way for the modern technological approach to the world.

Historical Considerations

One of the earliest forms of money was cowrie shells (c. 1200 b.c.e.); based metal (1000 b.c.e. in China) preceded precious metal (700 b.c.e. in the Middle East) coinage. At least as early as Aristotle, whose views have influenced classical and modern discourses on the topic, money was recognized as a medium of exchange and measure of value. Initially simple bartering had sufficed because the goal was subsistence. But even in barter, precise equivalences between bushels of wheat and a cow or a physician's services are difficult to determine, so that questions arose about how to determine a fair exchange or just price. Again in the Nicomachean Ethics, Aristotle contends that the just price of a technological product is determined by proportion, with the anchor of proportionality being the status of the producers, as when the shoemaker's product is to the farmer's as the farmer is to the shoemaker. In the Politics (350 b.c.e.), he describes how money, usually in the form of precious metals, facilitated exchanges between parties who could not engage in direct transactions. This function of precious metals was further enhanced when they were minted and embossed to attest to their monetary value—generally in excess of the use-value of the metals themselves. With paper or representative money, the disparity between use-value and monetary or exchange value becomes even more pronounced. For Aristotle, the use of money is contrary to nature when the exchange is for profit rather than subsistence. The function of money is distorted when it becomes an end-in-itself and the primary measure of wealth.

In the modern period, Adam Smith (1723–1790) continues to distinguish between money and genuine wealth, but goes on to argue that the desire for profit and personal advantage promote private and public good. The profit motive, free competition, and an advanced division of labor that includes the development and use of technology, work together to increase productivity and fuel a "universal opulence which extends itself to the lowest ranks of the people" (Smith 2000, p. 12).

Influenced by Smith, David Ricardo (1772–1823) initially agrees that advances in machine technology benefit all parties—landholders, capitalists, and laborers—but is less sanguine about the alleged advantages for laborers. He eventually concludes that machine technology and labor are in competition and that increased use of the former is often detrimental to the latter. This is by itself insufficient reason to jettison laissez-faire principles, for, as Ricardo sees it, government intervention to curtail the use of machine technology to fend off unemployment actually has the opposite effect of driving capital investment offshore and eventually destroying the domestic labor market.

Karl Marx (1818–1883) agrees with Aristotle that legitimate exchange binds human beings together, whereas the profit motive drives them apart. He goes beyond Aristotle, however, when he insists that money is an insurmountable obstacle to genuine human community. In his Economic and Philosophic Manuscripts of 1844 (1932), Marx argues that money alienates human beings from themselves, from the fruits of their labor, and from each other. In short, money subverts the natural order of things and turns the world upside-down. A return to an authentic mode of human (that is, communal) existence requires the rejection of both private property and money. Only then can one take an optimistic view of the impact of technology on human life. After all, technology has the potential to liberate energy normally expended to obtain the material necessities of life—energy that, once freed, may be redirected toward human cultivation and refinement.

The appearance in 1936 of The General Theory of Employment, Interest, and Money by John Maynard Keynes (1883–1946) precipitated a revolution in economics by assigning government a significant role in the economic affairs of free-market states. While the laissez-faire approaches of Smith and Ricardo allowed for modest and minimal government involvement in economic matters, Keynes articulated a theory whereby government bears major responsibility for the overall economic health of a nation. According to Keynes, adroit and judicious government intervention in setting fiscal and monetary policies, spending on public works to boost a sluggish economy, and supporting technological innovation would, generally speaking, stabilize the economy, increase productivity, and foster full employment. The implicit conviction is that eliminating involuntary unemployment and poverty would reduce, if not cure, many of the social ills endemic to failed economic environments.

Keynes's intention was to improve the "technique of modern Capitalism," and he did not challenge the capitalist "dependence upon an intense appeal to the money-making and money-loving instincts of individuals as the main motive force of the economic machine" (Keynes 1963, p. 319). Keynes nonetheless speculates about a day when economic issues will no longer matter. The basic needs of human existence will be met, leisure will be filled with noneconomic activities, and the "love of money as a possession—as distinguished from the love of money as a means to the enjoyments and realities of life—will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialist in mental health" (Keynes 1963, p. 369). With this assessment of the true value of money, Keynes, who was arguably the most influential economist of the twentieth century, joined forces with Aristotle and to some extent Marx.

Building on but criticizing Keynes, Milton Friedman (b. 1912) developed a theory of money that argues for measured control of the money supply as a better means than stimulus over the long term. Of course, for both Keynes and Friedman money has become an increasingly abstract phenomenon, far removed from the traditional technologies of coinage and representative money into fiat and credit money that are tied up with new technologies of plastic, computers, and information transfers.

Money and Technology

With the Industrial Revolution, money began to play a central role in the production, exchange, and consumption of all goods and services. During the same period, economic growth became increasingly dependent on and intertwined with technological developments requiring significant capital investment. In other words, money must not lie fallow. The supply of money must be directed at consumption and/or investment. The question is whether money, as a means to an end, is simply a benign technological device requiring no special caution by the user.

Simmel's consideration of money as the purest form of the tool, a pure instrument, is instructive here. His Philosophy of Money (1900) seeks to extrapolate from the "surface level of economic affairs a guideline that leads to the ultimate values and things of importance in all that is human" (Simmel 1978, p. 55). To that end, Simmel pursues two lines of inquiry—the subjective preconditions of economic life and the consequences of using money as the medium of exchange. In this latter inquiry, Simmel formulates his critique of modern technological society.

For Simmel, money enhances human freedom, but this freedom has a price. The overvaluation of money engenders a means-ends reversal whereby money is elevated to the status of an absolute end, while things that are ends-in-themselves are treated merely as means. It is not until money fails to function properly—for example, when money cannot even buy bread—that one remembers which of them has intrinsic value. Simmel also sees a causal connection between money and the modern technoscientific tendency to translate all qualities into quantities so that they can be quantitatively measured and assessed. "The ideal of numerical calculability has been made possible in practical and perhaps even in intellectual life only through the money economy" (Simmel 1978, p. 445). In other words, money is not neutral, and, like all technological artifacts, its use has both positive and negative consequences.

Despite the earlier connections between the exchange value of money and the material substances serving as money, the true nature of money and its socioethical implications cannot be derived from the material in which it is embodied. Just as money was introduced to facilitate bartering, paper money, checks, bank drafts, and credit cards were introduced to facilitate the use of money in commercial transactions. The socioethical implications of money derive from the impact that its use has on people's inner lives and their perceptions of the world.

Like Simmel, who argues that money transforms every quality into a quantity, Jacques Ellul (1912–1994), for instance, maintains in L'Homme et l'argent (Money and power) (1953) that the spiritual power of money transforms every relationship—be it to oneself, to others, or to the world—into one of buying and selling.

Whereas both Aristotle and early modern economists couched their analyses of the use and value of money in ethical and political terms, the view of economics as positive science often appears to treat technical economic issues independently of the broader ethicopolitical dimensions of social life. By embracing the goal of scientific objectivity, economics may obscure how the management of economic systems is never value-neutral. Of course, free market economists such as Friedman argue forcefully for a positive connection between money and freedom. Money, like all technological artifacts, has important ethical implications. While few in the early twenty-first century would seriously advocate its abolition, one should bear in mind that money surreptitiously shapes self-understanding and valuations of the world.

Naturally, there are people in the field of technology studies who defend the thesis that technology and, mutatis mutandis, money are inherently neutral with regard to ethicopolitical values. On this view, technologies are neither good nor bad and are steered in one direction or the other by values that are external to the technologies themselves. And even if one concludes that technologies are value laden, it does not necessarily follow that the relevant values and their consequences are negative.

JOHN E. JALBERT

SEE ALSO Affluence;Business Ethics;Class;Work.

BIBLIOGRAPHY

Davies, Glyn. (2002). A History of Money: From Ancient Times to the Present Day, 3rd edition. Cardiff: University of Wales Press. A thorough treatment of the history of money with interesting chapters on its early forms and uses. The author emphasizes the need for a broad understanding of money that includes its social and psychological dimensions.

Ellul, Jacques. (1984). Money & Power, trans. LaVonne Neff. Downers Grove, IL: InterVarsity Press. English translation of the 1953 French language L'Homme et l'argent.

Friedman, Milton. (1992). Money Mischief: Episodes in Monetary History. New York: Harcourt Brace Jovanovich.

Friedman, Milton, with Rose D. Friedman. (1962). Capitalism and Freedom. Chicago: University of Chicago Press.

Keynes, John Maynard. (1963). Essays in Persuasion. New York: W. W. Norton & Company. The general theory is arguably the most significant work in the history of modern economics. Keynes criticizes laissez-faire economics and argues for government intervention in the economic affairs of nations. Keynes's economic principles are put to work in the essays on public policy and political economy assembled in essays in persuasion. All are written in non-technical language and easily accessible.

Keynes, John Maynard. (1997). The General Theory of Employment, Interest, and Money. Amherst, NY: Prometheus Books.

Marx, Karl. (1975). "Economic and Philosophic Manuscripts of 1844." In Collected Works of Marx and Engels, Vol. 3: 1843–1844. New York: International Publishers.

Marx, Karl. (1996). Collected Works of Marx and Engels, Vols. 35–37: Capital. New York: International Publishers. Das Kapital is required reading, if for no other reason than it is perhaps the most unyielding and influential critique of capitalism to date. In Kapital, Marx formulates his labor theory of value and explains profit in terms of the exploitation of laborers.

Ricardo, David. (1996). The Principles of Political Economy and Taxation. Amherst, NY: Prometheus Books.

Simmel, Georg. (1978). The Philosophy of Money, trans. Tom Bottomore and David Frisby. Boston: Routlege and Kegan Paul. A much neglected work that focuses on the influence of a money economy on social and cultural life. It supplements and provides helpful alternatives to Marx's interpretations of history, value, and alienation. It also directs attention to the positive relation between money and human freedom.

Smith, Adam. (2000). The Wealth of Nations. New York: Modern Library. No study of political economy is complete without the inclusion of smith's classic treatise on the subject. Anyone who wishes to understand the development of modern capitalism and the origins of laissez-faire economics would do well to begin here. Smith argues that an unregulated economy benefits all of the parties involved in the production, exchange, and consumption of goods.