Understanding Money: Philosophical Frameworks of Monetary Value 9780367199449, 9780367202354, 9780429260322

Table of contents :
Cover
Half Title
Title Page
Copyright Page
Table of Contents
Chapter 1: Economics and the philosophical discourse on money
Crises, ethics, and economics: why philosophy ignored money
Making space for a philosophical take on money
Inspecting our clothes: the necessity of conceptual frameworks
Notes
Chapter 2: On conceptual frameworks and the role of a philosophical discourse on money
Not all distinguishables are separables
Monetary value is a distinguishable
How to judge the merits of a philosophical framework of monetary value?
Notes
Chapter 3: Aristotle and the philosophical discourse on money: Ethics, Politics, and the Nature of Monetary Value
Why does Aristotle discuss money at all?
The broad framework of Aristotle’s ethics of money acquisition
The ontological basis of Aristotle’s ethical claims about money
The barter narrative is central to Aristotle’s ontological convictions on money
Notes
Chapter 4: Objects, money, and the grounds of monetary value
Two aspects of the money-object: use and exchange
Aristotle’s oversight or philosophical sophistication?
Is money a spatial entity? Aristotle and the fallacy of separability
Notes
Chapter 5: Money and the modern scientific paradigm
Monetary alchemy: does monetary value emerge from nothing?
Coinage, monetary value, and Locke’s abstraction of weight or quantity
Value in weight versus value in tale
Notes
Chapter 6: The political economists, their critics, and the long shadow of Aristotle
The naturalistic turn in the philosophy of monetary value
The quest for a science of money
Abstract labor as the ontological ground of monetary value
Marx’s place within the Aristotelian paradigm of monetary value
Notes
Chapter 7: The traditional paradigm of monetary value and the philosophical problems surrounding it
Is the supposed discovery of the real–apparent dichotomy philosophically sound?
How economics attempted to escape the real–apparent dichotomy
Ricardo’s dissolution of the dichotomy does not resolve the underlying philosophical problems
The real–apparent dichotomy is not new to philosophy
Infinite regress and the substantive paradigm’s tendency to essentialization
Note
Chapter 8: Moving beyond the substantive framework of monetary value: Voices of Discontentment
Two dissenting strains of thought in the philosophical discourse on monetary value
Is monetary value just a fiction ? Hume’s skeptical stance toward monetary value
Bailey's relational theory of monetary value: A forgotten moment
Illustrating the relational nature of monetary value through the concept of distance
The relational framework as a door to alternative paradigms for monetary value
Notes
Chapter 9: Origin of money: The Barter Narrative and the Credit Theory of Money
Link between the barter narrative, the object-centric framework, and the substantive paradigm of monetary value
Credit theory of money: the barter narrative faces an empirical challenge
The credit theorists’ case against the barter “theory” in the history of money
Not a medium of exchange but a quantified system of obligation
Notes
Chapter 10: Simmel and the myth of objective truths concerning monetary value
Barter and credit: two modes of construing the history of the development of money
The question of credit : an originary occurrence or a monetary epiphenomenon?
Simmel’s philosophy of money and the question of credit
Credit, temporality, trust, and the function of exchangeability
Monetary value understood through the category of substance not of function
Simmel’s philosophically radical prioritization of epistemology over ontology
Our encounter with the monetary world demands a philosophical interpretation
Notes
Chapter 11: Money is what money does
The necessity for the money-object to shed its non-monetary function(s)
Being and value : the two aspects of sense-making
The gradual, collective process of value ascription to the money-object
Monetary value is a conceptual construct, not an intrinsic property of an object
Chapter 12: The constructivist paradigm: How Are We to Understand Monetary Value?
The need for a multi-categorical framework within the constructivist paradigm
If all epistemic frameworks are constructed, how are they to be judged?
The categories of our constructivist framework of monetary value are formal
A cautionary note: functionally interdependent epistemic categories are distinguishable from each other, but not separable
Ask not what causes monetary value, but how best to understand it
Generic description of monetary value, not of a specific monetary system
Notes
Chapter 13: Substance and relation : Two Sides of the Same Coin
Configuring the epistemic categories of substance, relation and function
Constructivist recasting of the category of substance
Overcoming the substantive intoxication with gold as money
Emphasizing the distinction between “gold” and the “gold standard” monetary system
Without relations, discrete elements lack epistemic significance
Substance without relation is atomistic, relation without substance is unhinged
Notes
Chapter 14: Fleshing out the multi-categorical, constructivist framework for monetary value
Belonging to the same world – the mode of association of substance-instantiations
Relations are determinate, but not predetermined
How functional capabilities frame, enable, and limit relational capabilities
Substance-instantiations and their properties
The rules of interaction and their role in the formal complex
Monetary systems are posited to realize a determinate end or ideal
Notes
Chapter 15: Why a constructivist framework of monetary value?
Mapping monetary systems in order to address pressing questions
Change in monetary systems necessitates an accommodative framework of understanding
How to think about change in monetary systems – two contrasting examples
Thresholds of change: range-bound deviation and the evolution of monetary systems
Toward a formal definition of monetary value
Notes
References
Index

Citation preview

UNDERSTANDING MONEY

This book offers a novel understanding of money by moving away from the dominant lens of economics through which it is usually seen. In contrast to the economic frameworks of “money”, the book examines philosophical discourses on money through conceptual frameworks that explain how monetary value manifests in various empirical monetary systems. It showcases how the increasingly abstract nature of the objects that stand proxy for money could be conceptualized ontologically, highlighting the predominance of digital money today, as well as contemporary monetary innovations such as cryptocurrencies like Bitcoin. Provocative, yet grounded in a sound theoretical framework, this book will be of interest to scholars, students, and teachers interested in money or monetary value, across various domains and disciplines such as philosophy, economics, sociology, anthropology, finance, science, and technology studies, as well as the interested general reader. Aditya Nain is an investment consultant with expertise in North American and Indian investments and is visiting faculty for philosophy and logic at Symbiosis School for Liberal Arts and FLAME University. He has taught an undergraduate course on the Philosophy of Money since 2012 and holds a PhD on the topic from IIT Bombay. His ongoing research is focused on the conceptual understanding of money and value, including contemporary innovations such as Bitcoin and other cryptocurrencies. P. G. Jung is Associate Professor of philosophy at the Department of Humanities and Social Sciences, IIT Bombay. His area of research and publications focus on the historical tracing of philosophical concepts and the problems concerning philosophy of language and values. His forthcoming monograph traces the different shades of the notion of autonomy in the Modern period and is to be published by the Indian Institute of Advanced Studies, Shimla.

UNDERSTANDING MONEY Philosophical Frameworks of Monetary Value

Aditya Nain and P. G. Jung

First published 2022 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2022 Aditya Nain and P. G. Jung The right of Aditya Nain and P. G. Jung to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-0-367-19944-9 (hbk) ISBN: 978-0-367-20235-4 (pbk) ISBN: 978-0-429-26032-2 (ebk) Typeset in Bembo by Straive, India

CONTENTS

1 Economics and the Philosophical Discourse on Money

1

2 On Conceptual Frameworks and the Role of a Philosophical Discourse on Money

10

3 Aristotle and the Philosophical Discourse on Money: Ethics, Politics, and the Nature of Monetary Value

17

4 Objects, Money, and the Grounds of Monetary Value

26

5 Money and the Modern Scientific Paradigm

32

6 The Political Economists, their Critics, and the Long Shadow of Aristotle

39

7 The Traditional Paradigm of Monetary Value and the Philosophical Problems Surrounding It

50

8 Moving Beyond the Substantive Framework of Monetary Value: Voices of Discontentment

57

9 Origin of Money: The Barter Narrative and the Credit Theory of Money

69

vi  Contents

10 Simmel and the Myth of Objective Truths Concerning Monetary Value

78

11 Money Is What Money Does

87

12 The Constructivist Paradigm: How Are We to Understand Monetary Value?

96

13 Substance and Relation: Two Sides of the Same Coin

103

14 Fleshing Out the Multi-categorical, Constructivist Framework for Monetary Value

112

15 Why a Constructivist Framework of Monetary Value?

123

References Index

133 136

1 ECONOMICS AND THE PHILOSOPHICAL DISCOURSE ON MONEY

Crises, ethics, and economics: why philosophy ignored money There has been a rejuvenation in the interest to reimagine the conceptual underpinnings of money that has led to a growing interest in the philosophical study of money in recent years. This renewed interest to understand money can be attributed to the increasing effect of money and monetary systems on our individual and collective lives, apart from the central role that it has come to play in the sociopolitical sphere. One recent surge in this wave of philosophical engagement with money emerged after the financial crises that was experienced in the so-called Great Recession of 2007–2009.1 Then, of course, the sudden unprecedented rise in “disruptive” technological innovations in the world of money and finance, as instantiated by the dramatic adoption and the ascent of certain blockchain-based cryptocurrencies, such as Bitcoin, has further fueled and even incentivized the need to reimagine the nature of money.2 It is now becoming increasingly clear that central banks around the world will soon issue their own digital currencies and this has further led to the spotlight being focused on the nature of money.3 Most recently, debates concerning the nature of money have emerged as a result of extensive quantitative easing programs carried out by central banks around the world, leading to the popularization of what has come to be known as Modern Monetary Theory. Further, debates on the nature of money have only intensified since the onset of the COVID-19 pandemic, as monetary authorities and thinkers on money around the world grapple with finding the right monetary tools to deal with the economic effects of the crisis; as well as the consequences, both known and unknown, of these tools. Historically too, such resurgences in the need to reimagine the nature of money have mostly emerged as a response to a crisis within the established economic and financial system. Given that such crises have been sporadic, philosophical thinking

2  Economics and the Philosophical Discourse on Money

about monetary value has, therefore, historically been intermittent as well; arising in the wake of such crises and disappearing with the restoration of “normalcy”. Consequently, philosophical attempts at understanding and analyzing money have been few and far between when compared with other more so-called mainstream concerns and themes that philosophy as a discipline has preoccupied itself with. Notwithstanding this general fact concerning the absence of a sustained philosophical engagement with the nature of money from within the perspective of the history of philosophy, one can, however, discern diverse complementing reasons for such an absence. Particularly, the reason for the lack of such a sustained interest in the philosophical discourse concerning money in the modern era is markedly different from those that we find in the pre-modern era. The modern era, as is broadly characterized in the context of the history of philosophy, is the shift from the dominance of the scholastic tradition to the new philosophical approach based on the philosophical principles advocated by thinkers like Bacon, Gassendi, and Descartes. In the pre-modern era, the philosophical discourse on money was deeply engrained in, and in fact, intricately intertwined with, the ethical discourse on money and economies.4 Beginning with the ancient Greek philosopher Aristotle, philosophical reflections on money, as seen in his Nicomachean Ethics and in his Politics, came to be primarily construed in a manner that was indistinguishable from ethics. Within Aristotle’s philosophical framework, money was construed as merely a means for the acquisition of property, which in turn was construed as a means toward the achievement of eudaimonia; usually translated into English as either “happiness” or “human flourishing”. And given the general sway that Aristotle held over philosophical discourse throughout the history of philosophy, the Aristotelian positioning of money as being merely instrumental in the pursuit of happiness can be taken to be the primary reason why philosophical reflections on the nature of money failed to secure an independent intellectual space within the philosophical cannon [We will revisit Aristotle in greater details in Chapters 3 and 5].5 On the other hand, during the modern period, philosophy, by and large, ignored money as an object or theme for dedicated inquiry because concerns regarding money were largely seen as best left to the field of “political economy”, which was securing an independent disciplinary foothold then as a precursor of the discipline of economics. This is evidenced by the substantial lack of non-economic literature on money in the modern period. In this sense, the disciplinary hold of economics over the academic study of money is akin to the dominance of Psychology, in the modern period, over the study of drives and emotions. Therefore, while the philosophical discourse on money in the pre-modern era remained confined within the domain of ethics, as instantiated in the works of Aristotle or in the theological ethics of St. Thomas Aquinas; in the modern era, which was marked by the success of the causal mechanical structures of Newtonian physics, discourse on the nature of money adopted the scientific modality of understanding; and this modality was primarily preoccupied with the unraveling of causal structures and generic laws u ­ nderlying the everyday world.

Economics and the Philosophical Discourse on Money  3

The shift, that we see during the modern period, to understand money purely in scientific terms, and largely in consonance with the mechanistic approach of Newtonian physics, was systematically charted and presented by Adam Smith in his The Nature and Causes of the Wealth of Nations, first published in 1776. It is this “scientific paradigm” with its mechanistic framework of understanding that we find in Adam Smith’s reflections concerning the nature of the monetary world. In a sense, Smith’s work marks the departure from the dominant trend of understanding money, which was still pre-modern till then and was primarily invested in its ethical and normative aspects under the influence of the Aristotelian framework. But with Smith begins the modern era of understanding money, which takes, as its primary task, the discovery of generic, universal, and quantifiable laws underlying the world of money. Thus, the early foundations of economics as a science framed economics squarely within a scientific framework. And given that economics held sway over the discourse on money, it should come as no surprise that the discourse on money itself was necessarily confined and restricted to this conceptual framework. Consequently, this unyielding hold of economics over the discourse on money has led to a particular modality of framing money itself, which, over a period of time, has come to be seen as the only possible lens through which money can be understood. It was assumed that the only legitimate method for its study, and the lone conceptual framework within which the nature of money could be made sense of and described, was that offered by the science of economics. However, the conviction that the study of money is necessarily tied to the disciplinary contours of economics was detrimental to the development of further philosophical reflection on money. The predominance of economics over the study of money in the modern era is akin to the hegemony of theology over the study of religion until the early twentieth century. As is clear from the scholarship of the past century, to conceive of the study of religion as the sole keep of the theologians is not philosophically defensible because it ignores the various non-theological conceptual frameworks under which the institution of religion could be studied. As William James argued in his Varieties of Religious Experience, religion can be fruitfully studied from various disciplinary perspectives, including, but not restricted to psychology and philosophy, apart from theology. In much the same manner, the recent emergence of scholarly publications on money from various disciplines has opened up the space for systematic inquiry into money from outside the confines of the science of economics.6 This book is precisely an attempt in that direction. It seeks to describe the nature of money by undertaking a philosophical analysis of money, or, more precisely, of monetary value. But in doing this, we seek to steer clear of the pre-modern tendency of conflating a philosophical discourse on money with ethics, wherein the discourse on money is hardly distinguishable from a discourse on ethical concerns pertaining to money.7 Further, the philosophical exploration that we intend to undertake does not have any normative pretense of ethical oughts concerning money as such. It only makes an endeavor to describe the nature of money philosophically, unconstrained by the disciplinary bounds set by the science of economics.

4  Economics and the Philosophical Discourse on Money

Making space for a philosophical take on money However, and interestingly, the period between the latter half of the nineteenth century and the early twentieth century did witness radical debates concerning the nature of disciplinary boundaries and their objects of enquiries. It was, for instance, convincingly argued that God and self could be legitimate objects of inquiry within the emerging disciplinary bounds of the then emerging disciplines of psychology and sociology, thus freeing the concept of “god” from the exclusive purview of theology. In a similar manner, the concept of “society” was freed from the descriptive framework of literature and made a legitimate object of inquiry within the discipline of sociology. Such a freeing up of disciplinary objects made possible the flourishing of alternative descriptions of these objects through the lens of alternate frameworks. However, the stranglehold of the discipline of economics over the study of money remained undisturbed even in the wake of such liberalization of disciplinary objects and boundaries. Surprisingly, and notwithstanding these shifting sands, money largely remained firmly lodged within its traditional domain of economics, and this emerging wave of rethinking of objects through other disciplinary frameworks failed to dislodge money off into the other disciplinary domains. However, it is not that attempts to ride on this liberalizing wave to free this object called money from the disciplinary bounds of economics were never made. They were. Unfortunately, intellectually speaking, they were neither unsettling enough nor powerful enough to leave a lasting impact or to create an avenue for alternative disciplinary inquiries. And while there are philosophical reflections on the nature of money in the writings of the modern political economists, these reflections are merely a prelude to other philosophical questions, either to do with the nature of the market, or with the larger concerns of sociopolitical philosophy.8 Philosophy of Money, which was first published in 1900, can be seen as a precise attempt on the part of the German philosopher Georg Simmel to argue for the legitimacy of space for an alternative philosophical inquiry into the nature of money. Such a discourse, as Simmel saw it, would be distinct from the inquiries that operated squarely within the disciplinary bounds of economics. Simmel’s revisionary insight was that the commonly held stance that money could only be conceived of within the confines of the framework of the science of economics could well be responsible for the poverty in our understanding of this object called money. Simmel believed, and he consistently argued, that while economics treated money under the purview of the scientific approach, and thereby what it had to say about the nature of money certainly deserved a respectable hearing, nevertheless, this respectability by itself did not foreclose the legitimacy for other modes of inquiry into the nature of money. As Simmel saw it, the very fact that economics adopted the scientific lens implied that the nature of money thus construed would necessarily be constrictively shaded by the colors of certain presuppositions that foundationally informed the very matrix of the scientific framework that was adopted by the science of economics. This thereby opened the avenue to raise the question if the scientific conceptual framework adopted by economics was, in fact, itself adequate to uncover the nature of

Economics and the Philosophical Discourse on Money  5

money? This foundational question, as we can see, though a legitimate one, cannot be decisively settled from within the disciplinary framework of economics itself without begging the question or by bullying it into redundancy. This realization, as Simmel sees it, should nudge us into acknowledging the possibility, and even the need, to investigate our understanding of money in terms of the originary presuppositions held with respect to it within the science of economics. Clearly, a philosophical discourse on the nature of money, as construed by Simmel, does not set for itself the task of dislodging the scientific understanding of money. Rather, it primarily seeks to offer a critical analysis of the foundational suppositions that inform our concept of money.This is turn, he expects would open up the possibility of alternative conceptual frameworks in a bid to have a more robust understanding of the nature and functioning of money.9 Simmel writes, Every area of research has two boundaries marking the point at which the process of reflection ceases to be exact and takes on a philosophical character. The preconditions for cognition in general, like the axioms of every specific domain, cannot be presented and tested within the latter domain, but rather they call for a science of a more fundamental nature. The goal of this science, which is located in infinity, is to think without pre-conditions – a goal which the individual sciences deny themselves since they do not take any step without proof, that is, without pre-conditions of a substantive and methodological nature… If the start of the philosophical domain marks, as it were, the lower boundary of the exact domain, then its upper boundary lies at the point where the ever- fragmentary contents of positive knowledge seek to be augmented by definitive concepts into a world picture and to be related to the totality of life … [if] … the philosophical mode of cognition is the primitive mode, of a mere estimate of the phenomena in general concepts, then this provisional procedure is nevertheless indispensable, when confronted with certain questions…especially those related to valuations and the most general relations of intellectual life.10 Simmel’s Philosophy of Money foregrounds the simple fact that the emergence and the progress of a definitive, or even an exact science, does not by itself cancel out our intellectual curiosity concerning the objects of its study. We can, and we should, despite the flourishing of such a science, raise questions, which notwithstanding their legitimacy, might not simply be commensurable with the disciplinary foundations of that science. After all, as Simmel argues, a conceptual framework through which a particular science enables us to make sense of an object does not, by itself, foreclose the possibility of applying some other conceptual frameworks to the same, as long as these are, as cautioned by Whitehead, “…balanced by complete humility before logic, and before fact”.11 It is along a similar premise that Isaiah Berlin, one of the prominent names among the British philosophers of the twentieth century, emphatically insisted on recognizing the simple fact that the steady growth of the sciences neither pronounces

6  Economics and the Philosophical Discourse on Money

the death, nor the redundancy of philosophical questions, concerning objects and themes that the sciences now deal with. Berlin’s point being that the emergence of a specific science is indicative of the fact that its pioneers and practitioners have established and adopted a definitive methodology. Berlin’s emphasis is that it is not the object of inquiry per se, but rather an allegiance to a specific methodology that fundamentally defines disciplinary boundaries. Subsequently, all concerns of legitimacy of discourses held and permitted within its disciplinary boundaries, as well as the settling of disputes concerning questions and answers provided therein, are ultimately governed by the dictates of this accepted methodology of the discipline.12 The twentieth century economist S. Herbert Frankel, based on Berlin’s descrip­ tion of the primacy of methodology over that of the object of inquiry in the sciences, argued for the legitimacy of an independent academic space for a possible philosophical discourse on the nature of money, despite the flourishing science of economics. Frankel’s observation was premised on the understanding that since philosophy was not necessarily bound by a definitive methodology of any particular science, it could, therefore, bring about a fresh perspective on the nature of money. As Frankel saw it, a philosophical discourse on money would evidently be distinct from the one offered by economics since philosophy inverts the primacy from the concern of methodology to that of the object of inquiry, namely to the nature of money, itself. From Frankel’s point of view, the specific science of economics is necessarily governed and established by the “scientific” methodology that it accepts and operates with.Thus, the kind of questions that can be raised legitimately, and the acceptability of the answers provided in relation to the nature of money within the discipline of economics are, in a way, determined by the very foundational bounds of the methodology it accepts. As a way of explanation, it can be argued that the discipline of economics being bound within the scientific framework necessarily construes money as an object that is causally related to other objects within the larger economic sphere. Its explorations regarding the nature of money, therefore, investigate the behavior of money as an object situated within the world that is populated by other economic objects and interrelated within a relational structure of causal dependencies among themselves.We could thus say that given the methodological constraints of economics as a science, it can only reveal to us the nature of money in terms of its empirical behavior when situated in the market, and when it acts upon, or is acted upon, by market forces.13 Therefore, economics as a science of money is primarily invested in discovering, formulating, and describing the general laws governing this behavioral aspect of money. Thus, everything concerning money, including the genesis of monetary value, comes to be necessarily explained in terms of these causal behavioral laws.

Inspecting our clothes: the necessity of conceptual frameworks Alternatively, Frankel could be read as asserting that in so far as economics adopts the scientific framework, it necessarily examines money in a mode consistent with, and circumscribed by, the disciplinary boundaries of that science. This mode, therefore, enables it to describe the world – and in this case the world of money – purely

Economics and the Philosophical Discourse on Money  7

in terms of causal dependencies and generic laws governing them. What, however, must not be lost sight of is the fact that the way in which one encounters the world of money from within the bounds of the science of economics is itself shaped by the assumptions and presuppositions that inform the scientific framework or the scientific worldview. These presuppositions or assumptions that provide the foundation to the scientific worldview constitute what is called the conceptual or the ontological framework through which economics makes sense of this object called money. Such conceptual frameworks inform, not merely the modality in which economics comes to encounter and subsequently describe money, but also the very ways in which we meaningfully encounter the world as such. In this sense, there is no escaping from such conceptual frameworks, scientific or otherwise, as long as we intend to make sense of the world that we encounter. Aldous Huxley’s assertion that “the choice…is not between some kind of metaphysic and no metaphysic”, but is merely “between a good metaphysic and a bad metaphysic”, scrupulously sums our dependency on conceptual frameworks in our quest of sense-making.14 Clearly, therefore, it appears to be critically necessary that one examines one’s conceptual frameworks, and be open to new ones, otherwise we would come to take our modality of encountering the world as an absolute one and remain oblivious of a “better” metaphysics or conceptual framework. From Frankel’s point of view, the science of economics freezes the nature of money within the particular conceptual framework of the scientific while ignoring philosophical questions concerning the conceptual foundations upon which its scientific thinking about money ultimately rests. Of course, this is not to say that philosophy has a secret key to the underlying metaphysics of money in any absolute way either. To be sure, any philosophical description of money can itself be challenged. However, this fact in itself should not deter us in undertaking such an engagement. After all, in the absence of a critical attitude toward the conceptual framework one operates with, the impetus toward the reimagining of fresh conceptual constructions is altogether lost. Consequently, there then emerges the threat that science, in absence of a philosophical gadfly, would be left impoverished and malnourished due to its incapacity to reimagine the world that it encounters. In a manner of speaking, we, in the absence of a therapeutically vibrant philosophical discourse, might just forget that old habits can, and needs to change sometime, even if they are difficult to change. As John Dewey, the pragmatist philosopher, reminds us, we cannot permanently divest ourselves of the intellectual habits we take on and wear when we assimilate the culture of our own time and place… intelligent furthering of culture demands that we take some of them off, that we inspect them critically to see what they are made of and what wearing them does to us.15 Given the importance of conceptual frameworks in the way in which we make sense of the world, we will now turn to the question of, what precisely a conceptual framework is, and how it affects us in understanding money in the next chapter.

8  Economics and the Philosophical Discourse on Money

Notes 1 For an application of Aquinas’ ethics of money to the financial crisis of the previous decade, see Mary L. Hirschfield, “Reflection on the Financial Crisis: Aquinas on the Proper Role of Finance”. Journal of the Society of Christian Ethics, vol. 335, no. 1 (2015): 63–82. For a radical reimagination of the ontology of money in response to the financial and ecological crises of our times, through the works of Lacan and Zizek, see Ole Bjerg, Making Money:The Philosophy of Crisis Capitalism (London:Verso, 2014); Ole Bjerg, Parallax of Growth:The Philosophy of Ecology and Economy (Cambridge: Polity Press, 2016). 2 For philosophically inclined works on money that see themselves as grappling with the digital nature of contemporary money, and also the phenomenon of cryptocurrencies like Bitcoin, see Ole Bjerg, “How is Bitcoin Money?” Theory, Culture and Society, vol. 33, no. 1 (2016): 53–72; Nigel Dodd, “Simmel’s Perfect Money: Fiction, Socialism and Utopia in the Philosophy of Money”. Theory, Culture and Society, no. 29 (7/8) (November 2012), 146–176. 3 For a discussion of various questions and issues surrounding central bank digital currencies, see the European Central Bank’s Report on a Digital Euro, published in October 2020. https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458. en.pdf. 4 In fact, even today, the philosophical discourse on money is dominated by ethics. As examples of modern philosophical works on the ethics of money, see Robert Skidelski and Edward Skidelski, How Much Is Enough? (London: Penguin Books, 2013); Michael Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Penguin Books, 2012); Adrian Walsh and Tony Lynch, The Morality of Money: An Exploration in Analytic Philosophy (New York: Palgrave Macmilan, 2008). 5 It would not be a stretch to claim that for the both Plato and Aristotle, “…money appeared to be little other than a necessary evil” (S. Herbert Frankel, Two Philosophies of Money:The Conflict of Trust and Authority. New York: St. Martin’s Press, 1978), 13. 6 See William James, “Varieties of Religious Experience”, in Writings 1902–1910, 1–479 (New York: Penguin Books USA Inc., 1987), 11–32. 7 The protest against the hegemony of economics over the study of money has been the loudest from sociology, partly because of the early engagement with money and economic life by Weber, Durkheim, and Marx, but also significantly because of the resurgent interest in the works of Simmel within strands of contemporary sociology. For significant voices within contemporary sociological thought on money, see Geoffrey Ingham, The Nature of Money (Cambridge: Polity Press, 2004); Nigel Dodd, The Social Life of Money (Princeton: Princeton University Press, 2014). 8 Therefore, within the history of philosophy, Simmel, in his work Philosophy of Money, is to the best of our knowledge, the first philosopher to treat money as the central concern of a full-scale philosophical work. However, Simmel remains largely ignored as a philosopher within the academic philosophical community, and has now come to be conceived as a Sociologist, by virtue of the attention sociologists give to his work by positioning it as a foundational work within the discipline of sociology. However, the sociological focus on Simmel’s work revolves primarily around “Sociology” rather than “Philosophy of Money”. 9 “…if there is to be a philosophy of money, it can only be to either side of the economic science of money” (Ibid., 54). 10 Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 53. 11 See A.N. Whitehead, Process and Reality: An Essay in Cosmology (New York: T   he Free Press: A Division of Macmillan Publishing Co., Inc., 1978), 17.

Economics and the Philosophical Discourse on Money  9

12 Thomas Kuhn, the twentieth American philosopher of science, characterized this in terms of the phrase “disciplinary matrix”. 13 In distinguishing the role of philosophy from economics in the study of money, Bjerg shows the investigative and empirical nature of economics through a typical introductory textbook in economics, “…we shall look at the opening pages of an introductory textbook on economics. The beginning of a beginning reads: On the evening news you have just heard that the Federal Reserve is raising the federal funds rate by ½ percentage point. What effect might this have on the interest rate of an automobile loan when you finance your purchase of a sleek new sports car? Does it mean that a house will be more or less affordable in the future? Will it make it easier or harder for you to get a job next year? This book provides answers to these and other questions…” See “Introduction”, in Ole Bjerg, Making Money:The Philosophy of Crisis Capitalism (London: Verso, 2014). 14 Aldous Huxley, Ends and Means (London: Chatto and Windus, 1941), 252. 15 John Dewey, Experience and Nature (New York: Dover Publications Inc., 1958), 37.

2 ON CONCEPTUAL FRAMEWORKS AND THE ROLE OF A PHILOSOPHICAL DISCOURSE ON MONEY

Not all distinguishables are separables Conceptual frameworks inform the manner in which we come to construe the world. They are the underlying foundations of our sense-making activity and the way in which we order and arrange our experiences of the things around us. They provide us lenses to see the world in a particular manner. It is by virtue of the conceptual framework that is adopted by a discipline that we come to understand objects in specific disciplinary ways. But conceptual frameworks are not “out-there” in the world. They are not a part of the world per se, but are rather what we have managed to formulate by developing concepts and fashioning ontological systems in order to provide meaning to the world that we encounter every day. Seen thus, philosophers have always acknowledged the gap between “how things are” or reality and “how we take things to be”. The former constitutes the world as a bare and brute existence, devoid of how we understand it to be. We may call this the cosmocentric world – the world qua cosmos.1 The latter, on the other hand, is always a product of human epistemic enterprise that involves formulating concepts and epistemic frameworks in order to make sense of the cosmocentric world. Therefore, philosophers have constantly emphasized the fact that our foundational epistemic task has always been the fashioning of various conceptual categories in order to contrive adequate conceptual frameworks through which we come to make sense of the reality that we encounter. However, there are philosophers like Barlingay, whose entire philosophical project can be summarized as a cautionary enterprise that seeks to constantly remind us that these conceptual frameworks, while inevitable to the entire human project of sensemaking, nevertheless often divide reality into aspects that may not factually map onto the world of objects. Thus, while our conceptual frameworks operate within a structure of related but discrete conceptual entities that are distinguishable from each other, they may not be necessarily separables.

The Role of a Philosophical Discourse on Money  11

But what’s the difference between the two and why is it important to recognize this distinction between conceptual distinguishables and factual separables? Well, consider this.When we say that a flower is both “yellow” and “beautiful”, we do not mean that these are physically separable parts that the flower could be broken down into. We cannot literally separate the yellowness or the beauty of the flower from the flower itself, but we may conceptually and linguistically distinguish them. Similarly, we may distinguish the shape of the flower from the flower itself or from its color but we cannot factually separate them.2 The conceptual frameworks that we invoke, or that a discipline invokes, in the very act of making sense of the world, are therefore, necessarily anthropocentric constructions that deploy a variety of such distinguishables which may, or may not, translate into separables in the real world of objects. Thus the world, as such, is much larger and many layered when seen from the anthropocentric perspective. These worlds are built upon each other as a combination of objects and linguistic descriptions of objects.There are as many anthropocentric worlds as we would care to invent through the use of language but there is only one cosmocentric world.3 Of course, depending upon the nature of one’s disciplinary boundaries and the conceptual framework that it employs, the degree of dependency upon the employment of such distinguishables that are not separables would come to vary. For instance, the empirical sciences, in so far as they deal with the world of objects,4 cannot merely restrict its epistemic framework to the realm of distinguishables that are not separables. After all, if it did so it would not, in a sense, reach out to the physical world that we live in, which after all is populated by separables. Mathematics, on the other hand, would be at the other end of this spectrum. And as we will argue in the following chapters of this book, the object called “money”, can be, and in fact has been, conceptualized both as a physical thing occupying space in the world (i.e., a separable) or as a construction of human ingenuity and creativity (i.e., a pure distinguishable). And it is, at least in part, because of this seeming ambiguity of the nature of this object called “money” that the philosophical exploration of money and monetary value is so fascinating. Philosophy as an activity (not as a discipline) is construed, especially by those who see it as a foundational activity, as an engagement whose fundamental task is to precisely formulate such epistemic categories or a network of distinguishables, which can be deployed within a disciplinary framework to provide sense and order to the world of our experiences. But given that the very formulation of such distinguishables or conceptual units is an anthropocentric activity, the resulting conceptual or ontological frameworks too are necessarily embedded, and firmly rooted, in the particular historical settings of their times. It is precisely for this reason that Dewey insists that theoretical conceptions and frameworks, must therefore, turn themselves in regularly for critical examination, so that their suitability to explain the times in which one finds oneself can be gauged.5 The tendency to forget the historical nature of our conceptual frameworks misleads us to posit them as a given and as an absolute, and as something that somehow manages to remain unscarred through changing times. But as is the case with all things man-made, the world of money too is historical and social in nature, and thereby, is

12  The Role of a Philosophical Discourse on Money

“perpetually in process”. Seen thus, the underlying conceptual framework invoked by economics to explain the world of money must, therefore, also be subjected to regular critical examinations of its viability as a structure to aptly capture the reality of the world of money.

Monetary value is a distinguishable Unfortunately, economics tends to overlook or underplay the simple fact that the very notion of monetary value is itself an epistemic category, a pure distinguishable. What the concept of monetary value signifies does not have any corresponding objective existence as a separable entity in the physical world. It is, after all, a value.We must distinguish that the paper, plastic, metal, or digital “material” that we – naively, but erroneously – consider money is money only because we bestow it some monetary value. In itself it is just paper with marks on it or a particular configuration of numbers like ones and zeros. This realization is of cardinal importance because it entails that unlike a separable object that physically exists, and therefore must have a specific nature, like for instance a stone, or the piece of paper or plastic, monetary value as such, does not have any objective or physical nature in itself. The nature of monetary value is, in contrast, essentially constituted in the very modality in which we frame and employ it within our conceptual framework concerning the world of money. Consequently, one might say that far from being “out there in the world”, all money is virtual. And because money is a conceptual construct as opposed to a physical or a natural object like a stone, therefore, how we come to construe it directly influences actual monetary systems, just as actual money systems influence our theoretical conceptions of it. But by this very token it is clear that the world of monetary realty is based on a construct that we have managed to formulate and that any philosophical discourse on money, such as the one being discussed in this book, does not mirror any objective reality per se. In short, no theory of monetary value is purely descriptive. Rather in its true avatar, a theory of monetary value is essentially prescriptive in so far as it prescribes that we see the money within the monetary world in a particular way. By contrast, the nature of a separable object, such as a stone, is not dependent upon our conception of it. After all, stones did not change the way they fell just because Aristotle’s physics theorized their fall in a particular manner. As we will see in the following chapters, a large share of the responsibility for this neglect toward the role of a philosophical discourse on money, other than ethical ones, lies in the manner in which money came to be construed within, what Richard Rorty calls, the “Plato to Kant cannon”.6 It was under the influence of this cannon – and we shall show how this is so in the following chapters – that the discourse on money came to be misconstrued as bearing the single responsibility of mirroring the world of money “out there”.7 This task was then left to the emerging science of economics. Consequently, the philosophical discourse on money limited itself to the ethical dimension concerning money. However, in this process what came to be forgotten is the fact that the very concept of money is anthropogenic and that monetary value

The Role of a Philosophical Discourse on Money  13

is but a pure distinguishable that is employed in the conceptual framework that we invoke to fashion and work our way through the world of money. The task of a philosophical discourse on money is, therefore, clearly not limited to the ethical dimension concerning money. Rather, its primary task, though often forgotten, is precisely to attempt an understanding of monetary value as a conceptual construct, i.e., a “pure distinguishable” in Barlingay’s terms. This is to say that while philosophizing about the ethical, or socio-political dimensions of money may be worthwhile, philosophy would be ill served to forget that such ethical or socio-politically bent critiques are themselves premised on a philosophically primary understanding of the nature of monetary value itself. Unlike the science of economics, a philosophical discourse on money, therefore, does not attempt to mirror the reality of the world of money. After all, this is impossible given that monetary value is a conceptual construct, a pure distinguishable and hence not really “out there” in the world to be mirrored. A philosophical discourse on money is more aptly described as an analysis of the conceptual construct called money. It is a conceptual description of money in as general a conceptual framework as philosophically tenable. Put another way, it is an attempt to describe, in the most general terms, one particular aspect of social and historical reality, i.e., money or monetary value.8 Though a philosophical discourse on money cannot make any ontological claims as to the nature of money “out there”, it is, nevertheless, not antithetical to the construction of alternative conceptual frameworks for making sense of the world of money. Thus, apart from critically examining our prevalent conceptual framework through the lens of which we make sense of the world of money, a philosophical discourse on money can also undertake a constructivist project of providing us an alternative metaphysics through which one could engage with the world of money. Now, metaphysics has often been rightfully criticized for being blind to the nuances of history and its own anthropogenic nature.These shortcomings can be easily creased if the categories of explanation are not understood as absolutely rigid or stable in an absolute sense. In fact, the fallibility, conventionality, and the provisional nature of philosophical thought itself provide philosophy with an impetus to critically examine, and to rebuild epistemic frameworks. The function of a non-mirroring epistemic or formal framework is to offer a cumulatively rich explanation or interpretation of monetary reality.9 Toward this end, it builds on the conceptual apparatuses inherited from the history of ideas; not in order to represent or mirror the real nature of monetary reality (since there is none to mirror), but rather “to determine the character of changes that are going on [in the world of money] and to give them in the affairs that concern us most some measure of intelligent direction”.10 We may call this view a constructivist view in so far as it explicitly recognizes that a philosophical discourse on money is a human endeavor to construct an epistemic framework by forging an epistemic category called monetary value in order to fashion the world of money. It is, at the same time, sensitive to the fact that being a pure distinguishable, monetary value is not real in the sense of being objectively “out there”.

14  The Role of a Philosophical Discourse on Money

How to judge the merits of a philosophical framework of monetary value? But we would have to be careful here. If a philosophical discourse on money cannot make any assertions with an ontological import, how do we judge the merits or the legitimacy of its philosophical constructs? Since it does not mirror reality, we would have to necessarily reject the traditional criteria of correspondence with reality as a criterion of truth. This opens up the possibility of the conceptual or epistemic frameworks emerging from within the philosophical discourse on money as being susceptible to no scrutiny at all in terms of its legitimacy. Simply put, in the absence of a criterion to assess the legitimacy of the claims of a philosophical discourse on money, the danger that emerges is that it would appear that, “anything goes”. However, as emphasized by Whitehead and Dewey, epistemic constructs of a philosophical discourse must be judged in the light of its warrant. The litmus test of the conceptual frameworks that emerge from a philosophical discourse on money must be the question, “does this explain the world of money, better?” But the absence of a philosophical discourse on money, accompanied by the blind surety with which we accept, adopt, and perpetuate, age old conceptions of money, has greatly impoverished our notion of money itself. This poverty does not merely mean that economics as a science has itself been impoverished, but also that monetary systems themselves have not benefitted from the lack of any robust intellectual challenges. But more importantly the absence of a philosophical discourse on money has led people to be forgetful of the foundational fact that money and monetary value are our epistemic constructs and as such it mirrors nothing of the world. This forgetfulness also has its root in philosophy itself. The early philosophical discourse concerning money or monetary value remained under the influence of both Aristotle’s ontology as well as his conception of monetary value as a medium of exchange. Aristotle’s framework of monetary value was largely informed by his understanding of the function of philosophy as that of mirroring reality. Consequently, the idea that the function of the discourse of money is to mirror the ontological realm of monetary value has deep historical roots in philosophy. Beginning with Aristotle, monetary value was construed as a product of the relationship that obtains between the ontological realm (reality) and the empirical realm (appearances). Construed first by him in his Politics, Aristotle’s framing of monetary value still remains the dominant framework to understand money even in the twenty-first century. Though alternative frameworks did emerge intermittently, they all remained under the influence of Aristotle’s paradigm in one way or the other. The chapters of this book will highlight this facet as well. This hegemonic domination of the Aristotelian conception of monetary value, as this book will seek to establish, lies in the fact that the Aristotelian framework forecloses the possibility of construing money as an epistemic construct altogether, and deems it squarely as “real”.The foreclosing of such a possibility did not invoke much protest prior to the twentieth century, until the rise of the credit and the state theories of money. Therefore, the absence of a constructivist alternative to the framing

The Role of a Philosophical Discourse on Money  15

of monetary value was not perceived as an absence at all within the philosophical discourse on money. This peculiar absence, as this book will further attempt to establish, lay on the fact that the discourse on money problematically adhered to a particular narrative of the historical development of money and saw the origin of money in the barter system, as was first systematically propounded by Aristotle in his Politics, and then enshrined for the modern era by Adam Smith’s, The Nature and Causes of the Wealth of Nations. From here, it found its way into the most fundamental and influential textbooks of economics in modern times. Consider this; Money is a lubricant that facilitates exchange. When everyone trusts and accepts money as payment for goods and debts, trade is facilitated. Just imagine how complicated economic life would be if you had to barter goods for goods every time you wanted to buy a pizza or go to a concert.What services could you offer Sal’s Pizza? What could you barter with your college to cover your tuition? Money acts as a matchmaker between buyers and sellers…11 This quote, taken from Samuelson and Nordhaus’, Economics, through which most of the students of economics get introduced to the science of economics, clearly suggests that money originates as a response to the inconveniences of the barter system, which echoes a story that Aristotle had written over 2000 years ago in his Politics. Our book argues that it is this historical positioning of the origins of money and monetary value that led to the absence of a robust emergence of the constructivist view. In doing this, the book, therefore, interpretatively draws out the connections between the reflections on money in the works of the major thinkers engaged with the philosophical discourse on money and the barter narrative that shapes these discourses.

Notes 1 We have adopted this term from the twentieth century Indian philosopher, S. S. Barlingay, who made a distinction between the cosmocentric and the anthropocentric worlds. 2 As Barlingay notes, “… I cannot separate the colour of the table or the weight of the table from the table, although I can distinguish the two. I cannot separate the mangoness of the mango from the treeness of the mango tree”. On the other hand, he notes that “I can distinguish between emotions and expressions of emotions but it is doubtful whether one can actually separate them”. That which is only distinguishable and not separable, Barlingay refers to as “pure distinguishables” or “distinguishable qua distinguishable”.The weight of a stone or the length of a slab are both pure distinguishables since neither weight not length exist as actual physical objects but are rather the result of epistemic abstraction. Barlingay refers to the realm of objects from which epistemic abstraction is carried out, as the cosmocentric world. A flower, for instance, is an object and as such a part of the cosmocentric world. Using the criteria of spatial reversibility, both the flower and the person are objects in this technical sense. However, the color of the flower, or its shape, are neither separable from the flower itself nor are they separable from each other. However, they are conceptually distinguishable from each other. The crux of the distinction between distinguishables and separables, thus, is that separables are actually or potentially physically apart from each other, whereas distinguishables can only be taken

16  The Role of a Philosophical Discourse on Money

apart in epistemic abstraction. See S. S. Barlingay, Beliefs, Reasons and Reflections (Pune: Indian Philosophical Quarterly Publications, 1983), 2–5. 3 Ibid., 107–108, Also see Ibid., 67. 4 The term “object” here denotes a physical thing that occupies space and can be moved positionally in relation to other objects such that the distance between the said objects may be reduced or increased. Put differently, there is spatial reversibility between the objects in question. See S. S. Barlingay, Beliefs, Reasons and Reflections (Pune: Indian Philosophical Quarterly Publications, 1983), 5–6. 5 Since concepts are human constructs, and human constructs are per force situated within a historical context, it follows that a metaphysic based on such conceptions would of necessity be historical. Historical change in ontological conceptions, applies not only to the world of money, but to our conceptual apparatus as well. 6 See Richard Rorty, Contingency, Irony and Solidarity (Cambridge: Cambridge University Press, 1989), 76–79, 96–97. 7 As Rorty puts it, traditional philosophy attempts to mirror nature just as it is, ontologically. See Richard Rorty, Philosophy and the Mirror of Nature (New Jersey: Princeton University Press, 1979), 3–14, 131–164. Further, since language is conceptual, and concepts are theoretical abstractions, philosophy cannot lay claim to any knowledge of money itself or money qua money, from the cosmocentric perspective. 8 The world of money is itself a construct; it is not a given in the absolute sense. All the constituent elements of this world are inventions, resulting from human conceptual agency. There must not be thought to be a pre-existing world of money, ready to be mirrored or accurately described. As epistemic agents, through the use of the tool of language, human beings have managed to construct multiple layers of worlds and one of these worlds is the world of money. “Since it is through the medium of language that we speak of the world, language has to express the complexity of the world. In so doing it may become as complex as the world or perhaps even more”. However, the use of the term “world” must not be thought to represent a singularity as such.The world of money itself contains worlds inside of it. Further, as money evolves and as we evolve our thought about money, the world of money continues to expand. For instance, the world of high finance may emerge from a rudimentary monetary system. These worlds, Barlingay terms orders; not to be confused with orders in the sense of categories. The most that can be said about the first order world is that it is.The world of money is not a first order world, but multiplicity of orders, built upon each other. See S. S. Barlingay, Beliefs, Reasons and Reflections (Pune: Indian Philosophical Quarterly Publications, 1983), 107–109, 120–126. 9 See Dewey, Later Works, 1:308–309. To accept a place for formal explanatory conceptions within a world of change and historicity is, philosophically speaking, not new. Wittgenstein’s construal of language as a changing, evolving city does not preclude the possibility of explanatory frameworks. His conceptions of language games, rule following, and form of life, are, in the constructivist sense used here, formal explanatory conceptions. For sure, they are not ontological in the sense of being an accurate mirror or picture of language. Rather, these conceptions are philosophically explanatory in the sense of being a description of the generic traits of language. For Wittgenstein’s construal of language as an evolving city, see Ludwig Wittgenstein, Philosophical Investigations, trans. Anscombe, Hacker and Schulte (West Sussex: Blackwell Publishing Limited, 2009), 11. 10 Fesmire, Dewey (2015), 45. 11 Paul A. Samuelson and William D. Nordhaus, Economics, 19th ed. (Boston: McGraw-Hill Irwin, 2010), 33.

3 ARISTOTLE AND THE PHILOSOPHICAL DISCOURSE ON MONEY Ethics, Politics, and the Nature of Monetary Value

Why does Aristotle discuss money at all? In the previous chapter we showed that epistemic frameworks are conceptual frameworks that we construct in order to make sense of the world we encounter. We argued that they are our philosophical constructs or epistemic abstractions and, therefore, are subject to historical change and in need of revision as times change. We then foregrounded the fact that the economic discourse on monetary value, i.e., the discourse that is de facto taken to be the authoritative mode of understanding the nature of money and monetary value, is itself based on a particular philosophical framework of monetary value. The aim of this chapter is to uncover the historical foundations of this conceptual framework that informs much of the discourse on money and monetary value and lies underneath much of the economic discourse on money. However, this historical excursion is not an analysis of the history of money or monetary systems, but rather of the history underlying philosophical thought about money and monetary value. Uncovering the roots of this conceptual framework that informs much of the contemporary textbooks of economics leads us back to the foundational classics of the discipline and all the way back to Aristotle’s writings on money. A closer reading of Aristotle’s sparse, but influential writings on money, makes one realize that his understanding of the nature of money is grounded in his ethical concerns with regard to the acquisition of property and not, by his own standards, on a rigorous attempt to understand the nature of money as such.1 Aristotle’s thoughts on money are primarily concerned with ethics and more specifically with the ethics of money acquisition. As a result, the scholarship on Aristotle’s philosophy of money tends to focus on the ethical aspects of money and by extension, on its political2 aspects. Aristotle’s engagement with philosophical concerns pertaining to money arise indirectly, in that he does not take money or monetary value to be his primary concern, neither does he take it to be a subject

18  Aristotle & the Philosophical Discourse on Money

worthy of a dedicated science. In fact, had Aristotle not been concerned with the human desire for unlimited and unrestricted acquisition of property and wealth, which was a serious concern for political stability of the Athenian polis then, he would probably not have discussed money at all. Money, in Aristotle’s writings, finds a place under the broader rubric of property and wealth, which in turn constitutes his deliberations concerning household affairs. Though he makes some explicit ontological statements about money, they are ostensibly in an effort to ground his ethical concerns. Thus, while he writes about money in Nichomachean Ethics and in Politics, his ontological underpinnings need to be gleaned out.3 Therefore, we must be clear at the outset that his writings are not directly aimed at shining light on the nature of money. Further, though within the history of economic thought, his writings on money are often seen as a precursor to the science of economics or, as the pre-history of political economy,4 we, however, are concerned with Aristotle’s reflections on the nature of money specifically and not primarily with its ethical or economic aspects. This chapter thus teases out Aristotle’s thoughts on the nature of money from his ethical observations on the matter and goes on to argue that before the existence of the science of economics, the operating philosophical framework for understanding monetary value was intrinsically tied to ethics. However, while Aristotle’s primary concern may have been ethics, and while this may have informed his thoughts on money, this chapter argues (i) that his ethics of money is not philosophically arbitrary but is grounded in an underlying understanding of the nature of money, (ii) that his understanding of the nature of money is informed by his conception of telos, his categorical understanding of nature, his view of substance as the primary category, and, by his logical essentialism, (iii) that his underlying substantive-essentialist ontology leads to irresolvable philosophical problems concerning monetary value, and (iv)that these philosophical problems are a result of the duality that he creates between empirical and ontological value,5 hypostatizing6 the latter. Hypostatization is a term often used by Barlingay to mark the philosophical error of treating two distinguishables as separables. Therefore, the fallacy entailed by hypostatization is the fallacy of separability, which is the treating of two conceptually distinguishable entities (concepts) as, in fact, two separate entities (objects). The fallacy is thus indicative of the conflation of the realm of the epistemic with the realm of the ontological. This hypostatization of value on the part of Aristotle inspired the price-value distinction in the discourse of economics; a distinction which maintains a separation between the empirical value of money (its price) and its ontological value (substantive value). Value is, therefore, conceptualized as the substantive bedrock upon which price rests. The succeeding chapters will go on to show how the Aristotelian substantiveessentialist ontological framework comes to be accepted, implicitly or explicitly, by key thinkers in the history of the philosophy of money, including John Locke and the other political economists like Smith, Ricardo, and Marx.7 In fact, Aristotle’s ontology can be seen even in contemporary theories of money, which is indicative of the fact that they have not moved beyond the ontology of classical political economy. For instance, it is, as we shall see, Aristotle’s categorical understanding of

Aristotle & the Philosophical Discourse on Money  19

nature as laid down in his work Categories, coupled with the primacy that he places on the category of “substance”, that informs the fundamentals of the commodity theory of money.

The broad framework of Aristotle’s ethics of money acquisition For Aristotle the demand to philosophically engage with the notion of money is necessitated primarily by an ethical urgency that emerges given the seemingly insatiable urge of money acquisition we seem to have. For him, this insatiability violates the basic tenets of human rationality, since this behavior engages in and encourages an individual toward an irrational tendency to accumulate money for no apparent reason. As such, Aristotle finds it disturbing that we could be driven toward the accumulation of money without any particular end in mind.8 He, therefore, holds this tendency to be driven by the insatiable urge for the accumulation of money, on the part of the individual, to be irrational. And given that, for Aristotle, reason or our rational potentiality is our natural defining mark, he characterizes this tendency as unnatural, and therefore, unethical. In Aristotle’s philosophical scheme, the unnatural is necessarily unethical. Using something in an unnatural manner is to use it in ways inconsistent with, or contradictory to, its telos. Being unnatural and being unethical are thus inextricably linked in Aristotle's philosophical framework. Consequently, an unnatural use of an object is invariably a case of its unethical usage as well, and since Aristotle holds that the telos of money is to be a “medium of exchange” and nothing more, any other use of it is deemed to be unnatural.9 Further, given Aristotle’s teleological approach, or his belief that all human activity is goal driven, the primary category invoked by Aristotle in the formulation of his “economic”10 paradigm is that of need-fulfillment. That is to say, for Aristotle, human actions are needs-driven, meaning that the fulfillment of a specific need is the force that drives us to act in particular ways. Now clearly, not all of our needs are ethical. We thus need a structure that can first filter our needs into ones that are ethically appropriate and those that are unethical and best not pursued. Toward this end, Aristotle, in his Nicomachean Ethics, argues that legitimate human needs are those that contribute toward the attainment of eudaimonia, which is roughly translated as human flourishing.11 Consequently, for Aristotle, all economic acquisitions leading to the legitimacy of ownership ascription must be justifiable on the basis of this specific end or goal of eudaimonia. Since the acquisition of money is, in fact, a claim of ownership of the money that one acquires, therefore, for Aristotle the legitimacy of money acquisition too must ultimately be subjected to scrutiny in relation to the telos of eudaimonia. In other words, money acquisition that is pursued as an end in itself, and not for the purpose of the fulfillment of eudaimonia, is unnatural, and therefore, unethical. However, this insatiable desire for money acquisition, for Aristotle, is a clear indicator of what he considers to be a fundamental erroneous belief of ours; that money is limitless and hence one too errs in giving in to one’s desire for its limitless accumulation. According to Aristotle, money is not limitless but only seems to be so because of a “sort of experience and craft”. That is, as Aristotle sees it, because human beings

20  Aristotle & the Philosophical Discourse on Money

in their economic or commercial activity, are in practice, able to acquire money for its own sake, as an end in itself, they are led to erroneously construe money itself as being limitless, when in fact, it cannot be so.12 It is not perfectly clear what this “craft” refers to in Aristotle’s text. However, given that he is troubled by monetary practices that do not involve the exchange of commodities, this craft probably refers to the financial practices of his time, which would have included the acquisition of money through interest accrued in the due course of trading and lending of money, in addition to the saving of money. While saving may not seem ethically problematic, generating money through interest accrued by simply saving it is what makes money seem limitless. Simply put, money acquired through interest accumulation leads us to believe that money is limitless since in this case of money acquisition, it is money that begets money. Thus arguably, Aristotle holds that the experience of insatiability that one has of monetary acquisition, and, the craft of commerce that responds to this demand of experience, collectively misleads the individual to transform the insatiability of this peculiar desire into the limitlessness of the object of acquisition. Within Aristotle’s economic paradigm, economic acquisition could be categori­ zed under two broad categories; wealth, which is the acquisition of money for its own sake, i.e., as an end in itself, and property acquisition, which is economic acquisition aimed at the acquisition of non-monetary objects, which a household may need to live a good life.13 In the light of this division, what Aristotle considers the fallacious transference of the insatiability of the “desire to acquire” into the limitlessness of the object of acquisition, leads to the general belief that all the economic things that we seek to acquire, whether monetary or non-monetary, are unlimited or limitless. As Aristotle writes, It is the reason wealth and property are thought to have no limit. For many people believe that wealth acquisition is one and the same thing as…property acquisition…because the two are close neighbors.14 Aristotle further holds that our tendency to inaccurately consider the objects that we acquire as limitless is a result of the blurring of the distinction between the telos of our economic activity, and the means by which this telos is actualized. So, while our desire to acquire wealth may be insatiable, the objects that are instrumental in the realization of this goal are not unlimited. Which is to say that while we do have an insatiable desire for the unlimited acquisition of wealth, this desire cannot naturally (or ethically) be fulfilled since the objects that are instrumental in the actualization of this desire, whether those objects be money or non-monetary commodities, are in fact, limited. Thus, Aristotle holds that while the goal may not be limited, i.e., while we may legitimately construe of medicine as being the search for unlimited health, and commerce being the search for unlimited wealth, we cannot, nevertheless, begin to believe that the means by which we gain these ends are themselves limitless.15 As Aristotle sees it, such a construal would grossly undermine the fact that a telos essentially generates the limits of the means, or the tools for its actualization. Lending

Aristotle & the Philosophical Discourse on Money  21

further support to the view that the means that are instrumental in achieving the ends are always limited (even though the craft of commerce may make it seem as though they aren’t), Aristotle asserts that the natural and proper limit of these instrumental means is per force limited by virtue of the fact that they reach their limit when they bring about their telos. Consequently, while the acquisition of wealth may seem as though it were a limitless activity, Aristotle asserts that this cannot be so since money is merely a means toward the realization of the end of eudaimonia and, therefore, the limit to money acquisition is brought about by virtue of the attainment of eudaimonia.Thus, Aristotle writes that “the end itself constitutes the limit”16 and that no end or telos “…has any tool unlimited in size or number, and wealth is a collection of tools…”17 Aristotle’s claim that the end state of eudaimonia therefore sets a limit to people’s needs is argumentatively sound. However, as sound as it may be, it is nevertheless based on the fundamental insight that all means are necessarily tools. Aristotle conceives of tools as objects. It is this conception that leads Aristotle to claim that with “wealth” as its telos,18 money as a tool, like all tools, is limited in size and number.19 Consequently, such a conception of money as a tool implicitly assumes that money is an object in the same physical manner that a hammer, a knife, or a shoe, is.

The ontological basis of Aristotle’s ethical claims about money While Aristotle’s assertion on the insatiable experiential desire of money acquisition is explicit in its ethical intent, nevertheless, embedded in the assertion is also a claim with regards to the nature of money, independent of any ethical considerations.20 His ethical assertion that money ought not to be acquired limitlessly is grounded on his philosophical belief that money cannot be acquired limitlessly by the very nature of money, which as an object of acquisition, is simply a means toward the end of becoming wealthy. Given that money is an “object”, and thus like any object is limited and not limitless, this itself poses a limit on the very idea of “wealthiness” itself. Simply put, one ought to acquire money only to the extent that it fulfills one’s need to be wealthy, whatever be the predetermined quantum of wealth to mark one as being “wealthy”. Thus clearly, the acquisition of money in one’s pursuit of being wealthy is an activity that is limited and has a definitive closure. It is, following Aristotle, certainly not an endless one. And as we can see, Aristotle’s reflections on money are fundamentally informed by the underlying idea that money is of the nature of an “object”. Of course, the ethical dimension of Aristotle’s assertion to curtail one’s desire for a limitless acquisition of wealth is appealing. However, his grounding of this appeal on the limited nature of money is counterfactual. After all, at the level of the practical, it appears perfectly possible to in fact pursue monetary acquisition without a definitive limit. This is suggestive of the fact that money is practically unlimited, and thus the pursuit to acquire and accumulate it appears to be unlimited too. But if Aristotle’s conception of money were to hold, such a conception should itself be impossible given his insistence that such a limitless acquisition is rendered impossible by the very nature of money itself. Here Aristotle seems to face a philosophical problem, since his theoretical construal of the nature of money simply does not map

22  Aristotle & the Philosophical Discourse on Money

unto the way that money actually functions in the world. In fact, Aristotle realizes this tension and it is precisely in a bid to resolve it that he goes on to argue that the appearance of money as something limitlessness is but a matter of ignorance, an illusion if you please. In reality, money is limited since money is, after all, an object. And since objects are finite, money cannot be acquired limitlessly. His defense of the limited nature of money would run thus: All tools being objects are limited, that is to say that they occupy specific space. Further, since according to his natural philosophy, space is limited, therefore, only a limited number of tools can occupy it. Consequently, if money is a tool, and given that it is a spatial object, it must be limited. However, this argument fails to hold if we reject the claim that money is an object. That is, Aristotle’s argument loses its ground, the moment we stop treating money as a separable. Non-Aristotelian or non-substantive theories of money differ from Aristotle in this fundamental point in that they do not accept Aristotle’s fundamental premise that money is an object. After all, the concept of spatial limit simply does not apply to concepts or pure distinguishables. For instance, it is meaningless to ask of the concept of “love” if it is limited in number or not. Though of course, one may still meaningfully ask whether the number of people who love, or are in love, are limited, because it refers to actual objects or separables, i.e., persons. It is this move, of construing money purely in terms of a separable or as an object that allows Aristotle to defend the impossibility of money as being limitless, and lends itself to a formidable substantive ontological stance pertaining to the nature of money. However, Aristotle’s move lacks the formidability which he believes is imparted to his reconciliation of the ethical and the ontological. In fact, as we shall now argue, the sense of this formidability emerges precisely by either diluting or ignoring key conceptual distinctions. To begin with, Aristotle, like his contemporaries, firmly believed that the origins of economic transactions lay in a barter system that prevailed prior to the emergence of money. In accordance with the basic sketches of the transition from the barter system to a monetary economy, money is, therefore, unproblematically seen by Aristotle as an objective medium of exchange. To be fair to Aristotle, the sole monetary system in place during his time being that of coinage makes it less problematic to have thought of money as an object of a special kind since coins were the actual operative objects of monetary exchange. In light of the previous chapters we can thus rephrase this to mean that for Aristotle, the fact that money is a medium or a tool entails that money is a separable and is not a pure distinguishable.

The barter narrative is central to Aristotle’s ontological convictions on money Though being a medium of exchange does not suggest that the medium is, in fact, an object, Aristotle, however, believes that such a necessity is obvious. But clearly,

Aristotle & the Philosophical Discourse on Money  23

the concept of a medium in itself does not necessarily invoke the notion of an object. For instance, maintaining that “language” is a medium of communication does not entail that language is an object. In Aristotle’s framework, money is construed as an object that mediates the exchange of two commodities. In effect, he holds that there must be an object which performs the function of exchange, and, in this way, for him, “medium” gets conflated with the notion of an “object”. In other words, Aristotle does not make the distinction between the function of exchange or exchangefunction and the object that performs this mediating function. While objects may perform the mediating-function, the latter cannot be unproblematically held to be identical with the former. Therefore, in Aristotle’s conception of money as a medium of exchange, the notion of function which is a distinguishable consequently gets conflated and reduced to the notion of an object that performs this function, which on the other hand is, clearly a separable. Further, the establishment of such a relationship of identity between a medium and an object demands the universal affirmation that all mediums are objects. Such an affirmation clearly forecloses the possibility that there may be other types of non-object realities that perform a function. Consider the case of love, which is a mediating feeling between two people. A gift from one to the other is merely a symbol of the love, not love itself. In a similar manner we could well construe that the transference of a coin from one person to another is simply a symbol of the exchange-function. Given Aristotle’s foreclosure of any such possibility, for him, the representative object that symbolizes money, i.e., the coin, comes to be seen itself as that which is merely being represented by the object, namely, the exchange-function. In simple words, Aristotle fails to distinguish the coin, which is the representative of the exchange-function, from money itself, which is what the coin stands proxy for. In other words, Aristotle discounts the fact that money may be represented by symbols that are not objects, and that the object or the coin is merely one particular symbolization of the exchange-function, that is known as money. In necessarily identifying the medium with an object, Aristotle hypostatizes the concept of medium of exchange and, therefore, construes the medium as an object. He seems to overlook the fact that it is one thing to make a claim about a medium of exchange and quite another to make a claim about the object that renders the exchange between commodities possible. As one can see, the notion of the medium of exchange can be construed as a pure relation or a pure distinguishable and, therefore, cannot be predicated any qualities per se that can be attributed to the object that symbolizes it.That is, though the coin symbolizing the exchange-function or money may be silver in color, nevertheless, this color predicate cannot be transferred over, as a predicate of the exchange-function or of money itself. It would make no sense to literally claim that money is silver in color. Likewise, Aristotle overlooks the fact that, the attribute of being limited or unlimited, in relation to the object that symbolizes the exchange-function, cannot be unproblematically transferred as an attributive mark of money itself. Thus, as can be seen, Aristotle fails to distinguish between that which is represented, the exchange-function, or monetary value, and that which represents it, i.e., the coin.

24  Aristotle & the Philosophical Discourse on Money

Notes 1 The “nature of money” here is to be understood in the sense elaborated in the previous chapter. 2 The term “political” is here meant in the Aristotelian sense i.e., to do with the constitution and administration of the polis or the city–state. 3 For a contemporary effort that seeks to build an Aristotelian ethics of money, see Robert Skidelski and Edward Skidelski, How Much Is Enough? (London: Penguin Books, 2013). 4 Such a reading is common in works on the history of economic thought. See Alessandro Roncaglia, The Wealth of Ideas (New York: Cambridge University Press, 2005). In this work, Aristotle’s writings on money are seen from the perspective of modern economics, finding in it the germ of economic theory and science. Such a reading interprets Aristotle from the perspective of the concerns of modern economics and not from Aristotle’s own philosophical concerns. For a fuller exposition and discussion of Aristotle’s thoughts on money, see Scott Meikle, Aristotle’s Economic Thought (Oxford: Clarendon Press, 1997), 1–68. 5 We find in Aristotle the historical antecedents of the price-value distinction, as held throughout the history of substantive-essentialism, from Aristotle to Smith and beyond, wherein price is considered to be changing and value stable. 6 Descartes’ mind–body distinction is an example of hypostatization since it holds that mind and body are two separate parts of the human being and are not merely distinguishable aspects of one integral whole. Further, Descartes hypostatizes both mind and body by treating each as though they were independently existing objects, thus leading to the question of their interaction. 7 While there are important differences in the philosophical reflections on monetary value among these thinkers, this section of our book attempts to foreground their commonality, as embedded in the substantive-essentialist paradigm generated by Aristotle’s philosophical reflections on money. Thus, while Smith’s development of the nature of monetary value diverges in some important ways from that of Aristotle, these divergences are themselves launched from the common substantive-essentialist ground which we wish to highlight. Similarly, while Marx’s thoughts on money and monetary value are novel in that it charts a course that allows it to explain the substructure of the capitalist mode of production, and therefore, its relation to the concept of “alienation”, these Marxian excursions are, nevertheless, premised on the substantive-essentialism of Aristotle. 8 Michael Sandel has in recent years highlighted the ethics of this phenomenon by arguing for “markets for society” rather than “market societies”. However, Sandel doesn’t explore the ontological underpinnings of this thought. Aristotle not only made a similar ethical point, but also provided the rudiments of an ontological understanding. See Michael Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Penguin Books, 2012). 9 According to Aristotle, money can have no other telos because each object whether natural or artificial, can have only a singular telos. Two or more teloses for the same object would render the concept of telos meaningless since it is the telos that grounds the nature of the object. It is, therefore, the notion of telos that lends uniformity to existence as such. Consequently, a non-teleological nature would have no structure, and therefore, no uniformity and this implication is not acceptable to Aristotle. For Aristotle’s defense of the notion of telos based on the uniformity of nature, see Aristotle, Physics (book II), trans. Robin Waterfield (Oxford: Oxford University Press, 2008). It is precisely this necessary link between the “unnatural” and the “unethical’” established by Aristotle that Marx comes to creatively invoke in formulating his critique of the capitalist mode

Aristotle & the Philosophical Discourse on Money  25

of production. For Marx too, whose framework for monetary value is embedded in Aristotelian substantive-essentialism, it is the ontological unnaturalness of the capitalist mode of production that renders the capitalist’s exploitation of labor as unjust. Further, it is this debate between the naturalness of money or the unnaturalness of the “moneyform”, that is also at play in the debate constructed between Smith and Marx. 10 We use the term “economic” in Aristotle as the ethics and politics of property acquisition and use. This use of the term corresponds in essence to what Richard F. Crespo has referred to as Aristotle’s use of the term in a “broad sense”. See Richard F. Crespo, Philosophy of the Economy: An Aristotelian Approach (London: Springer, 2013), 21–24. 11 When seen from the perspective of his teleological approach to philosophy, Aristotle’s treatment of the ethics of money is understandable. Since eudaimonia is the telos of human beings, all objects used by human beings must find a relation to eudaimonia. In turn, the object’s relation to eudaimonia determines the telos of the object. This is only true of artificial objects and not of natural objects since these have a given or inherent telos. For instance, the telos of human being is not determined by eudaimonia (this would be an obvious circularity). Also, the telos of the four elements is not determined by the telos of the human being. Since money is an artificial object, its telos is determined by its relation to eudaimonia. Further, it is a tool used in the fulfillment of eudaimonia and is therefore merely of instrumental value. In effect, it draws its usefulness from the end toward which it is being used as a tool. For Aristotle’s view on eudaimonia, see Aristotle, Nicomachean Ethics (book I), trans. David Ross (Oxford: Oxford University Press, 2009). 12 See Aristotle, Politics, trans. C.D.C. Reeve (Cambridge: Hackett Publishing Company, 2008), 15; Arist., Pol. 1.9, 1257a1–1257a5. 13 What we have called “economic acquisition” is what Aristotle terms as “property acquisition”. 14 Aristotle, Politics, trans. C.D.C. Reeve (Cambridge: Hackett Publishing Company, 2008), 15; Arist., Pol. 1.9, 1256a–1257b40. 15 Ibid., 17; Aristotle 1998, 17; Arist., Pol. 1.9, 1257b25–1257b30. 16 Ibid.,17; Arist., Pol. 1.9, 1257b25–1257b30. He holds both, that the end is limited and therefore, the means are limited. He does not provide any argument to support the claim that because ends have limit, the means that lead to those ends are limited. In fact, it is not clear what it would mean to claim that means have limit. 17 Aristotle, Politics, trans. C.D.C. Reeve (Cambridge: Hackett Publishing Company, 2008), 15; Arist., Pol. 1.9, 1256b35–1257b40. 18 It is justified to hold that eudaimonia calls for a limited use of objects or tools, because eudaimonia is a state that arises out of the appropriate use of means toward an end. By definition, ends have a point of termination. This point of termination is its limit. In the context of any human activity, to go beyond its proper “end”, is to have crossed its limit. Consequently, since end or telos is natural, limit is also natural. Based on this argument, Aristotle would be justified in claiming natural limits to any human activity. 19 If by tool is meant just a means to achieving a specific telos, this much is unproblematic. In fact, in this sense, money too may be seen as a tool without any philosophical problems arising. However, in going on to claim that all tools are “limited in size and number”, Aristotle has stated more than what is obvious. 20 The ethical claim hinges on the concept of telos or “end” and not on the nature of the object. Therefore, a purely ethical claim would not need to make any claims about the nature of the object. Since Aristotle does make a claim about the nature of the object (in that it is “limited in size and number”), we can conclude that he makes an ontological claim.

4 OBJECTS, MONEY, AND THE GROUNDS OF MONETARY VALUE

Two aspects of the money-object: use and exchange As we saw, Aristotle’s blurs the distinction between that which is represented, i.e., the exchange-function or monetary value, and that which represents it, i.e., the coin, and assumes a relation of identity to hold between the two. However, this is not an oversight on his part. Rather, it is a fallout of the manner in which he conceives the money-object, which in his case is the coin. Within Aristotle’s framework, the money-object has two aspects and, therefore, fulfills two distinct functions. Introducing this aspectual modality of the object (coin) that symbolically represents money or monetary value, Aristotle introduces the distinction between the principle of use and the principle of exchange, with the latter being ontologically dependent on the former. Use refers to the aspect of money-object as an object, while exchange refers to that aspect of the money-object when the object becomes a medium of exchange. Since for Aristotle the exchange-function is ontologically dependent on the object, therefore, the exchange-value is ontologically dependent upon the use-value of the money-object. Therefore, though Aristotle reduces the exchangefunction to an object, it entails that neither the use nor the exchange aspect of the object can be identified with the exchange-function or money, as such, in isolation. And since for Aristotle the exchange-value is ontologically dependent upon the use-value of the object, it therefore, enables us to understand why, for him, objects which were legitimate candidates to stand proxy for money were ones that already had a high use-value. That is, the adoption of a particular object to stand proxy for money must already have the aspect of being intrinsically useful. We must already consider it as being useful even before we use it as money. Thus, in the case of metallic coinage for instance, the metal itself should be used for other purposes, apart from being used as a medium of exchange.1 Therefore, from Aristotle’s perspective, it is clear why gold, silver, or bronze come to be used as the object that symbolizes

Objects, Money, and the Grounds of Monetary Value  27

money. After all, all of them were already deemed intrinsically useful. For Aristotle, when we adopt such an object as money, we now confer upon it the other aspect of exchange-value in addition to its intrinsic use-value. It is this intrinsic utility of the object that Aristotle holds as the key to explain the emergence of the exchangefunction. Aristotle’s tells us, At first, its [the coin’s] value was decided simply by size and weight, but finally people also put a stamp on it, so as to save themselves the trouble of having to measure it. For the stamp was put to indicate the amount.2 But the history of the evolution of monetary systems paints a slightly different picture for us. Historically speaking, the relation between the intrinsic utility of the metal in which the coin was minted, and the exchange-value conferred upon it, did periodically get seriously undermined to the extent that people had begun to doubt if the monetary or exchange value of the coins were necessarily related to its weight or size. And this is all the easier to see in our world of paper, plastic, and electronic forms of money, most of which is not backed by any object that has an equivalent intrinsic use-value whatsoever. Clearly, the paper of your paper bills or currency notes that you hold in your hands today do not have much intrinsic use-value in any philosophically significant sense, though they undoubtedly have an exchange value. However, this unrelatedness between the nature or intrinsic utility of the object representing money and the exchange value it holds would probably have been more difficult to discern in Aristotle’s time given their coinage systems.3 But it is clear that the intrinsic use-value of the object is not in any way necessarily related with its exchange value. Consequently, if no such necessary relation of dependency obtains between the intrinsic value (use-value) of an object with its exchange-value (monetary value), then the challenge that looms large is to explain precisely how the object symbolizing money acquires its exchange-value. Thus, unlike Aristotle, if one does not hold the view that the exchange-value of the money-object is derived from the intrinsic value (use-value) of the object standing proxy for money, then one is now at a loss to explain the sudden emergence of the monetary value of the money-object.

Aristotle’s oversight or philosophical sophistication? However, as we have seen, the failure to distinguish between monetary value and the object representing it is not an accidental mistake in Aristotle, nor is it a matter of oversight on his part. The roots of this conflation lie in Aristotle’s overall philosophical approach that seeks to make sense of existence by mapping them unto the ten fundamental categories of nature that he proposes, with the category of substance being the primary among these.4 Within his philosophical framework, these categories enable us to categorize and order the various kinds or types of existence that we encounter. Broadly put, these categories are what enable us to order all of our experiences. A category is, as per Aristotle’s understanding, “things said without

28  Objects, Money, and the Grounds of Monetary Value

any combination”.5 The import of the phrase “said without any combination” is ontological and not merely linguistic, since, as is clear from his On Interpretation, Aristotle conceives of language as a medium that maps the world.6 Therefore, within Aristotle’s framework, to be able to speak of something “without combination” entails that it can exist in isolation without any combination as well.7 Aristotle lists out “substance, quantity, quality, relation, place, time, positionality, having, doing, and being affected” as the exhaustive list of categories.8 Now given that for Aristotle money as a medium of exchange is an object, it entails that money as a medium of exchange will fall squarely within the category of substance. In the previous sections, we have referred to medium of exchange as a relation or function. These conceptions were used keeping in mind the categories that Aristotle himself had at his disposal from within his philosophical framework. Given that he did have ten categories to work with, Aristotle could have conceptualized the notion of medium of exchange, or money, in terms of any one from his set of ten categories. Consequently, he could well have alternatively theorized the medium of exchange in terms of a relation (relative), a quantity (given that exchange value is determined as quantity), a function (doing), or even a being-in-a-position (as money being “in between” two commodities as the exchange facilitator). Such an alternative stance would likely have led to very different philosophical commitments regarding the nature of money. He chooses, however, to think of money under the category of substance. “That which is called a substance”, he writes, “…is that which is neither said of a subject nor in a subject, e.g., the individual man or the individual horse”.9 However, conceptualizing money as a substance is completely understandable and rational from the point of view of the ontological framework he commits himself to in the Categories. In his Categories, Aristotle is clearly of the opinion that one cannot think of any of the other categories as self-standing, or, as existent on its own, without the existence of substance. This is clear in his statement that “All the other things (i.e., categories) are either said of the primary substances as subjects or in them as subjects”.10 For instance, relation cannot exist without substances to relate and neither can quantity or function. In order for relations to exist, substances must exist and be related to each other. Similarly, in order for quantity to arise, there must be things or substances that can be quantified. In the same vein, nothing can be done nor any action performed, without the existence of a substance that performs the action. Unlike his later metaphysics, the concept of substance in his Categories is devoid of finer nuances and is heavily shaded with empirical overtones. Aristotle’s understanding of substance in his later works is not the same as in his Categories. In Categories, empirical objects qualify as substances. Therefore, a table is a substance, as is Socrates. On the other hand, in his Physics and in his Metaphysics, his notion of substance goes beyond the empirical object, and is also construed as a form. From his own instantiation, roughly speaking, Aristotle in Categories takes substance to be, what we have earlier termed, a separable, for instance, an individual man like Socrates or other things that exist around us. Further, once the substance-Socrates exists, he may be related to somebody as a husband, and, he may be “one” in quantity, and, he may be a philosopher by function. As is clear from this, within Aristotle’s early

Objects, Money, and the Grounds of Monetary Value  29

ontological framework, substance is the primary category of existence, with all other categories being secondary to, or dependent upon, it. Given this commitment, the legitimate foundation of any knowledge of a thing, must ultimately begin with the knowledge of the substance that constitutes the thing. Since substance is the primordial category, therefore, the ultimate ontological knowledge must pertain to the nature of substance itself. It is this notion of substance, rather than its more nuanced version found in his later works, that informs Aristotle’s reflections on the nature of money. It thus becomes clear why Aristotle believes that an understanding of a medium of exchange, or money, if it is to be deemed accurate and legitimate, must ultimately disclose the nature of the substance wherein this function of exchange resides. Thus, Aristotle cannot consider the medium of exchange, or money, under any other category, because it is dependent on the substance of the object that stands proxy for the exchange-function. Therefore, the ontological ground for monetary value or the value of the coin, which enables it to perform a specific exchange-function, is to be sought not in the function itself but rather in the underlying substance – the materiality of the coin – that makes such mediating-functions possible. This, therefore, further explains Aristotle’s emphasis, that, the exchange-value derives its valuation precisely from the ontologically prior use-value of the substance that constitutes the coin, since the use-value is intrinsic to the substance that constitutes it. In the light of this explication, Aristotle’s assertion that, “none of the things that promote the end is unlimited”11 can now be seen as implying that no function can be served without a substance serving that function, since within Aristotle’s framework of categories, functions are clearly dependent upon the substance executing that function. Furthermore, since objects are primary and functions are dependent, it becomes clear now why Aristotle insists that the ontological nature of money is of being limited. Clearly, no object is unlimited in size and number. To claim that there exists a limited number of human beings, or a limited number of objects to stand proxy for the exchange-function in the world, is a perfectly reasonable position from within his philosophical framework. After all, there are certainly a limited number of coins or a limited number of shoes that can be used as a medium of exchange. Therefore, Aristotle is ontologically committed to the claim that money must necessarily be limited. As a corollary, Aristotle also remains firmly committed to the claim that one cannot, without violating the very nature of money, give in to the unnatural insatiable urge of the limitless acquisition of money.

Is money a spatial entity? Aristotle and the fallacy of separability As we had stressed earlier, Aristotle treats substances as spatial entities, and as what we have called separables. In that he does not, at least in his Categories, distinguish between substance as a spatial object and substance as a non-spatial category. Substances are necessarily spatial for him. Interestingly, and as we had indicated earlier, Aristotle did have a non-spatial notion of substance at his disposal as well. For instance, in his De Anima, he construes the soul precisely in non-spatial terms while

30  Objects, Money, and the Grounds of Monetary Value

asserting that it is nevertheless a substance. In contrast to his construal of money, he does not imagine the soul as being a spatial object, even though, like the coin, he conceives of it as a substance. This shows that his understanding of substance in his Categories is not the same as his conception of substance in De Anima. Further, this being the case, it shows that Aristotle did have a non-object model on which to conceive of the coin (since, like the soul, it is a substance), but he chooses not to. Thus, it follows that Aristotle, in imagining the categorical nature of the coin in his mature and relatively later works, Nicomachean Ethics and Politics, falls back on an earlier understanding of substance as presented in his Categories. But in doing so, Aristotle conflates a distinguishable with a separable. That is, Aristotle, while construing the nature of money fails to distinguish epistemic or linguistic substance (substance as a category) from ontological substance (substance as an object). However, from the distinction between substance as an object and substance as a category, it follows that categories are concepts in that they are the result of an epistemic abstraction or an epistemic creation.12 The category of substance is as much a conceptual abstraction as is the category of relation or quality or quantity. If the distinction between the two types of substances is maintained, it follows that no category is objectively existent, since all categories are epistemic constructions or what we have called, pure distinguishables. Since Aristotle does not maintain this distinction, he is led into thinking that all conceptual abstractions must have corresponding ontological or objective reality. That is to say, all substances must be existent and independent objects. While, categories are no doubt distinguishable from each other, since we may isolate the color of a flower from its shape,13 however, the color cannot be conceived as literally existing in space independent of any object, in the way that the flower, as an object, does. Similarly, the relationality of the table with the person sitting at it may be distinguished from its function but, this does not imply that the relation and the function are independent realities which could be separated spatially. The tendency to conflate distinguishables and separables is what we call the fallacy of separability, and it is the committing of this fallacy that leads Aristotle to hold that all categories are separable from each other, in the way that objects are spatially independent of each other. Given that he holds substance to be the primary category and identifies this category with empirical objects, he is led to uphold the primacy of the object that stands proxy for money (for instance, the silver coin). While he does maintain that apart from substance, no other category may be spoken of independently, he does not recognize the abstract nature of categories as such. He, therefore, does not recognize the possibility of money in terms of any abstractions either. His conception of money is a natural fallout of his ontological framework, through which, he is able to construe of money in terms of a spatial object, and consequently argue for it being “limited”. It is on the basis of this supposed fundamental nature of money as being essentially “limited” that he is able to constrain reflections on the nature of money under the thumb of ethics, without acknowledging that it may, as an object of philosophical inquiry, need more nuanced philosophical reflection than he explicitly gives it.

Objects, Money, and the Grounds of Monetary Value  31

Notes 1 If one was to take a skeptical stance toward the identification of the object and the exchange-function, it could open up a mode of undermining Aristotle’s own substantive ontology of money. In fact, Simmel takes this line of thinking to its logical conclusion when he claims that an object, once used as money, gains its monetary value from its use as money and not from its non-monetary uses. Simmel thus uses the tension between the notions of medium and of object in order to undermine substantive ontology, while Aristotle seeks to maintain it through the use-value and exchange-value distinction. This point has been made by Georg Simmel as well when explaining why gold seizes to be anything else but money, when used as the monetary object. 2 See Aristotle, Politics, trans. C. D. C. Reeve (Cambridge: Hackett Publishing Company, 2008), 16; Arist., Pol. 1.9, 1257a35–1257a40. 3 For a full discussion on money and coinage in the ancient Greek world, and of its effects on the thought structures of the time, including that of Aristotle and of metaphysics in general, see Richard Seaford, Money and the Early Greek Mind (New York: Cambridge University Press, 2004), 125–147, 174–190. 4 See Aristotle, Categories and De Interpretatione, trans. J. L. Ackrill (Oxford: Clarendon Press, 2002), 43; Arist., Cat. 16a3. 5 Ibid., 5; Arist., Cat. 1b25. 6 Ibid., 6; Arist., De Interp. 2a19. 7 For instance, to speak of quality as distinct from quantity is to hold that each category is ontologically independent of the other, and therefore, may be spoken of independently from the other as well. 8 Aristotle, Categories and De Interpretatione, trans. J. L. Ackrill (Oxford: Clarendon Press, 2002), 6; Arist., Cat. 2a19. 9 Ibid., 6; Arist., Cat. 2a11. 10 Ibid.; Arist., Cat. 2a34. 11 Ibid., 17; Arist., Pol. 1.9, 1257b25–1257b30. 12 S.S. Barlingay Beliefs, Reasons and Reflections (Pune: Indian Philosophical Quarterly Publications, 1983), 10, 45–47. 13 Ibid., 45–46.

5 MONEY AND THE MODERN SCIENTIFIC PARADIGM

Monetary alchemy: does monetary value emerge from nothing? The modality in which Aristotle framed the question of the nature of money informed subsequent philosophical writings on money. Even during the modern period, which witnessed significant sweeping changes across the philosophical landscape, Aristotle’s conception of money, nevertheless, remained the dominant framework within which the nature of money was imagined and conceptualized. This speaks volumes about the length of Aristotle’s philosophical shadow in historical terms. While it will be shown in this chapter that though the foundations laid down by Adam Smith for the discipline of economics initiated a fundamental shift in the manner in which the value of money was conceptualized, this shift was nevertheless the logical finale of a process that had begun with Aristotle and that ran through all of modern thought, via John Locke. Locke’ reflections on the nature of money make it clear that in the modern era money was still being thought through an ethical and political lens. It is clear to see that Locke’s reflections on money are considerations and are responses to key aspects of Aristotle’s way of thinking about money. In fact, in Locke’s Second Treatise on Government, he too traces money as emerging as a medium of exchange between two commodities in the barter system. However, to be clear, Locke’s mode of thinking about the nature of money is at once both, a nod to Aristotle, as well as a harbinger of the treatment of monetary value in the coming scientific paradigm of the eighteenth century.1 If Aristotle’s engagement with the notion of monetary value emerges out of the challenges of the then changing economy, and constitutes a response to the movement from a pre-monetary to a monetary system,2 in a similar fashion, Locke’s engagement with the notion of monetary value emerges as a desperate response to the coinage crisis that England faced during his time.3 According to Locke,

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the mystery surrounding money is not a mystery at all but is only a result of the crafty rationalizations of interested parties, who obscure its reality, in order to work the money system toward their own ends. Locke’s attitude toward money may be summed up by his claim that “…this business of Money and Coinage is by some Men…thought a great mystery, and very hard to be understood. Not that truly in itself it is so….”4 Locke finds himself during a time when the value for an ounce of silver in the market became higher than its mint value. As a result, silver from the coins was being melted down and sold for a profit at the market.This resulted in a devaluation of the coinage that was in circulation then. Locke, much like Aristotle, thought of this crisis not merely as presenting a picture about commerce and the market, but also as mirroring the ethical and political spirit of his times. However, the crisis also forced Locke and his contemporaries to rethink the fundamental Aristotelian thesis that the exchange value of a coin, i.e., its monetary value, is ontologically grounded in its intrinsic use-value. Thus, in this phase of transition in the journey of the philosophical discourse on money, while Aristotle’s influence continued to be present in providing the basic structure within which the value of money was conceptualized, we nevertheless begin to see a movement away from some of Aristotle’s insights and conclusions with regard to the nature of monetary value. Locke, in his 1691 work, Some Considerations on the Lowering of Interest and the Raising the Value of Money, remarks on certain aspects of the monetary policy along with his recommendations to tackle the coinage crisis. Here, we find Locke arguing against the proposal to increase the exchange-value of the coins in circulation by means of a fiat, thereby raising the money value of each coin above the weight of its silver content. Locke argued against such a proposal by invoking the substantive distinction between real and apparent value, which was introduced by Aristotle in terms of the distinction between the intrinsic use-value and the derivative exchange-value. To Locke, the divergence between the quantity of metal in the coin and its exchangevalue posed not only an ethical problem, but an ontological one. As Locke saw it, to increase the exchange-value of the coins in circulation purely by means of a fiat was doomed to fail in responding to the crisis because it was nothing short of a shameless manipulation – a monetary alchemy that sought to create exchange-value ex-niliho or out of nothing – which for him was a metaphysical impossibility, for that would mean something would be created out of nothing! In addition to the metaphysical nonsense that such a move would entail, Locke argued that it would be downright unethical to manipulate the real value5 of coinage, by illegitimately inflating its apparent value.6 In other words, for Locke, this was equivalent to a form of hypocrisy wherein one projects the value of an object to be more than its actual intrinsic worth.

Coinage, monetary value, and Locke’s abstraction of weight or quantity Locke’s objections are clearly based on the Aristotelian thesis that the value of the coin is essentially and necessarily linked to the quantity or the weight of the metal

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that constitutes the coin. Therefore, any valuation of coinage that is not identical to the quantity or weight of the coin is metaphysically illusory. Locke asserts, The intrinsick value regarded in these metals…is nothing but the quantity which Men give or receive of them. For they having as Money no other Value, but as Pledges to procure…only by their quantity, ‘tis evident, that the intrinsick Value of Silver and Gold used in Commerce is nothing but their quantity (sic).7 As is evident, Locke’s view reflects the Aristotelian conviction that all exchangevalue in the market must be grounded in something ontologically real. The weight of the coin is, in Locke’s view, the substantive ontological basis, or the source, and thereby the cause of its exchange-value. Underlying this thesis, once again, is the distinction between the real and the apparent value of money which we have already encountered in Aristotle. As we saw, in Aristotle’s case, the real value was identified with the use-value of the object that represented money, while in the case of Locke, it is identified with the weight of the metal that constitutes the coin. In this way, and to that extent, Locke marks a shift from Aristotle in that the source of monetary value, although ontologically necessary and philosophically important, is to be found in an abstraction8 of weight or quantity of the metal itself and not on a concept like use-value which resides outside of the object that represents money. One can, in this philosophical move, already see the shift toward a more naturalized philosophy of monetary value which would ultimately find its culmination in the scientific paradigm laid out by Adam Smith. In Locke’s view, consistent with the basic tenets of metaphysics going back to the earliest philosophers and crystalized by Aristotle, monetary value must be necessarily determined by its intrinsic value as opposed to an arbitrary legislative evaluation. Such legislation, if at all passed, would be metaphysically “impossible”, and therefore, merely illusory and out of step with the underlying reality. In other words, given Locke’s halfway empirical and halfway Aristotelian fold, he commits himself to the view that no legislation can truly alter or override what is prescribed by nature herself. Thus, for Locke, if one ounce of silver is traded above its value in weight, it has, without a doubt, deviated from its intrinsic value as prescribed by nature. To argue otherwise would lead one to concede that money has no real value apart from its market value. But this would then lead to the conclusion, unacceptable to both Aristotle and Locke, that the distinction between real and apparent value is superfluous, and, that the fluctuating exchange-values have no stable ontological basis. Moreover, to accept such a position would be, for any modern philosopher of this period, tantamount to admitting that the kind of monetary crisis that England was facing was inevitable, and, unavoidable since the exchange-value can either decrease or increase irrespective of the intrinsic value of the metal constituting the coin itself. Therefore, for Locke, to give away the Aristotelian ontological commitment of the exchange-value as being firmly grounded in some natural intrinsic value is to gear toward the inevitability of such monetary crises without any tenable solution. This

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conclusion is not only metaphysically unacceptable to a thinker like Locke, who has clear substantivist leanings, it is also, ala Aristotle ethically and politically dangerous, and therefore, unacceptable. In fact, for Locke, the monetary crisis that he and his contemporaries were facing was precisely the failure on our part to conform to this Aristotelian commitment. With the devaluation of coinage being a reality in Locke’s world, this failure was manifest in the economy, where the market value of silver was in divergence from the weight of the coin. In other words, the intrinsic value demanded by the coin in its sole aspect of being silver, was higher than the exchange-value that was conferred upon it. Locke took this divergence as a clear manifestation of the fact that the real value of the coin must, therefore, necessarily reside in its weight and that any attempts to create a divergence between the weight and value of coinage is a case of ethical and political manipulation, and, an open invitation to a monetary crisis. This theoretical perspective is summed up well in Locke’s statement that “… nothing will pay debt but money or money’s worth, which three or four lines writ on paper cannot be”.9 After all, as we have seen Locke emphatically maintains that “…it is certain, that one Ounce of Silver is always of equal value to another Ounce of Silver considered in its intrinsick worth”.10 However, by virtue of this very shared ontological commitment, Locke, like Aristotle, reduces money or the exchange-function to an object – although, admittedly, as an abstraction of an object – since he reduces the monetary value of a coin to the value demanded by the intrinsic quality of the quantity of metal that constitutes the coin. In this manner of conceptualizing monetary value, which is philosophically located somewhere between the ethical and ontological moorings of Aristotle and the empirical or scientific tendencies of Adam Smith, a coin has value that is exactly equal to its quantity or to the weight of the metal that constitutes the coin. An ethical and political implication of this position is the immorality of any attempt to alter the exchange-value of a coin to be either lower or higher than its intrinsic value. According to Locke, money is accepted as a medium of exchange in the process of commerce precisely because of the assurance that the coinage is constituted by a certain amount of metal whose weight is equivalent to its exchange value. This distinction between intrinsically and the extrinsically determined exchangevalue leads to the creation of the distinction between value and denomination, where the latter is conventional and externally determined, while the former is its ontologically determined by nature. Consequently, “…the raising of money then signifies one of these two things; either raising the value of our money or raising the denomination of our coin”. However, as already noted, Locke’s quantity or weight theory of value implies that the exchange value of a coin could only be raised by increasing the quantity of metal that constitutes it. Consequently, any increase in denomination without an equivalent increase in quantity is a distortion of the fundamental nature of money. Locke explains his position in the following passage: Silver therefore being always of equal Value to Silver, the value of Coin, compar’d with Coin, is greater, less, or equal, only as it has more, less or equal

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Silver in it: And in this respect, you can by no manner of way raise or fall your Money…wherein an equal quantity of Silver is always of the same Value with an equal quantity of Silver, let the Stamp, or Denomination be what it will… Silver, i.e., the quantity of pure Silver separable from the Alloy, makes the real value of Money. If it does not, Coin Copper with the same Stamp and denomination, and see whether it will be of the same value (sic).11 The import of the passage quoted above is that the weight of a certain amount of silver is, and will always be equal to that same weight of silver, and that, while one may be at liberty to change the denomination of the coin through an act of legislation, this act would nevertheless be incapable of altering its intrinsic value.The contradiction as he sees it is that in changing the denomination, legislators paradoxically claim to have the magical power to render one ounce of silver more or less than one once of silver without either adding or taking away some silver from a given ounce of silver. Seen from an empirical perspective, this would translate to the view that one ounce of silver should always exchange for the price of one ounce of silver, no more and no less. However, if in actuality, one ounce of silver does exchange for more or less than the price of one ounce of silver, the kind of thought that Locke espouses to, would insist that this is a market anomaly that must be corrected. Just like Aristotle thought that the emergence of money interest, although a market reality, is unnatural and, therefore, should be done away with, Locke views unequal prices for one ounce of silver to be an aberration, and therefore, a malpractice. For Locke, the mere change of the denomination of the coin may lead to “more money in tale” but not “…more money in weight and worth”.12 The word “tale” refers to an ontological fiction or an illusory rise in the value of money by changing the value of money arbitrarily without any concern or regard for its real or intrinsic value.

Value in weight versus value in tale However, the main philosophical problem in Locke’s ontology of money is the distinction between value and denomination, i.e., between value in weight and value in tale. This terminology tracks the deeper philosophical distinction between the real and the apparent value of an object.Various dichotomies have been used to describe the substantive distinction between the empirical realm and its ontological ground; real–apparent, intrinsic–extrinsic, or value–denomination. There are others apart from these as well, as for instance, value-price. However, while the terms may be diverse, the conceptual scheme underlying their ontology is the same, namely, that of substantive-essentialism. In each of these conceptual dichotomies, one concept of the pair refers to empirical reality which is marked by fluidity and change and where human agency and interventions play a role, while the other concept in the pair refers to the ontological ground of empirical reality or nature that is stable and unchanging and provides the ontological preconditions for the existence of empirical reality. As a result of working within this dualistic philosophical framework,

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Locke is faced with the perplexity that while value cannot really be changed except through a change in weight, it does in fact change empirically.13 The philosophical problem with the conceptualization of monetary value propounded by thinkers like Locke, just as in Aristotle, is that it is fundamentally entrenched in a commitment to the ontologically hierarchical distinction between the real intrinsic value and the extrinsic exchange-value, with the latter firmly rooted and governed by the former. However, the experiences of the actual market of commerce give way to skepticism toward the legitimacy of this commitment since the empirical realm of money does not seem to conform to the ontological realm and seems to have a mind of its own. After all, if the insistence on the primacy of the ontologically real and thereby of intrinsic value were to hold, the monetary crisis that Locke and his contemporaries were facing would surely be an impossibility and not merely an aberration. In other words, the ontological commitment that sees its origins in Aristotle seems to be at loggerheads with how the actual market operates. On the contrary, the market rather seems to suggest that the exchangevalue is independent of the intrinsic value of the coin. Locke’s commitment toward a naturalistic empirical paradigm, therefore, finds itself at a crossroad, wherein it is impossible to reconcile his substantive-essentialism with the empirical facts of the world of commerce, without breaking down his commitment to Aristotelian substantive premises. It is only in the works of the classical political economists like Smith and Ricardo that the tension between “real” and “apparent” value is somewhat, even if imperfectly, resolved through a naturalistic or scientific reimagining of what these terms mean.

Notes 1 See John Locke, Second Treatise of Government (Cambridge: Hackett Publishing Company Inc., 1980). 2 Richard Seaford, Money and the Early Greek Mind (New York: Cambridge University Press, 2004), 125–136. 3 For a contextual placement of Locke’s thought on money from the perspective of the coinage crisis facing England, see Felix Martin, Money: The Unauthorised Biography (London:Vintage, 2014), 122–138. 4 John Locke, “Some considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money” in Locke on Money, ed. Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), 330. 5 In Locke’s language, real value is referred to as “intrinsick” (sic) value. 6 The concept of apparent value is identical with that of empirical value, which is identical with that of price. 7 John Locke, “Some considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money” in Locke on Money, ed. Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), 234. 8 Locke’s identification of weight is an “abstraction”, because it distinguishes between the various qualitative aspects of the coin and its seemingly intrinsic quantitative aspect of weight. Having done so, he extracts the concept of weight and isolates it from the rest of the coin’s myriad characteristics, holding it out as the one defining characteristic that

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imparts it with monetary value. This move ignores, or seems to forget that weight itself is, in origin, a relative term and that one object can only be weighted in comparison to another object. In other words, weight requires a standard measure by which the weight of other objects is measured. To abstract the concept of weight and to think of it purely quantitatively, therefore, while a useful practice, hides the underlying truth that the weight of the object is not an intrinsic property of the object, but is, rather, one way of expressing its heft, so to speak, in relation to another object. 9 Ibid., 232. 10 Ibid., 266–267. 11 Ibid., 305. 12 Ibid., 339. 13 A change in empirical value is the same as a change in market value or price.

6 THE POLITICAL ECONOMISTS, THEIR CRITICS, AND THE LONG SHADOW OF ARISTOTLE

The naturalistic turn in the philosophy of monetary value The philosophical treatment of monetary value as seen in the works of classical political economists, and one may include Marx among these, is at once both an ode to Aristotle and a departure from his mode of thinking about it. It is an ode because despite all the developments within intellectual history since the time of Aristotle, the classical political economists – and its critics such as Marx – fundamentally adopt Aristotle’s substantive and essentialist paradigm with regard to the nature of money or monetary value.They do so in so far as they posit an underlying ontological substratum that lends “real” value to money, i.e., to monetary systems or in other words, to the empirical manifestations of monetary value. At the same time, their specific naturalistic or scientific deviations from certain Aristotelian themes carve out a new framework for the understanding of monetary value, even while remaining firmly lodged within the same substantive framework. In fact, notwithstanding their divergences, within the ambit of contemporary economic thought, it is the works of the classical political economists that contribute immensely to strengthen the Aristotelian framework, primarily because these thinkers, such as Smith and Ricardo, participate within the Aristotelian paradigm in a revisionist mode, thereby rendering Aristotle’s thoughts a hue of the modern spirit. However, unlike Aristotle, Smith does not offer a teleological analysis given his commitment to the form of naturalism that had gained prominence following the works of thinkers like Gassendi and Bacon. Nevertheless, like Aristotle, he does recognize the function of money to be a medium of exchange and uses this as his launching pad for an analysis of money. Further, Smith’s acceptance of Aristotle’s basic theory of monetary value is seen in his own conjectural history of the development of money which he sees as an evolute of a primitive barter system. And as has been shown in our introductory chapter, the theory of barter contains

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within it the seeds of the substantive view of money.Therefore, notwithstanding his scientific or empirically oriented treatment of various aspects of the world of commerce, Smith remains both a substantive and an essentialist economic theorist, since his acceptance of the barter theory is a tacit acceptance of a substantive ontology, logical essentialism, and economic atomism. In his Wealth of Nations, Smith makes his alliance with the Aristotelian paradigm explicit and underlying this alliance is the fundamental acceptance of the barter system as the precursor to the monetary economy. When Smith adds to Aristotle’s theory of barter, he does so only by way of detail and insight. For instance, he sees clearly that a number of different objects may perform the exchange-function.1 However, the result of this addition, for Smith, is not that of making the distinction between the exchange-function and the object of the exchange. Rather, it further seems to validate the Aristotelian view that money is reducible to the object that stands proxy for the exchangefunction (i.e., the coin). With this acceptance, the tradition of economic thought that dominates first year undergraduate economics textbooks, unproblematically assumes the barter system to be the originary grounds for both the necessity, as well as the genesis, of the monetary economic system. As per this narrative of the origin of money, the coin, and therefore money, was seen as an emergent object, fulfilling a mediating role between commodities. This stance allowed their philosophical reflections on money to be in close proximity with the reflections constituting the domain of “natural philosophy” or the natural sciences. Importantly for the history of philosophical thought on money, the domain of “natural philosophy” was seen not merely as the dominant, but also, as the ideal of systematic enquiry pertaining to nature.We focus our attention here on Smith because it is his novel appropriation of Aristotle’s paradigm that comes to pave the way for the discourse of classical political economy. And it is by virtue of this appropriation that thinkers like Ricardo – as Marx, the great critique of classical political economy himself notes – build upon to generate a more nuanced and mature framework of political economy. While a lot of scholarship has focused on the delineation of Marxist thought on money and monetary value from that of the classical political economists like Smith and Ricardo, there has been considerably less focus on discerning the common Aristotelian ground on which both, classical political economy and its critics like Marx, ground themselves on.2

The quest for a science of money Smith naturalizes economic philosophy in the manner that Locke naturalized psychology, and Hobbes, politics. His project, which is carried forward by Ricardo and Marx after him, is to provide a scientific treatment of economic philosophy in line with the Newtonian mechanistic model.This being the case, economics was sought to be founded on stable and unchanging principles, akin to the fundamental laws of nature. Therefore, the human propensity to exchange and the human disposition toward division of labor were taken by Smith to be unassailable and as given natural facts of human existence. Consequently, these were then taken to be the very

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grounds from where “economics”3 as a science would begin to systematize itself. As seen earlier, the exchange-function was conceptualized by Aristotle as a result of his belief in the barter system as the precursor to monetary economy, thereby, leading him to construe the notion of money as a medium of exchange. However, what Aristotle took to be a result of a teleological analysis came to be considered by Smith, and those who followed him, as a fundamental or innate aspect of human nature itself. This comes through in Smith’s assertion that …the division of labour is not originally the effect of any human wisdom… It is the necessary, though very slow and gradual consequence of a certain propensity in human nature…; the propensity to truck, barter and exchange one thing for another.4 Such a move enabled the seamless transition from a teleological approach as propounded by Aristotle to a more scientific or naturalistic approach, without major alterations in the fundamental tenets of the Aristotelian substantive and essentialist economic paradigm. Economics as a science, therefore, in the hands of the likes of Smith, Ricardo, and Marx presupposed a natural and closed sphere of activity, whose determinate laws could be discovered, just as the laws of physics were discoverable. These laws, therefore, formed the ontological substratum which underpinned the empirical world of fluctuating market prices. Now although Smith adheres to substantive-essentialist framework of Aristotle, the need for the discovery of laws through a “science” arises for these thinkers since they recognize that, in fact, use-value is not itself universally the measure of exchange-value. Smith sees this when he notes that in actuality, objects of great usevalue often demand little exchange-value and vice versa. In this, Smith challenges the Aristotelian universal causal relation between use-value and exchange-value. He writes, The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.5 In this way, both Smith and Ricardo challenge the Aristotelian understanding of usevalue as the underlying determinant of exchange-value. Nonetheless, despite this challenge to Aristotle, while not necessarily based solely on use-value, they agree with the Aristotelian conviction that the determination of exchange-value cannot be arbitrary. Consequently, they maintain that the exchange-value of objects, including any object that may represent money, such as a coin, is determined by various economic factors, which, while conventional, are not arbitrary. These conventional, nonetheless regular and

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uniform determinants of exchange-value or price are among the constituents of the laws of the economic system. However, while these conventional laws may be uniform scientific laws of the economic sphere, they demand an ontological basis. Consequently, these thinkers locate the ontological basis of economic laws on what they consider to be the real source, or, the substratum of the price of all objects, i.e., labor. Since Smith is the first of the thinkers mentioned here to formulate a labor theory of value, his words are reproduced below,6 The value of any commodity…to the person who possesses it…is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.7 The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What everything is really worth…is the toil and trouble which it can save to himself, and which it can impose upon other people… They contain the value of a certain quantity of labor which we exchange… Labour was the first price, the original money that was paid for all things. It was not by gold or by silver, but by labour that all the wealth of the world was originally purchased.8 The terms real and original emphasize the substantive nature of Smith’s theory. Both terms refer to a substratum which forms the bedrock of all that is built on top of it. Smith writes about real price in contradistinction to market price of a commodity. In other words, while I may pay money for something today, the value of the commodity is really the labor that produced it or the labor that it can command.Therefore, Smith holds, in line with Locke, that the value of money too – as with any other commodity – must in some sense emerge from the inherent or intrinsic properties of the object that represents money. However, in their rejection of the Aristotelian notion that exchange-value or price of an object is universally, or even necessarily, determined by its use-value, they come to reject the manner in which Aristotle and Locke addressed the determination of the price of the object that represents money i.e., the coin. Locke had noted that the value or the price of the coin is determined by the quantity or the weight of the metal that constitutes the coin. In other words, Locke did not go beyond the weight of the coin in his search for the price of money. He simply held the weight of the coin as necessarily determining its exchange-value or price. Consequently, the price and the value of the coin were seen to be necessarily equivalent to each other. David Hume, in his writings on economics and commerce, had already extended Locke’s distinction between value and denomination and maintained that coinage is nothing but tale in that it is not linked to any intrinsic value, whatsoever. Smith agrees with Hume, but being substantive in his philosophical convictions, insists that there must, nonetheless, be an ontological ground underneath the fiction. Given that Hume had shown the value of the coin to be “fictitious”,9 he had effectively

Economists, Critics, & Long Shadow of Aristotle  43

rendered the Lockean answer untenable, by arguing that the price and the value of the coin need not necessarily be equivalent. As Smith sees it, the metal that constitutes the coin was, therefore, insufficient to explain either the price, or the value of the coin. Rather, the price of the coin was to be sought in much the same manner as any other commodity, i.e., through the empirical laws of the economic system. This makes it clear that Smith and Ricardo recognize that money is itself a commodity and not merely a mediating object between two commodities.10

Abstract labor as the ontological ground of monetary value However, Smith and Ricardo (and Marx too) hold that while money is itself a commodity and its price is therefore determined by economic laws, these laws, like all other laws, must be grounded on a realm of ontological stability. In other words, since the price of the coin is conventional, and therefore, determined by conventional economic laws, and since all economic laws must be grounded on a firm ontological basis, it follows that there must be an ontological base which grounds the laws that determine the price of money as well. Further, given that the coin is itself a commodity, the ontological basis that grounds the laws of money must be the same as those which ground all other commodities, i.e., labor. Thus, the search for laws governing the economic sphere, on the one hand, led to the search for the empirical and conventional determinants of price,11 while, on the other hand, the search for the ontological ground of these laws led to the labor theory of value.This is clear in Smith’s assertion that In order to investigate the principles which regulate the exchangeable value of commodities, I shall endeavor to shew (sic), First, what is the real measure of this exchange value; or, wherein consists the real price of all commodities. Secondly, what are the different parts of which this real price is composed or made up.12 In the case of Smith and Ricardo, their theories of value are the philosophical underpinnings which support their scientific frameworks, and these ontological underpinnings of the empirical laws are causal principles which make empirical laws possible. Since these thinkers considered economic activity as nothing but an extended manifestation of human nature, and, since money is a natural part of the economy, the primary philosophical task was the precise delineation of the ontological basis that confers value to an object, thereby transforming it into money. The labor theory of value, which Smith, Ricardo, and Marx all propound, thus continues the Aristotelian substantive tradition within the philosophical discourse on money. According to Ricardo, the regulative laws of the price of any commodity, including that of money, would not be possible without an ontological foundation. However unlike Aristotle, Ricardo, following Smith, upholds the conviction that “utility13… is not the measure of exchange value…” and hence cannot be taken to be the

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ontological basis of money.14 Notwithstanding this difference, their insistence on the necessity of an ontologically stable and secure foundation for the price of any commodity, nevertheless, consolidates both Smith’s and Ricardo’s position within the Aristotelian paradigm. After all, following Aristotle, they too tacitly operate with the assumption that monetary value cannot emerge ex-nihilo or out of nothing. Consequently, the value must thus be conditioned by something which itself cannot be conditioned by anything else, or one would have to embrace an infinite regress. Smith, Ricardo, and Marx choose to take the former stance and hold that the ontological basis determining the exchange-value or price of a commodity, including money, is essentially labor.15 Just as according to Locke the real value of equal weights of silver cannot really be unequal in value, these thinkers hold that equal quantities of labor cannot but be equal to each other in reality, even though equal quantities of labor may be priced differently at the market. Given that equal quantities of labor are always equal to each other, therefore, it follows that labor is abstract, objective, and intrinsically valuable, even though its price fluctuates on the market. Further, these thinkers do not see this fluctuation as a sufficient argument against labor as being intrinsically valuable.16 Rather, they fundamentally hold that equal quantities of labor are always equal to each other in relation to the laborer. This point comes through clearly in Smith’s distinction between the value of labor in relation to the laborer and in relation to the employer, with the intrinsic value of labor residing in the former, while the price or monetary value residing in the latter.17 His argument, like Locke’s, is that although the monetary price of labor changes, this change is only seeming or apparent, and not real. Consequently, Smith and other labor theorists of value hold that while we imagine equal quantities of labor to be of differing value, in fact, it is only the price that changes.18

Marx’s place within the Aristotelian paradigm of monetary value Within certain schools of social and political thought, Marx’s labor theory of value is often identified as the point of departure from classical political economy, and consequently as the ground for the development of a more socially inclined framework for the understanding of money and monetary value. Concretely, it is argued that Marx effects a sociopolitically inclined shift in emphasis through a critique of the theoretical frameworks of the classical political economists; such as Smith and Ricardo. While this view of Marx’s thought on the theory of value may have truth to it, however, in fact – as has already been argued by various thinkers on the philosophy of money – Marx does not challenge the philosophical foundations of the substantive-essentialist paradigm first explicated by Aristotle.19 As much as Marx may have differed with certain aspects of Aristotle’s substantive paradigm, and with the frameworks of the political economists such as Smith and Ricardo, his theory of value is justifiably subsumed under the larger umbrella of the substantive paradigm owing to the fact that he upheld a singular nature of truth and espoused a substantive understanding of monetary value.

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As with Smith and Ricardo, Marx too passively shares the Aristotelian conceptualization of money as being reducible to a commodity, and premised on that, he seeks to shed further light on how it is that a commodity takes on the function of being money, i.e., how exchange-value emerges from use-value. Marx’s grouse with the political economists that he criticized, was not that their fundamental philosophical assumptions were in any sense incorrect, but rather that they didn’t do what he thought they ought to have done, i.e., to construct a theory of the capitalist mode of production, thereby showing how it is built on, allows for, and perpetuates the exploitation of labor. As with Smith and Ricardo, Marx upholds a labor theory of monetary value and this is because, he too is of the view that money is ontologically reducible to a commodity. However, Marx’s emphasis is on the fact that the fundamental ontological source of monetary value must reside in the labor vested in the creation of the money commodity. Since Marx shares the substantive conceptualization of money as being reducible to the use-value of the commodity, the political economists and Marx are in agreement with regard to the ultimate ontological source of its value, i.e., labor. Naturally, given their shared substantive premises, Marx too is led to conceptualize labor as an abstract concept, thereby freeing himself from having to fully deal with the distracting – but for him philosophically irrelevant – questions of the relation between the abstract understanding of labor and the labor that is bought and sold on the market. Marx’s acceptance of a labor theory of economic value, and therefore, of monetary value, is not surprising since the logic of the substantive paradigm necessitates the identification of an ontological realm that grounds all monetary value. So much has already been shown in the preceding sections when discussing the place of infinite regress in the positing of an ontological substratum of monetary value. Following the same substantive and essentialist philosophical map, so to speak, Aristotle identified the substantive site of monetary value in the use-value of the commodity that stands proxy for money; Locke in the weight of the metal of which the coin is minted, and the labor theorists including Marx, in the labor vested in the creation of the money commodity. Further, as would be expected, given that Marx followed the substantive-essentialist map for understanding monetary value, he was forced to uphold and reinforce the dichotomy between real and apparent value. This dichotomy, which we have already traced in the thoughts of Aristotle, Locke, Smith, and Ricardo, is essential to the theoretical edifice that grounds Marx’s critique of political economy. This is so because it is precisely the maintenance of this philosophical dichotomy that allows him to maintain, and exploit, the problematic distinction between real value and surplus value. Marx maintains, following Smith and Ricardo, that abstract labor is the only universal, stable, and therefore, real measure of monetary value. It is this notion of apparent, as being merely superfluous as compared to real value that allows Marx to conceive of the notion of surplus value, which is but the value gap between the real and the apparent values. This concept further allows him to characterize the capitalist mode of production as pernicious and as being based on the oppressive exploitation of labor in the capitalist mode of production, in service of the limitless creation of surplus value. It is by virtue of upholding the Aristotelian dichotomy

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between real and apparent value that Marx is able to philosophically pivot to the notion of surplus value. In fact, the concept of surplus value is a reinterpretation of the significance of the gap between the two types of value. While Aristotle had recognized the gap between real and apparent value, and had, in fact, based his ethical thoughts on this gap being the enabling factor with regard to the human desire for unlimited wealth acquisition, he nevertheless did not exploit this gap to the extent that Marx did. And it is precisely Marx’s exploitation of the gap between real and apparent value, i.e., surplus value, in critiquing the capitalist mode of production that sets his substantive framework apart from the other frameworks within the substantive paradigm.20 In any case, armed with the concept of surplus value, Marx believed he was in a position to show how limitless acquisition of money is at all possible and why it is undesirable. On the back of this philosophical move, it is not a stretch for Marx to then show how the capitalist mode of production perpetuates the possibility of the limitless acquisition of money. At this point, Marx’s similarities with Aristotle become clear. As with Aristotle, Marx too approaches questions of the nature of monetary value as a bit of a diversion from the core ethical issues concerning it. Like Aristotle, Marx too seems to have thought that the central questions regarding the nature of monetary value would take care of themselves. However, the notion of exploitation of labor though central to Marx’s theory, does not merely concern ethical connotations as is often taken to be the case. It, as is our concern here, holds on to some ontological commitments as well. In fact, its ethical and political connotations which are plain and well known in terms of the oppression of one class of economic agents by another class for the disproportionate benefit of the latter stands precisely on the ontological commitments that Marx holds on to. Consequently, the novelty of Marx’s contribution to the philosophical discourse of monetary value lies rather in his use of the labor theory of value in the construction of a socially oriented critique of classical political economy. Marx undertakes his critique of classical political economy, and through it, of capitalism, based on his conviction that philosophy is meant to change the world and not merely to interpret it. Marx’s adoption of Ricardo’s work on the foundations of monetary value is analogous to his adoption of Hegel’s dialectic in that he adopts Ricardo’s labor theory of monetary value with his novel addition of surplus value, in the same manner that he adopts Hegel’s dialectics with his transformation of it to dialectical materialism. In both cases, he was of the opinion that the philosophical understanding available at the time, be it that of Hegel or Ricardo, was essentially correct and sufficient in its essential structure, and therefore, what remained to be done by way of philosophy was a use of the existing understanding in the service of communism. However, though Marx’s socially oriented critique of classical political economy is novel, with a rich vocabulary that helped in the subsequent development of a critique of, what Marx refers to as capitalism, it does not add much philosophical novelty to the substantive framework of monetary value, within which Marx ­himself operates.

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Consequently, instead of the usual interpretation of Marx as a significant departure from classical political economy, when considered from the perspective of the philosophy of monetary value, Bailey’s thoughts on monetary value comes across as being a more apposite marker of departure from the earlier frameworks of monetary value.This is owing to Bailey’s explicit critique of Aristotelian substantive-essentialism itself. Though Bailey’s critique is explicitly aimed at Ricardo’s framework, it is nevertheless broadly applicable to all the substantive theories of monetary value, labor or otherwise. In other words, while Marx’s critique of the framework of the classical political economists, in fact, builds upon their substantive theories of labor, Bailey, in contrast, undermines the very substantive project itself by arguing that even the apparently abstract notion of labor is treated substantively in the hands of both the classical political economics as well as that of their critics, such as Marx. It is perhaps this overarching ability of Bailey’s framework to simultaneously generate a critique of the classical political economists as well as their critics that has led him to be largely ignored by all the disciplines that have enquired into the nature of monetary value.21

Notes 1 See Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2013), 34. 2 For a discussion on the similarities and differences between the labor theories of value of Smith, Ricardo, and Marx, see Peter C. Dooley, The Labour Theory of Value (London: Routledge, 2005). For the centrality of Ricardo in the history of the theory of monetary value, as being an advancement on Smith and as being the foundation for Marx, see Maurice Dobb, Theories of Value and Distribution Since Adam Smith (Cambridge: Cambridge University Press, 1973), 65–96. For a treatment of both Smith and Marx as falling under the Aristotelian mode of economic thought, see Spencer J. Pack, Aristotle, Adam Smith, and Karl Marx (Massachusetts: Edward Elgar Publishing Inc., 2010). For a work focused on a detailed explication of the nature of essentialism in Marx and its relation to Aristotelian modes of thought, see Scott Meikle, Essentialism in the Thought of Karl Marx (London: Gerald Duckworth & Co. Ltd., 1985). 3 Smith does not use the term “economics”. Our usage of that term here is purely for the sake of ease of writing. 4 Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2013), 22. 5 Ibid., 48. 6 Smith is the first of the classical economists to lay down the outlines for a labor theory of value. However, there exists a rudimentary theory of labor in the writings of Hume when he holds that “Everything in the world is purchased by labour” (Adam Smith, The Wealth of Nations. New York: Bantam Dell, 2013, 44). For a discussion on the two senses in which Smith uses the term “labour” and the ways in which this twin use has been interpreted, see Samuel Fleischacker, On Adam Smith’s Wealth of Nations (Princeton: Princeton University Press, 2004), 124–131. 7 Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2013), 43. 8 Ibid., 44. See Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2013), 41. 9 The term “fictitious” is used by Hume to characterize the value of money in contra­ distinction to the substantive construal of the same.

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10 With regard to this point, Aristotle would fundamentally disagree with Smith and Ricardo, since he held that money is the medium by which commodities were exchanged and is not itself a commodity, but only the object that mediates the exchange of commodities. It is for this reason that he considered the practice of the charging of monetary interest to be unnatural, since in that case, money would beget money, entailing that money could act both, as a commodity that could be bought with money, while at the same time retaining its status as money, and, therefore, a medium of exchange. Smith and Ricardo do not consider this practice to be unnatural. 11 Much of the debate on the theory of value, in the literature of the history of economic thought, is concerned with the scientific aspects of real and nominal price; the concern is how to maintain this distinction without the discourse slipping into the territory of metaphysics. While these debates may be important in the context of economic theory, they do not address the underlying ontological questions which are framed by the classical political economists. 12 Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2013), 42. 13 “Utility” is the term that Ricardo uses in lieu of the term “use-value”. 14 David Ricardo, Principles of Political Economy and Taxation (Ontario: Batoche Books, 2001), 8. 15 Smith holds that labor as the ontological source of value has escaped other thinkers because “it is often difficult to ascertain the proportion between two different quantities of labour” (Adam Smith, The Wealth of Nations. New York: Bantam Dell, 2013, 44–45). According to Smith, it is easier to value commodities based on money than based on labor even though labor creates value originally in the state of barter. Smith’s view of labor is abstract in that it thinks of all labor as uniform and therefore the same. Smith holds of metals that they are “sometimes cheaper and sometimes dearer” and that “The quantity of labour which any particular quantity of them can purchase or command…depends always on the fertility or bareness of the mines which happen to be known…” (Ibid., 46). 16 Like Smith, Ricardo maintains the labor theory of value even though he explicitly recognizes that there exist in the market some commodities that do not acquire their value based on their utility. In a similar vein, Locke adheres to a weight theory of value in spite of the recognition that an equal weight of silver may not be worth the same at all points in time and at all places. Ricardo brushes away this apparent difficulty by arguing that although there are such commodities, these “form a very small part of the mass of commodities daily exchanged in the market” (David Ricardo, Principles of Political Economy and Taxation. Ontario: Batoche Books, 2001, 9). Ricardo’s argument may be critiqued through later Wittgenstein’s argument against the author of the Tractatus, which maintains that the latter thought that non-picturing words take care of themselves and don’t need to be accounted for in a “picture” theory of meaning. See Ludwig Wittgenstein, Philosophical Investigations, trans. G.E.M. Anscombe, P. M. S. Hacker, and Joachim Schulte (West Sussex: Blackwell Publishing Ltd., 2009), 5. In other words, while there are exceptions to the theory, these exceptions need not be taken seriously, because being few in number, they do not affect the main thesis. However, as was evident to the later Wittgenstein, these limiting cases shine a light on certain shortcomings in the earlier theory which need to be remedied if a coherent theory is to be framed. 17 See Adam Smith, The Wealth of Nations (New York: Bantam Dell, 2013), 47. 18 Smith writes that “Labour is the only universal, as well as the only accurate measure of value, or the only standard by which we can compare the values of different commodities at all times and at all places” (Ibid., 52).

Economists, Critics, & Long Shadow of Aristotle  49

19 This has been undertaken in such works as Scott Meikle, Essentialism in the Thought of Karl Marx (London: Gerald Duckworth & Co. Ltd., 1985); Anitra Nelson, Marx’s Concept of Money (London: Routledge., 2018); and Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004). 20 Marx, Smith, and Ricardo ignored the many philosophical problems and logical irregularities that arise as a result of upholding the dichotomy between real and apparent value since they considered it to be scientifically substantiated. However, in the thought of Smith, Ricardo, and Marx, there is little by way of scientific thinking with regard to their conceptualization of monetary value and much of Aristotelian substantive metaphysics. Far from being a result of scientific thought, the concepts of abstract labor and its associated dichotomy of real and apparent value are both remnants of Aristotelian metaphysics and could be criticized as being unscientific along the same lines as Aristotelian metaphysics would be criticized as being unscientific. 21 Bailey’s work, being decidedly philosophical, was largely ignored by philosophers in the modern era because, as we have shown in the introduction, questions pertaining to monetary value were considered a concern only of the science of economics. However, precisely due to the nature of his engagement with monetary value as being starkly philosophical, he was ignored by economists as well. Furthermore, given that his work undermines the ontological ground that makes possible the determination of the empirical laws of the economic sphere, it was not well received within the circle of economists since it undermined the “scientific” paradigm they wished to be recognized as working under. Additionally, he was sidelined by Marx and the Marxian tradition because that tradition too is grounded on a substantive labor theory of value. For a discussion of the place of Bailey’s theory of monetary value in the context of classical labor theories of value, see Maurice Dobb, Theories of Value and Distribution Since Adam Smith (Cambridge: Cambridge University Press, 1973), 96–121.

7 THE TRADITIONAL PARADIGM OF MONETARY VALUE AND THE PHILOSOPHICAL PROBLEMS SURROUNDING IT

Is the supposed discovery of the real–apparent dichotomy philosophically sound? Within the standard framework of political economy, the thinkers that we have discussed so far (along with the schools of thought that they managed to inspire) are often taken to be pioneers in their own right. However, as we have seen, with regard to their philosophical conceptualization of monetary value, they are fundamentally Aristotelian in their shared conviction that monetary value demands a substantive ontological basis to ground it. This, as we saw, is true for even those, like Smith and Ricardo, who consciously renounced Aristotle’s teleological orientation, and his ethical anchor, in favor of a more naturalized approach that came to be the hallmark of the scientific paradigm. It is precisely this fundamental conviction, which these thinkers share in common with Aristotle, that leads them to invoke notions of intrinsic use-value, weight, or labor as the fundamental substantive grounds upon which monetary value ultimately rests, ontologically. And for someone like Marx, who further shares with Aristotle the cautionary ethical moorings concerning money, the similarity is too stark to go unnoticed. As a consequence, within the myriad conceptual frameworks concerning monetary value offered by thinkers as divergent as Aristotle, Locke, Smith, and Marx, we find the same demands of the substantive paradigm to which they all seem to be responding. To be sure, this demand of the substantive basis of monetary value forces them to construe money necessarily as an object and to locate the real ground of the ascribed monetary value of that object in an abstract concept like utility, weight, or labor. It is the demand of the substantive basis of monetary value that necessitates the dichotomy between the real and the apparent value of money, reassuring one of one’s faith in the stable basis of monetary value. The schools of thought in philosophy, economics, and sociology that accept this demand and operate within the substantive framework of

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monetary value, therefore, celebrate this distinction as a fundamental discovery and invoke this distinction in their framing of a number of arguments, both within and outside the sphere of the discourse on monetary value. However, notwithstanding this celebrated status of the conceptual pair of the real–apparent, we must come to recognize that it is not without its philosophical irregularities and challenges. Of course, the conceptual pair of real–apparent is not considered a theoretical flaw by those operating within the substantive framework. It is, in fact considered to be, as we saw, the cornerstone of the conceptual frameworks constructed by the likes of Aristotle, Smith, and Marx. However, philosophical perplexities apparently bust the party without much care about the adulation these thinkers give to the conceptual pair. As we will now see, in contradistinction to those who unproblematically accept this distinction, the conceptual pair of real–apparent is philosophically problematic and untenable since it creates a duality that is irreconcilable. But this problem goes largely unnoticed and is consequently left unaddressed by Aristotle, Smith, and Marx. And thus, as we shall also see, the inherent irregularities and contradictions in maintaining the dichotomy of real and apparent values stand as much in need of resolution now as they did at the time of Aristotle. Of course, it is often thought that the irregularities and contradictions generated by this conceptual pair were resolved in the labor theory of value, but as we shall see, this itself is a dubitable belief.

How economics attempted to escape the real–apparent dichotomy In fact, though Ricardo was working within the substantive framework himself, he recognizes the difficulty to tame the conceptual pair of the real–apparent. He grasped the irresolvable tensions that the dichotomy created. However, instead of an outright rejection of the dichotomy, Ricardo sought to tame the conceptual pair by putting them in two separate cages so to speak, thereby laying the theoretical groundwork for the demarcation between the scientific and the philosophical treatment of money and monetary value. Ricardo’s demarcation implied that the realm of economics as an empirical science must strictly confine itself to the sole notion of nominal or apparent value. He argued that the notion of real value emerges when the movement of the real market is mapped unto the postulated world of the perfect market, which then is a philosophical or a theoretical construct. That is to say, for Ricardo, in the postulated world of the perfect market, the nominal and the real dissolve into each other.Thus, in Ricardo’s framework, the relation between the real and the nominal gets inverted, wherein the nominal value gets the primacy over the real value. Because, in his formulation, the real value is, in fact, not really real in the empirical world of money. What turns out to be real is surprisingly the nominal. In fact, Ricardo wants us to accept that the real value is a construct that is simply postulated within the bounds of a perfect market. Economics as an empirical science must, therefore, restrict itself solely with nominal value. Of course, when one wants to reflect philosophically about the world of money, one may during these moments invoke the notion of real value.

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But one must ensure, Ricardo seems to be cautioning us, that one does not let it slip into the empirical domain. Now, while for the scientifically trained economist of today, this may seem obvious and inevitable, but for the early economists who were setting the disciplinary boundaries as they went by, such a straitjacketed demarcation between scientific and philosophical questions concerning money was clearly not the standard, or even the preferred, mode of engaging with economics. In fact, immediately in Marx we find this demarcation completely abandoned since he considers his metaphysical flights of theory to be comfortably grounded in the realm of the scientific. However, for the scientific strain of economic thinkers, Ricardo does provide one of the alternatives of excusing themselves from the tedious and, some might say, futile exercise of philosophizing about the nature of monetary value. However, this comfort can be only availed by those who hold the labor theory of value as, in fact, revealing the truth behind the nature of monetary value. For those who held this view, clearly the philosophical question with regard to the nature of monetary value was taken to be settled. Toward this end, not only do the schools of classical economists who take up after Ricardo and Smith, but also those who subscribe to Marx, hold the labor theory as adequately addressing all the philosophical concerns surrounding the nature of monetary value.

Ricardo’s dissolution of the dichotomy does not resolve the underlying philosophical problems Ricardo’s dissolution of the conceptual pair of real–apparent through his postulation of the perfect market within the ceteris paribus conditions of perfect competition, does not, nevertheless, resolve the philosophical problems that arise on the basis of this dualism. After all, even if the ontological realm is not, strictly speaking, the concern of the science of economics, Ricardo, in the philosophical spirit of the substantive framework of monetary value, must nevertheless uphold the belief that the empirical or the nominal value of money must somehow be based on an underlying ontological value that is natural to the empirical object that stands as money. Like all those working within the substantive framework of monetary value, Ricardo too must identify the substratum of monetary value to lie in an ontological value, and deem this ontological source as the essence of money itself. However, the nature of the duality between the real and the apparent is such that this identification of the substratum of money with an ontological value is precisely what is philosophically questionable, and problematic. It is such an identification, rather than the dualism per se, that raises the question on the nature of the relationship between empirical value and ontological value. Of course, it is clear that the objective behind such an identification within the substantive-essentialist framework is to account for the basis of monetary value that the object comes to acquire, which is now seen as a process of value transference from the ontological to the empirical, so to speak. But such a move to account for empirical value of money would entail that one has already adequately shown why the ontological source of the empirical value of money,

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is itself of value. Put differently, any substantive-essentialist framework of monetary value must explain how the ontological value, which by virtue of being a conceptual abstraction is inert and unchanging, can be the causal and explanatory ground of the empirical value of money, which is in flux, and therefore, radically different (and it fails to do this!). The establishing of this causal and explanatory ground is problematic precisely because of the radically different qualities these two realms, i.e., the empirical and the ontological, exhibit.Technically, we may say that they come across as two distinct categories altogether. The various frameworks of monetary value all fail to address this fundamental philosophical concern. This unaddressed philosophical concern manifests itself, within the various frameworks of substantive-essentialism, in terms of certain foundational questions which, in turn, are left unanswered. For instance, it fails to tell us how exactly labor manages to generate the fluctuating price of labor in the empirical world or, how the mere quantity or weight of the object that represents money gives rise to the fluctuating price of money in the market. In other words, how does the weight of gold give rise to the exchange-value of gold coins? Similarly, how does the mere possession of utility or use-value lead to the acquisition of price by an object? The failure to adequately address these questions is indicative of the inability of these frameworks of monetary value to demonstrate how the ontological realm goes on to create monetary value in the empirical world. Seen thus, the philosophical problems looming over the substantive-essentialist frameworks of monetary value is, therefore, twofold. It would need to account for the emergence of monetary value in the ontological realm, and would then have to account for the transference of this monetary value on the empirical realm while maintaining the former to be the causal/ explanatory grounds of the latter. And, we must grant that this task is philosophically demanding given that the realm of the ontological with its marks of inertness, stability, and permanence is to be related to the realm of the empirical with its characteristic marks of fluidity, instability, and change.These philosophical problems are difficult to resolve since the substantive-essentialist ontology makes a sharp distinction between the real and the apparent, and in doing this, characterizes one in opposition to the other.

The real–apparent dichotomy is not new to philosophy Further, this particular philosophical impasse of establishing a meaningful relation between the two poles of the dualism is not unique to the duality drawn between the real value (ontological) and the apparent value (empirical) within the philosophy of money. It is rather an old and familiar problem that looms large over any conceptual pair where the elements constituting the pair are defined in terms of contrary characteristics. Prime examples in philosophy are the Cartesian mind– body dualism and the Platonic dualism between forms and particulars. The Cartesian mind–body dualism argues for a categorical distinction between the mind (marked as aspatial, apart from other characteristics) and the body (marked necessarily as spatial). But Cartesian metaphysics demands at the same time that it be possible for

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these two contrarily defined categories to interact. After all, my mind does interact with my body as does my body with my mind. For instance, your desire or will to have a cup of coffee would force your body to get up from the couch and walk to the kitchen (or wherever you prepare your coffee). But given the contrary defining marks of the conceptual pair of mind–body, the Cartesian metaphysics fails to establish such a possibility (even if it is the case that the inability to convincingly show how this interaction is possible is not seen as a structural fault in its framework, but as a practical problem to be overcome through further research by those who vouch for this dualism). Similar are the well-known problems surrounding the Platonic theory of forms. It is, in fact, Aristotle himself who argued that given that for Plato, the forms are the grounds of empirical things and account for their empirical existence, Plato’s theory must adequately layout the nature of the relation that obtains between the realm of forms and the empirical realm. Aristotle hates to break it to us that Plato’s theory fails precisely to show this.1 For Aristotle, the inability to adequately account for the relation between the realm of forms and the empirical realm of things entails that Plato’s theorization is fundamentally erroneous. Just as Platonic forms are unchanging, stable, and self-sufficient, so is labor or weight that intrinsically houses value within it. But if this is so, like Aristotle, we could ask for the precise nature of relation between the substantive-real and the fluctuating empirical-apparent. Thus, like Aristotle’s Plato, the substantive-essentialist theorists of monetary value are unable to show how and why the ontological realm is related to the realm of the empirical given that they are marked by contrary characteristics and are categorically distinct. Thus, though Ricardo’s insistence on the notion of nominal value as the sole concern of economics and his bid to confine economics as a science within the realm of the empirical is a brave attempt, but given his lineage that aligns with the substantive-essentialist framework, he would then either have to leave the emergence of nominal value unaddressed, or once again invoke some ontological basis to account for the emergence of the nominal value. As we know, Ricardo unfortunately opts for the latter.

Infinite regress and the substantive paradigm’s tendency to essentialization Any thinker who subscribes to the substantive paradigm, as we’ve described it, must necessarily adopt the view that ontological value is intrinsic or, put differently, that the seat of ontological value is intrinsically valuable. This philosophical stance is necessary since to treat it as extrinsic would entail that something else would now have to confer it value and render it valuable, and so on, leading to an infinite regress. Now in itself, one may not think much of such regresses. After all, we go on our daily lives without paying much heed to such regresses. But within the framework of substantive-essentialism an infinite regress in terms of value transference cannot be tolerated, since an infinite regress of value transference would entail that monetary value has no stable grounds; that it is arbitrary, unstable and perpetually shifting from one locus to another. This conclusion would simply be unacceptable

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to thinkers who subscribe to the substantive school of thought. On the other hand, to adopt a stance of intrinsicality of ontological value entails an essentialist stance. It is essentialist in so far as the source of the value of money is necessarily reduced to a singular property that is then seen as accounting for the ontological value of money. Once again, the philosophical challenges faced by an essentialist framework are not peculiar to the substantive-essentialist framework of monetary value. It is a wellrecognized problem in the history of Western thought and one that is encountered by any substantive-essentialist ontologies of the self. Just as the substantive-essentialist frameworks of monetary value identify a specific ontological aspect as the defining basis of monetary value, substantive-essentialist ontologies of the self identify a specific aspect as its essence. This is clear in the Cartesian notion of self, which essentially identifies the self with our capability to think. Thus, within the Cartesian system, the self becomes synonymous with a thinking thing called the mind. In this sense, substantive-essentialist thinkers are like Cartesian philosophers of the self, in that both problematically identify a specific feature of an object (our “thinking aspect” on the one hand and the “materiality” of the gold or silver coin on the other) to be the essence or the ontological basis for the legitimacy for it to be called a “self ” or “money”. But such an essentialization is problematic, and the problem is best illustrated by the example of the gold coin. At first, it appears that the substantive-essentialists are correct. After all, it appears as though gold, i.e., the material or the physical metal, can clearly be identified as bearing intrinsic value, and thus may be construed as being the ontological basis for the monetary value of the gold coin. However, if this was so, then it must necessarily be the case that gold, by virtue of this intrinsic value, must be universally valuable. And here what appeared obvious does not appear to be obvious anymore, since gold is surely not valued by all, universally. However, those who do not value gold as such, would nevertheless still value a gold coin. This leads us to reflect upon the possibility that perhaps the value of the gold coin must be ontologically based elsewhere. Further the essentialist stance, which insists on identifying one singular aspect of money as its essence and as the ontological basis for monetary value, is philosophically problematic, in that when the object (a piece of metal) begins to function as money, it seems to lose precisely that singular aspect by virtue of which it is deemed to be an object worthy enough to be money in the first place. For instance, although Aristotle holds that the substratum of money is identifiable with a singular property (i.e., its use) of the object that represents money, this singular property (its use) seems to drop away when the object begins to function as money in the market. This is illustrated in the case of metals which are minted into coins, which, once put into circulation in the market, lose their utility as metals. Another example is cigarettes, which function as money in various prisons, which retain their exchangevalue till the time they are not handled in accordance with their use-value, i.e., until they are smoked. The dilemma confronting the substantive-essentialist paradigm, thus, is that while this paradigm is cardinally dependent on the duality between the real and

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the apparent or the duality between the ontological and the empirical, it is this very duality that fails to adequately account for the causal relation between the two poles being opposed, i.e., the real and the apparent. The irreconcilability of this dualism, which is fundamental to the substantive-essentialist paradigm, therefore, undermines the very basis of the explanatory power of substantive-essentialist ontologies of money, concerning the ground and the genesis of the value of money. It is this irreconcilability that becomes the central challenge for any substantiveessentialist framework of monetary value. It is precisely to address this challenge that substantive-essentialist thinkers attempt variously to locate the ontological ground of monetary value in some aspect of reality or the other, whether in the utility of the object that represents money, the weight of the metal that constitutes that object, or in the labor vested in the creation of the object. However, as has been shown, none of these ontological candidates postulated as the substratum of the monetary value adequately resolve the various problems that tag along with the acceptance of the duality between the real and the apparent. Therefore, the recognition of the irreconcilable nature of this duality upon which the substantive-essentialist paradigm grounds itself also leads to the recognition that perhaps, the substantive-essentialist framework itself needs to be foundationally examined in terms of its tenability as a conceptual framework for making sense of monetary value. In other words, the philosophical problems raised by this duality are not there as a challenge to be resolved by postulating a better replacement for the substratum of money (for instance utility), with another (for instance weight of the metal of the object that represents money). But rather, may be the philosophical problems raised entailed by this dualism are indicative of the fact that the substantive-essentialist conceptual structure in itself needs to be reconsidered. Or at the least, some thinkers in the history of economic thought, thought so. It is in light of this recognition of the need to radically rethink the ­ontological basis of monetary value that leads to the emergence of alternative conceptual frameworks of monetary value.

Note 1 There are many in the history of Western thought who argue that Aristotle completely misunderstood Plato.

8 MOVING BEYOND THE SUBSTANTIVE FRAMEWORK OF MONETARY VALUE Voices of Discontentment

Of course, though we have distilled and summarized the philosophical challenges that emerge from the substantive-essentialist framework of monetary value in the previous chapter, it is not to suggest that these crippling challenges went unnoticed during the modern era. Ricardo, as we noted earlier, was aware of the menacing problems emerging from the foundational conceptual pair of the real-nominal within the substantive-essentialist framework. But he was surely not alone in noticing the unease with which monetary value lodged itself within this paradigm. There were others, who in their own way, sought to critically engage with these challenges. However, notwithstanding these episodes of critical engagement, when seen from the larger historical perspective of the philosophical discourse on money and monetary value, these voices rarely managed to enjoy a widespread acceptance. In fact, more often than not, they were entertained as nothing more than fleeting and inconsequential objections that could be readily footnoted to be dealt with later when more pressing concerns within the substantive-essentialist framework were resolved.

Two dissenting strains of thought in the philosophical discourse on monetary value However, on reflection, these lesser known, but insightful, dissenting voices did seem to weigh in on the debate surrounding monetary value, despite the defiance and dominance of the substantive-essentialist framework. On hindsight, they appear to have either left a lasting trace on the discourse of the philosophy of money or, in some instances, dropped scattered insights for others to pick up and build on. Among these dissenting voices who seem to have diagnosed the fundamental contradictions within the substantive framework of monetary value as irresolvable, two strains of philosophical thought stand out in the history of the discourse on monetary value. One

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of these strains, as we have passingly mentioned in the previous chapter, sought to conceptualize money in terms of a “fiction” (as opposed to its construal as something real), while the other sought to construe it in terms of a “relation” rather than a substance (as was understood). The philosophical impulse underlying these alternative attempts to construe monetary value is starkly antithetical to the foundational stance of the substantive-essentialist framework which locates the foundations of monetary value as essentially lodged with the realm of the substantive, i.e., upon something that is taken to be real in the ontological sense of being “out there”. In contrast, these alternative construals of monetary value take a more, we might say, post-modern philosophical stance. To be precise, they take a non-substantive and non-foundationalist approach toward our ability to make sense of the monetary reality that we encounter.

Is monetary value just a fiction? Hume’s skeptical stance toward monetary value The philosophical attempt that construes monetary value as a matter of fiction frames it as a product of the imaginative power that we, as humans, possess by virtue of which we are capable of constructing ideas that are devoid of any counterpart in the world of real objects. Put another way, these thinkers were skeptical of any declarations that claim to have discovered an underlying ontologically postulated substance or substratum that grounded monetary value. The eighteenth-century British thinker, Hume, was, in a manner of speaking, the patron saint of this view. He was skeptical of relegating any explanatory force to a substantive realm in our quest for any knowledge, including that of monetary value. Within such a skeptical mode of thought, of which Hume was a prominent modern exponent, monetary value must be necessarily grounded within the empirical realm.This skeptical manner of thinking about monetary value emphatically denied the possibility of taking refuge in anything other than the realm of the empirical, and construed the metaphysical realm of substance as nothing more than a philosopher’s self-deceptive attempt to respond to his psychological need for stability and order within the changing world that we experience around us. Consequently, Hume’s alternative attempt is to understand monetary value from within the confines of the empirical and to critically consider the possibility of explaining the nature of monetary value in terms of various economic, industrial, and cultural forces. Though, as can been seen, Hume’s philosophy inaugurates the space necessary for the emergence of an alternative conceptualization of monetary value, but the Humean spirit of skepticism ironically comes to be embodied by the classical political economists like Smith and Ricardo. These thinkers, as we have seen, managed to neatly fit the realm of the empirical within a broader substantive-essentialist framework. And this historical happenstance provides a lifeline to the substantive paradigm of understanding monetary value once again. Thus, the Humean inauguration of an alternative conceptualization of monetary value has a short life and an unfortunate ending.

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But it is important to note that Hume, in stark contrast to the traditional understanding of monetary value, particularly contra Locke, opens up the possibility of construing monetary value in terms of the human capacity to create fiction. In lieu of the substantive realm – which the traditional paradigm requires in order to account for the foundational basis of monetary value that transforms an object into money – Hume proposes that an object comes to acquire monetary value simply through an act of human invention.1 For Hume, money is a representation of a value that we have externally bestowed upon an object to function as money. Put differently, an object becomes money because we choose to make it so. However, Hume holds, and here is the important bit, that this specific act comes to be forgotten over time. It is, as Hume sees it, precisely in the forgetting of this act of imparting value to an object, that we commit the philosophical error of positing an irresoluble dichotomy between real and apparent value. As a result of this misleading quest, we then foolhardily locate monetary value in such abstract notions as the weight of the object that represents monetary value. It is precisely this forgetfulness on our part that is the source of all philosophical bewilderment concerning monetary value. Antithetical to Locke, Hume maintains that the price of money is determined by various empirical factors and that to reduce all of these factors to just one, such as weight, would be philosophically indefensible.2 From Hume’s point of view, there are a number of determining economic or commercial factors which feed into the determination of the value of money, while money itself gets its value as money from the very ability to perform the function of money bestowed upon it precisely through an act of human assertive invention. Hume asserts of metallic coins that, …as these metals are considered chiefly as representations, there can no altera­ tion arise, from their bulk or quantity, their weight or colour, either upon their value or their interest.3 Thinkers sympathetic to the Humean approach toward monetary value would see the coin as being empty of any intrinsic value. The value it has is rater extrinsic or external to it since the monetary value it acquires is bestowed upon it by us. In light of this, they would maintain that metallic coins are invented merely as representations of money by us, and therefore since monetary value has nothing to do with the object or its properties per se, any alterations to the object, such as a change in its weight has no necessary bearing on their monetary worth.The Humean position on monetary value renders the very notion of the real value of money as a mythical construct that finds its genesis in our forgetfulness. Though Hume’s view is clearly a moment of rupture in the philosophical discourse of monetary value which had been broadly construing monetary value within the substantive paradigm, it brings with it its own set of discomforts. For starters, the Humean conceptualization of monetary value as a fiction forecloses the possibility of capturing monetary value within a scientific framework since it is a subjective construct rather than something that is objectively real. Though Hume asserts that our subjective evaluation of monetary worth depends upon the various

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objective empirical factors, it leaves too much for us to even begin to take stock of all these factors before one can even embark upon the quest to systematize monetary value. Simply put, it just appears too clustered for us to even begin to disentangle the various threads that weave the nature of monetary value. It is perhaps for this very reason that it failed to invite sustained attention from political economists of his time. As a result, the substantive paradigm remained the dominant model of construing monetary value within the modern era, with possibly the single exception of Samuel Bailey and his relational theory of value, toward which we now turn.

Bailey's relational theory of monetary value: A forgotten moment While the Humean stance surely stands in stark contrast to the substantive framework, it does not lend itself well to the provision of systemizing the nature of monetary value. However, in Bailey we find an alternative which does allow for a systematic philosophical thought without aligning oneself to the problematic dualism of the real–apparent that is unavoidable within the substantive framework. A leading, but often ignored, thinker, Bailey supplements his criticisms of the substantive paradigm with a systematic alternative framework, wherein monetary value is sought to be explained in terms of relations. His relational theory of monetary value seeks to explain the emergence of the value of money in terms of a relation between two objects or commodities. This can be seen as a departure from the dominant frameworks of monetary value given that it does away with the philosophically problematic notion of a substantive or real value over and above the empirical or apparent that is necessary within the substantive paradigm. Within Bailey’s relational framework, the value of money as a commodity itself emerges only from a nexus of relations, rather than by virtue of a quasi-metaphysical or abstract property of an object. Bailey argued that the value of one commodity, which seems to be self-standing, is, in fact, a value that emerges through its relation with another commodity. Therefore, a change in the value of one of the commodities that constitute the relation would simultaneously entail a change in the relation itself, which is nothing but a change in the monetary value.This simple yet compelling manner of conceptualizing monetary value relationally is clearly illustrated in the case of the valuation of national currencies such as the US Dollar in terms of other currencies, such as the Euro or the Indian Rupee where the value of one currency is correspondingly and simultaneously also a valuation of the other currency. Thus, in recognizing relations as a necessary constitutive element of monetary value, it calls into question the quasi-metaphysical notion of substantive value. For Bailey, much like Hume, the conceptual pair of “real-apparent”, so very dear to the substantive framework of money, is a philosophical muddle with no philosophical merit. But unlike Hume, for Bailey, this muddle is not by virtue of forgetfulness but is rather a product of the lax and confused use of the term “value”. In fact, Bailey expresses surprise at the fact that the emergence of a string of untenable dichotomies – ensuing from holding steadfast to the conceptual real–apparent dichotomy – did not

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bring about a serious reevaluation of the substantive framework itself.4 Although Smith, forced by the Humean challenge, does introduce the role of relations in his construal of the value of a commodity in terms of conveniences that it can command, nevertheless, as Bailey sees it, the centrality of relations escapes Smith in his formulation of the notion of value. Consequently, Smith is inclined to maintain that value is ultimately intrinsic to labor itself. This, however, in Bailey’s perspective, is a problematic move since it fails to recognize the fact that labor too can only be valued in terms of the conveniences it commands, or in other words, its price. Smith is forced by the theoretical demands of the traditional substantive framework to posit labor as the substantive ground of value. Thus, in Bailey’s assessment, though Smith begins with a relational notion of value but under the weight of the demands of the substantive framework, he gradually caves into upholding the substantive notion of labor as the substratum of monetary value. In Bailey’s analysis of the situation, Smith is led astray in his formulation since he fails to pay heed to, or differentiate, between the various uses of the term “value”. Of course, Smith is not alone in being led astray. In demonstrating the conceptual confusion with regard to the term “value” among thinkers within the substantive framework, Bailey offers a passage from Malthus to illustrate that although Malthus recognized the divergent senses in which the term “value” was used, he goes on to justify this state of confusion by asserting that one must inevitably accept the obviousness of intrinsic or absolute value, even if it be confusing.5 Demonstrating the dominance of this conceptual confusion through Malthus’s work, Bailey writes, After defining value…as expressing the power of commanding other objects in exchange; he [Malthus] proceeds to say, that this power “may obviously arise either from causes affecting the object itself, or the commodities against which it is exchanged. In the one case the value of the object itself may properly be said to be affected; in the other, only the value of the commodities which it purchases; and if we could suppose any object always to remain of the same value, the comparison of other commodities with this one would clearly show which had fallen and which had remained the same.The value of any commodity estimated in a measure of this kind, might with propriety be called its absolute or natural value; while the value of a commodity estimated in other which were liable to variation, whether they were one or many, could only be considered as its nominal or relative value, that is, its value in relation to any particular commodity, or to commodities in general.6 Within the substantive paradigm, the distinctions made in the above passage by Malthus are perfectly sound. However, Bailey identifies the cause of these confused ideas in a “deeper source…to an original perplexity and confusion in…fundamental ideas”,7 from which the theory of value within the substantive paradigm is unable to extricate itself. In Bailey’s analysis, the confusion is linguistic. He writes,

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…We are accustomed…to have a common name to a feeling and to the cause which has excited it, and to blend them together in our thoughts, so in this case we regard [monetary] value as a quality of external objects.8 What Bailey’s remarks foreground is that, even if we were to grant, for the sake of argument, that labor or weight is, in fact, the cause of monetary value, it would still be erroneous to identify the ensuing effect [monetary value] with its cause [labor/ weight]. But this is precisely what Malthus does, in resonance with all the others operating within the substantive framework, in Bailey’s analysis. We would, after all, find it ludicrous if someone identified the emotion of love that she experiences for another person with the person itself. Add to that that she even begins to claim that her love resides intrinsically in the other person. Of course, we could tell her that her experiencing of the emotion of love is a relational product that emerges because she relates with the other person in a specific manner. Bailey’s construal of monetary value as a relational emergent asserts precisely this. Construed in a relational manner, monetary value does not reside within an object, but instead arises relationally with another object. In other words, monetary value arises specifically “when objects are considered together as subjects of preference or exchange”.9 This being the case, value arises when we compare two objects against each other, in the context of the preference of one over the other. That is to say, the value of an object only emerges through a comparative relation of how much that object would exchange for the other. For Bailey, the value of any object, including the object considered as money, is therefore, an expression of this quantified relative esteem.10 Bringing out the necessarily relational aspect of the nature of monetary value, Bailey writes, In the circumstance, that it [value] denotes a relation between two objects and cannot be predicated of any commodity without an express or implied reference to some other commodity, value bears a resemblance to distance. As we cannot speak of the distance of any object without implying some other object…so we cannot speak of the value of a commodity but in reference to another commodity compared with it. A thing cannot be valuable in itself without reference to another thing, any more than a thing can be distant in itself without reference to another thing.11

Illustrating the relational nature of monetary value through the concept of distance Bailey’s insistence is that we need to realize that the construal of monetary value as an intrinsic property of an object independent of its relation to any other object is a logical impossibility; much in the same manner that it is logically impossible to construe of the distance of an object without reference to some other point in space.The term “monetary value” then is only conceptually coherent when defined in terms of the relative worth of two commodities in relation to each other.12 It

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follows from this quantitative relationism of monetary value that, it is not just pragmatically difficult to locate the ontological source of value, but logically impossible to do so, in the same manner in which distance cannot logically be calculated in absence of two given points. To say that my house is 10 kilometers away is not to inject the house with the inherent quality of being 10 kilometers away. It is rather an expression that indicates the distance at which it is located in relation to a specific point where I am at present.13 Similarly, claiming that a cell phone is worth 20,000 Indian Rupees or say 600 Canadian Dollars is not to make a claim about the inherent or intrinsic value of the cell phone; rather it is an expression indicating its value in relation to money, which is itself another object or a commodity. If this is so, it then follows that the value of one commodity cannot alter without an alteration in the value of the commodity in which it is being expressed.14 In other words, if the value of the cell phone as compared to money changes from 600 to 500 Canadian Dollars, it is not just the value of the phone that has changed but also the value of the money. Clearly, if my given “here” changes, so will the distance that I am from the house. Therefore, there is no such thing as the absolute value of money, which is independent and isolated from the commodities that it has the power to command in exchange. Although our linguistic use of the term “value” might seem to suggest otherwise, here is Bailey’s diagnoses, [It] may be objected that when we say the value of A is equal to the value of B, the expression implies a quality [i.e., the value of A and B as] intrinsic and absolute in each… [However,] …if we examine the real import of our expression, when we affirm the value of A to be equal to the value of B we shall find it to mean neither more nor less than this, that A will exchange for B.15 More than a century later, Wittgenstein’s Philosophical Investigations would echo Bailey’s sentiment in suggesting that language misleadingly encourages us to postulate the ontological realm of the substantive in order to explicate the meanings of our everyday linguistic terms.Wittgenstein, and much of the early Analytic philosophers of language, would agree with Bailey’s insight that language veils the relational nature of meaning from us. In Bailey’s analysis, both Smith and Ricardo were unfortunate victims of this linguistic impetus that led them on a wild goose chase for the universal standard measure of value when there was none that could ever be found.16 Once the veil generated by this linguistic confusion is lifted, it becomes evident that the dualism between the real and the apparent values is philosophically incoherent, and a product of philosophical confusion.17 However, as Bailey argues, the therapeutic realization of monetary value being relational and not substantive in nature can only dawn when one clears this linguistic confusion in which the substantive framework of monetary value is deeply entrenched. It is only then that we come to realize that “[value] must always imply value in something”.18 The term “in” emphasizes the notion that the value of a commodity necessarily expresses a relation to some other commodity in terms of

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which, or in comparison to which, it is being measured, and the value of the moneyobject [i.e., monetary value] is no different in this regards.Thus, though money may be what the commodity is being measured “in”, nevertheless to treat money as an intrinsically valuable commodity, is to forget that money is itself a commodity, and therefore, its value can only be evaluated in relation to other commodities that it can command. Furthermore, it follows that there could be many other relational quantitative evaluations of an object, since an object can be measured in relation to a variety of other objects. This is truly an important insight since it primarily rejects any essentialization of monetary value and suggests that monetary value does not have a singular essence but can shift depending upon the commodities that it is in an evaluative relation with. Bailey writes, The value of any commodity denoting its relation in exchange to some other commodity, we may speak of it as money-value, corn-value, cloth-value…and hence there are a thousand different kinds of value, as many kinds of value as there are commodities in existence, and all are equally real and equally nominal.19 We will exploit this insight in the last three chapters of our book, but for now, looking at Bailey’s intervention in the discourse on monetary value from a historical perspective, his critique of the substantive paradigm in the modern period is significant in that it specifically addressed the shortcomings of the labor theory of value. At the time Bailey was writing, there was a widespread acceptance of the labor theory of monetary value as the dominant framework of understanding monetary value. Bailey’s relational framework of monetary value rejects the legitimacy of the labor theory of value, insofar as labor comes to be conceptualized in substantive or quasi-metaphysical terms. This, for Bailey, was the fundamental flaw in the labor theory of monetary value since “the term, in reference to labour, denotes a relation… between labour and commodities” and not an intrinsic value housed in the notion of labor itself.20 In contrast to the erroneously held intrinsic value of labor, for Bailey, like any other commodity, “[the value of labor]…is high…when it commands a large [quantity of commodities], and low when it commands a small quantity of commodities”.21 Consequently, if the claim is that labor must be valued in the same manner as everything else, and, if the question of value must always be settled relationally, then labor too must be valued based on a comparison with some other commodity, including, but not limited to, money.22 It is this critical dislodging of the foundations of the labor theory of monetary value that opens up the possibility of rethinking the nature of monetary value in terms of alternative non-substantive theoretical perspectives.

The relational framework as a door to alternative paradigms for monetary value Notwithstanding Bailey’s novel relational approach to the philosophy of monetary value, his systematization of value nonetheless necessarily revolves around the axial

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category of object. Thus, though it seeks to move away from the clutches of the substantive paradigm, it nevertheless remains an object-centered framework, i.e., a conceptual framework that considers objects to be the fundamental building blocks of monetary value and our economic reality. After all, his notion of relation is that of a comparison between two objects, which implies that the existence of objects is a prior necessary condition for the existence of relations, and therefore, for monetary value itself. Bailey’s acceptance of objects as the ultimate unit of economic activity is thus, though tacit, but nevertheless an acceptance of the object-centered framework, which is itself a result of the substantive paradigm of monetary value. In working within the object-centered framework, Bailey’s reimagining of the philosophical theory of monetary value is thus still partially tied to the substantive framework of monetary value. We could thus say that Bailey recognizes the incoherence of holding that the source of monetary value lies in the nature of an object, intrinsically. He consequently construes monetary value as an emergent that emerges through a comparative and quantitative evaluation of objects in relation to other objects or commodities. To be sure, in doing so, relational philosophy of monetary value implicitly rejects the fundamental substantive conviction that value must emerge intrinsically because, otherwise, it would lead to an infinite regress as far as the quest for the source of monetary value is concerned.The rejection of this conviction consists in recognizing an alternative, i.e., a relational resolution to the problem of infinite regress. Bailey’s alternative resolution to this problem of infinite regress simply rejects the disjunctive premise that value must reside, substantively, either in the empirical object that stands for money, or in an ontological realm upon which it is based. The relational approach offers an alternative to the intrinsic–extrinsic dichotomy of the substantive framework, not by showing that the question of value leads to infinite regress, but rather by seeking to explain the emergence of monetary value in terms of the comparative quantitative relationality between objects that constitute the economic sphere. In other words, the relational approach argues that value does not reside in an object at all, and, therefore, the question of it residing in an object intrinsically or extrinsically (i.e., in another object) does not even arise. However, although the relational approach as represented by Bailey is novel in that it distinctly construes monetary value as a quantitative relation between two commodities or objects, it nonetheless remains embedded in an object-centric theoretical framework. Given the cardinal role that objects come to play in Bailey’s framework, his approach only manages to partially extricate philosophical reflections on money from the substantive paradigm. That being said, the relational approach, as already noted, nevertheless provides the possibility of imagining alternatives to Aristotle’s substantive paradigm of monetary value.

Notes 1 David Hume, “Of Interest”, in Political Essays, ed. Knud Haakonssen (Cambridge: Cambridge University Press, 1994), 127.

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2 The best that Hume has to offer us in this direction is the rather broad observation that, money is nothing but the representation of labor and commodities; and serves only as a method of rating or estimating them… While Hume does refer to labor and to commodities, he forecloses any possibility to ground monetary value in any ontological realm, therefore, in contrast to Smith, Ricardo, and Marx, Hume’s notion of labor is distinct insofar as it does not treat it as the metaphysical or abstract basis for monetary value. Hume does not invoke an abstract notion of labor, but rather, uses the phrase “labour and commodities” as shorthand for market place activity or “industry”; what Smith termed as the “propensity to truck and barter”. 3 Ibid., 127. 4 Bailey notes that Ricardo, “…seems never to have been sent back, by the strangeness of the results at which he arrived, to a reconsideration of the principle from which he set out, nor to have been roused to a suspicion of some lurking ambiguity in his terms” (Samuel Bailey, A Critical Dissertation on the Nature, Measures and Causes of Value (London: Charles Wood, 1825), xxi. Bailey’s charge against Ricardo’s approach is analogous to the latter Wittgenstein’s charge against his own early work.While the seemingly incongruous conclusions reached by the early Wittgenstein regarding meaning, as a result of his picture theory, should have led to the reconsideration of the theory itself, early Wittgenstein instead attempted to explain away the problems at the heart of the theory. This attempt was grounded on maintaining a distinction meaning in use, and real meaning. 5 Samuel Bailey, A Critical Dissertation on the Nature, Measures and Causes of Value (London: Charles Wood, 1825), 23. 6 Ibid. 7 Ibid., xviii. 8 Ibid., 23. 9 Ibid., 2. Bailey makes the distinction between value as a general conception and value as an economic conception. According to this view, economic value arises only in the context of exchange and not outside of that.This distinguishes economic value from other cases of value like, for instance, aesthetic value or even snob value.The substantive tradition does not make this distinction, which is what leads Marx, for instance, to find the source of the value of gold in its ornamentative qualities. 10 Ibid., 3. The philosophical premises of the substantive tradition do not allow it to recognize the claim that value is relational and thus quantitative. In fact, the use-exchange dichotomy itself forces us to conceptualize value as being qualitative since the utility of an object is a result of its qualitative features. 11 Ibid., 5. 12 This is analogous to making the claim that words acquire meaning by virtue of their use in context and then jumping to the conclusion that this use meaning itself must be grounded in picturing. The former recognizes relationality in meaning which the latter does not. One could make a number of meaningful statements about the word “car” in isolation but none of those would be the meaning of the word because the word has no meaning in isolation. In the same manner, one could say a number of things about silver or about labor in isolation, but one could say nothing about their value, in isolation. Bailey has shown that “Value denotes nothing positive or intrinsic, but merely the relation in which two objects stand to each other as exchangeable commodities” (Ibid., 4–5). 13 Bailey’s principle of quantitative relationalism is that “the value of one commodity can be expressed only by the quantity of some other object for which it will exchange”. As a result, “It is impossible to designate, or express the value of a commodity, except by a quantity of some other commodity” (Ibid., 26).

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14 “it follows…that it [value] cannot alter as to one of the objects compared, without altering as the other” Ibid., 5. 15 Ibid., 7. 16 Against the notion of a standard measure of value, which itself is predicated on the assumption of absolute value, Bailey writes that, “The very term absolute value, implies the same sort of absurdity as absolute distance; the invariable value of one object amidst the fluctuations of all other things, is as self-contradictory a notion as the invariable resemblance of a picture to the natural scenery from which it was taken, amidst all the vicissitudes of the seasons, the touches of time, and the encroachments of arts” (Samuel Bailey, A Critical Dissertation on the Nature, Measures and Causes of Value. London: Charles Wood, 1825, 23). In parallel with the theory of meaning, the substantive claim is like claiming that even though the use of the word “mouse” has changed in the English language, its real meaning has not changed because it lies underneath all the alterations that natural language is subject to. Further, that all the changes in the meaning of the word “mouse” may be measured by the original or primary use, which was to denote or picture the rodent. Even if we accepted that there was such a thing as the original meaning of the word “mouse” we would yet have to concede that at most, that original meaning may be taken in some sense to be the cause of the meaning of the altered use, but not the new meaning itself. To claim that the original meaning of the word “mouse” remains the same while the altered meanings must be measured or understood in relation to that original use, is like claiming the invariable resemblance of a picture to the natural scenery from which it was taken, irrespective of the changes that the natural scenery has undergone. 17 Ibid., 38. 18 Ibid., 39. 19 Samuel Bailey, A Critical Dissertation on the Nature, Measures and Causes of Value (London: Charles Wood, 1825), 39. 20 Ibid., 46. 21 Ibid. 22 Given Bailey criticisms, proponents of the labor theory of value may argue that labor is the substantive basis of the value of money, precisely because it is labor that creates commodities that can then be evaluated in terms of its use-value or its utility. It is this utility that then acts as the basis of exchange-value or market value. However, Ricardo too recognizes the inherent problem in upholding such a stance in defense of the labor theory given the counter fact that there are certain commodities whose exchange-value is not in proportion to its use-value and furthermore, that there are commodities with an exchange-value or a use-value but are not a product of labor. Such counterfactuals dislodge the portrayal of a linear dependency between the ontological value, the use-value, and the exchange-value. However, even if it were granted, merely for the sake of argument, that labor necessarily is the cause of use-value, it does not follow that labor is therefore intrinsically valuable. In fact, it is the case that not all use-value emerges from utility, and that not all utility generates use-value.Value may be generated by other factors such as scarcity in the case of a rare wine, or artistic beauty in the case of a painting. Furthermore, great amounts of labor may lead to the creation of a commodity that is utterly useless, without thereby lowering the “worth” of the labor. A substantive labor theory may take recourse to the view that while value emerges from various sources, in the cases in which labor does, in fact, generate use-value, there is a necessary link between utility and the labor which produces it. However, the labor theory of value problematically assumes that the very existence of the created commodity is sufficient in itself for the emergence of use-value. In other words, it fundamentally holds utility to be a property that inheres in

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the object by virtue of the labor that creates it. Further, if the labor theorist tries to base the value of labor on something else, like for instance its eudaimonistic value, then by its very admission, labor cannot be the source of all value, because it is itself given value in reference to eudaimonia. Even the view that labor is valuable because of the beauty of a life lived by doing rather than merely appropriating, would be philosophically untenable because the division it seeks to establish between doing and appropriating is impossible, given that these two notions are not two distinct categories, since, an act of appropriation is in fact a kind of doing.

9 ORIGIN OF MONEY The Barter Narrative and the Credit Theory of Money

Link between the barter narrative, the object-centric framework, and the substantive paradigm of monetary value We saw, that in contrast to accounts of monetary value offered within the substantive framework, the relational framework for understanding monetary value construes relations as the originary grounds of monetary value. In that, it is an explicit attempt to move beyond the substantive paradigm. Unlike the substantive frameworks that would hold an abstract aspect of the object, such as its intrinsic utility, weight, or labor, as the basis for the emergence of monetary value, the relational framework construes monetary value as emerging by virtue of a quantitatively comparative relation between objects. However, as far as its object-centeredness is concerned, Bailey’s relational framework still has traces of the substantive framework’s insistence on objects or commodities as being indispensable to the genesis of monetary value. But let us pause to ask a question here. Why did objects come to be seen as cardinal in the very construal of monetary value? The answer to this question, which we will show to be philosophically important in generating and sustaining the substantive paradigm of monetary value, has not so far been given adequate importance; be it from philosophy, economics, sociology, or anthropology. And, it is imperative that this question be taken seriously, given the central role that the conceptualization of money as an object has played in the history of philosophical discourse on money and monetary value. The answer is both surprising as well as interesting because the very beginning of the philosophical discourse on monetary value in Aristotle commences with an assumption, which is taken to be true purely based on its seeming obviousness. Namely, that prior to the emergence of money, all economic transactions were simply conducted through barter. In short, it is the acceptance of the obviousness of all pre-monetary economies as being driven by barter, beginning with Aristotle, that renders the notion of “objects” as being indispensable to the very construal

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of monetary value.1 The barter narrative pictures objects as commodities put up for exchange. It thus construes objects as the primary constituents of an economic exchange or transaction in a pre-monetary system. Clearly, if pre-monetary economic systems were truly barter economies, then we can imagine how limited and cumbersome these transactions would have been. It would be limited since for a successful transaction to take place, two individuals would first have to meet with each one of them having precisely the object that could satiate the need of the other, or what is called the double coincidence of wants in economic terms.That is truly a demanding condition. Imagine taking an ox to the market because you need some grain, only to find out that no one wants an ox that day. The barter narrative, first systemically expounded by Aristotle, argues that it is precisely to facilitate and ease the process of such cumbersome and limited economic transactions, that money as a medium of exchange emerged. Thus, the barter narrative already cardinalizes objects or commodities since they come to be seen as the fundamental or atomic building blocks of the economy, with money as the medium of exchange. Put another way, money is the object that acts as the mediator between two other objects, i.e., commodities. The object-centered view of the substantive paradigm, which holds commodities to be the fundamental building blocks of the economy, comes through clearly in Marx’s Capital, when he asserts that “…the wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity”.2 Marx’s intended critique of capitalism here is itself indicative of the historical fixation with objects or commodities as the central concepts or the building blocks of monetary economy on which Marx himself builds his critique. It is, perhaps, the simplicity of the argument that one finds in the barter narrative that makes it appear as obviously true. And it is this obviousness, which pervades the discourse on monetary value, and transforms it into a belief that cannot be tampered with, and consequently ordains it into a truth that is both definitive and unassailable. It is also perhaps this force of obviousness of the barter narrative that somehow leads Bailey, despite his criticism of the substantive framework, to retain the centrality and the inevitability of objects or commodities in his alternative relational construal of monetary value. After all, it appears to be legitimate to construe money as an element that was historically introduced to smoothen, and to boost the functioning of, the barter system. But by this very logic of obviousness, it is clear that to adopt any skeptical stance toward the legitimacy of the barter system as the accurate account of the origin of the monetary economy is to open up the possibility of adopting a skeptical stance toward the primacy of objects or commodities in relation to monetary value; and in turn, adopting a skeptical stance also toward substantive frameworks of monetary value. Such a skeptical stance toward the accuracy of the barter narrative and its commodity-centric framework of understanding could enable a radical shift in the way in which we come to construe monetary value. After all, if commodity is not considered to be primary, then money itself need not be necessarily construed

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either as a commodity or as an object. In short, to bracket the barter narrative as an authoritative account of the origin of money would enable us to construe money in ways other than as a medium of exchange.

Credit theory of money: the barter narrative faces an empirical challenge Of course, the alternative attempts to construe monetary value as fiction or as a relational product, managed to highlight the inadequacy of the substantive framework of monetary value. However, both Hume and Bailey held on to the barter narrative.3 It is Alfred Mitchell-Innes who explicitly rejects the barter narrative in propounding his credit theory of money. Innes argues for the suspension of our belief in the barter narrative, as upheld within the substantive frameworks of monetary value, as a historically accurate account of the origin of money.4 In a way, it is from Innis that we can draw the centrality of the belief in the barter narrative for the very plausibility of any substantive framework of monetary value. He writes, The fundamental theories [barter] on which the modern science of political economy is based are these: That under primitive conditions men lived and live with barter; That as life becomes more complex barter no longer suffices as a method of exchanging commodities, and by common consent one particular commodity is fixed on which is generally acceptable…that this commodity becomes a medium of exchange and measure of value. That a sale is the exchange of a commodity, for this intermediate commodity, which is called money.5 Innes’ attempt is to challenge the accuracy of the account of the origin of money as offered by the barter narrative. As we see it, it is the dismantling of the barter narrative that opens up the possibility of construing monetary value in radically distinct modes. The rejection of the barter narrative seems to open up the possibility of reimagining monetary value without being hinged on the notion of object anymore with regard to a philosophical framework of monetary value.This is because moving away from the barter narrative would free us from the necessity to construe money and monetary value in terms of objects or commodities. After all, money and monetary value, since the time of Aristotle, had necessarily been construed only within an object-centric, and therefore substantive, framework. If one pays close attention, the credit theory of money, and the resultant downfall of the barter narrative, allows for a paradigmatic shift in the way we come to see and understand money and monetary value. This is because the downfall of the barter narrative also displaces the object-centric framework for monetary value, thereby creating space for non-object-centric and non-substantive reimaginations of the nature of monetary value. As we noted earlier, such a radical reconceptualization is brought about by Innes’ credit or debt theory of money by precisely rejecting the barter system as a precursor to monetary economy, and as the substantive frameworks of

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monetary framework would have us believe. Effectively, what this rejection enables is the inquiry into the origins of money, afresh. And with it, fresh imaginations of the nature of monetary value, freed from its object-centric and substantive philosophical shackles. In other words, while the near universal acceptance of the barter narrative may have led us to believe that the question of the origins of money was settled once and for all, the credit theorists’ challenge to this dogma opens up the possibility of alternative reimaginings of the origins, and thereby the nature of money and monetary value itself. It does this by thinking about money as a system – rather than as an object – where economic obligation is quantified, tracked, and accounted for through a system of debt or, what is the same thing, credit. No doubt, while debts may be repaid through the transference of ownership of objects, debt is not itself an object. Further, since the credit theorists take the debt system itself to be money, money is no longer itself even thought of as necessarily being an object. Objects are merely accidental elements of a credit system; elements that are occasionally used to pay off debts. In allowing for the possibility of construing money as a system – through its conceptualization of money as a system of credit – rather than as a mediating object between two commodities, the credit theory of money not only effects a shift in the way in which we think about the historical development of money, but also in the way we philosophically conceptualize money or monetary value. It foregrounds the system over objects that are now seen as mere elements participating in a system.

The credit theorists’ case against the barter “theory” in the history of money In his critique of the barter narrative, Innes maintains that the barter narrative essentially rests on the notion of a proto-economy, which by definition is a stage of the economy before the introduction of money or before birth of monetary economy. Thus, in Innes’ analysis, barter must thus be considered as a proto-economic stage of activity, and therefore as a natural epoch or a natural stage in the teleological progression of economies into more mature monetary economies. But if this account be true, then as Innes argues, it must also be necessarily true that all monetary economies, present and past, must have passed through the barter stage before evolving into their monetary phase. It should then also necessarily follow that societies that are not yet economically or monetarily mature, should, in fact, exhibit the characteristics of a barter economy. Thus, Innes’ argument is that for the barter narrative to be a legitimate and a historically accurate portrayal of the evolution of monetary economies, there must be empirical evidence either from the past or from currently existing pre-monetary economies to corroborate the truth of the claims of the barter narrative. But, as the credit theorists like Innes and Graeber maintain, history, as well as the study of pre-monetary societies of the present, only throw up evidence to the contrary. As Innes asserts, Modern research in the domain of commercial history and numismatics, and especially recent discoveries in Babylonia, have brought to light a mass of

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evidence which was not available to the earlier economics, and in the light of which it may be positively stated that none of these [barter] theories rest on a solid basis of historical proof.6 Following Innes’ line of argumentation, Graeber, a century later, makes a similar assertion in his Debt: The First 5000 Years, when he claims that “the problem [with the barter narrative is that] there is no evidence that it ever happened, and [to its contrary we have] an enormous amount of evidence suggesting that it did not”.7 In the absence of concrete historical evidence in support of the barter narrative, the barter narrative appears to be more of a hypothetical postulation, or a conjectural history, invoked to explain the genesis of monetary economies, rather than a historical fact. As Graeber points out, barter is not “something that actually happened, but [is] a purely imaginary exercise”. But since economists, notwithstanding Innes’ radical intervention, still held on to the barter narrative, Graeber goes on to write, “…the story of money for economists always begins with a fantasy world of barter. The problem is where to locate this fantasy in time and space”.8 However, for the credit theorists, the portrayal of a primitive economy, i.e., a barter system, is not an innocent explanatory postulate. Within the substantive frameworks of monetary value, this imaginative postulation has rather dangerous distorting effects upon the way in which we come to construe money and monetary value. Since thinkers working within the substantive framework of monetary value assume barter to be a historical actuality, they come to construe money as being merely an addition to the already underlying reality of the proto-economy populated by commodities. In other words, that which was hypothetically imagined to explain the functioning of the market comes to dictate the very structure of the market. Therefore, for the credit theorists, the acceptance of the barter narrative subsequently leads to the transformation of an imagined description into a narrative with a prescriptive force. But precisely by virtue of the fact that the barter narrative is an explanatory postulate, we could as well replace it with other plausible explanatory postulates that might explain the emergence of money and monetary value. And further, explain it in a manner that is at the same time amenable to actual facts of economies and historical reality. Thus, in contrast to Aristotle, Smith, and others who uphold the legitimacy of the barter system, Graeber provides us an alternative construal of a proto economy. So, what could be such an alternative imagination of money? Where do we begin? Well, here is what Graeber asks us to imagine. Imagine a situation where someone named Henry walks up to another individual, Joshua, and compliments him about his shoes and lets Joshua know that his shoes, on the other hand, is causing him painful corns. Hearing this complaint, Joshua visits Henry’s place the next day, and gifts him a pair of shoes, making it clear that it’s a present, and that he expects nothing in return. At this stage, Graeber tells us, Joshua has registered a credit since, “Henry owes him one”.9 Graeber asserts that there are many possible ways in which Henry could pay the credit back to Joshua.

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Perhaps Joshua really does want potatoes. Henry waits a discrete interval and drops them off, insisting that this too is just a gift. Or Joshua doesn’t need potatoes now, but Henry waits until he does. Or maybe a year later Joshua is planning a banquet so he comes strolling by Henry’s backyard and says ‘Nice pig…’10 So this much is clear that we can imagine transfer or transfer of commodities in ways other than an exchange as held in the barter system. Seen from Graeber’s perspective, it becomes apparent that the problem of the double coincidence of wants, which leads Aristotle, Smith, and myriad authors of modern economics textbooks to uphold the legitimacy of the barter narrative in order to explain the emergence of money as a medium of exchange, is contrived. After all, there clearly are various alternative ways in which non-money economies may be imagined or speculatively constructed, which do not assume the same structure as a monetary economy. The possibility of such an alternative imagination of a pre-monetary economy, therefore, highlights the important fact that in contrast to what the substantive position would have us believe, the problem of the double coincidence of wants is neither natural nor necessary. Clearly no such double coincidence of wants arise in the proto-economy that Graeber paints for us, and its absence does not render his reimagining of a pre-monetary economy any less reasonable or plausible. Graeber’s construal surely validates Innes’ claim of “there being no reason for assuming the existence of so clumsy a device as a medium of exchange when so simple a system would do all that was required”.11

Not a medium of exchange but a quantified system of obligation The highlighting of both the possibility and the plausibility of alternative modes of construing the origin of money by the credit theorists like Graeber brings into question the very necessity to construe money in any substantive terms, or the necessity to construe monetary value in terms of some intrinsic property housed in an object. In this it challenges any framework of monetary value that is substantive or object-centric. What emerges as central in Graeber’s alternative conceptualization of a premonetary economy, as played out in the imagined Henry–Joshua event that we discussed earlier, is the fact that the sanction behind the act of giving, or the transferal of objects or commodities lies squarely in the feeling of an obligation. It is this feeling of being obliged, coupled with the act that it sanctions, that Graeber alternatively suggests to be the originary site of monetary value. Graeber holds the source of the value of money to rest in our disposition to put ourselves “under an obligation”. Of course, a feeling of obligation is a subjective matter, and there is no standard measure of how much obligation I ought to feel for a specific act by a fellow human being. And, as Graeber sees it, this is precisely why this is still a proto-monetary economy. It is when this obligation comes to be quantifiable, measurable, and standardized that money and the monetary economy emerges. Such a determinate and a calculated measure of obligation within the context of a monetary economy, as Graeber tells

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us, is what is called debt. Consequently, within this alternative imagination, money is debt because money is nothing more than a system of calculated obligation. It is precisely for the sake of quantifying this obligation that money comes into being. Graeber writes, What is the difference between a mere obligation, a sense that one ought to behave in a certain way, or even that one owes something to someone, and a debt, properly speaking? The answer is simple: money.The difference between a debt and an obligation is that a debt can be precisely quantified. This requires money.12 The transition from a non-monetary to a monetary economy with the emergence of money need not necessarily be seen in terms of the necessity for a medium of exchange. It can, as Graeber shows, be accounted for in terms of a transition of a vague and a subjective obligatory force to a quantified and objective one.The monetary system, within Graeber’s framework, is, therefore, simply this mechanism of quantifying obligations, and consequently, monetary value can be seen as standing proxy for such quantified obligations.Thus, while within the barter narrative, money was seen as an extension of the exchange of commodities, the alternative framework of credit or the debt theory construes credit or debt as the primary form of money. For them, credit does not emerge from exchange; rather, exchange emerges out of the credit system. This goes against the substantive paradigm, which begins with the primacy of commodities and their intrinsic values and only subsequently moves to credit. As a result, it emerges, in contradistinction to Aristotle, that credit is thus the origin of money and not an extension of it.13 Foregrounding the oddly inverted and erroneous picture of credit as held by those operating within the barter narrative, who come to construe credit as impossible without there being money first, Innes writes, One of the popular fallacies in connection with commerce is that in modern days a money-saving device has been introduced called credit and that, before this device was known, all purchases were paid for in cash…[a] careful investigation shows that the precise reverse is true. In olden days coins played a far smaller role than they do to-day… So unimportant was the coinage that sometimes kings did not hesitate to call it all in for re-minting and re-issue and still commerce went on just the same.14 Though the positing of credit prior to money appears counterintuitive, the plausibility of such a counterintuitive imagination of the origin of monetary value, as construed within the credit or the debt framework of Innes and Graeber, is summed up by Ole Bjerg thus, The credit theory…starts from the counterintuitive idea that money is not backed by any value residing beyond the money system itself. Once the reader

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has accustomed himself or herself to this idea, it seems almost impossible to go back to thinking about money in any other way. The simplicity of the theory makes it highly persuasive. The move from the commodity theory to the credit theory is comparable to the experience of looking at an optical illusion, such as the one simultaneously showing an old lady and a beautiful young woman. At first glance, you see the old lady, but as soon as your eye has caught sight of the young woman, it is difficult to go back to seeing the old lady again.15 While the anthropological and economic implications of the shift in perspective from barter to credit is quite obvious, the shift effected in the philosophical discourse on money and monetary value is immensely significant too. In dislodging the barter narrative itself, and thereby in shaking the Aristotelian ground on which the substantive tradition stood, the credit theory opens up the possibility of alternative philosophical conceptualizations of money which, unlike the theories that conceive of money in terms of a fiction or relation, are not constrained by the object centric view of monetary value. It is such a non-substantive philosophical framework of monetary value that we develop, broadly, in the final three chapters of this book.

Notes 1 To be sure, while the barter narrative of the historical development of monetary value has been criticized by the credit theory of money – as we will show in this chapter – the link between the barter narrative on the one hand, and the centrality of objects in the conceptualization of monetary value on the other hand, has not been made. 2 Karl Marx, Capital: A Critique of Political Economy, trans. Samuel Moore and Edward Aveling (New York: Random House, 1906), 41. 3 These thinkers did not wish to reject the theory and therefore did not attempt to substitute it. Their philosophies were meant to build on the foundation laid by the barter theory and were not meant to substitute it. 4 Innes’ credit theory of money, in which he lays the foundation for inquiry into the origins of money from outside the perspective of the barter narrative, is developed in two essays, What is Money? and The Credit Theory of Money, both published in the Banking Law Journal in 1913 and 1914, respectively. 5 A. Mitchell Innes, “What is Money?”, in Credit and State Theories of Money, ed. L. Randall Wray (Northampton: Edward Elgar Publishing, Inc., 2004), 14. 6 Ibid., 15. Innes goes on to report that, in Newfoundland and in the Scotch village, which are two of Smith’s examples of a barter economy, what Smith had found was not a barter system, but rather, “in both instances…he has, in fact, merely found credit” (Ibid., 16). 7 David Graeber, Debt: The First 5000 Years (New York: Melville House Publishing, 2011), 28. 8 Ibid., 23. 9 Ibid., 36. 10 Ibid. 11 A. Mitchell Innes, “What is Money?”, in Credit and State Theories of Money, ed. L. Randall Wray (Northampton: Edward Elgar Publishing, Inc., 2004), 30.

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12 David Graeber, Debt: The First 5000 Years (New York: Melville House Publishing, 2011), 21. 13 In the Aristotelian theory of money, credit is an unnatural extension of the exchange process and is seen in the Money for Money (M-M) stage of the economy. For a summary of Aristotle’s theory of money from Commodity for Commodity (C-C) exchange to M-M exchange, see Scott Meikle, “Aristotle on Money”, in What is Money, ed. John Smithin (London: Routledge, 2000), 157–173. Although money’s natural function is to serve as a medium of exchange between commodities, once money is established, market participants may choose to defer payments.That, for Aristotle, is the ground for the emergence of credit. Instead of clearing both sides of the exchange at the same time, the creditor offers something to the debtor, with the understanding of being paid at a later point in time, instead of the more natural on-the-spot settlement. This movement from barter to money to credit, is described by Simmel when he states that the, “…significance of money is much more evident in its extended form as credit. Credit extends the series of conceptions still further and with a greater awareness”.Taking this point further, he states that “[i]n credit transactions the immediacy of value exchange is replaced by a distance whose poles are held together by trust.” (Georg Simmel, Philosophy of Money. New York: Routledge, 2004, 520–521). 14 A. Mitchell Innes, “What is Money”? in Credit and State Theories of Money, ed. L. Randall Wray (Northampton: Edward Elgar Publishing, Inc., 2004), 27. 15 Ole Bjerg, Making Money:The Philosophy of Crisis Capitalism (London:Verso, 2014), 120.

10 SIMMEL AND THE MYTH OF OBJECTIVE TRUTHS CONCERNING MONETARY VALUE

Barter and credit: two modes of construing the history of the development of money As is clear by now, historically speaking, reflections on the origin of money and monetary value present us with two modes in which it has been framed. On the one hand, the dominant and the traditional mode upholds the barter narrative, wherein money emerges as a consequence of the demand to ease the exchange of commodities. In stark contrast to such an imagination, the credit or the debt theory holds monetary value as having its origins in the natural human disposition of being obliged to, and takes this human tendency as the basis for our sense of experiencing a debt, consequently leading to the birth of money. But in its alternative picturing of the genesis of money and monetary value, the credit or the debt theory radically inverts the traditional account of credit within an economic system. The manner in which it comes to conceive the origins of money, credit now comes to be seen not as a result, but rather as a precondition for the emergence of monetary system. Of course, choosing one among these two contrasting construals as providing the correct account of the origin of money and monetary value is a matter that demands some serious deliberation. After all, this choice of ours fundamentally determines whether we come to construe money as a medium of exchange or as quantified obligation, which then consequently informs all our subsequent construals about the nature of the world of money.1

The question of credit: an originary occurrence or a monetary epiphenomenon? As a matter of fact, the credit or the debt theory comes to seen as a worthwhile alternative framework of monetary value precisely because the traditional

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substantive  frameworks operating with the barter narrative failed to account for the emergence of credit within the monetary system. The barter narrative of the traditional framework treated credit as something of an afterthought of barter. It was seen as nothing but a monetary epiphenomenon; benign but unimportant at best, or unnatural and pervasive at worst. Much of the legitimacy of the reimagined origin of money, as painted by the credit theory, was a direct consequence of the fact that it could precisely account for the phenomenon of credit or debt in a comprehensive manner, while at the same time possessing the explanatory force of the barter narrative in accounting for all the other features of the monetary world. But the barter narrative has its own charm, despite its now obvious flaws and shortcomings. For one, it is simple, and the facts it presents appear to us as intuitively accurate. It is a narrative that has been around for a long time and is not so easy to displace, despite evidence to the contrary. Georg Simmel’s, Philosophy of Money, can be framed precisely as an effort to accommodate the phenomenon of credit within the world of money in a more comprehensive manner without letting go of the barter narrative. Of course, why he would want to hold on to the barter narrative is a matter altogether of historical accident, and can be put down to the simple reason that he, in fact, never questioned this narrative at all. In achieving the goal of accommodating credit within the world of money squarely anchored by barter, Simmel, however, rejects the traditional Aristotelian tendency to anchor all empirical phenomena in the world of money upon a substantive basis. And as we shall see, it is in his sweeping and incisive rejection of, and the consequent shift he occasions from, the substantive framework of monetary value, that Simmel presents us with a unique alternative framework of understanding monetary value. One may ask why Simmel’s rejection of substantive philosophy in the context of monetary value is important, given that the credit theory, as we have already seen, itself undermines the barter narrative, which constitutes the foundations of the substantive paradigm? It is because although the credit theory of money allows us to conceive of the historical development of money in an alternative fashion, thereby allowing us to shift our philosophical stance from being object centric to being systemic, the credit theory is, after all, an empirical or historical account of the development of money. Consequently, it is neither adequately engaged with, nor really bothered about the philosophical or generic conceptual apparatus through which we philosophically engage with monetary value. For the credit theory of money, it is enough that we recognize barter as a myth and that we conceptualize empirical monetary systems as being, essentially, systems of credit. While from an empirical point of view the credit theory of money is invaluable and insightful, however, from a philosophical point of view, it leaves much to be desired. Although the shift in the historical frame from barter to credit is invaluable, it does not, in itself, flesh out what this shift means for the philosophical or conceptual framing of money or monetary value. Simmel, on the other hand, while yet mired in the barter narrative, manages to (almost entirely) extricate himself from the substantive paradigm. Therefore, taken together, the credit theory of money and Simmel’s nonsubstantive philosophical framework help us in freeing ourselves from Aristotelian

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substantive framework of monetary value, empirically and philosophically, respectively. And it is precisely this that paves the way for the non-substantive framework of monetary value developed in final three chapters of this book. Simmel’s framework, though lodged firmly within the barter narrative, nevertheless abstains from reducing the grounds of monetary value to the realm of the substance-object. And precisely by doing this it avoids all the problematics that plague the substantive-essentialist framework of monetary value due to its adherence to the unavoidable, but philosophically untenable, conceptual pair of realnominal that we discussed earlier.

Simmel’s philosophy of money and the question of credit We take Simmel’s fundamental insight to be hinged on the fact that Aristotle’s understanding of the barter narrative ignores the central aspect of temporality. As Simmel sees it, it is not that the barter narrative is false, but it is simply incomplete in the hands of the traditional adherents of the narrative. In our reading of Simmel, the traditional account of the barter narrative fails to recognize the significance of the temporal dimension that underlies it. As a consequence, it fails to adequately emphasize that the barter system is a system that can operate only in the now or the present. According to us, this temporal dimension is an integral limiting aspect of the barter system, and in our interpretation of Simmel, it is precisely this aspect that constitutes the blind spot in the traditional account of barter. In an economic system envisioned as being governed by barter, one commodity is immediately exchanged with another commodity and this exchange, therefore, has no temporal lag. All transactions in a barter economy must be clearly seen as economic transactions that can only take place in the here and the now. Seen under the lens of such a demand of temporality, Simmel presents us with the novel insight that money is invented precisely to introduce a temporal lag in the immediacy demanded by the economic transaction within a barter economy. Thus, credit or debt emerges precisely when such a temporal lag is institutionalized within the transaction of an exchange, thus giving birth to money. Put differently, Simmel accounts for credit within the monetary world by construing it as nothing more than the simple deference of an exchange into the future from the now or the present. Within this conceptual framework, therefore, a barter economy is logically prior to the genesis of money, and thereby, logically prior to credit. This being the case, the phenomenon of credit or debt within the world of money is merely indicative of the fact that the world of money has matured enough to break free from the confines of the present and incorporate the temporal dimension of the future. It is in the attaining of this maturity that credit, which is nothing more than an acknowledgment of the fact that something ought to be paid, emerges, and money comes to acquire the special significance ascribed to it. In Simmel’s formulation, credit can thus be accounted for within the barter narrative without bringing in the subjective element of a human disposition to feel obligated, after all. Simmel writes,

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… [The] significance of money is much more evident in its extended form as credit. Credit extends the series of conceptions still further and with a greater awareness.2 However, seen thus, what the introduction of money would necessarily bring forth is a sense of predictable uncertainty. After all, the notion of a temporal lag is precisely indicative of the fact that the economic exchange remains incomplete. And it is precisely because it remains to be completed, the fact that a debt ought to be paid in the future necessarily brings along with it the predictable uncertainty of whether it will, in fact, be paid. Thus, for Simmel, what governs the trajectory of the world of money toward the attainment of this maturity is the institutionalization of trust. Reflective of this fact, he writes, …in credit transactions the immediacy of value exchange is replaced by a distance whose poles are held together by trust.3 Therefore, within Simmel’s framework, one could render the notion of quantified obligation as the idea of indebtedness that is itself cardinally rooted in trust; specifically, with regard to the ability of the object that represents money to, in fact, still be money in the future. That is, I need to have adequate trust in the object I hold as money to bring a closure to an incomplete exchange-transaction that is owed to me, in a future time. Consequently, and this is an important counter point to the credit theory’s construal of the grounds of credit, the credit theorist’s construal of money in terms of quantified obligation may thus be simply reconceived as a monetary system that is based on trust and which emerges as a natural culmination of the evolutionary process from a barter system of immediate exchange to a mature and complex monetary system that extends the completion of an economic transaction into the future.

Credit, temporality, trust, and the function of exchangeability Thus, if a mature monetary system demands the introduction of such a temporal lag, then as Simmel sees it, money and monetary value can emerge only within a world that is mature enough to see exchange of objects in terms of a function of exchangeability rather than in terms of the objects actually being exchanged in the here and now. It is only when one can abstract the notion of the function from the objects that are being exchanged in a barter transaction can the idea of credit or debit emerge. Only after such an abstraction is actualized can one bestow the function of exchangeability to some other entity than the one that is being exchanged. For instance, when I buy a car, I exchange pieces of paper (money) for it. Clearly the dealer is not exchanging the car for the pieces of papers I give her. Rather, this is an incomplete economic exchange, so to speak. What she is exchanging the car for is the trust she has in the pieces of paper that I hand over to her to be exchangeable for things that she needs from elsewhere, say a house. Within the framework of the barter economy, I would of course have to exchange a house for the car, but within a mature monetary

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economy, we have transferred the function of exchangeability onto these pieces of paper. Thus, we could construe the object we call money only as a symbol of, or a proxy for, the pure function of exchangeability. As Simmel sees it, this is precisely what the substantive paradigm fails to realize in its insistence to define monetary value in terms of an inherent quality of the object that is considered money, when truly speaking, monetary value is merely the function of exchangeability, which in turn could be ascribed unto any object for that matter, as long as it is agreeable to all the players within the economic system. With Simmel’s intervention, it apparently seems that Graeber was perhaps wrong is ascribing the human disposition to feel obligated as the primordial ground of the origin of money. After all, as Simmel has us believe, the notion of credit or debt emerges only when we are mature enough to operate within an economic system that tolerates and trusts incomplete transactions. The very idea of obligation implies the temporal dimension of the future for it invokes the notion that something is yet to be. Put in economic terms, obligation emerges only in a system that manifests a faith in the system to allow for the completion of the transaction in a future exchange. And such a system emerges only when one is able to abstract the function of exchangeability of an object (commodity) from the object as such.Therefore, as Simmel sees it, the phenomenon of credit or debt within the world of money is itself the result of the historical evolution of the function of exchangeability, and economic indebtedness or the credit system is but one of the manifestations of the function of exchangeability in the evolution of monetary value, rather than its foundational grounds. It is also for this reason that a sense of sacrifice in entailed by the deference introduced by an incomplete transaction. For Simmel, the notion of sacrifice emerges as central to any conception of economic value, since in monetary economies, we must sacrifice the need for instant satisfaction of wants by way of the trust placed in the money object to satisfy those wants, through exchange, at a later point in time. According to Simmel, this notion of sacrifice is characteristic not only of mature or monetary economies, but since money is central to mature economies, it is in fact, generally speaking, the characteristic of the modern economic form of life. Therefore, through Simmel’s lens, we may consider that what seemed to Graeber as obligation comes to appear rather as sacrifice; a sacrifice made possible because of the trust placed in the object that represents money since that object embodies the very function of exchangeability. Thus, if on the one hand Simmel’s unique version of the barter narrative accommodates the economic aspect of debt or credit neatly, his framework also manages to avoid the shortcomings of other traditional accounts of monetary value that operate within the barter narrative, precisely by being critical of the substantive framework they inevitably adhere to.

Monetary value understood through the category of substance not of function Both paper money and metallic coins, clearly two distinct objects with distinct properties, were prevalently in circulation as objects that represented money in the

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economic system during Simmel’s lifetime. This could well have led him to the realization that the substantive frameworks of monetary value erred in emphasizing the wrong ontological category of substance in its quest to account for monetary value. After all, unlike gold or silver, paper just did not appear as having an obviously lucrative intrinsic or use-value. It is perhaps this fact of the historical epoch in which Simmel operates that makes him reject the reductive tendency inherent within the traditional substantive frameworks of monetary value to inevitably emphasize the substantive nature of the money-object in a bid to account for monetary value.This, of course, is clearly indicative of the error that they all committed in turning a blind eye to the fact that the apt category for the explanation of monetary value was in fact that of function rather than that of substance. However, for Simmel, the traditional insistence on the category of substance is not simply a matter of inaccuracy due to the misconstrual of a particular feature of the monetary world. Rather, the demand to locate an ontologically stable, and therefore the quest for a substantive basis for the notion of monetary value is a fundamental epistemic bias at best and a fatal error at worst. For Simmel, the traditional approach to look for a substantive basis for monetary value is a result of the human desire for stability in a world of change. As Simmel sees it, the endeavor to locate monetary value in terms of some intrinsic property of the object is indicative of the hope that by doing so we might successfully stabilize the ever shifting and evasive notion of monetary value. Simmel writes that the traditional quest for a substantive basis is indicative of “the first tendency of thought, by which we seek to direct the disorderly flow of impressions into a regular channel and to discover a fixed structure amidst their fluctuations”.4 In other words, for Simmel it is precisely this miscued quest for an unchanging, absolutely stable and substantive core underlying the changing realm of the empirical world of money, that led substantive thinkers to posit monetary value as residing objectively within the object that represented money. Such a hypothetical positing of an underlying realm of value is indicative of the fact that the primary search within the contours of the substantive paradigm is for “what is steadfast and reliable behind the ephemeral appearances and the flux of events”.5 As Simmel sees it, the search for such a steadfast ground behind the realm of ephemeral appearances looms over as a methodological necessity because “in this way we attain the fixed points that can guide us through the maze of phenomena, and that represent the counterpart of what we conceived in ourselves as valuable and definite”.6 As Simmel puts it, the substantive paradigm seeks to make sense of the changing world of money by proceeding to …systematize our disorderly, fragmentary and confused first perceptions of an object by distinguishing a stable and essential substance from the flux of movements, colors and accidents that leave the essence unchanged…[thereby such an] articulation of the world as a stable core within fleeting appearances, and the accidental manifestations of enduring bearers of such appearances, grows into a contrast between the absolute and the relative”.

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Thus, Simmel diagnoses that the substantive paradigm essentially divides the contents of our experience into those that are core and those that are mere appearances, wherein, the meaning ascertained by the stable core is taken to be stable and enduring. However, since change is a part of our experience too, it stands accounted for by maintaining that while there is a stable core of reality, change or flux takes place only apparently in appearance. Thus, as Simmel would argue, it is precisely the positing of such a distinction between the aspects of the core and the appearances that traps the substantive paradigm within the realm of unchanging essences. But more fundamentally, Simmel’s rejection of the traditional essentialism lies in his discomfort with the subversive role that such a positing of the realm of essences brings about with regards to the fundamental aspect of the human subject as a value imparter and a creator of sense and meaning. It fundamentally forgets the fact that “in whatever…sense the difference between objects and subjects is conceived, value is never a ‘quality’ of the objects, but a judgment upon them which remains inherent in the subject”.7

Simmel’s philosophically radical prioritization of epistemology over ontology Simmel is onto something of importance here. Simmel’s denial of the intrinsicality of the so-called explanatory powers of essences and his insistence on the cardinal role that the human subject plays in the whole process of sense-making is precisely an attempt to prioritize epistemology over ontology, something that we have already discussed in the first two chapters of our book. The genesis of monetary value, as Simmel argues, is precisely an epistemological creation – a purely human invention – to make sense of the world economically by providing it a structure such that objects of the world stand transformed as commodities. As Simmel sees it, it hardly matters what objective properties an object has. As long as we can abstractly construe it as having a certain value, it will effectively function in accordance with the value that we impart it. For Simmel, it is no different with monetary value either. It does not matter what objective or intrinsic properties an object or a commodity has. As long as we can abstractly confer upon it the function of exchangeability, it will effectively function as money. Therefore, following Simmel, monetary value has no substantive basis at all but rather emerges by virtue of the epistemic framework that we uphold to make sense of the world. It is not something out-there in the world at all, but something that only emerges when we relate with the world in a particular manner. It is for this reason that money emerges at a particular historical moment.The barter system demands money simply because within the barter economy humans construed or related with objects or commodities within a particular epistemological structure. In a mature economy on the other hand, humans relate with the world of objects or commodities equipped with a distinct epistemological framework, leading to the emergence of a new epistemic category of monetary value. Through the insistence on the primacy of epistemic frameworks in relation to monetary value, Simmel radically departs from not merely the substantive framework

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but also from the relational framework of monetary value as well. After all, unlike Bailey’s relational framework, Simmel construes the emergence of monetary value as the result of the relation that we manage to establish between the world of commodities and our epistemic framework, rather than the result of any objective relation between two commodities, as Bailey construes it. In fact, Simmel’s overarching philosophical approach is radical, in so far as he upholds the primacy of the epistemic frameworks as a precondition to all our projects of sense-making, which is not merely limited to making sense of monetary value. Thus, for Simmel, our understanding of any reality already presupposes the adoption of a particular epistemic framework through which we approach reality. Consequently any “truths” that we claim of reality necessarily entails that such truths are themselves relational to the criterion of truth that is embedded within the epistemic framework that we uphold.8 As Simmel sees it, it is precisely this relational nature of truth that the substantive frameworks fail to recognize, thereby leading those operating within the substantive framework to erroneously construe truth as indicative of an accurate recording of certain ontological properties of an object. For Simmel, it follows that on final analysis all our construal of reality or ontology itself is foundationally grounded in our epistemological frameworks; and that these epistemic frameworks are themselves human constructions. Asserting his vision of epistemic relativism and the primacy of the epistemic over the ontological, Simmel writes, “Truth is then a relative concept like weight. It is then perfectly acceptable that our image of the world ‘floats in the air’, since the world itself does so”.9 For Simmel, all sense-making is conceptual and all ontological positioning, or the way we come to view the world, are the products of certain conceptual frameworks that we have come to construct. Therefore, all claims to truths are relative to the conceptual scheme in which they figure and cannot be taken as absolute truths. Consequently, for Simmel, monetary value, if it has a basis is not to be found in the world of objects out there, but rather in the epistemic framework that we have come to adopt in relation to the world of objects as commodities.

Our encounter with the monetary world demands a philosophical interpretation Thus, all knowledge, including that concerning monetary value, is constructed and is not meant to be a mirror of a given ontological reality, as was thought to be the case in the substantive framework. This leads to the understanding that our encounter with the world fundamentally demands that we construct and adopt certain conceptual frameworks in order to make sense of it. In short, our encounter with the world fundamentally demands a philosophical interpretation. Monetary value, therefore, and all the premises on which this value is built is the result of the epistemic enterprise that we undertake to make sense of the economic realities which on final analysis, are themselves the result of our own epistemic constructions. We are thus not passive receivers of experience as such, but active creators of it. Therefore,

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an ontological framework for the understanding of money is, per force, an epistemological interpretation or, in other words, a perspective on the nature of money that we seek to construct through the adoption of a particular principle of truth. Any ontological framework of monetary value, thus, is an epistemological perspective, in so far as all ontologies are conceptual constructs to make sense of the world. It is in this interpretative engagement that values are created. Consequently, a tenable philosophy of the nature of monetary value forecloses the possibility of any objective notion of ontological truths about it. And consequently, any claim concerning the nature of monetary value as absolutely and objectively true is at best but a myth, however seemingly obvious, incontrovertible, or unassailable that myth may appear.

Notes 1 Ole Bjerg’s, Making Money: The Philosophy of Crisis Capitalism, published in 2014 is a notable exception to this trend. 2 Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 520–521. 3 Ibid. 4 Ibid., 108. 5 Ibid. 6 Ibid. 7 Ibid., 65. However, Simmel maintains that the opposite is also true, in that to conceive of value as purely subjective would not do justice to the experience of it.Value, he notes, cannot sufficiently be “understood by referring [it]…to the ‘subject’” (Ibid., 65). This view is informed by Kant’s analysis of the distinction between judgments of taste and aesthetic judgments, where the latter contain the sense of an objective demand of the recognition of beauty. In this context, Simmel notes that, “Just as we represent certain statements as true while recognizing that their truth is independent of our representation so we sense that objects, people and events are not only appreciated as valuable by us, but would be valuable if no one appreciated them” (Ibid., 70). Just as for “Kant…the possibility of experience is the possibility of the objects of experience… In the same way, the possibility of desire is the possibility of the objects of desire” (Ibid., 68). 8 See Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 111. 9 Ibid., 112.

11 MONEY IS WHAT MONEY DOES

Simmel provides us a radical alternative to grasp the nature of monetary value. He convincingly opens up the possibility of construing monetary value as something that emerges by virtue of our epistemic ability of abstraction – an ability that positions us as makers of sense, rather than simple discoverers of it. It is through this ability, as Simmel assures us that we come to impart meaning to objective reality; the world that we encounter, including the world of money. In Simmel’s assessment, traditional thought concerning monetary value overlooked this fundamental ability of ours and was thus misled into seeking the basis of monetary value in the world of objects. And in this, they erroneously construed something that was, in fact, a pure epistemic construct as an ontologically intrinsic property of an object. As we have seen in the previous chapter, for Simmel, it is precisely through this very ability of epistemic abstraction that we are able to isolate or abstract the very function of exchangeability from the objects that are exchanged in a barter transaction. Further, it is this abstracted function of exchange that we then go on to ascribe to some object ordaining it as money, which subsequently, by the very virtue of the ascribed function of exchangeability, begins to function as money. Thus, in contrast to accounts of monetary value provided by the substantive frameworks, Simmel holds monetary value to be a pure epistemic construct and thus insists that to understand the nature of monetary value is not so much a matter of understanding the object that is money, but rather the function that the object manages to execute as a symbol of the function of exchangeability.

The necessity for the money-object to shed its non-monetary function(s) Whatever be the other properties of this object, and while these may be a factor in how well the object may perform its function as money from a practical

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standpoint, these properties of the object are nonetheless, of no essential import to the object’s status as money. In fact, in a certain sense, all its other properties are quite literally ignored after we ascribe it with the function of exchangeability. In a manner of speaking, the money-object functions as money only when it sheds its non-monetary functions in service of being money. In serving as a symbol of the abstracted notion of exchangeability, the object that is money acquires monetary value simply because it symbolically represents or stands proxy for the abstracted function of exchangeability. The fact that a material that is esteemed as bearing low intrinsic value, as for instance paper, can functionally stand as money is indicative of the fact that in a similar vein, the weight or quantity of the metal that constitutes a coin must have little to no correlation with the ability of that object to function as money. After all, as Simmel highlights, it is a folly to explain the ability of the object to function as money with reference to its substantive qualities. Rather, it is money because it has been ascribed the very functional capability to represent or symbolize money by us. This thought is succinctly expressed by Simmel when he asserts that money “does not have a function, but is a function”.1 Money is nothing more than this function of exchangeability. Money is precisely what money does. It is money in so far as it enables us to defer an economic transaction to a later period than the here and the now. Thus, though it was intuitive on the part of the traditional thinkers on monetary value to hold that gold functions as money precisely because it is in itself valuable or that it is intrinsically valuable, this intuitive force seems to wane in case of paper money (and is eradicated entirely in the case of purely digital money). It becomes imminently clear that the object that represents money performs that function not because it is the seat of some intrinsic value, but rather because we chose to use it as money. Clearly, though, certain objective qualities do inform our choice to ensure that we make a sound practical choice. For instance, we may aptly be concerned with the durability of the object, its availability, etc., but they are not the basis of the monetary value per se. Of course, this impasse clears off, as epistemic constructivists like Simmel inform us, when we realize that irrespective of the intrinsic value of the gold, it could not have propelled itself to imbibe monetary value had we not imparted it with a particular function; that of exchangeability. Hence, paper came to acquire monetary value – and now digits on a computer screen have come to acquire monetary value – that gold and silver once possessed precisely because we have chosen to ascribe this very function to it. Why, we could very well ascribe this function to stones, shells, or any other object, and as the history of money shows us, this has in fact been done. As Simmel sees it, the invocation of the substantive characteristics of the object that stands proxy for money in terms of its specific usevalue is a misconstrual within the substantive frameworks of monetary value.2 Thus, for an object to function as money it does not need to house any intrinsic value, but rather must be rooted in an assurance that it will be accepted in exchange for any commodity, irrespective of the particular nature of the commodity or entity.3 That is, though the object would surely have specific qualities or intrinsic properties which may be associated with its so-called original use-value, in its abstract or

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its pure spiritualized form as a symbol of exchangeability, the object must, so to speak, give up its internal characteristics or its original use-value in order to properly function as money.4 And given the variety of demands of exchanges within the world of money, the object that stands for money must necessarily be fluid enough to accommodate this diversity of demands. And its fluidity is ensured precisely by shedding off its other qualities which would otherwise constrain it and render it dysfunctional as money. Consequently, the very existence of money in a world of individualized, diverse objects, indicates that money cannot be merely one of those objects, but rather must be both, an object and a pure value. This is so because money must be a representative of all exchangeable objects that constitute the universe of commodities, irrespective of individualized differences among these objects. Thus, while an object – be it physical or digital – may be needed to, in fact, serve as a symbol of exchangeability, the degree to which an object can successfully function as money is proportional to the degree to which it can give up its substantive qualities and be flexible enough to be construed as a shared symbol of monetary value.5 Furthermore, Simmel’s construal of money or monetary value as being a function rather than merely having a function can also be seen as a radical departure from the traditional substantive frameworks in philosophy in general, because within Simmel’s constructivist framework, the category of function is granted an independence that it lacks within the substantive framework. The substantive trend in philosophy in general adhered to the hierarchical relations between the various metaphysical categories as had been laid down by Aristotle. Further, this trend in philosophy upheld the category of substance as being an ontological prerequisite for the existence of any other metaphysical category, including that of function. That is to say, they worked with the conviction that all functions are necessarily dependent upon the substance that performs that function. Thus, the traditional frameworks of monetary value foreclosed the possibility of any imaginative construal of the function of exchangeability in isolation from the substance that housed that particular function. It is for this reason that the traditional substantive theorists of monetary value, sooner or later, inevitably landed themselves into a quest for the intrinsic properties of the object that enabled it to emerge as money in a bid to explain the monetary value acquired by that object. For Simmel, on the other hand, monetary value or money is simply an abstract function independent of any substance; an abstract function that is then ascribed by us unto an object so that it comes to stand as money.

Being and value: the two aspects of sense-making But there is a deeper subversive move involved when Simmel insists, in contrast to Aristotle, that these categories are not ontological and are not given to us in our encountering of the world per se. They are rather our epistemic constructs invoked by us in order to make sense of the world. In Simmel’s analysis, of course, everything that exists does exist.That is, they all are. This, for Simmel is a necessary postulate that one must accept even before we begin to make sense of the world. The granting of being is thus the first operation we undertake in our encounter with the world.

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As Simmel puts it, this operation “flattens” the world for us since the world is now encountered as existing with things in it. The encountered world now has things that all have being. But this operation simply opens up the possibility of our engagement with the world, and is not, in itself, sufficient to enable us to make sense of the world. For this sense-making to happen, we would now require the second operation of ordering of the world of things. Such an ordering of the world of things is precisely accomplished by introducing differences among the “flattened” world of things by introducing various values. It is here that we impart values to the world of being and come to establish an order among them. It is through such an ordering of the world that sense emerges. As Simmel sees it, the history of ideas has always imparted importance to being. In following the hierarchy established by Aristotle among the fundamental categories, they had unwittingly placed values themselves in the world of objects as a subsidiary of being. This, as Simmel sees it, is the fundamental error that demands correction. After all, values are not to be found in the objective world, but rather are introduced into the world of beings by the subject, i.e., by us. Thus, if being is central in our experience of the world, so are values, for without them, we would fail to make sense of the world. As Simmel sees it, when we begin to see the world alright, we not merely realize that value and being are irreducible into each other but also that neither has more cardinality nor primacy over the other. Being and value are, in fact, the subjective and the objective aspects that inform our sense-making process.6 Thus, Simmel considers value to be an equally foundational aspect of experience, as is the foundational aspect of being or existence. Given this foundational nature of values, we can only describe their nature, including that of monetary value, in terms of their functions rather than explain them in terms of their genesis or being. After all, money is what money does.7 Consequently, to adequately explain monetary value is no longer to comprehend the phenomena through or as specific static substances, but rather as “motions, the bearers of which are increasingly divested of any specific qualities”.8 Therefore, for Simmel, the origins of monetary value must be construed in terms of this act of bestowal of a function to an object to render it as money, and thereby, it cannot be construed through an account that seeks to ground it in the properties of the object that stands proxy for money as such.9 Simmel’s conceptual framework entails that the object that stands as money is an artifact, in that it is made to function as a symbol of exchangeability by sheer human invention.

The gradual, collective process of value ascription to the money-object However, Simmel stands out from other non-substantive thinkers of monetary value before him, like for instance, say Hume, in so far as Simmel’s understanding of how such an inscription of values upon objects come to take place. Unlike Hume, who conceives of the act of ascription of monetary value as a conscious intervention on the part of human agency at a particular point of time in history, for Simmel, such an ascription of monetary value cannot be construed as a singular act of any

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discrete individual agency. Rather, for Simmel this act of bestowal of the function of exchangeability upon an object can only be traced in terms of a gradual and incremental process within the monetary world where we privilege certain objects over others as the rightful bearer of monetary value. This gradual and incremental process may be thought of as analogous to the gradual and incremental movement from day to night, wherein one cannot precisely locate the specific point in time when one comes to be the other. Thus, while we cannot claim a specific temporal moment to be the precise point when day changes to night, we can, however, unproblematically claim that the change, in fact, does occur.10 Rather than conceive of the agential subject in isolation, Simmel construes it as constituted by the economic reality that one finds oneself in. In other words, Simmel construes subjectivity in terms of the collective self that participates in the shared beliefs of a particular life-form of an economy. Thus, seen this way, the bestowal of the function of exchangeability upon an object emerges not through a conscious choice of an individual or a group, but rather, as an unfolding of a consensus on the grounds of the shared beliefs and practices within the life-form of the world of money. It is in this shared consensus that the object that represents money sheds its seemingly original substantive qualities and takes on its new value, i.e., the value it acquires by virtue of being trusted as the symbol of exchangeability. It is precisely this mark of shareability that ensures that the object, whatever its particular objective qualities be, represents the symbol of exchangeability, or money, and it continues to function as money precisely by virtue of the trust that is placed in it by the community populating the world of money. Simmel’s construal of the bestowal of the function of exchangeability is suggestive of an underlying Hegelian influence that construes of a historical unfolding of reality. For Simmel, the evolution of the world of money in terms of the evolution of monetary value is marked by a steady, but a gradual and incremental, transformation with its beginnings based on the substantive qualities of the money-object, to the more mature or evolved nature of monetary value as manifested in the credit systems which embody the abstracted function of exchangeability. Conceived in light of Simmel’s insights then, monetary value in its purest form is thus purely a function, that is the function of exchangeability which is not a property of any object as such, nor does it demand a substance as its substratum. We may thus conceive of the trajectory of monetary value as a movement toward this pure form of monetary value or what Simmel calls, toward a spiritualization of money. He writes, …[the] function…[of money]…has no inner relation to the material value of money…that what is essential in money…[is]…far beyond the significance of its material representatives…the greater the role of money becomes…the less it will need to be tied to a material substance; for the mechanical sameness and rigidity of a substance will become increasingly inadequate compared with the abundance, mutability and variety of values which are projected upon, and consolidated in, the concept of money… This process may be called the growing spiritualization of money.11

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In Simmel’s analysis, the substantive paradigm mistakes a part of this evolutionary process of monetary value to be the whole of the process itself.The conviction in the ontological primacy of the category of substance is the root cause of the failure – on the part of the substantive paradigm of monetary value – to realize the evolving nature of monetary value because this evolving nature seems to be in direct conflict with the stability that is assured by the very category of substance that they hold as cardinal. Consequently, they fail to discern that what provides stability within this evolving world of monetary value is precisely the collective trust that perpetuates the ability of an object to represent money successfully.

Monetary value is a conceptual construct, not an intrinsic property of an object Following Simmel, we can now see that monetary value is a conceptual construct that has mere conceptual existence brought about through a process of abstraction and it emerges from the ability of an object to symbolically represent the exchange function. It is this abstracted function which is then ascribed unto, and embodied in, a particular object that stands as its visible symbol. As such then, this framework leads to the conceptualization of money not as an object, but as a concept. In the terminologies introduced in our early two chapters, we can now see that Simmel’s framework of monetary value construes monetary value as a pure distinguishable, thus, clearly as a pure distinguishable, monetary value cannot be legitimately held to literally exist “out there” in isolation from the visible object that symbolizes it, which is to say that monetary value does not actually stand apart from the object that represents it. For instance, a coin, a currency note, or digits on a computer screen that represent a bank deposit, therefore, are merely the visible symbols of monetary value, which in itself is a conceptual construct. This being the case, the aspect of the coin that answers to monetary value is not separable as such from the coin and therefore cannot literally be isolated from the object. This leads us to the fundamental insight that the attempt to separate substantive value from empirical value within the substantive paradigm is clearly misguided, since it erroneously construes the actual separation of the substantive value of the object that represents money from the symbolic value of the object as representative of the function of exchangeability, to be possible. In the constructivist approach, as the one proposed by Simmel, monetary value can however, only be epistemically isolated, i.e., it can only be distinguished, from other aspects or qualities of the object that represents money. But it would be a folly to try to separate one from the other. In other words, the substantive paradigm conflates the possibility of epistemic isolation or abstraction of substantive value from symbolic value with the possibility of actually separating the two, thereby committing, what we termed the fallacy of separability. In contrast, the constructivist’s symbolic framework of monetary value makes us realize that we can only conceptually distinguish the monetary function of an object from the money-object. Simmel writes,

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… From the economic relationship, i.e., the exchangeability of objects…is extracted and acquires, in contrast to those objects, a conceptual existence bound to a visible symbol.12 And for Simmel, the money-object is precisely that visible symbol. The moneyobject simply is “the representative and expression of exchangeability” in concrete. Since the object merely serves as the visible symbol of monetary value and is not the substantive seat of value itself, Simmel does not conflate the function of exchangeability with the object that performs the function. Money is, simply put, a symbol of exchange much in the manner that numbers are symbols of quantification. The particular shape of the symbol used in our everyday process of quantification, say the mark “2”, is irrelevant to its ability to quantify. The efficacy of the mark “2” to stand as a symbol of quantification rests solely on its ability to perform the quantifying function.13 In fact, Simmel’s characterization of the nature of monetary value as a pure distinguishable, i.e., exchangeability itself, makes itself intuitively apparent when seen in the light of the contemporary case of digital money, where most money is not even backed by paper, gold, or any precious metal. Seen thus, the object that represents money, unlike most things which derive their value from their content, “derives its content from its value”.14 It is this inversion of the source of monetary value from the substantive to the symbolic that allows us an alternative modality to explain the origins of monetary value. Thus, though Simmel maintains money to be a facilitating medium of exchange – in line with the substantive framework of monetary value – however, unlike it, he construes this value as a “pure function”, whereby the money-object is merely its concrete symbolic representation.15 The view of money as a pure symbol of the function of exchangeability, as construed by Simmel, is buttressed by the historical fact that in the evolution of various objects that have come to stand as proxy for money, what has remained constant is precisely the function of exchangeability. Historically speaking, money has become, “…more and more a mere symbol, neutral as regards [the] intrinsic value” of the money-object.16 However, since the function of exchangeability emerges clearly as a pure distinguishable or “a conceptual existence bound to a visible symbol” that cannot manifest itself in isolation from the object that symbolizes it, from the evolutionary perspective of monetary value, it can never reach its “final conclusion”.17 In other words, according to Simmel, the evolution of monetary value would never, in reality, attain its pure form for its expression necessarily demands that it be embodied in an object. While Simmel’s prescient move toward conceptualizing monetary value as a pure function goes a long way toward eradicating the substantive bias in the philosophy of monetary value, his framework remains object-centric and, therefore, quasi-substantive, possibly for two reasons: one empirical and the other philosophical. Given the existence of paper-based currency in his time, and this fact coupled with the nonexistence of any monetary system devoid of an object that represented money, it would be reasonable for Simmel to fall back on the thought that while money may

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be ideally purely functional, in practice, it could never be such since there would have to be some tangible symbol for trust in the monetary system to hold. Further, in the pre-digital world that Simmel wrote in, the concept of visibility necessarily implies spatiality. Consequently, the notion that money, for practical purposes, must have a visible, and therefore, spatial manifestation, ties in well with the good old barter narrative which conceptualizes money as being a commodity, and therefore, an object. However, unlike Simmel, we are now historically in an advantageous position to clearly assert that the object that comes to embody monetary value or the function of exchangeability is not limited to the realm of the physical and could well be digital or of some other type not yet discovered or invented. Thus, notwithstanding his difference and points of radical departure from the traditional substantive frameworks of monetary value, Simmel still construes the world of objects as a necessary constituent for monetary value to operate. Consequently, despite Simmel’s non-substantive intervention in the philosophy of monetary value, his eventual drift toward object-centrism renders his framework inadequate in a world increasingly populated by purely digital and, importantly, seemingly limitless money.

Notes 1 Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 181. 2 Ibid., 159. 3 This amounts to the assurance that, “…[the transaction with the object that represents money]…will lead to the same result…[and that]…the result will be applicable for all particulars” (Georg Simmel, Philosophy of Money, 159). 4 Georg Simmel, Philosophy of Money, trans. Dabid Frisby (New York: Routledge, 2004), 152, 159. 5 Ibid., 108. Simmel claims that the tendency of objects to become pure symbols by virtue of shedding their substantive characteristics does not belong solely to the object that represents money. However, money may be its “greatest triumph”, or the purest visible expression of this tendency, since, of all objects, “Only money, in terms of its pure concept, has attained this final stage; it is nothing but the pure form of exchangeability. It embodies the…function of things by virtue of which they are economic” (Ibid., 138). 6 See Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 61–64. 7 While Simmel holds value to be a given part of experience, this does not imply that value is purely subjective. Simmel insists that while monetary value originates in a subjective evaluation of an object as being desirable, it gradually and incrementally gets objectified until it reaches the stage where monetary value seems to rest in the object itself. 8 Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 108–109. 9 From among the theories of monetary value considered so far, the use-value, labor, and weight theories are examples of objective theories of value, while Bailey’s is an example of a subjective theory, since he sees value as residing in the mind of the subject that estimates value. In contrast to Bailey, Simmel notes that “The subjectivity of value… is…only negative, in the sense that value is not attached to objects in the same way as is

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colour or temperature” (Ibid., 65).When purely instinctive desire shifts to being centered on the acquisition of an object, and when it begins to be discriminate rather than indiscriminate with regard to the object of its satisfaction, it may be concluded that subjective desire has shifted to take the form of demand for an object. In other words the demand for the acquisition of the object “…seems to be determined by the object; feeling is guided increasingly by its terminus ad quem instead of its terminus a quo” (Ibid., 73). “In exchange”, therefore, which Simmel sees as the defining feature of economic activity, “value becomes super-subjective, supra-individual, yet without becoming an objective quality and reality of things themselves” (Ibid., 82). 10 Ibid., 486. 11 Ibid., 212. 12 Ibid., 127. 13 See Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 130, 160. 14 Ibid., 128. 15 Ibid., 130. 16 Ibid., 162. 17 See Georg Simmel, Philosophy of Money, trans. David Frisby (New York: Routledge, 2004), 127, 178.

12 THE CONSTRUCTIVIST PARADIGM How Are We to Understand Monetary Value?

The need for a multi-categorical framework within the constructivist paradigm So far, our survey of the history of philosophical discourse on monetary value shows us that the manner in which monetary value came to be construed at various junctures in time is tacitly, although indubitably, informed by the manner in which monetary value manifested itself concretely as money at that specific time in history. Inaugurated by Aristotle’s thought on the matter, the substantive framework of monetary value believed it to be grounded in some of the specific properties of the money-object itself. Such a theorization of monetary value in that specific historical epoch is understandable, since monetary value manifested itself in terms of metal coinage. However, as we saw, such a construal of monetary value led the substantive theorists of monetary value to invoke the ungainly and problematic conceptual pair of real–apparent within their explanatory framework. This distinction, as we are now aware, needed to be defended within the substantive frameworks of monetary value to account for the shifting value of money in the actual market. After all, how could monetary value shift and vary within the actual market when it was grounded in an objective and stable intrinsic value that was housed in the money-object itself? Far from adequately resolving the matter that it was invoked to resolve, the conceptual dichotomy between the real and the apparent brought along with it its own set of philosophically irresolvable problems. The nature of monetary value thus remained elusive. And as if that was not enough, precisely because of the manifestation of monetary value in terms of metal coinage, the substantive frameworks of money did not pay much attention to the theorization of its manifestation as debt or credit, which in the modern period had come to be seen as an important manifestation of monetary value. The steady rise of these uncomfortable facts within the available substantive frameworks of monetary value then led to a reevaluation of our

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understanding of monetary value. It is here, as a response to this crisis that the credit theories of money and, most insightfully, the functional theory of Simmel emerged, carving a room for themselves within the discourse on monetary values as compelling alternatives. However, when we come to the contemporary manifestations of monetary values, such as Bitcoin for instance, or other monetary innovations such as central bank digital currencies, these alternative frameworks too appear constricted and narrow to be applicable to all of the manifestations of monetary value. It is not that they are wrong. Rather, following Simmel’s insight, we could say that these epistemic frameworks are inadequate to make complete sense of contemporary manifestations of monetary value. As we see it, one of the fundamental reasons for this inadequacy is that all the frameworks of monetary value hinge their philosophical description of monetary reality in terms of a single category, which is then taken to be the fundamental descriptive category of their epistemic framework.Thus, as we saw, the categories of substance, relation, or function come to provide the basic epistemic lens through which the concrete manifestation of monetary value is then sought to be explained within the substantive, relational, and the functional frameworks of monetary value, respectively. Unfortunately, the contemporary manifestations of monetary value, wherein money appears in not merely the physical but also in digital and virtual avatars, seem to repudiate any such attempt to straightjacket it in terms of a single explanatory category. However, a philosophical discourse on monetary value would surely have to accommodate all these various manifestations of monetary value within our monetary reality, if it is to be taken as an adequate descriptive framework of monetary value. This and the following chapters of the book will attempt to do this by providing a sketch, of course, through broad strokes, of a multi-categorical epistemic framework of monetary value that brings with it the promise to adequately capture the various manifestations of monetary value of our contemporary monetary reality. Clearly then, following the first two chapters of our book, we, like Simmel, believe that all descriptions of reality, monetary, or otherwise are simply the products of the epistemic frameworks that we come to create and adopt. In this, we are firmly constructivists. Thus, in contradistinction to the substantive framework of monetary value, our framework is mindful of the fact that assertions about money or monetary value can neither be legitimately described as an absolute nor as a final mirroring of the nature of monetary value. All epistemic frameworks, including the one we are set to propose now, must be open to a critical scrutiny and possible revisions in light of the future changes within our monetary reality; in much the same way as territorial maps must be open to scrutiny and revision from time to time.

If all epistemic frameworks are constructed, how are they to be judged? But to uphold a constructivist framework is not to hold that “each one of us” can create one’s own epistemic framework as isolated sense-creating subjects, independent of others. Rather in contrast to such a belief, as constructivists, we are mindful

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of the fact that an epistemic framework, first and foremost, needs to be shared intersubjectively for it to be a framework at all. And given that no epistemic framework mirrors the ontological reality but rather provides us with an adequate framework to simply make sense of it in a particular manner, the choice of which epistemic framework comes to be shared in making sense of the monetary world, therefore, becomes the first question we need to address. Simply put, given that the various frameworks of monetary values are all different epistemic frameworks, including the one we are about to propose, how do we go about selecting the most appropriate epistemic framework of monetary value. After all, if all of them are epistemic frameworks, one framework cannot surely be the basis for the rejection of the others, except by sheer force of adamancy. But given that the task of any epistemic framework of monetary value is to enable us to make sense of its various manifestations in the monetary world, minimally, every epistemic framework of monetary value would have to be: a.

b. c. d.

logical, in that the elements of the framework must follow from either other elements of the framework, or from a certain set of first principles of the framework itself. coherent, in that the various elements of the framework must not contradict each other, applicable, in that our epistemic framework must enable us to meaningfully engage with money in its various forms in the actual monetary world, and adequate, in that it should enable us to understand the various manifestations of monetary value in the actual monetary world.

If the fourfold criteria of logicality, coherence, applicability, and adequacy are taken as the yardstick of a suitable epistemic framework of monetary value then by the sheer criterion of adequacy, all the traditional frameworks of monetary value appear lacking in the contemporary monetary world given their inadequacy to account for the multifarious manifestations of monetary value that are present in the contemporary world of money. And we can safely assume that they fail to account for the breadth and depth of empirical monetary systems given that they are driven by a singular epistemic category. In contrast, the multi-categorical epistemic framework that we will now propose has the adequate flexibility due to its categorical plurality to account for these manifestations of monetary value. In addition, our framework is sensitive to the fact that all epistemic categories that are invoked while making sense of the world of money are not only epistemic constructs but more importantly that, as such, they have no reality in themselves unless they come to be related to the empirical world.

The categories of our constructivist framework of monetary value are formal In this sense, an epistemic framework is constituted of merely formal and empty categories that are related with each other in certain specific and determinate relations

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which when applied to the world comes to be filled with content, or comes to be saturated, enabling us to make sense of things that saturate the epistemic framework. A better way to think about the formal nature of epistemic frameworks is to think of them as a mathematical formula or a mathematical function like “x + y = z”. In itself, the given mathematical function simply informs us that x when added to y will give us z. Though all the three variables z, y, and z are empty or hollow, they nevertheless enable us to make sense of the world of numbers through the process of summation precisely by providing the possibility of being saturated by numbers. Our proposed multi-categorical epistemic framework of monetary value is formal in this precise sense. Unlike the substantive, relational, or the functional accounts of monetary value, it takes the categories of substance, relation, and function as merely formal categories that can be saturated by various actual objects, actual relations, and actual functions through which we then come to make sense of the world of money. It is this formal nature of the epistemic categories of our categorically pluralistic framework that accounts for its accommodative nature; that allows it the required elasticity to accommodate the various avatars of monetary value in the actual monetary world. Furthermore, the “+” symbol would be unable to function without the variables “x” and “y”. It acquires its meaning only within the broader horizon of the mathematical function “x + y = z”. Another way of putting this would be to say that though the symbol “x” surely has an independent identity as a symbol, it is functionally dependent upon the other symbols of the mathematical function “x + y = z” in the specific context of the function of summation. Analogous to this, the formal epistemic categories of our constructivist framework of monetary value, though each conceptually isolable or distinguishable from the others, are functionally dependent upon each other in accounting for the nature of monetary value. They come to acquire their respective roles only within the bounds of the epistemic framework as a whole, and thus, they fail to function in isolation. Each isolated epistemic category is, therefore, bereft of any meaning outside their relations with other categories or other conceptual constructs of the formal and complex epistemic framework that they collectively constitute.

A cautionary note: functionally interdependent epistemic categories are distinguishable from each other, but not separable However, a word on the functional interdependence is in order here. In construing these epistemic categories as interdependent functionally we do not construe them as parts with an independent intrinsic role that then go on to constitute the epistemic framework as a whole, in the sense in which a car is literally constituted of its component parts with independent functions. Unlike the parts of a car which can be literally taken apart while each constitutive part may still retain their individual functionality independent of other constitutive parts of the car, these epistemic categories even when conceptually isolated from each other would lose the function it has within the system when isolated from it.The formal categories of substance, relation and function are

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not parts of a whole, but rather are interrelated aspects of a conceptual framework. In other words, these invoked categories would cease to bear the meaning that they do when isolated from the conceptual framework of monetary value within which they describe various aspects of monetary value. In fact, what makes these categories meaningful in describing monetary value is precisely the determinate relation they bear to each other within a monetary system. This is to say that monetary value cannot be simply reduced to a single epistemic category without invoking the other epistemic categories that constitute the broader epistemic framework of monetary value. A singular categorical description of monetary value, as for instance, being a substance or being a relation, or a function would be meaningless. To be sure, the constructivist framework itself cannot be hypostatized and, therefore, cannot be considered to exist in an objective manner as being out there in the world, so to speak. In the language of the second chapter of this book, these categories are pure distinguishables and thus do not have an existence outside the epistemic framework invoked to make sense of the world of money. To construe them as ontologically existent, as was done within the substantive frameworks of monetary value, would be to commit the fallacy of separability, since they would then have to retain their individual function when separated from the collective.

Ask not what causes monetary value, but how best to understand it Our epistemic framework for understanding monetary value within a constructivist approach is, therefore, governed by the principle of constitutive interdependence, which is to say that all categories that constitute our framework are dependent upon each other for their respective epistemic roles in our understanding of the nature of monetary value. Each category, so to speak, contributes in its own specific manner to the adequacy of the framework to better understand the nature of monetary value. Such a functional interrelatedness between the epistemic categories also enables us to glean insights from the work of the thinkers we have discussed so far, and to weave them together within a formal, and categorically plural, philosophical framework of monetary value. It is precisely this fact of interdependence among the epistemic categories or the concepts that populate the constructivist framework that forecloses the possibility of raising questions of causal primacy among the categories. It cannot, for instance, be asked whether substance causes relation or vice versa, because neither causes the other. The possibility of framing questions of the causal relationship between the categories of explanation does not arise at all since none of the categories exist outside of the conceptual system. Thus, with regard to a constructivist framework of monetary value, questions of causation simply do not arise. This helps us to understand that the question pertaining to monetary value is itself misplaced if we take the question, “what is the cause of monetary value?” as our primary concern. As we can now see, given that all frameworks of monetary value are simply epistemic frameworks that invoke abstract and formal categories in order to understand the world of money, the primary concern of a philosophical discourse on the nature of

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monetary value should be “how do we best understand the manifestations of monetary value in the world of money?” The failure to recognize this and to seek and investigate into the cause of monetary value is to lose sight of the fundamental insight that our epistemic categories are pure distinguishables and are not separables. After all, it is only with regard to a separable that we can talk of its cause. For instance, the category of substance would have to be separable from that of relation in order for us to ask which caused which. But to treat these epistemic categories as separables rather than as distinguishables would amount to hypostatizing epistemic categories, i.e., we would be treating them as ontological entities existing out there in the empirical world of separable objects. Thus, though in constructing a categorically pluralistic framework of monetary value, we reconstructively borrow from Aristotle himself who breaks down reality into a plurality of categories in his early writings, we nevertheless do not follow Aristotle in his move to confer cardinality to the category of substance over all the others. We rather construe these categories as epistemic constructs and as pure distinguishables and not as parts of reality per se, as independent separables, and as commanding equal primacy. Of course, each of these epistemic categories can be distinguished from the other. It is, in fact, this distinguishability that entails that the formal contours of the categories are distinct and determinate from each other, thus enabling them to perform certain determinate roles within the explanatory framework.

Generic description of monetary value, not of a specific monetary system Further, our construal of the categories as not merely epistemic but also as formal meets the demand of the criterion of applicability. That is, our framework of monetary value is able to accommodate not merely a specific historical manifestation of monetary value, but its manifestations in various avatars. Precisely because we construe these epistemic categories as formal and, therefore in the Kantian sense, empty with the possibility of being empirically saturated, it follows that our framework of monetary value is simply a precondition for the possibility of describing the nature of monetary value and is not the description of a specific and a concrete manifestation of monetary value as such. In other words, our framework is general and broad enough to be applicable to systems as divergent from each other as the bank-based modern money system, the gold standard money system and also alternative monetary innovations such as Bitcoin and other cryptocurrencies. This leads us to therefore understand that constructing a framework of monetary value does not by itself translate into the act of understanding a specific manifestation of monetary value. Rather, it merely puts in place the most generic conceptual apparatus that is required to descriptively understand any manifestation of monetary value or any monetary system. Therefore, in order for a constructivist framework to actually describe a particular monetary system, such as the modern bank-based monetary system, a further move of saturating or instantiating the formal categories of our epistemic framework with contents specific to that monetary system would be needed. In this sense, the framework we offer here is like the form of an

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argument,  which, though itself empty, may be employed to explain the generic structure of various specific arguments. This also entails that without being saturated or instantiated with the monetary contents specific to a particular monetary system, our epistemic framework of monetary value remains vacuous or merely formal. And thus, in itself, it has no interpretative value with regards to any particular monetary system. Employing the terminology of Toulmin, our framework of monetary value is field-invariant.1 That is to say, it merely shows the form that underlies any monetary system regardless of the concrete particularities of that system. And one could, theoretically speaking, go on to make sense of a particular monetary system if one goes on to saturate its epistemic categories with the actualities of the specific monetary system that is to be made sense of. In this sense, most of the available conceptual frameworks of monetary value would, upon analysis, turn out to be confined to a singular empirical manifestation of monetary value. It would fail to be field-invariant and would, therefore, fal to satisfy the criterion of applicability. For instance, Graeber’s debt theory of money, which carries immense interpretative force when applied to the bank-based modern system of money, loses at least some of its explanatory force when applied to Bitcoin.Therefore, it would not meet the applicability criteria for an ideal framework of monetary value. However, as one might now see, we believe that such inadequacy that marks almost all traditional frameworks of monetary value is because they all fail to realize that any monetary framework ought to be, first and foremost, field-invariant, and therefore, formal. That is, all traditional frameworks of monetary value blur the distinction between a framework of money value as such, from a framework that explains a particular, concrete manifestation of monetary value. The failure to recognize this makes these frameworks of monetary value restrictive in their scope of applicability to other manifestations of monetary value.2 Our proposed constructivist framework of monetary value, on the other hand, seeks to capture the nature of monetary value as such and thus, in principle, could be applied to make sense of or to map, so to speak, any empirical configuration of money or manifestations of monetary value, such as the historical gold standard, the contemporary bank-based monetary system and even current monetary innovations such as Bitcoin and other cryptocurrency systems. This task of laying out our formal and categorically plural framework of monetary value is undertaken in the next two chapters.

Notes 1 See Stephen Toulmin, The Uses of Argument (Cambridge: Cambridge University Press, 2003), 14–33. In the context of the analysis of arguments and logical types for Toulmin, the formal constituents of an argument structure are field-invariant, in the sense that they are agnostic to the field within which the argument is put forth. Therefore, whether an argument is made in philosophy or in law, its formal structure may be broken down into the same elements. 2 A theory of monetary value that was only able to explain or make sense of the contemporary bank-based monetary system, but not of older systems like the gold standard or newer ones like Bitcoin, would not be field-invariant, and therefore, would not be an adequate explanatory framework for the description of monetary value, as such.

13 SUBSTANCE AND RELATION Two Sides of the Same Coin

Configuring the epistemic categories of substance, relation and function In the previous chapter we made the case that the existence of multifarious manifestations of monetary value, i.e., the fact that there exist multiple types of monetary systems, demands a multi-category conceptual framework for the understanding of monetary value. Thus, the available frameworks of monetary value that operate with a single category of substance, relation, or function would inevitably fall short of adequately grasping the nature of money, since they are concretely invested in explaining one particular empirical manifestation of monetary value using a single category. Subsequently, we also laid out in the previous chapter what such a multicategory conceptual framework would entail in terms of its formal nature. However, it still remains for us to lay out the specifics of our epistemic and formal conceptual framework, along with examples of how that applies to actual monetary systems. The previous chapter also makes it clear that our rejection of the available frameworks of monetary value, however, is not wholesale. And while it is, as we saw through the chapters, undeniably the case that traditional frameworks of monetary value bring in their fair share of unwieldy theoretical issues, we shall, nevertheless, draw upon the insights they offer and recast them in our constructivist framework. Consequently, while some terms and concepts within our proposed framework of monetary value might sound familiar, they are distinctive in that they are all construed as formal and exclusively as epistemic categories, and thus they carry no ontological baggage. In other words, unlike the substantive frameworks of monetary value that we discussed in the preceding chapters, the term “substance” within our framework denotes an epistemic concept rather than an object in the world. Thus, within our framework, monetary value is itself an abstract epistemic construct which cannot be unproblematically conflated with an object such as a coin, a strip of

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paper, or a rectangular piece of plastic. Broadly put, the substantive frameworks of monetary value construe epistemic categories as mirroring the ontological realm or the monetary world as it really is. This leads them to treat epistemic categories as names or labels of certain ontological objects or properties. In stark contrast to this, our approach, i.e., the constructivist approach, is to uphold not merely the independence of the epistemic realm, but more importantly to stress the primacy of these epistemic categories, without which the reality we encounter would be devoid of any sense or order. This is to say that the constructivist paradigm does not reject the notion of substance, as such, but stops short of hypostatizing the notion of substance. Rather, by emphasizing the primacy of the epistemic, the constructivist paradigm recognizes the notion of substance as, first and foremost, an epistemic abstraction, a pure distinguishable in determinate relations with other epistemic formal categories such as those of relation and function.

Constructivist recasting of the category of substance From our constructivist perspective, the category of substance does not denote an object at all, such as a shoe, a commodity brought to market, or a metallic coin. It is construed, rather as a formal epistemic category invoked within a multi-categorical epistemic framework to refer to a discrete aspect of the manifestation of monetary value. Thus, substance within the context of the formal epistemic framework of monetary value refers to the constituent elements of the monetary system that can be distinguished, though non-separable from each other. Consequently, by virtue of it being a pure distinguishable, substance or the constituent elements of the formal epistemic framework can only be conceptualized as self-standing. For instance, one may conceptualize a coin, a currency bill or note, or even a digit on a computer screen as being distinguishable from other aspects of the monetary system to which they belong, such as commercial and central banks. And, in doing so, one would be conceptualizing it from its aspect of discreteness. However, this conceptualization, though an epistemic possibility, does not imply that these elements can actually be separated or can function independently from the other elements of the monetary systems within which they function. In other words, a coin, a currency note, or digits on a computer screen that represent a bank deposit, holds monetary value only in so only insofar as it maintains a determinate relationship with the network of commercial banks, a central bank, and other elements of the monetary system. This is to say that categorizing something as a substance is a precise way of saying that it a distinguishable and can be conceptually construed as a singular or self-standing formal entity within the epistemic framework in which it occurs. For instance, an individual human being may be unproblematically conceptualized as a self-standing or discrete entity, even though it is an undisputable fact that it is the individual’s relationships with other people, as well as her natural and artificial environment that determines her character or specific individuality. This aspect of functional interdependence is what we had highlighted in the previous chapter. Recall that the formal, and therefore, the empty nature of these categories, including that of substance, was emphasized as well.

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As a formal epistemic category, the category of substance is merely a place holder for certain substance-instantiations, that then come to saturate it with the specificities of the empirical monetary system of which it is a part. Say for instance, the category of substance could be instantiated or saturated by the coin or the paper note in the world of physical money objects. Or, in the world of digital money, by digits on a computer screen that represent a bank deposit, or the (fractional or whole) units of Bitcoin in your digital wallet. Thus, to say hypothetically that the gold coin is a substance representing monetary value is simply to say that the gold coin saturates the formal category of substance in a particular empirical monetary system. But, to be clear, it is not to identify the gold coin with the category of substance itself, as is done within the substantive paradigm, or by some gold-based commodity theorists of money whose framework is informed by the substantive paradigm. Nor is it to assert that the gold coin as a substance is ontologically independent and can function as a symbol of monetary value bereft of its relations with other equally primary elements of the monetary system of which it is a part. The gold coin in isolation from other elements of the monetary system cannot simply function as money. In fact, we could safely say that the character of any empirical monetary system is determined precisely by the relationships that obtain between such substance-instantiations, as for instance between bank notes, the commercial banking system, and the central bank of the country; all three of which are essential components of the modern bankbased monetary system and can all be seen as substance-instantiations that bring about a particular manifestation of monetary value. But, they are all dysfunctional on their own outside that specific monetary system. Think of an alien planet where you happen to land with lots of gold and which has a non-gold-based monetary system.You would find all the gold you have simply dysfunctional as money there, though the gold still remains precisely what it was, namely, gold. This goes on to show that while a discrete unit or element of a monetary system may be conceived of as distinguishable and thus isolatable from its relations with other elements of the monetary system, it cannot be actually separated from its relations without rendering it dysfunctional.Therefore, from our perspective, monetary value cannot be reduced to one or another discrete, and singular, aspect of our monetary reality, whether that be use-value, the weight of the coin, the labor invested in the object that represents money or, as is more appropriate in the case of modern monetary systems, the institutions such as the central bank, commercial banks as whole, or the Bitcoin blockchain protocol.To do so would be to lose sight of the myriad relations that any element of a monetary system holds with other elements of the system that renders them the definite role that each of them play within that system.

Overcoming the substantive intoxication with gold as money But to let go of the belief in the substantive denotation of the term substance is a habit difficult to leave behind, especially given its long-standing dominance in intellectual history. And this belief plays out within the discourse on money in its most forceful avatar in terms of the long-standing and the widespread tendency to fixate on gold

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as being a natural objective symbol for monetary value, owing to certain substantive qualities that it is imagined to intrinsically possess.This fixation with money as gold is historically aligned with the fact that the substantive frameworks of monetary value dominated the philosophical discourse of money for a substantial period of time. Given this prevalence of taking gold as money, a brief detour to show the problematic aspect of adhering to this belief is in order here. So strong is this tendency to consider money as gold, that despite the fact that the international monetary system has not run on the gold standard, at the least, since the time of the Bretton Woods Agreement of 1944 [after which the international gold standard monetary system was officially discontinued],1 the gold standard is still considered by many to be the paradigmatic example of a monetary system. It is this belief that has led to the widespread myth, and a deep-seated popular prejudice, that money is still backed by gold.This belief, as we have seen, was what was central to the sustained dominance of the substantive paradigm of monetary value.The substantive frameworks of monetary value took money to be necessarily related to the substantive qualities of the object that stood for money, which was usually gold or some other precious metal, thereby establishing a link between money and gold, even when gold coins ceased to function as money, to an extent that it is difficult to erase it from our collective psyche. It is this shared collective psyche that immediately leads us to believe that modern forms of money are simply products that have evolved from, or have their basis in, this fundamental substance – gold – given that it is taken to be intrinsically valuable. And as we know, within the substantive paradigm, gold is considered to aptly function as money because it is seen as intrinsically valuable. That this belief of the substantive framework still lingers on with us is evident from the simple fact that we found a renewed call for the adoption of the gold standard in the aftermath of the 2007–2008 financial crises, when the central bank of the United States, i.e., the Federal Reserve, was seen as illegitimately and “dangerously” pumping cheap money into the banking system, creating a “bubble” of fiat money not backed by anything substantively real.2 In fact, gold is often considered by many to be the most natural form of money and the only object in which monetary value can be universally embodied. However, on careful reflection, even the simple belief in the intrinsic value of the object gold is evidently misplaced. While it may seem psychologically obvious that gold, or other precious metals like silver, functioned as money because of their so-called intrinsic value, the moment we begin to inquire into the more fundamental question of the nature of their intrinsic value, we realize that we are often at loss to explain as to why they come to be held as intrinsically valuable.3 In fact, both Smith and Marx attempt to address this fundamental question in their own ways from within their substantive frameworks. While Smith tried to explain money as gold by referring to seemingly “irresistible reasons” for its acceptance as money, Marx goes a step ahead and identifies the basis of its value to lie in its intrinsic aesthetic worth and its ability to symbolically represent wealth and prosperity. The aesthetic qualities of gold, thought Marx, were the reason for the intrinsic value of gold.4 Notwithstanding Marx’s attempt to make the intrinsic value of gold understandable through an application of his theory of labor, his

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account fails to adequately resolve the philosophical problems emerging out of the conceptual pair of the real–apparent. This problem, as we have already explicated in Chapter 7 of this book, is a problem that haunts any substantive framework of monetary value. Marx’s explanation of exchange-value through use-value of gold, and finally resting in the intrinsic value of labor only manages, in Ole Bjerg’s words, the “displacement of a mystery by an even greater mystery”.Thus, if earlier the mystery surrounded our upholding of gold as intrinsically valuable was already perplexing enough, Marx, by resting the ultimate ontological source of the value of gold in labor further complicates this mystery for then it leads to other perplexing questions including, but not restricted to, why anyone would then struggle to mine gold in the first place, if labor itself was intrinsically valuable?5 However, as we have already seen, the fundamental problem with any attempt to explain the intrinsic value of gold or labor within the substantive frameworks is that they operate with the belief in the primacy of the category of substance and fail to realize that the category is simply an epistemic construct. In Bjerg’s words, this then hinders them to come to the realization that, “it is impossible to speak of value without simultaneously invoking some kind of symbolic system that sets the standard for the determination of value. Even though gold may indeed possess the qualities listed by Marx, it is possible to speak of gold as valuable only insofar as there is already a symbolic system in place that enables us to compare the value of gold to the value of other commodities”.6

Emphasizing the distinction between “gold” and the “gold standard” monetary system As has been argued by Simmel, and in contemporary times by Ole Bjerg, there is nothing special about gold that would somehow endow it with intrinsic value.7 In fact, unlike the position taken by substantive thinkers regarding the intrinsic value of gold, a “closer inspection reveals that gold is anything but concrete”. Our contention here is that gold has been commonsensically thought of as concrete or as intrinsically valuable because thinkers on the subject have not adequately distinguished between the object gold on the one hand and the gold standard as a monetary system on the other. Gold, as such, refers to the tangible entity that we can handle with our hands, and out of which gold coins may be minted, or jewelries made. The “gold standard” however, is not a thing at all, and therefore, is not easily susceptible to substantive patterns of philosophical thought. The difference between the gold standard and gold as such is that the former is a monetary system, i.e., a particular empirical manifestation of monetary value, while the latter is an object, i.e., a piece of metal. While gold, as a physically existing entity may be a commodity, the gold standard is not. Gold in itself is not a system of money, and system by its very definition demands other systemic elements other than gold. Unlike gold, the gold standard is not an object; therefore, it is not a commodity. And in not being a commodity, it is simply not amenable to being treated as an object and, therefore, cannot be adequately or meaningfully made sense of through the lens of a substantive framework of monetary value.

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Equating the gold standard with gold is an unjustified reduction of a complex system to a simple singular object. In fact, if the metal in itself was sufficient to function as money, there would be no need for a monetary system as such at all. Rather, as we see it from the constructivist perspective, it was precisely because gold was made a part of a larger monetary system, that it acquired its monetary functionality. Thus, while it might be true that the metal is a highly important and significant part of the gold standard monetary system as a whole, it cannot be equated with the monetary system itself. This is painfully obvious from the simple empirical fact that even in the times of Smith or of Marx, there really wasn’t enough gold to fully back the quantum of money that was, in fact, in circulation within the monetary system. Further, in the case of coin-based monetary systems, gold had not always been the metal of choice. And, we could well imagine a monetary system without gold. And historically speaking, there have in fact been such monetary systems in place where stones functioned as money.8 However, substantive thinkers, who attempt to explain the nature of money as gold by ascribing an intrinsic value to the metal, tend to forget the historical fact that gold (or silver for that matter) has not always functioned as money. In fact, as the economic historian Barry Eichengreen has argued in his Globalizing Capital: A History of the International Monetary System, the emergence of the gold standard itself can be seen as “one of the great monetary accidents of modern times. Open an international economics textbook”, he writes “and you will likely read that the gold standard was the normal way of organizing international monetary affairs before 1913”. Eichengreen’s own historical analysis concludes that “the gold standard became the basis for Western Europe’s international monetary affairs only in the 1870s [and that]…it did not spread to the greater part of the world until the end of the nineteenth century”.9 In fact, the monetary system in India was based on a silver standard for a long time, not gold. It was only in 1898 that the Indian Rupee “got pegged to the Pound, and thereby, to gold”.10 Eichengreen’s historical account of the development and decline of the gold standard monetary system gives further credence to the nonsubstantive philosophical position that we adopt in this book. In other words, while gold is undeniably a necessary component of the gold standard monetary system, it is however not a necessary component of monetary systems as such. Thus, far from being the ultimate basis of monetary value and thereby the basis of monetary systems as such, gold – as an object or a commodity – is neither a necessary nor a sufficient condition for the emergence of monetary value. It gains its monetary value precisely by virtue of functioning as a symbol of money within a particular monetary system, rather than by virtue of being intrinsically valuable.Thus, in the vein of our constructivist multi-categorical framework, gold is merely an object-instantiation that saturates the formal category of substance in a particular and specific empirical monetary system where it stands in determinate relations with other formal epistemic categories that constitute the gold standard monetary system. Moreover, holding on to such problematic phantoms of gold or any other particular object as being the primary and natural manifestation of monetary value

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is becoming increasingly difficult given the dominance of digital money and the emergence of alternative digital currencies, cryptocurrencies, and central bank digital currencies. Bitcoin, for instance, does not have any physical manifestation at all, and therefore, it undermines the conviction of the substantive-essentialist paradigm that money demands a tangible object to act as the substratum of monetary value and that it requires an object to stand proxy for it. Given that it undermines this conviction, Bitcoin cannot be made sense of through the invocation of an object-centric explanatory framework for monetary value based on the substantivist’s convictions. What the present-day manifestation of monetary value in terms of digital money does is that it forces us to give up thinking of monetary value in substantive terms. It forces us to consider money as a systemic product rather than a tangible physical thing.

Without relations, discrete elements lack epistemic significance Further, as with all systems, monetary systems must therefore be understood in terms of the relations that obtain between the various elements of the system. Therefore, a philosophical framework of monetary value, as the one we are proposing, has the task of laying bare, formally, the various categories that are minimally required, and the relations that must obtain between them, as an adequate epistemic framework of monetary value. It is through this formal epistemic framework that we then come to make sense of any particular empirical monetary system, by figuring out the concrete elements that actually saturate the formal categories of the epistemic framework of monetary value. These actual elements are what we have termed in this book as substance-instantiations. Given that monetary value is a systemic product, our epistemic framework of monetary value per force needs to incorporate, within its conceptual tool kit, the category of relation. In this manner, the categories of substance and of relation, both of which are central to Aristotle’s early ontology as well, come to be central in our framework too; except here, we construe these categories as merely formal epistemic constructs rather than categories that mirror reality “out there”. Thus, as a formal epistemic construct, the category of substance can be saturated by any actual element that is discrete.Therefore, a substance-instantiation that saturates the formal category of substance within our framework is not limited to spatial or physical objects but gets extended to abstract entities as well as to institutions as long as they can be distinguished from one another. For instance, the institution of central banks of the modern monetary system can be seen as a substance-­instantiation within our constructivist framework of monetary value, because central banks can be meaningfully distinguished from other elements of the monetary system, say from commercial banks, for instance. In the terminology introduced in the first two chapters of this book, we could say that while certain elements or substance-instantiations that saturate our formal categories may not exist “substantively” out there as such, they can, nevertheless, be conceived of as discrete entities. Therefore, while the category of substance may be fiction from the cosmocentric perspective, or from an absolute ontological standpoint, it is nevertheless an important part of our conceptual tool kit, and one that we

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could ill afford to lose. To completely denounce the category of substance would be to give up, for no good reason, an important tool in the universe of concepts employable in the explanatory framework of monetary value. To let go of the category of substance, merely due to the fact that it forms a part of the substantiveessentialist paradigm, would be to commit the genetic fallacy, i.e., to base a judgment upon the legitimacy of an idea solely upon the conditions of its genesis. Therefore, with regard to the category of substance, a constructivist explanatory framework must forge a middle path between rejecting the category altogether on the one hand, and elevating it to being the primary category of monetary value, on the other hand.The substantive-essentialist understanding of the category of substance is an instance of an extreme construal of the category. On the other extreme falls the view that the category of substance is completely illegitimate within a formal explanatory framework. Avoiding both the extremes, here, we take the middle path. The substantive strain in philosophy tends to emphasize the discrete nature of things, while the relational strain tends to emphasize the fact that even that which seems discrete is constituted relationally. But clearly, for the relation to emerge, we must construe of two discrete entities in a relation, wherein we come to realize that the epistemic category of substance is precisely what enables us to recognize discreteness in the world and thus cannot simply be discarded. Thus, what our constructivist framework manages to show is that both substance and relations must be functionally interdependent within the formal epistemic framework of monetary value for the particular elements that go on to saturate them to function as they do within a specific empirical monetary system. The substance-instantiation saturating the category of substance, when isolated from the specific relation instantiation saturating the formal category of relation within that specific monetary system, fails to perform the role it would normally perform. On the other hand, it is obvious that the relational instantiations when isolated from the substance-instantiations which they relate, and unhinged from them, would fail to perform their role within the monetary system of which they are a part. The demonetization of Rs. 500 and Rs. 1000 notes or currency bills in India in November 2016 foregrounds the centrality of this interdependency between the category of substance and the category of relation.The relegation of these bills [which in this case saturates the formal category of substance] as worthless overnight, foreground the simple fact that the paper bills gain their monetary value not by virtue of their substantive qualities, but rather by virtue of the network of relationships that constitute the Indian monetary system, of which it was a part.

Substance without relation is atomistic, relation without substance is unhinged Thus, the category of relation, which conceives of monetary value from the perspective of relatedness, is a necessary complement to the category of substance, which conceives of monetary value from the perspective of discreteness. Therefore, as can be seen, both the formal categories of substance and relation are formal necessities for a framework of monetary value. The essentialization of the category of substance, as we saw in the case of the substantive paradigm of monetary value, leads to an

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irredeemable philosophical atomism. On the other hand, the essentialization of the category of relation, as we saw within Bailey’s relational framework of monetary value, leads to an unhinged fluidity that cannot adequately account for the relative stability of monetary value that empirical monetary systems, in fact, manifest. Since both these philosophical categories are dependent on each other for their own functional sustenance, they are each, in a manner of speaking, two sides of the same coin.11 The lone employment of the category of substance is not enough to comprehensively map monetary reality, since this category does not by itself account for the relations that obtain between the substance-instantiations, which in absence of the relation would simply cease to be what it is. Substance-instantiations like coins, paper notes, or digits on a computer screen, in themselves, can neither adequately describe nor explain the nature of monetary value. But nor can the sole category of relation enable us to make sense of monetary value in absence of the category of substance. The latter, after all, is the pillar, so to speak, for the relation to hinge itself on.

Notes 1 For a history of the modern international monetary system, see Barry Eichengreen, Globalizing Capital: A History of the International Monetary System (Princeton: Princeton University Press, 2008). For his discussion of the end of the gold standard and the adoption of the Bretton Woods system (see Ibid., 6–19). Contrary to popular conceptions, the gold standard does not refer to a monetary system wherein gold coins were literally exchanged every time one wished to avail of a good or service. 2 Ole Bjerg, Making Money:The Philosophy of Crisis Capitalism (London:Verso, 2014), 90. 3 Ibid., 93. 4 For a discussion of Marx’s understanding of the basis of Gold’s economic attractiveness, see Ibid., 93. 5 Ole Bjerg, Making Money:The Philosophy of Crisis Capitalism (London:Verso, 2014), 91. 6 Ibid., 95. 7 For a critique of, what we have labeled “the substantive understanding” of the monetary value of gold, see Ibid., 85–90. 8 See Felix Martin, Money:The Unauthorised Biography (London:Vintage, 2014), 1–31. 9 Barry Eichengreen, Globalizing Capital: A History of the International Monetary System (Princeton: Princeton University Press, 2008), 41. 10 Ibid., 18. 11 The twentieth century philosopher Ludwig Wittgenstein, in a similar manner, thought that the correct way to approach the notion of “sense” is to see it precisely in terms of an organic whole constituted by formal logical elements and the internal formal relations that obtains between them. This organic whole is what he terms a “fact”. To make sense of the world, Wittgenstein argues, we must see sense itself as a product of this organic whole rather than seek them in the world of discrete objects or things that can somehow be externally related. In a similar vein, we may say that the world of money “…is the totality of facts, not of things”. This world can only be construed as a totality of “a combination of objects combined in a determinate manner”. The world of money is in fact an organic whole constituted by substances and their “combination”. See Ludwig Wittgenstein, Tractatus Logico-Philosophicus, trans. Pears and McGuinness (London: Routledge, 2001), 5; Propositions 1.1 and 2.01.

14 FLESHING OUT THE MULTICATEGORICAL, CONSTRUCTIVIST FRAMEWORK FOR MONETARY VALUE

Belonging to the same world – the mode of association of substance-instantiations In the previous chapter, we proposed that perhaps we need to understand monetary value as something that emerges when the formal concepts of substance and relation are saturated by substance and relation instantiations. That is, monetary value manifests itself concretely only when at least two discrete entities saturate the formal epistemic concept of substance so as to come into a definitive relation with each other. The relation between the discrete entities must be determinate in nature if they are to belong to a common epistemic framework. As the philosopher Peirce has shown, in absence of such a specific, determinate relation between two discrete entities, it makes no sense to say that they are part of the same world.1 Thus, our insistence in the previous chapter that for monetary value to concretely emerge in the world, both the formal categories of substance, as well as that of relation, are necessary. By way of elucidation, say national currencies such as the Indian Rupee and the Canadian Dollar were to saturate the formal category of substance on the one hand, and Bitcoin were also to saturate the formal category of substance on the other hand. This is possible since within our framework of monetary value, there is no upper limit on the number of substance-instantiations within a concrete monetary system. Now if there were no specific and determinate relation between a unit of Bitcoin and the Canadian Dollar or the Indian Rupee, it would be meaningless to claim that they both belong to the same monetary world. And, in fact, it is precisely because this relation has not so far been made determinate by way of government regulation, that the Indian Rupee and Bitcoin cannot unequivocally be declared to belong to the same monetary world. In the case of the Canadian Dollar, on the other hand, the case for Bitcoin occupying the same monetary world is much stronger, since the relation between the two monetary systems is far clearer, i.e., is more determinate,

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comparatively. Or take for instance, the Indian Rupee and the Indian central bank – which is the Reserve Bank of India (RBI) – come to saturate the formal category of substance within our constructive framework of monetary value. If no specific and determinate relation exists between these two substance-instantiations, then they could not be part of the same monetary world. In fact, we have no doubt that they belong to the same monetary world because the relation between the two substance-instantiations is pretty clear by way of regulation and is well entrenched in practice. Clearly, in absence of any specific and determinate relation between the given substance-instantiations, we would have to accept that they belong to different monetary worlds. In other words, to claim that an entity is related with another entity within a common monetary world is only epistemically significant when the nature of that relation is specific and determinate. Take for example the relation between gold and the US Dollar in the pre-1971 monetary era from the perspective of the then prevailing monetary system. The specific and determinate relation that obtained between them is precisely what made the conversion of the US Dollar to gold possible. Such specific and determinate relation that exists between any two substance-instantiations is what is designated, in our constructivist framework of monetary value, as the mode of association between two substance-instantiations of a monetary system.2 Seen thus, the mode of association determines the very function of the substance-instantiations that it relates, thereby informing the functional roles, and the scope of these entities, within the monetary world of which they are all a part. It is the mode of association that informs us as to how we are to construe these entities within that specific monetary world.

Relations are determinate, but not predetermined By way of elucidation, imagine two individuals within the framework of a family. Of course, this enables us to see them as two discrete and distinct individuals. But from this given discreteness, we cannot really ascertain if they belong to the same family. To ascertain this, I would have to know if they stand related in some specific manner. That is, I would need the additional information regarding the mode of their association, in terms of family-relation, if they have any. Say for instance, if we were informed that the mode of relation between them is that of “being married to each other”, then this mode of association enables us to characterize them in terms of being conjugal partners, recognized as such under the law. Thus, not merely does the mode of association determine if they belong to the same family, it also – and this is important – informs us as to how we are to conceive them. And though their respective individual (substantive) characteristics must have played a role in them entering this mode of association of “being married to each other”, it hardly plays a role in helping us to conceive them as legal partners. For instance, if we were instead informed that the mode of association between these two individuals were that of “being siblings”, then we could conceive the same substance-instantiations, i.e., the same persons with those very substantive characteristics, rather differently. However, this does not translate into raising the epistemic

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category of relation (mode of association) into a position of cardinality within our epistemic framework. For just as the mode of association informs us about how precisely we are to construe entities, the substance-instantiations that saturate the formal epistemic category of substance are equally important since as discrete particularities they inform the possible mode of associations that can obtain between them. For instance, in our example above, if two males saturate the category of substance, then the mode of association of “being a brother and a sister” between them is clearly precluded. Thus, though every epistemic framework must necessarily have a mode of association between the various substance-instantiations, its nature would depend on the nature of object-instantiations employed to saturate the formal category of substance. This further has the important entailing insight that no mode of association within an epistemic framework is predetermined.3 After all, any mode of association that can materialize between two substance-instantiations presupposes certain relational possibilities on the part of substance-instantiations given their specific substantive characteristics. To deny these, specific substantive characteristics would entail the denial of multiplicity of substance-instantiations. After all, in the absence of any specific substantive characteristics, we would not be in a position to describe or explain the differences that obtain between different substance-instantiations.4 It is precisely this limiting aspect brought about by the substantive characteristics of the substance-instantiation that forecloses the possibility the category of relation to bring about an extreme form of relativity and fluidity within the monetary system. Thus, if the invocation of the formal category of relation does away with any form of necessary dependency upon a specific entity for the monetary system to function, the formal category of substance provides the monetary system with some epistemic stability by delimiting the scope of the category of relation. In other words, every substance-instantiation brings with it certain limitations, and conversely, certain possibilities that is built into its very configuration, which then serve as the limits of its relational possibilities. A substance-instantiation, thus, is not inert in the sense of being relationally neutral.5 Rather, it is relationally dynamic in so far as the specific substantive characteristics that it brings with it are the grounds for its relational capabilities.

How functional capabilities frame, enable, and limit relational capabilities Clearly, an element of a monetary system or a substance-instantiation brings along with it many relational capabilities, enabling it to perform various roles. For instance, within the modern bank-based monetary system, a commercial bank (one element) has the functional capability of creating bank deposits (i.e., digits on a computer screen that represent legal tender). This functional capability frames, enables, and also limits the relational possibilities between commercial banks (as one of the elements of the system) with other elements of the system. By way of illustration, it is because of its functional capability of creating bank deposits that commercial banks are able to provide credit to businesses and not the other way around. Further,

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it is precisely the same functional capability that necessitates that commercial banks be regulated by the central bank of the country so that the inflationary effects of the growth of credit (in terms of bank deposits) are kept under check. In this example, the functional capability of commercial banks determine its mode of association with both, businesses and the central bank. Depending upon the demands of the epistemic framework, or what we may call the formal complex, in which they are substance-instantiations, a certain specific set of these relational capabilities are brought into operation so that it comes to perform a specific role within the system. We call this specific role played by a substance within a formal complex, its function. For instance, the function of a central bank within the formal complex of the modern bank-based monetary system is that of being the regulator of commercial banks. And since a relation demands minimally two substance-instantiations, it follows that any formal complex concerning monetary value is constituted by at least two substance-instantiations in a determinate mode of association, with each of them executing a specific and determinate function. We ought to remember here, lest the language mislead us, that a formal complex is after all an epistemic framework that we construct in order for a monetary system to come into effect. Thus, the functions of substance-instantiations too cannot be determined outside the specific monetary system of which they are a part. Consequently, within the constructivist framework of monetary value, our construal of the relational possibilities of substance-instantiations within a formal complex informs the manner in which we epistemically construct these functions. That is to say, that a substance-instantiation executes a specific function within the bounds of a specific monetary system is not to hold that this function is natural to it. This is in contradistinction to the substantive-essentialist paradigm, wherein the functional capability of a substance is taken to be a natural outcome of its substantive qualities. In fact, it would be misguided to inquire into the functional possibilities of a substance-instantiation outside of a formal complex. Such a search would be epistemically meaningless because the notion of function itself, along with its interdependent concepts, like substance and relations, are our epistemic constructions, and therefore, devoid of any independent ontological basis. Their life, so to speak is limited within the epistemic bounds of the formal complex. For instance, surely an object may be conceived of as a coin in relation to commodities that it can purchase. But in itself, the object is not a coin per se. Rather, it is just that, an object, until we epistemically reconfigure it as a coin within a specific monetary world.The fact that an ancient coin cannot in any significant sense be considered a coin proper drives this point home. By contrast, the substantive-essentialist framework of monetary value takes recourse to the notion of the intrinsic essence of the object in order to ground its specific functional capability within a monetary system. This, as we have already foregrounded, gives birth to the problematic conceptual pair of real–apparent, which then leads to irresolvable philosophical problems. However, within our constructivist paradigm, the conception of the coin as a substance-instantiation, its relation to the world of commodities, and its functional capabilities in relation to the universe of commodities, can all be described only in relation to each other within an epistemic framework that we

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have come to construct. Isolated, and in themselves, they, not surprisingly, shed all their epistemic significance in relation to the world of money.

Substance-instantiations and their properties Our constructivist framework of monetary value while recognizing the substantive characteristics of the object only take it to be a necessary but not a sufficient condition for grounding its specific function within a specific monetary world. Its specific function within that specific monetary world is a relational emergent that emerges by virtue of the modes of association that we construe it as bearing with other objects within that monetary framework.Thus, when a formal complex is saturated by concrete substance-instantiations, the functional capabilities of each of these substanceinstantiations emerge in relation to each other and through the rules governing their interaction. But we might as a caution add here, that an object that acts as a substance-instantiation and its properties must not be conceived as physically separable from each other. Properties themselves, when seen from the perspective of an integrated whole, is what enables us to subsume it under the epistemic concept of substance.6 Thus, monetary value within the constructivist framework can simply be described as something emerging from the specific integrated network of connected properties of the various substance-instantiation related in determinate manners through certain modes of association. Such a construal of object in terms of its properties enables us to construe change within a monetary system in terms of two different, though related modes. We could thus construe change in terms of change in specific properties of an object populating a monetary system, or in terms of a change in the monetary system as a whole. That is, we could construe change as concerning “a thing or an object”, or concerning the entire system of which it is a part.7 This enables us to understand how a specific monetary system still retains its operational stability even while there are evident changes in specific properties of entities that populate it. In other words, by invoking the notion of range-bound deviation, we could say that the monetary system as a whole can accommodate some deviation in terms of changes that concern a specific substantive property of its constitutive elements without the system as a whole undergoing a change. But every range has a threshold or limit. So monetary systems too must be construed as having a threshold to bear such deviations. Once the changes in the substantive characteristics cross the deviation threshold, the change in the property translates into a change in the monetary system as a whole. We will elaborate upon the significance of this insight in the next chapter. Now, irrespective of the what actual entities, with their specific substantive characteristics or properties, saturate the category of substance and what specific relations come to saturate the category of relation within an actual monetary system, we can minimally claim from our discussion so far that in adequately describing a monetary system, we must necessarily construe some modes of associations between some entities, whatever they actually turn out to be within a specific given monetary framework.8 Thus, from our perspective, it is not essential for a philosophical discourse

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on monetary value to lay out what and which particular entities and relations actually come into play within a specific monetary system, but rather to foreground that they must. Thus, what comes to saturate these formal epistemic categories is a matter of historical contingency and consequently, an accidental aspect of the world of money. But that these formal epistemic categories of substance and relation must be somehow saturated for monetary value to emerge is a necessity. Therefore, the notion of a universal and timeless natural money-object, such as gold, is both erroneous and misguiding, since it takes gold (which, as we saw, is merely a substance-instantiation and thereby, subject to historical forces) to be the necessary and the only entity to naturally saturate the formal category of substance for the emergence of monetary value.9

The rules of interaction and their role in the formal complex From the way we see it, what is demanded of a philosophical discourse on monetary value is to lay bare the formal necessities that make the empirical manifestation of money, possible. And as we have seen, from the constructivist framework of monetary value, what is necessary is for the formal category of substance to be saturated by at least two specific substance-instantiations in a specific mode of association, so as to provide these substance-instantiations distinct functions within the monetary world. This determinate relation entails that these substance-instantiations execute their roles under the rubric of a certain set of rules that are inscribed upon them by the mode of association, in consonance with their respective substantive characteristics. We may call these rules the rules of interaction. In other words, it is clear that all entities that saturate the formal categories are interrelated within a formal complex through specific modes of association. However, the specific mode of association we come to construe between the various entities saturating the formal complex for a specific monetary system to emerge is informed by the specific nature and demands of the system that we seek to secure. These demands translate into what we call the rules of interaction. It is in the light of such systemic demand-generated rules of a construed monetary system that the mode of association takes on any specificity and begins to concretely inscribe the needed mode of association onto the various substance-instantiations that populate the formal complex to materialize and secure the construed monetary system.Thus, once again, though it is a necessity that there be certain specific rules of interaction that informs our formulation of the various modes of association and our selection of the substance-instantiations within a formal complex, what these rules are in concrete terms is determined by the actual demands of the particular monetary system we seek to secure. However, as a way of elucidation, we could look at these rules of interaction analogically as the “rules of a game”. To conceive a game is to construe a set of definite and determinate rules. Now, of course, there are many games that involve teams of players and a ball, but given the different set of rules governing each of these games, the mode of association between these three substance-instantiations, which in our case are the two teams and the ball, turn out to be different for each of these games. And if two games were to be governed by the same set of rules, it would be absurd

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to talk of them as two different games. After all, to describe a game is to describe the relation between the two teams and the ball along with the specific mode of association that obtains between these three elements.This simply amounts to asserting that to describe a game is to describe the rules of the game.10 In a similar manner, each specific monetary system would have a distinct set of rules of interaction governing the modes of association, and consequently informing the nature and the scope of interactions between the various substance-instantiations populating it. Thus, an adequate description of a specific monetary system would have to lay bare the specific rules that govern the interactions of the various elements populating the field within which these elements are interwoven. In other words, if we intend to understand a specific manifestation of monetary value in a specific monetary system, we must first and foremost uncover the rules of interaction that underlie that specific monetary system. Though it is beyond the scope of this book to show what precise rules of interactions operate within specific monetary systems that have historically operated within the world of money, it takes it within its scope to emphasize the simple fact that such rules of interactions are fundamental in the emergence of monetary value within any monetary system. We may raise a question here. What informs the rules of interaction then, analogous to the question, what informs the rules of a game? What are the factors that determine the nature of these rules? It is to this final question that we now turn.

Monetary systems are posited to realize a determinate end or ideal Since a monetary system is a human construal when seen from the perspective of a constructivist framework of monetary value, any manifestation of monetary value is geared toward the attainment of a specific economic goal. Thus, monetary systems must be construed as goal driven. In Aristotle’s parlance, the question we just raised translates into the question of the ideal toward which monetary value tends. The rejection of such an ideal, or the goal toward which monetary value moves, would amount to adopting a mechanistic stance of monetary value. This would amount to upholding the belief that monetary systems simply happen to be a constitutive part of the natural world rather than a creation of human agency. However, as we’ve seen throughout this book, money or monetary value is a construct and not a part of a priori given reality. Monetary value cannot be thus reduced into an intrinsic property borne by a natural object, and as something that would exist in the world irrespective of the existence of human agency. Consequently, a constructivist philosophical framework of monetary value accepts the notion that monetary processes are nonrandom, or are programmatic and therefore, unfold uniformly toward the realization or satisfaction of a posited end.That is to say, they are there to fulfill a specific purpose. We call the posited purpose of a monetary system the end-result.11 It is precisely this end-result that goes on to inform our formulation of the specific rules of interaction governing that specific monetary system.

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Seen thus, it is the end-result that foundationally determines the very nature of the formal complex and, the monetary system that emerges from it, since it sets the outermost conditions for the possibility of the emergence of an empirical manifestation of monetary value. Without an end-result, there would be no epistemic fence, so to speak, within which the contours of a particular monetary system could be drawn, defined, and recognized by us. Seen thus, on our final analysis, we come to see that it is the end-result that informs the saturation of the formal complex in terms of the choice of both the substance-instantiations and the modes of association between them. In a sense, it is the end-result that determines the whole world of money. Therefore, unlike the Aristotelian vision of specific individual objects as moving toward their respective telos, we need to construe the monetary systemic as a systemic whole proceeding uniformly toward its end-result. It is within this organic movement that we need to construe individual entities populating that monetary system as contributing to, through their own respective movements. However, the centrality of the end-result in the world of money does not necessitate us to construe the end-process as an objectively predetermined given. After all, if the formal complex is a human construct, so must be its end-result. Thus, the end-result is itself a product of human conceptualization, which leads us to the important insight that it, therefore, cannot be singular, as Aristotle would make us believe, nor can it be predetermined by nature as such. As a consequence of the very fact that the end-result of any formal complex is an act of construction that is informed by specific historical forces, the possibility of any absolute or singular teleological end is foreclosed. This brings us to a pivotal insight. What ideal are we to take to inform our construal of monetary value is squarely a matter of human will and imagination, and of course, the ability to construe a formal complex in accordance to this vision. After all, the end-result of every construed monetary system is nothing but a particular vision of how the monetary world ought to look like and to ensure its materialization and the necessary structures for its subsequent sustenance.12 From the discussion so far, it has been argued that a constructivist explanatory framework for monetary value is necessarily a formal complex, which is the fundamental conceptual apparatus for making sense of monetary value, or in other words, the conceptual precondition for the possibility of an explanatory framework for monetary value. The formal complex is constituted by at least two substance instantiations and a mode of association by which they are related. The mode of association, being determinate or specific, is constituted by the rules that govern their interaction, which we have referred to as rules of interaction. These rules are determined by the functions of each of the individual substance-instantiation related through the mode of association. The functions in turn are determined by the internal properties of the respective substance-instantiations, without which there would be no way to describe the divergence in their functional capabilities. It is, of course, quite a distinct matter as to what actually saturate these formal categories within a specific historical epoch, given that they are determined by historical circumstances. And finally, a formal complex tends toward the realization of an end-result, which is not given a priori, but is rather our construed ideal.

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Formal Category of Substance

Formal Category of Relaon

Substance Instanaon [SI 1]

Mode of Associaon

Specific Funcon unco of SI 1

Rules of Interacon

Figure 14.1 

Substance Instanaon [SI 1]

Specific Funcon of SI 2

A graphical representation of the formal complex and its constitutive

elements

Notes 1 Peirce refers to the relational element as the category of thirdness. Peirce notes that “A graph of three tails cannot be made out of graphs each with two or one tail, yet combinations of graphs of three tails each will suffice to build graphs with every higher number of tails” (C. S. Peirce, Philosophical Writings of Peirce. New York: Dover Publications Inc., 1955, 93). In Peirce’s terms, substantive-essentialism may have recognized the category of firstness, and maybe, in some cases, even that of secondness. However, it does not recognize thirdness. Again, as with Wittgenstein of the Tractatus, we are not working within the philosophical details of Peirce’s categories, but do accept his fundamental insight, that without relation of threes, there can be no significance; the world of money is constituted by threes, i.e., within the formal complex framework the three aspects are that of two substance-instantiations and a mode of association.Within the formal complex, the mode of association is analogous to the relation leading to “combination” of Wittgenstein or the “thirdness” of Peirce. Without a mode of association, there would be no connection between the two substance-instantiations. 2 Within the relational-essentialism of Bailey, the nature of the relation between two substances was conceived to be the quantitative comparison of how many of one would be exchanged for the other. The determination of the relation, thus, was expressed in terms of being a comparison, between two commodities, from a purely quantitative perspective. Thus while Bailey recognized the demand for a relation between two commodities in order for monetary value to emerge, this relation was conceived as being of just one specific type. The notion of mode of association, on the other hand, does not restrict the specificity of the mode of association that obtains between two substance-instantiations.

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3 We maintain a distinction between “determinate”, which we construe as being synonymous with “specific”, and “predetermined”, rather than a predecided or an inherent, given nature, i.e., what philosophers often refer to as a-priori. 4 The philosophical principle at work is akin to that which led Leibniz to posit multiplicity within unity in his Monadology. 5 Thus, though functional capabilities may be ontologically grounded, the choice of the function that will eventually materialize and manifest within the nexus of substanceinstantiation in an epistemic framework of monetary value, is determined by the framework itself. The function of this selection is the task of what we have later in this chapter called the “end-result” of a formal complex. 6 This is analogous to the Buddhist explanation of atman as nothing but a way of characterizing the process of the skandhas. Properties are like skandhas, a network of internal processes or characteristics which may be seen, when looked at through the perspective of collective integrity, to give rise to an atman. Further, there is no need to invoke any notion of essence as opposed to accident in order to define and characterize substance and properties. In substantive orthodoxy, the substance would be characterized by its essence, as separable from its accidental properties. Properties are not atoms, in that they do not function in isolation. Since substance and property do not imply levels of existence as such, we cannot differentiate between essences and accidents. Further, there is no causal implication between substance and property because they are not separable. Since there is no absolute objective point of view, i.e., no cosmocentric perspective, the traditional notion of essence is philosophically indefensible. Essence may only be legitimately conceived from an epistemically pragmatic perspective, in which case, the essence is as much a construction as the accident. One may speak of essences and accidents only within a constructed world. For a process-oriented reading of the Buddha’s notion of anatta, See Richard Gombrich, What the Buddha Thought (Oakville: Equinox Publishing Ltd., 2009), 60–75. 7 See Nicholas Rescher, Process Philosophy:A Survey of Basic Issues (United States of America: University of Pittsburg Press, 2000), 22. 8 This is in stark contrast to Aristotle’s manner of construing substance in Categories, wherein the form predetermines the nature of a substance to become a particular object. It is also in contrast with Bailey’s construal of the notion of relation, wherein the nature of the relation is predetermined to be a quantitative comparison between two commodities. 9 While a constructivist ontological framework employs the categories of substance and relation, the framework, unlike that of the substantive-essentialism paradigm, does not necessarily conceive of substances as objects, and therefore, per force, cannot conceive of relations as necessarily only obtaining between objects. Since each category is a way or manner in which monetary value is described, the instantiation of what a substance is, and, of what a relation is, too is a result of anthropocentric conceptualization. In contradistinction to the constructivist mode of thought, the substantive-essentialist thinkers, starting with Aristotle, conceive of the commodity as the fundamental substantive objects that populate the economy. Further, as an effect of the influence of Aristotelian substantive thinking, Bailey, and Simmel, who effect the shift away from substantive to relational thinking with regard to monetary value, yet concede that commodities are, in fact, the fundamental building blocks of the economy, and therefore, monetary value must be explained in terms of the relations that obtain between these commodities. From the perspective of a constructivist mode of thought, the substantive insistence on conceiving of substances as objects is just one of the modes in which the category of substance may be instantiated. As a corollary to this assertion, from the constructivist perspective, the

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insistence that monetary value emerges by virtue of the relation that obtains between two commodities too is just one of the many possible modes in which the category of relation may be construed with regard to monetary value. 10 This is derived from Wittgenstein’s view, that while rules necessarily govern “language games”, the precise nature of these rules is specific to the particular language game in question and meaning emerges only within the nexus of such a rule-bound activity. 11 The term end-result is adopted from Rescher. See Ibid., 27–28.Though Aristotle’s acceptance of the teleology of nature in terms of the principle of uniformity in process is surely the underlying principle that informs our constructivist paradigm, we adopt Rescher’s notion of end-result instead of the Aristotelian notion of telos given that the latter comes with a commitment toward the traditional notions of absolutism, essentialism, and substantive metaphysics. 12 This manner of conceptualizing the notion of end-result is guided by Whitehead’s reading of Aristotle in order not to overstate the point of final or formal causes. That is, as Whitehead asserts, the demand placed upon any explanatory framework, such as our proposed framework of a formal complex to explain the nature of monetary value, is to describe the end-result toward which it is moving. “It is notable”, writes Whitehead, “that no biological science has been able to express itself apart from phraseology which is meaningless unless it refers to ideals proper to the organism in question.This aspect of the universe impressed itself on… Aristotle… One task of a sound metaphysics is to exhibit final and efficient causes in their proper relation to each other” (see A. N. Whitehead, Process and Reality: An Essay in Cosmology. New York: The Free Press: A Division of Macmillan Publishing Co., Inc., 1978, 84).

15 WHY A CONSTRUCTIVIST FRAMEWORK OF MONETARY VALUE?

The preceding two chapters laid out a philosophical framework of monetary value in terms of a constructivist approach that stands in stark contrast to the substantive framework. Our formal framework approached monetary value from a multi-categorical perspective. It, in a sort of neo-Aristotelian manner, approached monetary value from a multi-categorical perspective, within which the categories of substance, relation, and function all come to be considered as equally essential categories in an adequate description of various empirical manifestations of monetary value, or what is the same thing, a monetary system; such as the contemporary bank-based system, the gold standard system or Bitcoin. But then, one may want to ask, what precisely is achieved by laying out such a philosophical framework of monetary value? It may appear that all we have achieved through our formal framework is merely an alternative description of money or monetary value. And in itself, this description appears to be devoid of any value that could help us understand, change, or formulate an actual monetary system that is better suited to our contemporary societal needs.

Mapping monetary systems in order to address pressing questions But that is precisely what our formal constructivist description of money or monetary system is geared to do. On closer look, the constructivist framework that we fleshed out in the two foregoing chapters, in fact, enables us to map and understand various empirical manifestations of monetary value in a more adequate manner than those provided by the present empirical theories of money.1 In enabling us to map monetary systems in a more comprehensive manner, our framework does not merely engender a better understanding of particular monetary systems, but also equips us to address some contentious and philosophically pertinent questions that emerge as a consequence of monetary innovation, metamorphoses, and crisis.

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After all, pertinent present-day questions such as “Does Bitcoin have intrinsic value?” “Are cryptocurrencies really money?” “Is private money, such as Facebook’s proposed cryptocurrency Libra, in fact, money?” “Is money naturally limited or is it only artificially so?” “Does money necessarily have to be based on a scarce commodity, or is scarcity merely an accidental quality of a particular historical configuration of monetary value?” “Can digital money be real or must it be based or convertible to something physical?” are all fundamentally hinged precisely on how we describe and characterize money itself.2 All of these questions and the debates surrounding them arise when our description of money or monetary value fails to adequately account for some manifestation of monetary value that defies the bounds of our description of money which is informed by the modern bank-based monetary system. Such outlying and unwieldy manifestations of monetary value are brought about by either material changes within the system (think Quantitative Easing) or by monetary innovation outside the system (think Bitcoin), and sometimes even by seemingly innocuous, but potentially subversive ideas, that can’t obviously be characterized as being from either inside or outside the system (think Facebook’s Libra). Now the answers to these questions are not always obvious. Add to this the fact that competing empirical theories of money often offer opposing answers to these questions making it difficult for us to understand the emerging problematic phenomenon in the monetary world.These, as we see it, are indicators of the simple fact that the empirical theories of money at our disposal are not adequately equipped with the conceptual apparatus to handle these novel manifestations of monetary value. And to give these empirical theories of monetary value their fair due, we need to understand that the epistemic framework within which these empirical theories of money operate were simply not meant to deal with such outliers. Thus, this epistemic inadequacy on the part of empirical theories of money is to be expected. After all, these theories are attempts to identify the cause of a particular and specific manifestation of monetary value. And, as is the case with all excavations aimed at unearthing empirical causes, they are therefore concerned with, and limited to, a particular empirical, i.e., historical manifestation of monetary value. The aim of an empirical theory of money, therefore, is to provide a historically contextualized answer to the question of how money gets its value within a specific monetary system, operating at a particular historical point in time. We cannot, therefore, without being in self-denial, expect it to account for all manifestations of monetary value as such. On the other hand, a philosophically oriented description of monetary value, like the constructivist framework we proposed in the preceding two chapters, is conceptually geared to do this since it proposes a formal description of monetary value as such. It is only through such a philosophically oriented framework that we can even begin to try to understand these various outlying manifestations of money through a single framework of monetary value. Thus, while empirical theories of money have their own significance, use, and warrant, they are not geared to deal with these unwieldy manifestations of monetary value that have little regard for the hard and rigid boundaries drawn between monetary systems, often with little to no success, by the empirical theories of money.3

Why a Constructivist Framework of Monetary Value?  125

Change in monetary systems necessitates an accommodative framework of understanding It is a historical fact that monetary systems undergo change over time. In absence of an epistemic framework of monetary value that can accommodate such changes, the threat to slip into some variety of monetary solipsism looms large. The insistence that a single empirical theory of money somehow adequately accounts for all manifestations of monetary value is hinged on the belief that only one among the various competing empirical theories of money delineates the empirical cause of monetary value accurately. That is to say all changes in the manifestation of monetary value is merely apparent, for its cause remains constant. However, to begin with such an assumption is to undermine the nature of change within the world of money and the radicality of outlying monetary manifestations. In fact, if history be examined closely, it may not be too contentious to claim that it is precisely the fact of change, often experienced on the cutting edge of monetary systems, that throws up the most pressing and engaging questions with regard to the nature of money and monetary value. The constructivist formal framework of monetary value, on the other hand, merely lays out the descriptive formal template that can potentially accommodate varieties of changes and manifestations of monetary value given its flexibility. It achieves this flexibility precisely by leaving the concrete entities that saturate its formal categories outside the descriptive realm of monetary value. Simply put, it leaves aside the empirical entities and empirical manifestations of monetary value in describing monetary value, and thus in turn, its descriptive force is not affected by actual changes in the empirical world of money. It can, so to speak, absorb these changes by simply saturating the formal categories with different substance-instantiations and by laying out the changed mode of association between them. And here is the thing, our constructivist framework allows us to accommodate this wide variety of changes as regards empirical manifestations of monetary value precisely because the formal concept of end-result itself ensures that all of the other constituent formal categories of our framework be elastic and flexible enough to accommodate any change brought about by a change in the end-result. But then, we must also concede that by this very claim, that our formal description of monetary value must be able to traverse across time, so to speak. In other words, it must be able to map not just one, but any empirical manifestation of monetary value.4 Its epistemic flexibility must be able to describe monetary systems of the past, present, and also enable us to imagine prospective monetary systems. Simply put, unlike empirical theories of money, it should be able to accommodate all of the changes within the world of money concerning monetary systems. It must be adequately applicable to monetary reality as such, and not just to one specific type of manifestation of monetary value. Rather, given its claims of accommodative prowess, the framework should be able to accommodate more than one monetary system within a single monetary framework. At the least, it should lay out the formal conditions that would be necessary for two distinct monetary systems to, in fact,

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interact as one integrated system.5 This would enable us to understand monetary systems better and help us anticipate concerns that may emerge therein.

How to think about change in monetary systems – two contrasting examples For instance, one of the pressing questions of the day is if, and how, the Bitcoin monetary system can be incorporated into the modern bank-based money system. Our constructivist framework attempts to answer this question by “shrinking”, so to speak, the entire modern bank-based system as one substance-instantiation, and the Bitcoin monetary system as another substance-instantiation. This conceptual move is possible within our constructivist framework, since the category of substance is a formal placeholder for anything that is discrete, and each of these monetary systems, when considered separately, is a discrete monetary system. This enables us to bring to the fore some peculiar features that emerge when we attempt to describe a projected unitary monetary system wherein these two distinct monetary systems interact. For instance, though the other aspects of the formal framework like that of function, rules of interaction, mode of association, and end-result are clear when we treat these two substance-instantiations as independent and discrete monetary systems, nevertheless in the case of amalgamating the modern bank-based system and the Bitcoin system into a single system these aspects are what are, in fact, not clear at all.This is indicative of the fact that the rules that govern the interaction of these two substance-instantiations are not yet decided and codified. This leads us to understand that there is, as yet, no clear end-result under which both these monetary systems may be incorporated within a single comprehensive monetary system. The demand for the construal of a distinct end-result for any unitary framework of monetary system emerges because the end-result of the modern bank-based money system, i.e., the creation and sustenance of bank-based money, is precisely what the Bitcoin system wishes to replace. This being the case, the end-results of both systems, considered individually, are at odds with each other, while they both, independently, may legitimately be characterized as manifestations of monetary value.6 Our constructivist framework thus allows us to draw the conclusion that for an integrated monetary system to emerge that incorporates both, the modern bank-based money system and the Bitcoin monetary system, a distinct set of rules of interaction would have to be formulated and codified, consequently demanding a construal of a new end-result.This, in turn, would establish and codify the nature of the other substanceinstantiations required for such a system to emerge, and would, therefore, also delineate the functions that each of these substance-instantiations plays in relation to each other. Consider the historically successful amalgamation of various monetary systems through the creation of the European Central Bank for the purpose of framing the monetary policy for the Euro as a currency. This, in our context here, may be interpreted as the creation of a bridging institution which enables each of the monetary economies of the various Euro zone countries to saturate the formal

Why a Constructivist Framework of Monetary Value?  127

category of substance within the same formal framework or monetary system. The function of the European Central Bank is precisely to facilitate monetary fluidity between various individual countries, thereby creating one integrated monetary system. However, in this case, the possibility of such an integration of various monetary systems was relatively more straightforward to comprehend because the endresult of the new unitary Euro monetary system was not a radical departure from the end-result of the then existing monetary economies of the various Euro zone countries. After all, the Euro was made to function under the limiting conditions, or the end-result, of the modern bank-based monetary system. However, the case with the integration of the modern bank-based monetary system with the Bitcoin monetary system is more contentious and unclear, because it is precisely the end-result or the limiting conditions of the monetary system as a whole that is the point of debate. This brings to the fore, our earlier emphasis that the flexibility and accommodative nature of the formal categories is precisely ensured by the flexibility of the end-result. Thus, how much change a specific monetary system can accommodate is, as can be seen, clearly related with its end-result.

Thresholds of change: range-bound deviation and the evolution of monetary systems We can now see that the constructivist framework construes the notion of change within monetary systems in a slightly different vein, in that it does not construe it necessarily as a transformative process. Generally speaking, when we say that a thing has changed, we mean that it has transformed into something else. In contrast to such a notion of change, we construe change in terms of degrees rather than taking it to entail an absolute transformation every time it occurs. So within the constructivist framework of monetary value, the shifting contour of any monetary system can be understood as a result of changes within the monetary system that the system can accommodate without being transformed into a different monetary system. In this, all monetary systems are elastic, wherein they can accommodate changes within a certain range- a range of elasticity that is determined by the nature of the construed end-result of that monetary system. Seen thus, any change that breaches the limit of the system’s elasticity entails a dislodging of the end-result of the monetary system itself. Such a change, when it occurs, breaches the bounds of elasticity of the monetary system and is, thereby, transformative. Put another way, the relative stability of monetary systems, as the history of money puts before us, entails that almost all of the changes within a monetary system are range-bound, or are all within the bounds of the system’s elasticity, and thus do not transform the monetary system into something different as they do not disrupt or dislodge the end-result of the monetary system wherein they occur. The modern bank-based monetary system, for instance, is designed to proceed toward the maintenance of its own ends, thereby promoting its own sustenance. However, it experiences and can accommodate changes in terms of range-bound elasticity. Thus, though any monetary system has a determinate, unshifting, and unchanging end-result, it nevertheless makes room for

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deviation within a certain range.Any deviation that breaches the threshold of change would lead to a radical change; a change that cannot be accommodated within that monetary framework given its end-result. Such radical changes are what dislodge the very end-result of a monetary system, and demand the invention of a new end-result altogether. To make matters clear between a range-bound change and a change in type, we may put it this way: If an object is the same type of object after it undergoes a change then it undergoes a range-bound change. Such a change would be, therefore, a change in degrees. But if an object transforms into something other than what it was before it changed, then such a change would be a change in type. This movement from degrees to type is expressed in the principle of range-bound deviation. Seen thus, the threshold of change for each particular substance-instantiation would be determined by its ability to still perform its assigned function, after it undergoes a change, in realizing the projected end-result of the monetary system. As a way of elucidation, consider the creation of a new currency such as the Euro, or the contemporary creation of Central Bank Digital Currencies, often referred by the abbreviation “CBDCs”, within the overall framework of the modern bank-based monetary system. Both of these instances exhibit elasticity that though noteworthy (as they effect significant shifts to the monetary system), are nevertheless, rangebound to the extent that they do not alter the end-result of the monetary system that they situate themselves within. Therefore, the creation of central bank digital currencies will, as is clear from the statements and reports from various central banks around the world, not subvert existing monetary systems, but will rather supplement them. Now, while many instances of change experienced by monetary systems would, in fact, be range-bound, thereby sustaining the end-result of the system in question, there are nevertheless, cases where the change to the system is to such a high degree that it effects a transformation of the end-result itself, and therefore, demands the invention of a new monetary system altogether. And it is likely not known beforehand what these changes would be. For instance, take the pre-1971 global monetary system. With the end of the window that allowed for conversion between the US Dollar and gold, the monetary system didn’t just exhibit regular “range-bound” change or fluidity. This change breached the threshold of the range of change resulting in a change in type leading us into the new post-1971 global monetary system.7 This change in type marked the shift from a monetary system in which the US Dollar was convertible, and therefore, “‘backed”, albeit only tenuously, by gold, to one in which the US Dollar was not backed by any external object. In fact, it maintained its monetary value and its place in the international monetary system based on the trust placed in the US Federal Reserve and its ability to maintain the monetary integrity of the US Dollar. Since the possibility of conversion of US Dollars to gold was so fundamental to the pre1971 system, the loss of conversion privileges pushed the pre-1971 monetary system over a threshold of degree, thereby forcing it to take on a different type, in effect altering the end-result or the limiting conditions of the monetary system as a whole. By way or another example, consider the substance-instantiation of a coin in a metal coin-based monetary system. If the metallic composition of the coin is

Why a Constructivist Framework of Monetary Value?  129

debased, but nevertheless continues to function as money, then notwithstanding this change, and given its functionality, this change would be deemed as a range-bound change, rather than a change of type. This same coin, however, if debased beyond a certain threshold, i.e., if the metallic composition of the coin is altered to such an extent that its specific metal content is no more capable of supporting its functionality as money,8 then the coin would have crossed the permissible threshold of change in degrees, and therefore, the object can no longer saturate the substanceinstantiation as a “coin”, which is to say that the substance-instantiation would have changed its type.9 In being able to describe change in a formal manner, using generic concepts not endemic to any one particular historical manifestation of monetary value, the constructivist framework of monetary value developed in the previous two chapters offers a conceptual apparatus that is offered neither by the traditional substantive paradigm of monetary value, nor by its non-substantive philosophical alternatives, nor by modern or contemporary empirical theories of money. It is because of the constructivist framework’s capability to provide a formal or generic description of monetary value, which in turn allows for a historically agnostic conceptual understanding of monetary value, facilitating an epistemically meaningful understanding of, and engagement with, change and transformation in the world of money and monetary value.

Toward a formal definition of monetary value From the preceding two chapters, our primary focus till here has been in laying out a formalistic description of how monetary value emerges from a constructivist’s perspective, in contradistinction to the substantive theories of monetary value. In the backdrop of this horizon, we would now need to describe, in formal terms, what money is. In other words, what are the formal marks of an entity that enable us to recognize and identify an entity within the monetary world as a legitimate manifestation of monetary value. Such a formal definition of money would enable us to map diverse empirical manifestations of monetary value in the history of the world of money without restricting the applicability of the definition to any particular historically situated monetary system. The breadth of applicability of such a formal definition of money would thus not be arbitrarily limited by, or to, any one particular type of historically situated monetary system. Further, this formal definition would, at the same time, act as a mark of demarcating monetary value from other values. This would, thereby, foreclose the possibility of any and every type of value being characterized as monetary value. Thus, while so far we have, through our constructivist framework, offered a description of a formal framework for the emergence of monetary value or money, we will now look into the formal defining characteristics of money itself when it thus emerges. Of course, philosophers and thinkers have offered various definitions of money. However, on closer scrutiny what they characterize as a definition falls short of

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being a definition. Problematically they seem to believe that their very description of the nature and emergence of monetary value also takes care of the very definition of money itself. That is, they take the question “how does money emerge?” as roughly synonymous with the question “what is money?”. From what we have already seen; consider the definitions of money as a medium of exchange within the substantive framework of Aristotle, as the quantitative comparison of the empirical value of two objects within Bailey relational framework, as the symbol of exchangeability in Simmel’s functional framework, as the quantification of obligation as in Graeber, as the dictate of the state in the state theorists of money. We can here easily discern from these definitions the simple fact that they all conflate the task of defining money with the task of providing an explanatory framework of how monetary value, in fact, emerges. Consider this conflation as analogous to conflating the task of defining the term “child” with explaining how she comes to be. But one may ask, why such a fuss over definition in the first place. After all, an accurate description of how monetary value emerges surely enables me to correctly identify money. Clearly, we can all identify objects in the world if an adequate description of the object is provided. So, on the face of it, there seems to be hardly any serious issue that one may take with philosophers of monetary value, as well as empirical thinkers on money, for their lack of interest in defining money independently of their description of the nature and genesis of monetary value. But when you come to think through it, it poses a serious concern. To confuse the notion of identification with that of a definition is to confuse an instance or a token with the type itself. That is to say, I may identify a particular object as a “table” but the identified object is merely a token of type of object that we define as a table. Thus, it is possible to have many tokens for a single type.The conflating of a token with a type might then lead us to exclude many other tokens of that type under that type. In our context, it may therefore bar many other tokens of money or monetary manifestations from being identified or recognized as money. We may thus say that the notion of “definition” pertains to “type”, while the notion of identification pertains to a “token” of the type. Therefore, as such, a “token”, presupposes a “type”, that is, the act of identification presupposes a definition for one must surely know “what” one is identifying before one goes on to “identify” it. However, since none of the traditional philosophical theories of monetary value (be it substantive, relational, or functional), nor the empirical theories of money (be it commodity, state, or credit), maintain the distinction between the notion of definition and that of identification; therefore, their respective definitions of money are necessarily limited to hold only within their descriptive frameworks of monetary value. In other words, money fails to be defined in a neutral stance, and the definition so arrived at, through identification, comes to be confined in its applicability to the particular theoretical framework within which it is sought to be explained. Toward this end, what our formal definition of money enables us to do is precisely define money as a type rather than in terms of the characteristics of a particular

Why a Constructivist Framework of Monetary Value?  131

token (a particular monetary manifestation). Of course, there are others who have found this token-type conflation in the definition of money a problematic issue. One among them is Felix Martin. Martin too attempts to define money in terms of its generic attributes. For Martin, for something to be money, or a manifestation of monetary value, it must satisfy three criteria, “…the first is an abstract unit of value in which money is denominated. The second is a system of accounts…which keeps tracks of…credit or debit balances.The third is the possibility that the original creditor in a relationship can transfer their debtor’s obligation to a third party in settlement of some unrelated debt”.10 However, as is seen from the cardinality conferred on the notion of debt or credit in his set of criteria, one could argue that Martin himself subscribes to a particular version of the debt theory of money, and therefore, his definition is not “generic” or formal in the sense of being applicable to all types of money systems and to explanatory frameworks of monetary value.11 However, a simple act of unhinging Martin’s “criteria-based” definition of monetary value from its credit or debt framework, enables us to generate a set of formal, and theoretically neutral, criteria by which to delineate money or the manifestation of monetary value. The simple act of unhinging simply demands the consistent replacement of “value” for the notions of credit or debt. Consequently, the three necessary, and sufficient conditions for something to be defined as money or as manifesting monetary value could be reformulated as: ( i) it should be an abstract quantitative unit of value, (ii) that is transferable, and (iii) that this transfer, in terms of its positionality, must be trackable and translatable into a system of accounts. Taken together as a set, these three criteria constitute the formal definition of money. In other words, monetary value is a type of value that is distinguished from other types of value in being quantitative, systemic, and transferable. Other axiological predicates like “beauty”, or “moral good”, for instance are not transferable, at the least.12 I cannot borrow someone’s goodness or beauty, nor can anyone transfer theirs to me. Given that the definition is formal, therefore, they are general enough to account for, and incorporate the different empirical manifestations of monetary value discussed in this chapter. Since it makes no reference to money being an object, or a relation between objects, or a function with regard to the exchange of objects, or to a notion of obligation, therefore, it is not itself an attempted explanation of monetary value, but is only the precondition for the possibility of predication of monetary value. Thus, on the final analysis it appears that “money” is, therefore, not ontologically real in the cosmocentric sense of the term, but a human and an epistemic construct that has, however, come to govern our reality in a manner that it has effaced this very fundamental fact of its own constructed past from our memory altogether.

132  Why a Constructivist Framework of Monetary Value?

Notes 1 Empirical theories of money include the commodity, state, and credit theories. Ole Bjerg, in his Making Money: The Philosophy of Crisis Capitalism, has already shown how, from a philosophical perspective, these empirical theories of money are, in themselves, inadequate to a comprehensive understanding of money as such. 2 While most thinkers on money would now consider this debate to be settled, and would agree that digital money is, in fact, real money and doesn’t need anything to base itself on or to be convertible to, this debate was quite lively before digital money became ubiquitous, and before asking such a question itself began to appear a little outdated. 3 This is because empirical manifestations of monetary value experience change over time, as for instance the move away from the historical gold standard, or the shift to the Bretton Woods system, or the giving up of the convertibility of the US Dollar into gold. 4 We limit the scope of what qualifies as being a case of monetary value through a formal definition of monetary value, later on in this chapter. 5 Furthermore, like all systems created through human agency and intervention, monetary systems too are, to an extent, fluid. 6 As per the formal definition of monetary value that follows later in this chapter. 7 Our proposed explanatory framework construes of change as understood within the evolutionary perspective of dealing with the problem of types, in which a change in type is nothing but a change in degree beyond a particular threshold. 8 Which is to say that it is debased to the extent that people lose faith in the coin’s ability to be accepted as payment, i.e., to function as currency. 9 In other words, the nature of the substance-instantiation is not static or unchanging, since such a construal of staticity within the world of money would be counterfactual to monetary reality. Rather, since monetary reality is constructed, and therefore, subject to the changes that are necessarily associated with social and historical phenomena, the categories or concepts that constitute the formal complex must be flexible enough to accommodate change within a certain threshold. 10 Felix Martin, Money:The Unauthorised Biography (London:Vintage, 2014), 26. 11 Felix Martin’s definition of money is general and all-encompassing when seen from the perspective of empirical theories of money, since the credit theory of money is, in comparison to the commodity or the state theory, the most general theory of money. However, from the philosophical perspective of this book, which aims at a higher level of generality, even the credit theory is not generic enough, and therefore, a definition based on the notion of credit cannot be considered a truly formal or generic definition. 12 Utilitarianism, for instance, at least as conceived by Bentham, would hold “moral value” to be quantifiable, but definitely not “transferable”, and therefore, not “systemic” either.

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INDEX

Page numbers followed by n indicate notes. anthropocentric 11–13, 15n1, 121n9; see also cosmocentric apparent value 33–34, 36–37, 37n6, 45–46, 49n20, 50–51, 59; see also empirical framework Aquinas, Thomas 2, 8n1 Aristotle 1–2, 8n5, 12, 14–15, 17–23, 24n4, 24n5, 24n9, 25n11, 26–30, 32–37, 39–47, 54, 70, 71, 77n13, 80, 89, 101, 109, 119, 123, 130 Bacon, Francis 2, 39 Bailey, Samuel 47, 49n21, 60–65, 66n4, 66n9, 66n12, 66n13, 67n16, 67n22, 69–71, 85, 94n9, 111, 120n2, 121n8, 121n9, 130 Barlingay, S.S. 10, 13, 15n1, 15n2, 16n8, 18 barter 15, 22, 32, 39–41, 48n15, 66n2, 69–76, 76n1, 76n3, 76n4, 76n6, 77n13, 78–82, 84, 87, 94 Berlin, Isaiah 5–6 Bitcoin 1, 8n2, 97, 101–102, 102n2, 105, 109, 112, 123–124, 126–127 capitalism 46, 70, 77n15 Cartesian system 53–55 category 10–13, 16n8, 18–20, 27–30, 53–54, 82–84, 89–90, 92, 96–102, 103–105, 107–114, 116–117, 119–120, 120n1,

121n8, 121n9, 123, 125–127, 132n9; epistemic category 11–13, 99–102, 103–105, 117; formal category 99, 101, 109, 112, 117, 119, 120, 125; of relation 110–112, 114, 116, 123; of substance 108–110, 112, 114, 123, 126–127 Central Bank 8, 97, 104, 105, 106, 109, 115, 128 Central Bank Digital Currency 8, 97, 109, 128 coin 22–23, 26–27, 29–30, 31n3, 33–37, 37n8, 40–43, 45, 53, 55, 59, 75, 82, 88, 92, 103–105, 111, 111n1, 115, 128; coinage 22, 26, 27, 31n3, 32–35, 42, 75, 96 commercial bank 104–105, 109, 114–115 commodity 20, 23, 28, 32, 40, 42–45, 48n10, 48n15, 48n16, 48n18, 60–65, 66n2, 66n12, 66n13, 67n22, 69–75, 77n13, 78, 80, 82, 84–85, 88–89, 94, 104–105, 107–108, 115, 120n2, 121n8, 121n9, 124, 130, 132n1, 132n11 commodity theory of money 19, 76 communism, 46 cosmocentric: perspective 16n7, 109, 121n6, 131; world 10–11, 15n1, 15n2 COVID-­19, 1 credit 14, 15, 35, 69, 71–73, 75–76, 77n13, 78–82, 96, 114–115, 130–131; system 72, 75, 82, 91; theory of money 69, 71–72, 75–76, 76n1, 76n4, 79, 81, 96, 102, 132n1, 132n11 cryptocurrency 1, 8n2, 101, 102, 109, 124

Index  137

debt 15, 35, 71–73, 75, 77n13, 78–82, 96, 102, 131; see also credit demonetization 110 Descartes, René 2, 24n6 Dewey, John 11, 14 dialectical materialism 46 digital currency 1, 8n2, 8n3, 12, 88, 89, 93, 94, 97, 105, 109, 124, 128, 132n2 distinguishable 10–13, 15n2, 18, 22–23, 24n6, 30, 92–93, 99–101, 104–105, 107, 109, 131; see also separable double coincidence of wants 70, 74 dualism 18, 36, 53–56, 60, 63 economic framework 1–7, 8n7, 8n9, 9n13, 12, 15, 17–20, 24n4, 25n10, 32, 40–43, 47n2, 47n3, 48n11, 49n21, 50–52, 54, 56, 66n9, 73–74, 108 elasticity of monetary system 99, 127–128 empirical framework 6, 9n13, 11, 14, 18, 28, 30, 34–37, 37n5, 38n13, 39–41, 43, 49n21, 51–54, 56, 58–60, 65, 71–72, 79–80, 83, 92–93, 98, 101–102, 103, 105, 107–111, 117, 119, 123–125, 129–131, 132n1, 132n3, 132n11 essentialism 18, 40, 47n2, 49n19, 84, 122n11; relative essentialism 120 ethical framework 2–3, 8n1, 8n4, 12–13, 17–22, 24n3, 24n8, 24n9, 25n10, 25n20, 30, 32–33, 35, 46, 50 Eudaimonia 2, 19, 21, 25n11, 25n18 exchange 15, 20, 22–23, 26–29, 32–33, 35–36, 39, 41–43, 48n10, 48n16, 61–64, 66n9, 66n12, 66n13, 70–71, 74–75, 77n13, 78, 80–82, 87–94, 94n5, 94n9– 95n9, 111n1, 120n2, 130–131 exchange-­value 26–29, 31n1, 33–35, 37, 41–45, 53, 67n22, 107 fallacy 18, 29–30, 92, 100, 110; infinite regress 44–45, 54, 65 fiction 42, 47n9, 58–59, 71, 76, 109 financial crisis 1, 8, 32–35, 37n3 Frankel, Herbert S. 6–7 function 13–14, 23, 26, 28–29, 39, 55, 59, 77n13, 81–84, 87–94, 94n5, 97, 99–100, 103–106, 108, 110, 113–116, 121n5, 121n6, 123, 126–127, 129, 131, 132n8 function of exchange 23, 29, 81–82, 84, 87–89, 91–94

Gassendi, Pierre 2, 39 Graeber, David 72–75, 82, 102, 130 Hegel, G.W. 46, 91 Hume, David 42, 47n6, 47n9, 58–61, 66n2, 71, 90 Huxley, Aldous 7 hypostatization 18, 23, 24n6, 100, 101, 104 infinite regress 44–45, 54, 65 Innes, A. Mitchell 71–75, 76n4, 76n6 intrinsic value 27, 34–37, 42, 44, 55, 59, 63–64, 75, 88, 96, 99, 106–108; see also use-­value James, William 3 Kant, Immanuel 12, 86n7, 101 labor 24n9–25n9, 40, 41–47, 47n2, 47n6, 48n15, 48n16, 48n18, 49n20, 49n21, 50–54, 56, 61–62, 64, 66n2, 66n12, 67n22, 69, 94n9, 105–107 Locke, John 18, 32–37, 37n8, 40, 42, 44–45, 48n16, 50, 59 Malthus, Thomas 61–62 Martin, Felix 37n3, 131, 132n11 Marx, Karl 8n7, 18, 24n7, 24n9, 39–41, 43–47, 47n2, 49n20, 49n21, 50–52, 66n2, 66n9, 70, 106–108 medium of exchange 14, 19, 22–23, 26, 28–29, 31n1, 32, 35, 39, 41, 48n10, 70–71, 74–75, 77n13, 78, 93, 130 Modern Monetary Theory 1 monetary system 16n8, 22, 75, 78–79, 81, 93–94, 100–102, 101, 104–105, 107–108, 109–110, 111n1, 112–119, 123–129; Bitcoin monetary system 126; coin-­based monetary system 128; empirical monetary system 105, 109; gold standard monetary system 107–108; Indian monetary system 108, 110; integrated monetary system 127; modern bank-­ based monetary system 101–102, 102n2, 105, 114–115, 124, 126–128; pre-­ monetary system 32, 70 Nordhaus, William D. 15

138  Index

obligation 72, 74–75, 78, 80–82, 130–131 perfect market, 51–52 Plato 8n5, 12, 53–54 price 18, 24n5, 36, 37n6, 38n13, 41–44, 48n11, 53, 61 property acquisition 20, 25n10, 25n13; see also wealth real-­apparent dichotomy 36, 50–53, 60, 96, 107, 115 real value 34–36, 37n5, 39, 44, 45, 51, 53, 59–60; see also ontological framework Ricardo, David 18, 37, 39–41, 43–46, 47n2, 48n10, 48n13, 48n16, 49n20, 50–52, 54, 57, 58, 63, 66n4, 67n22 Rorty, Richard 12, 16n7 sacrifice 82 Samuelson, Paul A. 15 separable 10–12, 15n2, 18, 22–23, 24n6, 28–30, 36, 92, 99–101, 104–105, 116, 121n6 Simmel, Georg 4–5, 8n8, 31n1, 77n13, 78–85, 86n7, 87–94, 94n5, 94n7, 94n9, 97, 107, 121n9, 130

Smith, Adam 3, 15, 18, 24n7, 32, 34, 35, 37, 39–45, 47n6, 48n15, 48n18, 50–52, 58, 61, 63, 66n2, 73, 74, 76n6, 106, 108 substance instantiation 105, 109–110, 120n1, 120n2 surplus value 45–46 symbol 23, 26–27, 82, 87–94, 94n5, 99, 105–108, 130 teleological framework 19, 25n11, 39, 41, 50, 72, 119, 122n11 telos 18–21, 24n9, 25n11, 25n18, 25n19, 25n20, 119, 122n12 use-­value 26–27, 29, 31n1, 33–34, 41–42, 45, 48n13, 50, 53, 55, 67n22, 83, 88, 89, 94n9, 105, 107 US Federal Reserve 9n13, 106, 128 utility 27, 43, 48n13, 48n16, 50, 53, 55–56, 66n10, 67n22, 69 wealth 18, 20–21, 24, 42, 46, 70, 106 weight 15n2, 27, 33–37, 37n8, 42, 44, 45, 48n16, 50, 53–54, 56, 59, 61–62, 69, 85, 88, 94n9, 105 Whitehead, A.N. 5, 14, 122n12 Wittgenstein, Ludwig 16n9, 63, 66n4, 111n11, 120n1, 122n10