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European Tribune - Ascent of Money

The defining property of money is credit assertion. Right from the Babylon times, transferable notes of credit claims were issued - and that is what money is to this day (most of the time). Collecting money means collecting credit claims. The fundamental unit of value appears to be a credit claim or expectation. The significance of precious metals (and real estate) in financial transactions is that usually these are accepted as most reliable collateral, merely.

Even if modern dollar bills are promised to be nothing more but "legal tender", all paper and electronic money originates (more or less exclusively) as credit in this world. ...

There is definite logic in the "money as credit" definition. It appeals to a certain will of cooperation, trust and common expectation of future between a creditor and a borrower. But there are caveats. ...

From Simon Critchley's post Sunday on The New York Times Happy Days Blog, Coin of Praise:

There is a theological core to money based on an act of faith, of belief. One can even speak of a sort of monetary civil religion or currency patriotism. This is particularly evident in attitudes in the U.S. to the dollar, particularly to the sheer material quality of the bill. It can also be found in the U.K.'s opposition to the Euro and to the strange cultural need for money marked with the Queen's head, underwritten by the power of the sovereign, who is also -- lest one forget -- the head of the established church.

Plato defines a "simulacrum" as something that materializes an absence, an image for something that doesn't exist in reality, for example the god Poseidon or Bob the Builder. Such is money, in my view. In the absence of any gold standard (but ask yourself, how real is the value of gold? Is it not simply yellowish metal?), money is only sustained through an act of faith, belief, promise and trust in sovereign power.

To push this a little further, we might say that in the seemingly godless world of global finance capitalism, money is the only thing in which we really must have faith. Money is the one, true God in which we all believe. ...



The West won the world not by the superiority of its ideas or values or religion, but rather by its superiority in applying organized violence.
by marco on Tue Sep 1st, 2009 at 10:24:49 AM EST
You read it here first:
So what market prices really indicate is faith in the future. Everything else, from asset valuations, to cash flow expectations, to special prices paid for shares during takeovers, depends on this faith.

...

The remarkable corollary of all this is that to maximise economic growth, governments should act in ways that maximise faith in the future. If they destroy faith in the future, sooner or later the economy will inevitably start to contract - potentially quite violently.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 1st, 2009 at 12:32:17 PM EST
[ Parent ]
Brilliantly obvious -- now that you've pointed it out to me, of course.

The West won the world not by the superiority of its ideas or values or religion, but rather by its superiority in applying organized violence.
by marco on Tue Sep 1st, 2009 at 12:44:37 PM EST
[ Parent ]
Also known as 'Love-me numbers'.

You can't be me, I'm taken
by Sven Triloqvist on Tue Sep 1st, 2009 at 12:51:42 PM EST
[ Parent ]
money is about trust in the future - but given that it started in (hard to cheat with) precious metals, there's always been an awareness that cheating is intrincically linked to money.

Then it becomes trust in institutions, in enforcement, ie in violence applied in an organised way. Money is at the heart of politics, society and human relations.

Again, I'll plug Aglietta and Orlean's La violence de la monnaie and its updated version La monnaie entre violence et confiance


La monnaie est constitutive du lien social. Elle est à la source de la société marchande, parce que, sans elle, personne n'accepterait de se séparer de ce qui lui appartient contre quelque chose dont il risque de ne pouvoir se défaire. Cet objet produit à la fois de la confiance (puisque chacun l'accepte, je l'accepte, d'où un sentiment d'appartenance sociale) et de la violence (violence mimétique: puisque chacun la désire, je la désire, d'où une lutte potentielle).

De ce double aspect dérive la contradiction essentielle: "D'un côté, la confiance collective dans la monnaie est promesse d'harmonie dans les échanges; de l'autre, le pouvoir de l'argent déclenche des crises qui sont des facteurs de désordre dans l'ensemble de l'économie." A la fois bien public et pouvoir privé d'accaparement, la monnaie a besoin d'une régulation publique, garantissant la permanence de l'unité de compte, ce que les auteurs nomment le "principe de garantie", sans bloquer pour autant le fonctionnement de l'économie (le "principe de croissance") et la possibilité pour chacun de participer à l'échange (le "principe de justice").



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Sep 1st, 2009 at 05:16:07 PM EST
[ Parent ]
but not for human society in general.

Jerome a Paris: Money is at the heart of politics, society and human relations.

If you are talking about commerce-based cultures, then you may be right.  But if you are talking about politics, society and human relations in human society at large, I really hope and believe you are wrong.  Granted, today, practically the whole planet is infested with commerce-based culture, but wasn't there a time when human society existed before and therefore without money.  And is it not possible to imagine a post-money post-capitalist human society?  If not, then that is a bleak prospect, indeed.

Jerome a Paris: Again, I'll plug Aglietta and Orlean's La violence de la monnaie and its updated version La monnaie entre violence et confiance

Aglietta and Orléan seem to make the crucial distinction:

La monnaie entre violence et confiance Michel Aglietta et André OrléanMoney between violence and faith Michel Aglietta et André Orléan
La monnaie est constitutive du lien social. Elle est à la source de la société marchande, parce que, sans elle, personne n'accepterait de se séparer de ce qui lui appartient contre quelque chose dont il risque de ne pouvoir se défaire. ...Money is fundamental to the social bond. It is at the origin of commercial/market society, because without it, nobody would agree to let go of something that belongs to them for something that they may not be able to get rid of. ...

Of course, this is a tiny extract from their book, so dangerous to jump to conclusions based on just this.  But their language of appartenir / belong, se défaire / get rid of, on top of the explicit reference to société marchande reveals assumptions indicating that they are talking about societies in which these commerce-based notions have already developed.

On the other hand, if they have based their theory on the work of René Girard, then maybe they are in fact talking about human society in general, and not just commercial society, since Girard apparently believes his theory applies to all societies and that it explains "the genesis of archaic religion".  Perhaps for Girard, Aglietta and Orléan, what I consider to be "commerce-based notions" are actually universal notions intrinsic in human society regardless of whether they are commercial or not.

Now that I am in Paris, I should find myself a copy.

The West won the world not by the superiority of its ideas or values or religion, but rather by its superiority in applying organized violence.

by marco on Wed Sep 2nd, 2009 at 03:41:27 AM EST
[ Parent ]
More realistically money is one particular instantiation of politics, defined as the quest for personal power and prestige.

Debt is a personal obligation, and credit is simply the socially sanctioned - or socially appropriated - right to create social obligations that are enforced by physical penalties.

It's also the socially sanctioned right to make a claim on another individual's or group's industry and creativity.

The mythology is that this kind of credit-based creates an environment which promotes industry and creativity. Sometimes it does. But just as often it destroys or wastes them.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Sep 2nd, 2009 at 04:19:53 AM EST
[ Parent ]
Can you combine the original comment you link to with your comments in this thread and the ones in the recent threads about narratives into a diary?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Wed Sep 2nd, 2009 at 04:56:50 AM EST
[ Parent ]

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