Philosophy of Money
Simmel, G. (1900), Philosophie des Geldes, Leipzig: Duncker & Humblot.
Georg Simmel's 1900 masterpiece, "Philosophie des Geldes", explores the relationship between money, our behavior, values, and the way we perceive the world. Simmel examines money as a cultural determinant rather than merely an economic tool.
As Immanuel Kant noticed, value is a cognitive category constructed by individuals rather than something inherent in nature. Human beings assign value to various aspects of life, such as human life, relationships, and material goods, but these values are initially distinct and incommensurable. Attempts to quantify and exchange these values are often arbitrary and unsatisfactory. With the introduction of currency, money becomes the medium through which different values can be exchanged. Human cognition is pragmatic and fallible: it relies on abstractions to comprehend reality. Money, as a widely accepted abstraction, serves as a tool for understanding the world and facilitating exchanges.
In Simmel’s dynamic view of life, various components of a system gain their truth in relation to the entire system. The tensions and oppositions in life define the system, rather than reconciling them into a harmonious whole. Therefore, absolute, definitive truths have to give way to heuristic reasoning to navigate the complexities of life. Money, as a concrete manifestation of abstract value, represents the relativity of things that constitute value. It becomes a stable point of reference amidst the ever-changing fluctuations and interactions of objects. Money's banality and its everyday role might make it seem less profound compared to other philosophical concepts. But it’s of paramount importance in modern society, as reflected in the constant shortage of money experienced by many people.
Money has evolved from being tied to physical substances like gold to becoming an abstract concept representing shared value. Just like money, other important aspects of life such as love and politics also become more abstract in our minds. Money's abstract nature allows it to be a universal measure for exchanging different things, and it takes on symbolic meanings and influences our emotions. The physical form of money (coins or paper) is not necessary for its function; its symbolic representation is enough for its role in trade. As money becomes more abstract, there's a risk of losing touch with reality, which could have negative effects on society.
The paradoxical nature of money
Despite lacking any specific purpose or intrinsic value, money holds immense importance as a universal tool that people value for its own sake. Both money and love represent a state between having and not having something. Money embodies the practical relationship between humans and their desires, symbolizing both their power and limitations.
The pursuit of money can lead to a focus on means rather than specific goals, resulting in a loss of purpose and value in life. Money's formlessness and quantification contribute to the rise of individualism and equality. Its quantifiable nature allows for the calculation of equality and compensation for imbalances.
Money's formlessness leads to a democratic sentiment, valuing everyday experiences and contributions of individuals over heroic actions or extraordinary experiences. Money is a representation of reducing quality to quantity, reaching its highest and most perfect form in the modern world. It plays a central role in shaping modernity, influencing how individuals perceive and interact with the world in an instrumental and quantified manner.
Individual Freedom in a money-based society
Money creates a paradox: it binds people together through trade and specialization, yet it also grants individuals the freedom to define themselves beyond their occupations. As money abstracts the value of goods into a common measure, individuals become detached from the specific aspects of their work and lifestyle, leading to a sense of inner independence but also increased dependence on others' achievements. This transformation occurs not only in capitalist economies but also in trade-based systems like socialism.
Money enables the possibility of radical equality by quantifying imbalances and theoretically correcting them. It opens up various possibilities for individuals, but this freedom can lead to uncertainty and a lack of direction in life.
Money allows people to participate in associations without personal commitment, contributing to the depersonalization of social life. Socialism was a reaction to the impersonal nature of the monetary system, aiming to eliminate individual isolation and promote communal equality. Simmel points out that socialism's ideals contradict each other, seeking both familial bonds and erasing individual particularities that give relationships meaning.
The impact of money on value in modern society
Money, as a universal medium of exchange, makes everything comparable and challenges absolute value systems. But money itself has no intrinsic value; it is simply a tool for exchanging goods and services. In modernity, labor and life have been quantified in monetary terms, making individuals more like money—indistinguishable in numbers and flexible but at the cost of losing fixed and specific identities. This quantification of value is not limited to capitalism; also in socialist planned economies, efforts to measure and compare values were required. In medieval societies, humans were treated as property, but there was an avoidance of putting a monetary value on human life. But, historically, women were assigned monetary prices in marriage arrangements and societies that treated them as commodities.
The paradox of money is that it both democratizes and dehumanizes. It both levels class distinctions, making people more equal, and it reduces unique attributes and identities to generic monetary value, leading to interchangeability and fluidity among individuals.
Socialism attempted to establish labor as the basis for assigning value, but this exacerbates the crisis of meaning and human purpose. It becomes impractical to have a genuine universal valuation of labor due to inherent differences in human capabilities and conditions of existence.
The dual nature of money in modern cosmopolitan life
Money functions both as a universal medium of exchange, quantifying all human pursuits, and as an end in itself. It transforms various purposes into abstract cash, creating a meaningful link without a fixed hierarchy. Similar to energy in the natural cosmos, money represents a universal value, linking different aspects of modern life. Even in socialism and communism, some form of universal valuation, similar to money, was still necessary.
Financiers, as representatives of modern society, approach money neutrally, gaining influence and mobility by understanding and navigating the world of money. The dominance of money and its objectivity give it superiority over more emotional individuals, impacting various spheres of life, including philosophy and law. Money, logic, and law share the quality of removing circumstantial particulars, focusing on abstract, general factors. However, this formal equality introduced by money and law can also accentuate individual inequalities.
Money as a reminder for the ever-chaning world and its values
Modern life, driven by money, leads to automatic accumulation and concentration of knowledge, but it also brings alienation and a lack of stable values. The pursuit of fashion reflects a quest for absolute value, but its constant changes make individual styles fleeting. Money serves as a structural link between individuals and society, temporarily fixing their connection while everything remains in constant flux. The impermanence of values and the dynamic nature of the world are embodied by money. The cosmos is pure flux, where physical and social systems continually evolve into unfamiliar forms. Human civilization has gradually come to terms with this reality, and money serves as a constant reminder of the ever-changing nature of the world and its values.