The Just Society: Equality or Freedom?

In A Theory of Justice John Rawls conducted a famous thought experiment. He asked, if we were to imagine, behind a ‘veil of ignorance’, being born into a world in a position somewhere on the scale of unalloyed privilege and crushing poverty, what would be the type of social system we would advocate. Rawls assumed it would be reasonable to choose a society in which economic justice of a distributive nature prevailed, on the likelihood that we would be more likely to be one of the multitude of the poor than the small fraction of the privileged.

Rawls attempted to derive in a purely rational manner the proper balance between freedom and equality. This has, indeed, been the central narrative of political discourse for at least the last century. It has been assumed that the rational position is a centrist one, forging a middle point somewhere between the two poles of freedom and equality. Although in American terms it was considered radical and A Theory of Justice is considered a liberal left academic touchstone, from the perspective of the present Rawls position seems mildly quaint. The middle ground is now largely out of favour and this is perhaps a timely moment to reconsider the prevailing political narrative. I happen to think that Rawls is wrong: from a point of logic, ethics and the facts of history.

To begin with, the contiguity of freedom and equality is the wrong juxtaposition. Freedom and equality are not opposite ends of a spectrum in which the Aristotelian mean is the just position; they are contradictory ideas which compete for the same space. Therefore, it is impossible to derive a stable balance between them. Logically, if you favour freedom, you cannot accept the idea of equality; similarly, if you favour equality, you cannot logically tolerate freedom. Some, like Rawls – though, I suspect, fewer than in the past – argue that we need to compromise: we accept limitations on our freedom for the sake of some equality (although, strangely, I never hear people arguing the opposite; it seems the argument only goes one way). However, the reality is that the advocates of equality are never content with some equality. In the end, everything must be levelled, to the point of absurdity. It would be reasonable to assume that this might have less to do with the idea of equality as an abstract principle than with its advocates; but even this obsession can be explained by an analysis of equality.

Freedom and equality are, in fact, only related by the concept of power, and who holds it. In freedom, power is distributed; so, the closest we get to equality is when we are free. In equality, power is concentrated in the hands of a few, and even the few controlled by the most powerful; so, the only sense in which we are equal is an equality of powerlessness. To paraphrase Orwell in Animal Farm, everyone is equal, only some are more equal than others.

Despite freedom and equality (or their advocates) competing for social space, there is an ethical difference between them, which to my mind is like the difference between light and darkness. Belief in freedom must logically be accompanied by a belief in tolerance. If I believe in freedom, I do not believe in it only for myself, but for everyone, because the fact that it is distributed guarantees my own freedom. Just as I have a right to my thoughts, words and actions, so do you and everyone else, except inasmuch as the exercise of your right would deprive me of mine, for example by intimidating me or killing me. This is a perfectly reasonable and realisable state, in a society in which everyone shares that fundamental belief. It does have vulnerabilities, though, to pathological liars, the intolerant, those living at the extreme and those whose tendency is to usurp power.

That vulnerability is exploited by ideologues, who manifest all the traits just described. The love of freedom grows out of the philosophical discovery of ignorance, expressed eloquently by Socrates, but reaffirmed in the scientific revolution and accompanying Enlightenment of the seventeenth century. Ideologues first trait is absolute certainty. That means, bluntly put, they believe a lie, as truth is an evolving quality, ever pursued but never finally attained. If you are certain of something, there is a tendency to think everyone who disagrees with you is a fool or a rogue. There is, of course, a reasonable degree of certainty, which anyone having a point of view is expected to possess (otherwise we would have nothing to say), but it is tempered by an openness to correction and development. The ideologue, though, cannot bear correction and hates the open debate of ideas. The more unreasonable the belief the more vociferously its opponents must be attacked, and in the most extreme cases, be silenced. That is why the ideologue loves power, because it is a means of controlling knowledge and protecting certainty.

The belief in equality is an ideological position tout court. There is no equality either in nature or human society. The Procrustean critique of equality is already so well established that it needs no repeating. The socialist dogma of equality of outcomes is just an economic version of such crude egalitarianism and is impossible to realise where any spark of human creativity and freedom remain. It has been shown in practice not to result in greater equality, except in misery and fear for all but a tiny privileged minority. The liberal fudge of equality of opportunity is no more realisable, though a worthwhile goal if pursued intelligently, pragmatically and gradually. I will suggest such an approach (at least the theoretical foundations of such) towards the end of this article.

Being an ideological position, and embodying a fundamental untruth, any programme to implement equality must resort to lies, the denigration of critical voices, the capture of the levers of power in any society, and the use of those powers to force conformity to the dictates of the ideology. This is both the logical necessity of equality and the actual practice of its advocates. This is most obvious in totalitarian states of the left, though it is also manifested in totalitarian states of the right that have policies to ‘equalise’ society by removing undesirable elements. However, it is also seen in otherwise liberal democratic societies where the equality agenda proceeds stepwise by advancing the cause of groups that are proclaimed to be disadvantaged, less by addressing the root causes of their disadvantage, but by political activism and entryism to tear down the normative values of those societies and to brand the relatively advantaged as oppressors. Each step proceeds by labelling the cause promoted as addressing an ‘injustice’. However, the final result is not equality but conformity and the rule of a powerful minority.

If there is one sense in which I would accept the notion of equality, it is that we are at a deep metaphysical or mystical level of equal value as human beings, and that as members of the species homo sapiens we have a value above all other species. I would qualify that by saying that in a secular context our assessment of the value of any specific individual is driven by a host of symbolic, aesthetic and practical concerns, such as who they represent, how they present themselves and how they act. Nonetheless, a transcendent sense of human value, in which we feel called to work for the betterment of humanity and, particularly, for the lessening of inhumanity, is not only compatible with freedom; it seems to me to be the essence of freedom.

Turning then to freedom, it has become an accepted orthodoxy that science has demonstrated the non-existence of free will. This is only true, however, according to the canons of positivistic reductionism, and I’m not even sure of the status of this assertion in the light of quantum theory, which portrays indeterminism at a very fundamental level. Be that as it may, the experience of freedom is real at the human and social level; we know when we are free and when we are not free, because it is felt at the level of our perceived status in the social order and our experience of relative power or powerlessness, which is even manifested as a physiological response.

The moment I think or move of my own volition, I assert my freedom and my difference, which is manifest in the world, multiplied infinitely by all the individuals in the world. In the way I am, think and move I create inequality. Naturally, I am better at some things than any other random person and worse at some; which is true of all people, everywhere. Some of these attributes lead to power, influence and wealth, some to mediocrity and some to ruin. This effect is multiplied across all societies and creates the turbulent history of the world, an uncomfortable truth of how individuals, peoples and nations prosper, stagnate and decline.

The true dilemma of justice is not in the clash between freedom and equality, but the subtle negotiation between freedom and responsibility. Freedom guarantees the possibility of doing anything within your power. This is an exuberant, exhilarating, addictive human experience, and one in which individuals can blossom emotionally and intellectually and achieve unimaginable things. On the societal level it enables the conditions under which real human progress can be made. It also, of necessity, allows bad choices to be made, individually and socially. That includes the freedom to act criminally and psychopathically and endanger the lives and possessions of others. It also includes the freedom to be obnoxious or simply insensitive and offend others. It may also just include acts of kindness in good faith which are, nevertheless, unwelcome. It will inevitably include choices which impact on our health, education, career, livelihood, prospects for love and family, and overall happiness and quality of life. Since the outcomes can be so different, it is important to understand responsibility and the part that it plays in freedom.

Responsibility is not well understood, because few people think about it, and it is not part of our social discourse today, apart from sniping asides from the fringes of moral commentary. If most people have heard of it, it is probably as an admonition to bend to the will of the commentator rather than to act on their own will; that is, it is perceived as a threat to, or an imposed limitation of, one’s own freedom. It is true that the word is often uttered as a reactionary shibboleth without, however, having any specific content. This is to misunderstand the role of responsibility.

Responsibility is not the inhibitor of freedom, it is its guarantor. The first stance of the responsible person is to accept that they are free, in both an existential sense and as a social actor making choices. Without this affirmation there can be no responsibility, only obedience, and at worst, slavery. The great tragedy of much of human history and still much of the world today is that social conditions do not allow people to be free and, therefore, not responsible, though this number is, arguably, diminishing. The human thirst for freedom is unquenchable; we always choose it as an alternative to tyranny, especially when we have experienced the latter.

The second stance of the responsible person is to accept that their choices and the acts that flow from them all have consequences, for good and ill, for which they reap the benefits and the costs. With experience comes a greater ability to discern between the two and the wise person will not only make better choices but also choose to impose limits on their actions. The actions that destroy, deplete and offend are the ones that are most likely to result in a reaction that aims to curtail the freedom of the individual for the protection of the common good. For this to happen, the power of the community or the state must be invoked. Every invocation of the power of the greater collective or its authoritative representative entails a diminution of the freedom of the individual, which itself informs the state of freedom of the society. Consequently, that which guarantees the freedom of society is an act of self-limitation imposed on oneself for the sake of the greater good. It is something that emerges from the realisation and experience of the actual and potential consequences of one’s actions in the world and the harm that may occur because of them.

The third stance of the responsible person is to work for the common good, which is as close to a definition of social justice as I would allow. A commitment to justice in this sense is not a commitment to equality, but it can be compatible with a commitment to reducing inequality, particularly of opportunity. Justice, we might say, is relative freedom (rather than absolute freedom). Justice is the addressing of actual injustices, where there is the absence, limitation or oppression of freedom. It is not attempting to equalise everything by limiting the freedom of the majority in favour of a minority. People are not, and never will be equal in freedom, but it is not unreasonable to address that issue by increasing the freedom of the less free. One of the ways of doing that is education about freedom and the values of freedom, that come through a grounding in science, the humanities, arts and ethics. Another is through strengthening the character of people to be self-reliant and resilient, as well as generous in spirit. Physical disadvantages can and are increasingly be addressed through technological development, empowering people who have life-limiting conditions.

It would be naïve to think that we could do without laws and rely simply on the self-realisation of all the individuals with whom we share a society. There is an argument to be made, though, that justice and the common good can only emerge when there is a keen sense of individual freedom and a commitment to be governed by a state that protects and fosters that sense based on an evolving notion of truth. An over-strong state or community has ideological motives, degrades its commitment to freedom and replaces it with coercion, precisely because it cannot command assent. In a free society, the justification for the state is that it protects the freedoms of the people that it represents, internally and externally, and not the interests of a ruling faction.

The quest to build an equal society, on the other hand, requires totalitarian government precisely because of its fundamental impossibility. In addition, radical egalitarians feel no need to exercise the type of self-control discussed here in their treatment of other people, and feel free to offend, demean, ultimately to dispossess and eliminate those that they have determined to be the enemies of equality. Of course, this mistreatment of those they consider ideological enemies demonstrates the absurdity of their position, as believers in equality and warps, ultimately, both their sense of and realisation of justice.

 

 

Advertisements

The shadow of value: money theory and the roots of economic anomie

In the West, our ambiguity towards money is expressed deeply in religion, politics and art. We have been beholden to the institutions that provide it as a necessity of life, but desired liberation from the corrupting influence of our dependence on our authentic nature. Through money we have both experienced the possibility of living pleasurably, and recognised its power to lead us astray. That ambiguity, and a measure of hypocrisy, is not merely historic, but pervades our society today: while we expect a decent standard of living, there is anger at gross inequalities of wealth, particularly in developing countries, although we may be ambivalent about their economic advancement; closer to home, our desire for personal wealth is often coupled with disdain for the foibles and vulgarity of the rich. This Janus-like relationship with money seems implicit in the nature of money itself. It may not be resolved, but this ambiguity might be explained and mitigated to some degree by understanding the roots of our economic anomie in the philosophical intertwining of the existential and monetary notions of value.

As with much thinking on any issue, the ancient Greeks thought about the problematic nature of money first, or at least mythologised it in this case, in the story of king Midas. The existence of money as a metal coinage was a relatively new invention, but already both its properties of great convenience and the temptation to excessive accumulation were appreciated. Midas desired that everything he touched be turned to gold and the gods granted him his wish, literally. Realising that he could no longer eat or touch those he loved, Midas begged to have the gift removed. This timeless fable teaches us that there are things that cannot be bought with money or gold, and suggests that the modern belief that everything can be monetised hollows out the very things we find valuable.

It is a feature of the word ‘value’ that it has two distinct meanings, that of moral worth and that of monetary worth, a distinction rooted in a common etymology which runs through most European languages, indicating that at some point they have been considered to be closely related issues. In fact, in two worldviews they have been and still are: Thomistic theology derived from Aquinas, with its notion of the ‘just price’ and the Marxist ‘labour theory of value’. Both theories have been superseded by market economics, in which prices are determined by supply and demand in the marketplace, yet continue to inform areas such as business ethics, the honouring of contracts and the critique of exploitation or capitalist excess.

My intention in this article is to explore the relationship between monetary value and existential value, which underlie, respectively, the prices we assign to goods and services and the values that shape our lives and institutions, and in this way attempt to understand the role of money in institutions and how this might inform economic life and our relationship to money. Clearly, to do this systematically would be a massive undertaking and here I am only developing some of the philosophical framework to underpin this project. In particular, I want to take issue with theories of intrinsic value, particularly Locke’s view of natural value and the labour theory of value, and to present a hypothesis that the moral dimension of monetary value exists at an institutional level rather than at a commodity or service level.

Money and monetary value

For an everyday reality that pervades our lives and our society, money is actually something of an enigma, at one level tangible and obvious, but on closer investigation something whose nature is surprisingly elusive. Clearly money cannot be identified with the notes and coins we carry around with us, firstly for the superficial reason that the currency we identify most readily with is not transnational and can only with some difficulty and cost (and even here the equivalence is not always transparent) be converted into another. Then, although we are not quite there yet, it is possible for us to conceive of a cashless society, in which all financial transaction will take place electronically, through the transfer of information in binary code. However, even more than these reasons, if we stop to consider it, the source of the agency that money confers to enter into economic transactions appears to be wholly mysterious.

The emergence of the digital economy and electronic money has popularised the notion that there has been an evolution in our economic transactions, beginning with barter, passing through the money economy, and now moving into the era of credit largely carried out invisibly. This view is based on what we could call the commonsense view of money, first advocated by philosophers such as Locke and Adam Smith, who drew on Aristotle’s and Homer’s observations in the ancient world two millennia previously, and it is the view still propounded in the majority of textbooks on economics (Graeber, 2011). However, it is demonstrably wrong. There is no evidence that any culture that relied on a barter economy ever existed (Humphrey, 1985). The alternative view, previously at the margins but gathering momentum in the aftermath of the global financial crisis, is that human economic activity has always in its foundations been about credit and debit.

Much of this reassessment is based on the century-old writings of Mitchell Innes (1913) and William Furness (1910). Innes pointed out that the earliest recorded notion of debt, found in the Code of Hammurabi, predates the earliest coinage by 2000 years, and that the repayment of a debt was considered to be a sacred duty. The foundations of economy have always been about the agreements between creditors and debtors, in which the origins and function of money is no more than a marker of that relationship and agreement.  Furness recorded the highly unusual money system on the Indonesian island of Yap, which consisted of stone wheels of various sizes known as fei. He noted that even when transactions were concluded the fei were rarely moved; change of ownership was merely acknowledged. In the most remarkable case a fei which had sunk to the bottom of the sea while being transported was still recognised as valid currency. In other words the currency functioned as markers of credits founded on trust. This view eventually won the approbation of economists as diverse as John Maynard Keynes and Milton Friedman, though is still largely ignored in macroeconomic theory (Martin, 2013).

The reason for this misunderstanding lies in the seventeenth century in the period when the Bank of England was being set up. Prior to the establishment of the bank, the ultimate source of the authority for the English currency was the British sovereign. Coins were stamped with the monarch’s image and minted in silver, theoretically to the value as stated per denomination. In fact, it was long recognised that the face value of coin and the price of silver frequently diverged, silver being more valuable that the actual coinage. This led to huge amounts of money being melted down and sold as bullion and the stock of coinage being vastly depleted as a result. The Bank of England, which had in the meantime emerged as a mercantile counterbalance to the monetary authority of the sovereign, saw the obvious solution to lie in debasing the metal in the coinage, alloying the silver, and thus lowering the actual value of the coins to or below their face value, thereby removing the motive for destroying them. Unfortunately, this pragmatic solution was overruled by Parliament on the advice of John Locke, the pre-eminent philosopher of his age and a hugely influential figure. Locke, a fierce republican, wanted the Bank to break entirely with the notion that the value of the currency was based on authority, such as the authority of the king, and instead base it on the intrinsic value of nature, such as that of silver. Locke’s suggestion was followed and the nation’s supply of silver coins was replenished, with both predictable and unforeseen disastrous consequences.

Locke clearly believed, or at least wished to assert for political reasons, that money has an intrinsic value, and the modern capitalist economy, whatever private reservations people individually may harbour, continues to function on the basis of this belief, using gold as the most common standard rather than silver. It is necessary, though, to analyse what the ‘value’ is that is the object of such a belief. The Lockean argument from nature can be dismissed out of hand. Value is not a property of nature, but of human judgement. Even if our currency were ‘worth its weight in gold’ (which it is not, by a significant margin), this would not constitute its value any more than it were worth its weight in manure, because the value of gold or manure is not ‘intrinsic’, but arises fundamentally from their utility, a distinction Pepper (1970) refers to as ‘value proper’ and ‘utility value’, the latter which we could also refer to as social value. The different social value ascribed to gold and manure arises from their relative rarity, flexibility and aesthetic appeal. Gold is almost universally considered beautiful due to its colour and lustre, and useful due to its malleability and ductility, qualities which obviously cannot be ascribed to manure. However, gold’s social value depends to a large degree on the technological capacity of the culture in which it occurs. Primitive cultures in regions in which it was naturally relatively abundant had little use for it outside decoration, and were happy to trade it for coloured beads. Unlike manure which is a good fertiliser and building material, useful in settled agricultural communities, gold perhaps had only marginal social value. This point does not seem to me to be undermined by any subsequent retrospective reassessment by post-colonialist critics.

One of the functions of money in monetary theory is reckoned to be to store value (Nesiba, 2013), which seems a not unreasonable proposition; that is, until we start to interrogate its exact meaning, whereupon it slips rapidly from our grasp. The way in which money stores value is like the way in which the sun rises, that is, metaphorically. Since money has no intrinsic value, either as a physical or digital currency, it cannot store value either. And since, with the exception of some hobbyists or collectors who may fetishize the physicality of money, we do not value money as such, but only its instrumentality, the idea of storing value is really just shorthand for the ability to exchange it in denominated amounts for the things that we deem actually valuable, or vice-versa, to receive it in denominated amounts for goods or services. What is ultimately valuable is that which makes human life liveable, bearable and pleasant, so it is in the social agency of money that its source of value is found.

To pursue this thought further, value does not inhere in money itself, but nor can it in the goods or services which are exchangeable for money, at a price determined by the market, as the same objection which was raised against the intrinsic value of money can similarly be raised against the intrinsic value of any commodity or service, that is, value does not exist in the state of nature. The question this denial poses, then, concerns the ontological foundations of the economy in which money plays such a crucial role. Marx (1859)advanced an alternative view of value: rather than arising from nature, the intrinsic value of a commodity represented the ‘congealed labour time’ of the industrial proletarian whose sweat and toil had manufactured it. Although this view, referred to as the labour theory of value, is disparaged by mainstream economists, and although I believe it takes too narrow a view, nonetheless, I will develop an important insight which I believe Marx had, which is that value is inherently social and that it is generated in the world of work.

Marx was motivated to blame capitalism for the dreadful conditions of the industrial working class which sprang up in the newly growing cities created by the industrial revolution. He identified the profit generated in the manufacturing process as an ‘excess’ derived from the exploitation of the workers who had created the value of the commodities, that is by paying them insufficiently for their labour. A clear objection to this idea is that the price – even the marketability – of any commodity is a function of its quality and the demand for it. If a manufactured item is shoddy or faulty it cannot demand the same price in the market as one which is made to high standards, regardless of the labour invested in it, while if there is no demand for an item, it will not sell. Price is determined largely by these two factors, quality and demand, and any business in order to be profitable, has to identify a market where a certain demand exists and strive for quality that meets the market’s expectations.

Money, then, neither has value nor stores it. As we discussed, according to Pepper there are two types of value, value proper and utility value. Money has utility, clearly, though it is a very specific type of tool, one whose usefulness is in being exchanged for things that are in turn useful or pleasurable to us, and therefore to that extent valuable. It has neither value nor utility intrinsic to itself, only as a medium of exchange. Money, though, is unique in that it is denominated and acts as a scaled measure of wealth. Unlike value, which is a function of judgement, wealth is a function of a social process; moreover, it is a social process in which existential and social values play a critical role. As already mentioned, economic activity can only take place on the basis of trust, and money itself exists as a place marker for relationships of credit based on trust. For much of history this was the common understanding of how money worked. It is only in the past few hundred years that this seems to have been forgotten.

Institutional wealth hypothesis

Rather than value, a nebulous term at best, I suggest it is wealth which both money measures and that links money to the value-driven activities of institutions.  By ‘institution’ I mean any human grouping that has some sense of a common purpose, some shared values, a degree of organisational structure however informal, perhaps some rules, and a boundary demarking inside from outside. This would include businesses and all manner of organisations and even individual family units. It would not, for example, include neighbourhoods as geographic entities, but would include neighbourhood associations. Wealth is generated by and accumulates around such institutions and their activities. We tend to think of wealth in opposition to poverty, but what I have in mind is relative wealth, wealth that can be an indicator of the relative performance of institutions. Rather than engage in a diatribe against the perception of poverty created in our society by gross inequalities of income, I suggest that wealth be thought of as a neutral term that can employed evaluatively across all cultures and historic periods and that poverty be restricted to its more ethical connotations, by which I mean a culture-dependent term of disparagement for lack of aspiration.

The hypothesis, one that does not seem implausible, is that wealth is generated in successful institutions. To emphasise, by wealth I am not talking about vast wealth, but wealth as a relative quality; some institutions, such as banks, are required to process huge quantities of money (leaving aside for the moment structural anomalies in the banking sector that governments are attempting to address), but others, such as voluntary or community-based organisations, might run on a shoestring but be fully functional in achieving their nominal purpose. All institutions need money to function and this has to be considered integral to the institutional ontology not as an add-on. It is also a necessity in a comprehensive theory of value to be able to offer explanations of economic value and explore any underlying unity between economic value and social value/values.

The great monetary settlement of the seventeenth century never fully resolved the issue of the nature of money, and Locke’s intervention saddled us with an erroneous concept, which has had consequences to this day. According to Martin (2013) the final authority for a currency is the people in democratic society, who invest their authority in the government of the day to make sensible decisions regarding the economy for the benefit of the people as a whole. Money is like language, in some sense, in that it pervades our culture and is ultimately controlled by no one (ibid); it is above all a social phenomenon, and always has been, although this has been forgotten by governments, the banking industry and by most economists, with rare exceptions like Keynes. Nevertheless, the current financial crisis has led to government intervention, some reforms in banking and some reassessment of economic theory in line with Keynesian thinking.

Wealth goes hand in hand with success in any venture, and that success is built by gradually building relations of trust around that venture. Building a successful venture requires a range of skills and the ability to work hard, for example, but the focus here is not on this range of skills but on the fundamental ontological requirements of institutional success, which requires the creation of multidimensional trust, both within an organisation and outside in relation to other relevant organisations and constituencies. As I have argued in a previous essay on values and institutional structure, relationships within any organisation are strengthened and organisational conflicts between different constituencies are ameliorated when shared values are sought and promoted alongside core values and organisational goals; in fact, the discovery of shared values in the context of the organisation is one of the fundamental responsibilities and ‘people skills’ that a leader of any organisation needs to manifest, as it demonstrates attention to the particular and the individual rather than just to the general and the abstract.

Trust is not something that can be established at once, and not necessarily easily, and it is something that can be rapidly destroyed. However, as Fukuyama (1995) has argued, trust is the fundamental value of social capital, one which enabled the growing prosperity of Europe through the early modern period. If this is true I suspect it is because, unlike other values which are (or run the risk of being) etiolated when they are monetised, it has the property of self-replenishment. The building of trust, therefore, should be a fundamental goal of every organisation. First, everyone feels happier when they are in an environment in which they feel trusted. When people feel happy they willingly contribute to the good of the whole and invest themselves, their efforts and time for the success of the whole. There is a common interest that whatever goods or services they provide should be to a high standard of quality, and when they are to a high quality the recipient of those goods or services will naturally be satisfied. Those who fund the activities of the organisation, whether consumers, shareholders, banks, or donors should be treated as extended constituencies of the organisation, common values discovered and a basis for trust and satisfaction established. This is the basis for success and wealth in any organisation. The same reasoning can also be applied to an individual and a basic social institution such as a family.

Potential objections to the hypothesis

An objection to this hypothesis would be that many organisations seem to function, even function well, while not adhering to this strategy. I would say that this is due to the dampening effect of society; changes rarely happen suddenly, but usually there is a cumulative effect before something becomes apparent. The economic crisis was building up and was predicted by some many years in advance, as indeed the recovery is many years in manifesting itself. When any institution fails, whether it be large or small, there are always underlying reasons, and those reasons invariably come down to human problems: the arrogance of a leader, the disaffection and even sabotage of those mistreated, greed and eventually dishonesty undermining trust. Even failure to adapt to a changing environment can be laid at the feet of systemic failure to seek common values, because that is a failure to draw upon the variety of skills, to discover and to exploit those skills, that any group of people bring with them. Edward Freeman (2010), in his writings on stakeholder theory, asserts that any business that is not seeking to keep all its stakeholders – such as investors, shareholders, banks, employees and customers – happy is a failing business. I have used the term ‘constituency’ rather than stakeholder, but the logic is much the same, although I have attempted to give a more theoretical underpinning to what stakeholder happiness actually comprises.

A second objection would be that wealth simply means the accumulation of money or its equivalent in assets. This is a commonly held view and it arises out of the mistaken understanding of the nature of money and economic value. This view justifies the moral view (not that I am saying that everyone who shares this understanding of money shares this view) that gaining money is a justifiable end in itself, and it does not matter the means by which one acquires it. Clearly, such a view underlies criminal acquisition, whether that be corporate crime, gang-related crime or street robbery. I have advocated the view that the acquisition of wealth should be understood as a reward for, or a consequence of, institutional strengthening. Theft short-circuits that process; it does not represent the justly deserved reward for valued activity, which reinforces the values of social institutions, but leaves the basis of social chaos in its wake: mistrust, fear and loss. Moreover, the empowering function of money cannot be fully realised; its power to purchase is always accompanied by fear of exposure, fear of punishment, mistrust of others and the knowledge that one is not truly worthy in that one has not been rewarded. As a society we are left to take effective measures to counter the increasing prevalence of this sort of activity and its social fallout, whereas we should be establishing as a norm the correct understanding of money and of wealth, that people can police themselves more effectively.

Money is a token that represents the wealth which is generated in successful institutions. In some respects it has similarities to Austin’s (1962) idea of the performative speech act, in that an exchange of paper, metal or electronic tokens effects a change in ownership and the conferring of rights. Money is effectively a symbol, which exercises symbolic power throughout society, for all social institutions. Externally it has the nature of a tool that quantifies wealth, which can switch between a physical format (currency and perhaps its bullion equivalent in extremis) and a digital format (as an entry in a ledger or perhaps now even as a digital currency, such as bitcoin). In this sense it is proper to speak of it having utility or use-value rather than value proper, in the same way that all things that can be defined as tools have utility, and only have value proper if they enter the sphere of our personal experience in the sense of evoking a (usually) positive emotional response. But as a symbol money also represents things that we recognise as social universals such as freedom, both freedom from want and freedom to choose, competence in earning a living and supporting oneself, and also things like moral obligation, such as to pay one’s debts, to care for one’s dependents materially and to contribute to the common good through supporting enterprise, inspiration and endeavour, supporting the needy, and paying one’s taxes.

Money has been one of the most powerful tools for liberation, as it has freed the masses from excessive social control and opened up the way for individual decision-making, risk-taking and enterprise, which has contributed to the emergence of economically vibrant and democratic societies. A further step is now needed to correct the social injustices that the wrong understanding of money has perpetuated, by a new consensus on its nature.

References

Austin, J.L. (1962). How to do things with words. Oxford: Clarendon Press.

Freeman, E. R., Harrison, J. S., Wicks, A. C., Parmar, B. L. and De Colle, S. (2010). Stakeholder Theory: The State of the Art. Cambridge, UK: Cambridge University Press.

Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. London: Penguin.

Furness, W. (1910). The Island of Stone Money: Uap of the Carolines. Philadelphia, PA: Washington Square Press.

Graeber, D. (2011). Debt: The First 5000 Years. NY: Melville House Publishing.

Humphrey, C. (1985). ‘Barter and Economic Disintegration’. Man, 20(1), pp. 48-72.

Innes, A.M. (1913, May). ‘What is money?’. Banking Law Journal, pp. 377-408.

Martin, F. (2013). Money: The Unauthorised Biography. London: The Bodley Head.

Marx, K (1859). A Contribution to the Critique of Political Economy. Moscow: Progress Publishers.

Nesiba, R. F. (2013). ‘Where did “money” come from?’ Western Social Science Association (WSSA) News, 42(2) (Fall 2013).

Pepper, S. C. (1970). The Sources of Value. Berkeley: University of California Press.