Money Wisdom #257

"Investigation of the relationship between money and social action is fundamental to undertaking a more penetrating assessment of the form of knowledge, virtually indistinguishable from economic rationality, which has underpinned the economic, political and military hegemony of the West throughout the modern age."

Nigel Dodd The Sociology of Money (1994) p.84

In Defence of Simmel

One of the downsides of leaving posts unfinished is that there is a lot of issues floating around in my mind unsaid and unresolved. So this is just a quick note on one such issue. There are many others.

In his Toward an Anthropological Theory of Value, David Graeber painted a picture of Georg Simmel that I didn't recognise. Now, it's 15 years since I've read Simmel's The Philosophy of Money but I do clearly remember the feeling I got from my reading which was that there was a great connection between Simmel's thought and Freud's. I mentioned before that on my visit to the Freud museum I was scanning the bookshelves looking for a copy of The Philosophy of Money. I couldn't see one, and unfortunately the complete listing of Freud's library (available as a book with accompanying CD-ROM if I remember correctly) was beyond my means and securely shrink-wrapped.

In Graeber's work he sees Simmel as marking out a conceptual territory that has since been occupied by neo-liberalism. I think Graeber bases his view of Simmel on a couple of things, (a) Simmel's emphasis on exchange, and leading on from this (b) a notion that Simmel believes that ultimately value is subjectively determined. Now, I should say (in case you haven't read it) I gave Toward an Anthropological Theory of Value a five star review, loved reading it, and thoroughly recommend it - so my criticism of Graeber's very brief references to Simmel (the index shows three page references against Simmel) should be viewed in context.

My contemporaneous reading note was 'I'm not sure about his [Graeber's] reading of Simmel'. I'll quote some passages from Toward an Anthropological Theory of Value:

The first reference to Simmel comes when Graeber is discussing the work of anthropologist Arjun Appadurai.

"Anthropologists would do well, [Appadurai] suggests, to forget Marx's approach entirely and look instead to those developed by Georg Simmel in The Philosophy of Money (1907).
Value, according to Simmel, is not rooted in human labor, nor does its existence depend on any larger social system. It arises from exchange. Hence, it is purely an effect of individual desire. The value of an object is the degree to which a buyer wants it. It is measured by how much that person is willing to give up in order to get it" (p.31)

Then after briefly mentioning Simmel as the 'mirror image' of anthropologist Annette Weiner and her writing on 'inalienable possessions', Graeber goes onto say that 'someone like Simmel' would say that;

"the value of commodities comes from the fact that someone is willing to buy them rather than the thought and energy that went into producing something a buyer would desire to buy." (p.38)

But I think what sums up Graeber's view on Simmel more than anything is the following;

"The rejection of Marx, the emphasis on self-interested strategies, the glorification of consumption as creative self-expression - all this was entirely in keeping with the intellectual trends of the mid 1980's. But it also serves as an object lesson about why, when one catches a wave, one might do well to think where it is ultimately heading. Because the end result is anthropology as it might have been written by Milton Friedman. As James Ferguson (1988) has pointed out, there is a reason why Simmel is the darling of modern-day free market Neoliberals."

In the late 1990's I was a member of the Hayek Society at the LSE and I attended a few events at the Institute of Economic Affairs - two places where you're pretty sure to find a surfeit of 'modern-day free market Neoliberals'. They could probably tell you everything you ever need to know about Hayek, Mises, Friedman, Rothbard or any of a number of libertarians. But I'm not sure anyone I met at those places would've known who Georg Simmel was.

The James Ferguson paper that Graeber refers to is Cultural Exchange: New Developments in the Anthropology of Commodities - it's a review of Arjun Appadurai's The Social Life of Things. Using the black arts, I managed to find Ferguson's paper. Its a good read - even if, like me, you've not read Appadurai's book. I think the part that must have stuck in Graeber's mind is where Ferguson quotes two 'neoconservative economists, Laidler and Rowe' singing the praises of Simmel and saying Simmel owes an undeclared debt to the work of Carl Menger (Menger was the founder of the Austrian school of economics, father, if you like, to Hayek, Mises, Friedman, Rothbard etc ). Ferguson says that academics like to speak through the mouths of 'dead Gods' (which I think is very true) but in choosing the God of Simmel (because he stands in opposition to a Marxian theory of Value) Appaduriai has a dead God "who delivers neither the intellectual nor the politico-academic goods". Ferguson claims that Simmel doesn't work for Appaduriai as 'big name protection' to speak against Marx, and really, he just doesn't dig Simmel at all.

Now, I said earlier that I haven't read Simmel for about fifteen years. That's true. But I have picked him up a lot for the odd five minute perusal, and more importantly, he's been mentioned at some point in every other book I've read about money from across the political and conceptual spectrum. He's a big part of James Buchan's Frozen Desire on the one side, and Keith Hart's Money in an Uneven World on the other. So in the intervening fifteen years I've read a lot about Simmel from different perspectives.

And as luck would have it, the book I'm reading at the moment - Nigel Dodd's The Sociology of Money (1994) - has got a cracking section on Simmel. I'm going to quote a few passages from it to balance out those views expressed by Graeber (and Ferguson) about Simmel. For Dodd, 'Simmel 's arguments provide an important indication of how a systematic approach to the study of money in sociology might proceed'. The section on Simmel also has a great sub-title (especially for someone like me who has a monist or Pirsigian concept of Value) - God and the Theory of Value.

[The] dual quality of constancy and flux* has a philosophical analogy in Simmel's work whereby money, which in economic terms expresses 'nothing but the relativity of things that constitute value', embodies the principle of relativism. It is for this reason that he regards money as having cultural significance as well as economic importance. Money's omnipotence relative to other values excites feelings psychologically analogous to the worship of God. Just as 'the essence of the notion of God is that all diversities and contradictions in the world achieve a unity in him', so with money, 'the relativity of things is the only absolute....' p.42 

Value is 'in a sense the counterpart to being .... comparable to being as a comprehensive form and category of the world view.' p.43 

....we value things which seem beyond our reach, which resist our desire to possess them. Simmel's analysis of value is in this sense derived from a particular view of the relationship between human beings and the world they inhabit; or in his terms, the relationship between subjects and objects. p.43 

A distance is gradually imposed between the subject and object which creates the potential for friction between them. Without such friction, the concept of value would be meaningless, for our desires would meet no resistance. It would also be impossible to distinguish one thing from another, for this only becomes possible when our desires go unfulfilled. For economics, this process explains the formation of the category of value. Philosophically, it accounts for the origins of the dualism between subjects and objects. It is because humans think in terms of this dualism that they need to place formal catagories on the world around them and organize its content. This process therefore marks, for Simmel, the 'birth in experience' of form. p.44

You can see why I as a Freud-lover (rather than a rabid libertarian) might find Simmel's work appealing. Nigel Dodd address this idea that Simmel is some sort of neo-liberal godhead fairly directly.

The concepts of distance and resistance at the heart of the theory certainly bear comparison with the marginal utility theorem in neoclassical economics. Reflecting this, Smelt has argued that Simmel's theory of value simply means that 'the value of an object is what an individual will sacrifice for it'. But to reduce Simmel's arguments to this basic principle requires some effort at misreading them. p.44 (my emphasis)

When I read The Philosophy of Money I felt Simmel was trying to say something profound about money and thought or even money and being. I think that's why I didn't recognise the Simmel that Graeber described.

For Ferguson, and possibly for Graeber (although I don't think he says so directly) Simmel proceeds from the basis that first there was exchange and then came culture - in a kind of Smithian 'propensity to truck and barter way'- or a 'doux commerce civil society was built on market exchange way'. Again I didn't get this from Simmel, myself. And Dodd doesn't either. Simmel explicitly acknowledges the importance of 'structures of a higher order' (p.46) but says that analysis of social structures cannot provide a penetrating route to the study of modern society.

I think that Simmel's detractors take the word 'exchange' in too economic a sense. Yes, for sure, Simmel thinks that 'exchange is the fundamental condition of social life, for "interaction between individuals is the starting point of all social formations"' (Dodd 1994 p.45). But there's the clue; exchange is interaction. Simmel says 'most relationships between people can be interpreted as forms of exchange' (PoM p.82) - indeed he says explicitly 'Every interaction has to be regarded as an exchange, every conversation, every affection (even if it is rejected), every game, every glance at another person'. To me this seems like an argument for a reflexive approach;

'The concept of exchange is often misconceived, as though it were a relationship existing outside the elements to which it refers. But it signifies only a condition or change within the related subjects, not something that exists between them in the sense in which an object might be spatially located between two other objects." (PoM p.83)

So, as far as 'exchange' goes, I think Graeber and Ferguson define the word a little too narrowly.

As for Value being subjectively determined. Gosh, that's a biggie. Nietzsche had this idea of nature being 'valueless'. It is we who ascribe 'value'. That kind of idea sits quite neatly with a neo-liberal view - things are worth what the market says they are worth. But its not really what Simmel was saying. He does say that the ego is the universal source of value, but he also says;

"The form taken by value in exchange places value in a category beyond the strict meaning of subjectivity and objectivity. In exchange, value becomes supra-subjective, supra-individual, yet without becoming an objective quality and reality of the things themselves." (PoM p.78)

So, once you broaden your definition of 'exchange' and allow for the subtlety and complexity of Simmel's  Subject Object metaphysics, I'm not sure there's such a huge difference between what Simmel is suggesting, and Graeber's idea of 'creative potential' being a fundamentally social power realized through action and thereby creating social reality**. Perhaps I'm missing something?

I have avoided that word 'desire'. Its seems to be a key one. (One brilliantly explored by James Buchan's book Frozen Desire). I like to refer to Freud on that one. I wish Freud and Simmel had written a long series of letters to each other, it'd make things so much easier. But my view, sharply put, is that removing 'desire' from sex is nonsensical, as is removing sex from Life and Death. So creating the analytical category of 'desire' as a kind of sociological, economical, or anthropological Occam's razor will lead, ultimately, right back to the problems that Freud addresses.

I was very very happy to note Nigel Dodd saying that '....ambivalence is at the core of Simmel's analysis.' (p.51) because obviously its at the core of Freud's too.

Finally I should say that reading Pirsig's ZenMM has definitely re-kindled my Simmel fire. It's those words - Subject and Object and the way that Simmel can't quite fit Value into them. I guess academia poo-poos poor old Pirsig, and its obvious that this was/is a source of frustration for him. I don't have to worry about academia, so I'll happily to say how influential ZenMM has been on my conception of value. It seems an obvious, almost trival thing to say, but an understanding of value isn't the destination of a series of logical steps. Its not the end point of a rational discussion. It's the beginning (and the end and the middle and etc). It's what we look for and what we find. Whatever you have to do to get those ideas across is fine by me; a thesis, a novel, a film, a song, contemporary dance, a painting - they're all good.

It looks like I might have ten days at my brother's place right on the Nova Scotian coast in May. I think I might take Georg Simmel with me and do that re-reading I've been dreading. Maybe it's time.


_________________
*interesting that Dodd notes both constancy and flux in Simmel - Graeber's emphasis is squarely on flux. A theme of his work is the quarrel between Heraclitus and Parmenides.

**you know its just struck me, but that actually describes sex pretty well.

Marx and Freud led Hayek to take Popper's

I hope you like the title but this is very geeky.

The following is a transcript from a long interview with Hayek conducted in October and November 1978 the transcript is here (its a large pdf) pp 18-19

In a discussion I had on a visit to Vienna from London with my friend [Gottfried] Haberler, I explained to him that I had come to the conclusion that all this Machian positivism was no good for our purposes. Then he countered, "Oh, there's a very good new book that came out in the circle of Vienna positivists by a man called Karl Popper on the logic of scientific research." So I became one of the early readers. It had just come out a few weeks before. I found that Haberler had been rather mistaken by the setting in which the book had appeared. While it came formally out of that circle, it was really an attack on that system, [laughter] And to me it was so satisfactory because it confirmed this certain view I had already formed due to an experience very similar to Karl Popper's. Karl Popper is four or five years my junior; so we did not belong to the same academic generation. But our environment in which we formed our ideas was very much the same. It was very largely dominated by discussion, on the one hand, with Marxists and, on the other hand, with Freudians.  

Both these groups had one very irritating attribute: they insisted that their theories were, in principle, irrefutable. Their system was so built up that there was no possibility-- I remember particularly one occasion when I suddenly began to see how ridiculous it all was when I was arguing with Freudians, and they explained, "Oh, well, this is due to the death instinct." And I said, "But this can't be due to the [death instinct]." "Oh, then this is due to the life instinct." [laughter] Well, if you have these two alternatives, of course there's no way of checking whether the theory is true or not. And that led me, already, to the understanding of what became Popper's main systematic point: that the test of empirical science was that it could be refuted, and that any system which claimed that it was irrefutable was by definition not scientific. I was not a trained philosopher; I didn't elaborate this. It was sufficient for me to have recognized this, but when I found this thing explicitly argued and justified in Popper, I just accepted the Popperian philosophy for spelling out what I had always felt. Ever since, I have been moving with Popper. We became ultimately very close friends, although we had not known each other in Vienna

You may remember a while back I posted a video interview with Hayek where he talked about Freud. He couldn't really have got the most basic of Freudian concepts more wrong.



Its an odd world we live in.

"[Freud's] basic idea of harmful effect of repressions just disregards that our civilization is based on repressions"

Now I suppose this should be where I call Hayek stupid. And say 'You never read Freud'. But really the interesting question is how someone as intelligent as Hayek could have misunderstood such a basic idea of one of the most influential thinkers of the modern world. How can that happen?

[Don't take this too seriously but....] Freud might have the answer. Indeed, the answer maybe in that transcript. Hayek's rejection of Freudianism (and Marxism) was the basis of his adoption/creation of his own philosophical position which he found to be in harmony with his friend  - "his very close friend" - Sir Karl Popper. I say no more.

Money Wisdom #256

"....ambivalence is at the core of Simmel's analysis."

Nigel Dodd The Sociology of Money (1994) p.51

Money Wisdom #255

"Monetary freedom.... ....is a freedom which is empty of content, having only the negative connotations linked to the removal of constraint : 'In itself, freedom is an an empty form which becomes effective, alive and valuable only through the development of other life-contents' [Simmel, The Philosophy of Money p.401]. These life-contents will be stunted whenever money is treated as an end in itself. This is exactly what has happened in modern society. Money, as the ultimate economic instrument, has been turned into the ultimate economic goal. It has imploded in on itself as mammon."

Nigel Dodd The Sociology of Money (1994) p.49

Money Wisdom #254

"The social, political and cultural realities which generate economic uncertainty are no awkward intrusion in to the world of monetary analysis. They are the condition for the very existence of monetary networks in the first instance."

Nigel Dodd The Sociology of Money (1994) p.XXVIII

Money Wisdom #253

"The solvency of any banking system is, in the last analysis, illusory, so that success depends entirely on confidence - which in the last resort is misplaced - on the part of the depositors."

T Parsons Sociological Theory and Modern Society (1967) p.335 quoted in 

Thomas Crump The Phenomenon of Money (1981) p.146

Money Wisdom #252

"[money]... does not flow when in circulation but undergoes a series of emissions from one transactor to another."

FOOTNOTE:

"20 . This description suggests that the most appropriate bodily metaphor for money is not blood but semen. No doubt much could be made of this in psychoanalytical terms."

Nigel Dodd The Sociology of Money (1994) p.XIX

Money Wisdom #251

"After all, any object could in principle be used as money....."

Nigel Dodd The Sociology of Money (1994) p.XV

A review of 'Towards an Anthropological Theory of Value' by David Graeber

This review is on Amazon here. As always, if my review pings your pong be a dear and pop over there to click the like button.

Given I read the book last December, its taken a long time for this review to appear. The story of why - which will probably be of interest only to me - is below the review. I gave it 5 stars - one more than Debt- the first 5000 years. I'm a sucker for a bit of ethnographic detail - especially the sexy bits. Page 137 the sick old Huron woman dreaming about an orgy in side her longhouse - I liked that. Anyway *serious face*.

__________________

A compelling work on the nature of value as creative potential realised through social action

Graeber wanted to title this book 'The False Coin of Our Own Dreams' but at the publisher's request that became the sub-title under the rather more staid and academic 'Toward an Anthropological Theory of Value'.

Graeber's preference is indicative of his hope for an audience beyond anthropologists. It's clearly written (for the most part), not over-long and balances expositions of theory with some personal insight. I'd say he succeeded in making it accessible to the non-specialist. The book proceeds by considering three common approaches to value and then examines how our experience of value is contextualised by scholars (with a focus on post-structuralist work). Then it gives exposition to Graeber's understanding of value as action and gradually explores this understanding by examining how value is experienced and conceptualised in different cultures. Finally he concludes with the idea that value exists in the potential for creative action; 'the ultimate social reality'.  The social aspect is key because ‘structures of relation with others come to be internalized into the fabric of our being', and so the potential for creative power - and hence value - cannot be (significantly) realized, other than through coordination with others.

In reaching such conclusions about the relation of reality to value, the book deals with some arcane material. For example; it details how the Maori's metaphysical concepts of 'mana' and 'tapu' relate to their exchange, politics and society; it considers the how the ancient quarrel between Heraclitus and Parmenides (are things in flux or are they fixed?) echoes through thought and time; and it pays homage to Marc Shell's seminal discussion of the Ring of Gyges and the problems of visibility and invisiblity as they relate to money and value among the Iroquios. You can see why the publisher would have insisted on the more academic title.

However, ultimately I sympathise with Graeber's wish to call it 'The False Coin of Our Own Dreams'. The phrase is inspired by a passage from Mauss and Hubert's 'Mana and Magic' quoted at the start of Graeber's odyssey. Simply put, ‘Our Own Dreams’ are our creative potential, and the ‘False Coin’ is our misattribution of the value of that creative potential onto objects. A version, if you like, of fetishism. But a version that digs deeply into the ontology of value. Philosophical musing from an armchair is all well and good, but what Graeber tries to do is combine this ontology with real world observations from anthropology. He creates a compelling picture of the political, social and economic manifestations of value across time and culture, even if sometimes the link between the ethnography and his ontology of value isn't that easy to pick out..

I very much enjoyed the book. In particular, I found the discussion of the Iroquoian 'Dream Economy' and the Maori's 'mana and tapu' fascinating and thought-provoking. Towards the end, Graeber says that certain objects can act as 'pivots between the imagination and reality' and, maybe for me, this book might be one such object. Although I disagree with Graeber about some quite fundamental issues - the nature of money in particular - reading this book has really made me consider the relation of value to action and pushed me more deeply into the work of philosopher Roy Bhaskar.

I thoroughly recommend it.

_________________________

So I think I've mentioned before that I decided I had to read this book whilst writing a review(ish) piece on a paper by Tim Johnson called ''Reciprocity as the Foundation of Financial Economics'. I ended up abandoning it. I enjoyed Tim's paper - I'm a fan of his Magic-Money-Maths website - but the paper references behavioural economics, which being a devotee of Dr Freud was never going to sit too well with me. So among other things, my review became a plea for economics to open its mind to psychoanalytical theory. That wasn't very fair on Tim whose focus was on blending Pragmatism with Virtue Ethics as a context to the Fundamental Theory of Asset Pricing. 

Anyway, in his paper Tim mentioned David Graeber. He claims that David's 'you don't have to pay yer debts' idea is trangressive of Virtue Ethics. I don't really see it that way. So I was keen to explore those differences and map them (unsuccessfully) onto Tim's Pragmatism Vs David's Critical Realism. The long and the short of it was that I started writing a lot about what David Graeber says about Value. I was speaking with great authority. Albeit an authority gained from my own sense of self-importance rather than actually reading his book. I thought I best remedy that before finishing the piece. 

So I read the book. Meantime, I lost the impetus to finish the piece. One day, who knows. It was of course, valuable to think about all the stuff Tim bought up. In fact I read the paper twice. Must have been habit forming because I ended up reading Towards and Anthropological Theory of Value twice too. What happened was I read it (in December, as I said), then I started a review. Normal sort of quasi-academic thing that I do. It got longer and more anecdotal. I thought, no problem I'll do a long personal anecdotal idiosyncratic review and stick a short version up on amazon. That's when I re-read it and made a some  notes to make sure I was just making stuff up (well, not too much). But it actually made things worse. I started talking about loads and loads of other stuff. All I wanted to do was explain how I think a Monist conception of Value would really help things along. Turns out it wasn't that easy. (The review above is cobbled together from the early academic version.)

In the end I abandoned all idea of a review and decided that what I was writing was going to be 'On Value'. And that's really where I'm at now. Adrift with no structure ! I do have a couple of good anecdotes though. And a more realistic idea of quite what a task it is to write something meaningful about Value. Respect to the Pirsig ! and to the Graeber !

I'm intending to jump back into money in the immediate future. I'm just starting Nigel Dodd's The Sociology of Money (its got good reviews from Ingham & Frisby - he of the Simmel translation- on the back cover) so I'm excited about reading that. I need to track down some papers by Ingham, Dodd & Lapavistas on the ontology of money and Nigel Dodd's paper on Nietzsche, Money and my very favourite 1950's psychoanalytical theorist Norman O Brown.

I've also got half an eye on the ontology of Value, and the value of Ontology. Thinking about getting What is Value ? An Essay in Philosophical Analysis Hall, Everett W. Or maybe, Valor y existencia / Value and Existence (Paperback) Wilbur Marshall Urban, Ricardo Parellada. Recommendations gratefully accepted.

Oh yeah, and most importantly I desperately need to finally get round to doing some 'Burn Your Money' T-shirts. Please hassle me about that. Action. Doing stuff, rather than just thinking about it. It's important you know.

Money Wisdom #250

"All things are an exchange for Fire, and Fire for all things, even as wares are for gold and gold for wares."

Bertrand Russell on Heraclitus The History of Western Philosophy (1961) p.62

A review of 'The Social Meaning of Money' by Viviana Zelizer

This review appears on Amazon here. I hate writing a bad review (I gave it 3 stars) but there you go - I have to say it as I see it. Do go click the 'like' button if you approve, or indeed the 'unlike' if you think I'm being unfair to Viviana.

Rather repetitive, the book is conceptually and theoretically under-developed and is only partially saved by some interesting observations.

The key issue with this book's argument is that Zelizer's fails to explain her central terms or develop the relationship between them. She uses the words money, monies, currency and currencies interchangeably. The central action she describes is 'earmarking' but she doesn't make clear how this is related to the idea of money other than a vague notion that earmarking creates currencies. The book fails to develop a solid conceptual underpinning. Instead, it examines the effect of earmarking on various relationships surrounding money; employer and employee, charity and the needy, the state and benefits claimants, etc. In doing so, Zelizer tends to circle the social meaning of money rather than penetrate it.

However her work does contain some interesting observations. Evidence of earmarking is drawn form various American sources from 1870 and 1930; etiquette magazines describe how cash gifts should be given and whether or not they should be accepted, the reports of various committees on the allocation of charitable funds to the poor give insight into the how the issue of transfer either in-kind or with direct cash was dealt with across the time period, and the effect of the growth in the science of 'home economics' and its dissemination through various books and journals is examined for its adoption in the domestic sphere and its consequences. All interesting stuff, but ultimately I felt the analysis fell short. For example, Zelizer fails to consider the dynamics of the publishing industry and question the relationship of the etiquette magazines to their readership - was their advice truly reflective of social mores, or did they have an incentive to create a picture of complex socio-economic relations to which they could provide a solution?

The book suffers from repetition. Zelizer observes the same relationships from only marginally different perspectives that seem somewhat arbitrarily chosen. Because of this, her points appear laboured rather than nuanced. If I were to be very harsh I'd say that the book started as a thoroughly decent journal article which was extended to meet a publishing deadline. The opening and closing chapters have the feeling of being tagged on. Ultimately, the book falls between two audiences. It isn't rigorous enough and doesn't contain enough source material (they are extensive footnotes, although no bibliography and no source expenditure/gift lists or inventories) to satisfy an academic audience, and yet the style is not personal or anecdotal enough to appeal to a wider more general audience. This is a shame. Zelizer has obviously made some important observations on money but I couldn't connect with them in this book. I hope her later 'The Purchase of Intimacy' which is on my shelf unread, proves more fruitful.

Money Wisdom #249

Money is what words are,
Words are what money is.

Gertrude Stein  The Geographical History of America or The Relation of Human Nature to the Human Mind (1936 [1973]) p.201