Asia and China, in particular, are changing the balance of power and trade in the world. New commercial alliances are taking shape that could thwart or help economic growth and market development in the whole world.
Meanwhile neo-Maoists in China and India, radical Islamists spreading from Indonesia to the Chinese province of Xinjiang, dream of barriers protecting trade, diffident of the function of monetary economy. After all, what the Khmer Rouge did in Cambodia in the 1970s, when they abolished money, is something that lurks behind the surface of many minds. Therefore, it is worth understanding better what is money and what it brings to societies.
It is often thought that money is an instrument which was surreptitiously introduced for the self-advantage and through the evil of a few. But the question as to whether it is a necessity of social life is not asked. This is an issue which was addressed from various perspectives and, in all cases, with outstanding perspicacity by Carl Menger and Georg Simmel.
The latter told us that “money is the expression and means of the relationship and the mutual dependency between men,” of the fact, that is, that “satisfying the desires of some” depends on ”interacting with others.” Which means that it finds no place only where there is no dependence, “because one no longer desires anything from other men.”
In order to renounce money, one would therefore need to live in a world of self-sufficient beings. But such a world would have nothing human about it. For what characterizes us most was generated through interaction and cooperation with others; in a situation of self-sufficiency we would not possess the models of behavior and the institutions which we benefit from today, which stem precisely from the permanent relationship we have with our fellow men and not from the creation of an imaginary isolated mind. It is enough to consider that in isolation our brains would never be able to become human minds.
Menger called attention to language, family, cities, law and other institutions, which were definitely originated by inter-subjective relations, but without prior planning on the part of anyone. They are a product of interaction. Money is one of these institutions. The relations between actors have slowly led goods which have performed an intermediary function to prevail. There has thus been a move from direct exchange to indirect exchange. Desired goods have ceased being directly pursued. They have come to be attained following the transfer of one’s own goods or services in exchange for a commonly accepted means, which has become the intermediary for obtaining that which is desired.
Money is not therefore the product of a deceit perpetrated by a few perverse minds. It is the response provided by the social process to the need of each to have a means for all their ends. It was Simmel again who defined “as the magna carta of individual freedom (…) the fact that classical Roman law established that any claim of a property nature could be addressed by means of money,” thus removing oneself from any “servitude” of a “personal character.”
All this makes it clear that, in order to be fully mobilized, private ownership needs money and that, without one and the other, there can be no individual freedom of choice. When in “The Wealth of Nations,” Adam Smith writes that man “stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarcely sufficient to gain the friendship of a few persons,” he means to tell us that we can only satisfy our needs through the intervention of people who are unknown to us and who live far away from us. Without money, we could not entertain any relationship with them. Money fits the purpose: it enlarges the area of cooperation and multiplies the volume of exchanges. It is an opening onto the world, the activation of a gigantic process of exploration of the unknown and correction of errors. And this, among other things, allows the broadest realization of our ends.
Are we then dominated by money? Many repeat this notion. Money cannot however act on its own. Thinking so is equivalent to reifying it, making it, that is, a subject which is distinct and autonomous from ourselves, and portraying it as a great “conspirator”, which reduces us to the condition of puppets. This is a convenient idea; because it relieves us of any responsibility. But things are actually very different. It is always men who act. It is we who make use of money for the most diverse purposes in our lives. In this way, we exercise our freedom of choice. And perhaps it is for this very reason that money is abhorred. So what is targeted is individual choice.
In other words: condemning money conceals a deeper condemnation: that of freedom of choice. This is equated with selfishness. This opens the door to the conclusion that, if what is individual is selfish and despicable, then what is collective is altruistic and worthy. However, since it is always man who decides, this is false and illogical. And this is not disproved by the fact that when we occupy public positions we are more willing to spend. We are only so inclined because the resources used belong to others. Squandering what is not ours, doing supposed good with other people’s money, is the least demanding thing in the world. But mistaking the squandering of resources of others with virtue is a serious form of color-blindness.
Liberal theory has taught us to deal with the matter in completely different terms. The basic problem of living together in society is not that of having virtuous men. It is preventing each of us, when we our at the worst of our condition, from causing damage to our neighbors. Very straightforwardly, Adam Smith reminded us that knowing the rules of grammar can lead us to write properly but does not transform any of us into a great writer. This means that we cannot expect men to give us what they are unable to give us. Each of us has his or her own preferences, which can only be attained by means of the cooperation of others.
What we can obtain is that the “exchange” be voluntarily judged advantageous by the parties involved. No more than that. Obviously, we welcome highly motivated or exemplary men. But the idea of reshaping man is a desperate and cruel enterprise. Desperate, because it is impossible. Cruel, because it aims to make virtue compulsory, with all the consequences which history has abundantly displayed: no virtue comes of it and freedom of choice and well-being are lost. Scarcity, exchange and conflict are inextinguishable, the good old times of yore are mere fantasy. And those who propose them for today deceive us and, probably, have a need to deceive themselves.