Overcoming Monetary Nihilism

Money may be a bridge between you and others, but it is not built from faith

My last piece argued that the 'Functions of Money' blind us to the Structure of Money. Since then I’ve received messages from scholars who find the approach interesting, but who take exception to the bluntness of its central argument. After all, you cannot cleanly separate out a pure structure from a pure function. Not only do the terms themselves have ambiguity and nuance, but they can form a type of co-evolving continuum with each other.

We do not, however, live in a world of nuance. The vast majority of the public are still presented with a blunt version of the default Economics position on money, which requires a somewhat blunt counter-narrative to act as a counterweight. We’re slowly colouring in a darker and more mottled Yin to contrast the clean story of the bright economic Yang.

Image by Rafael Javier

To illustrate this, let’s sum up the dominant ‘functions of money’ story. Economists often assert that people have:

1. A need to trade, which in turn requires…

2. A tool, that…

3. Functions as a ‘medium of exchange, store of value, and unit of account’ to fulfil the aforementioned need

This is supposed to then account for both the origin and continued existence of money. At first glance this seems straightforward - even reasonable - but economics textbooks only go on to describe 1 and 3. They begin on the first by asserting that people naturally trade, an activity that brings with it certain difficulties (see my Flintstones piece for more on this setup). They then provide a list of functions that will supposedly resolve the difficulties, which in turn is supposed to imply what the tool is: 2 is simply anything that fulfils 3, which is required for 1.

If you train yourself, you will begin to realise that this standard presentation of money conceals a shadow side in that it deliberately diminishes 2. The setup leads you to see money as a kind of ‘tool’ - small and under your control - that you pick up to fulfil your needs. It draws the mind away from the idea that the so-called ‘tool’ may in fact be vast and out of your control, and not really a tool at all. Furthermore, it draws attention away from the possibility that such a vast 2 may in fact precede 1 and 3. It thus implicitly denies that structures can induce (or catalyse) needs and functions.

It takes a while to slowly see this, much like it takes a while to see your own shadow sides. But if left unacknowledged, it leads to all manner of delusions, manias and neuroses, some of which later turn up - perversely - in attempts to describe the shadow side (this latter condition is what you see when, for example, conspiracy theorists rant about how Rothschild-led Illuminati control the US Federal Reserve from dark boardrooms). To delve deeper into this, and to push the rebalancing counternarrative forward, let’s detour into the realm of Platonic Forms.

The superficial appeal of ideal forms

Whenever someone quotes the ‘functions of money’ at me, they appear to be reciting a kind of deflective mantra designed to avoid acknowledging the shadow side. It is somewhat like approaching a man and asking him what it’s like to be a man, and then listening to him reel off a series of ideal characteristics of an abstract Man (“a Man is a person who fends for his Family, fights for Freedom, and who acknowledges God as his only judge”), rather than describing who he really is (like ‘I am a tormented being who feels shattered on some days, strong on others, and constantly bound into a contradictory web of impossible ideals’). Similarly, by saying that money is something that emulates certain ideal functions, a person is refusing to speak about what they actually hold, and its contradictions.

To me, this creates a vibe similar to that of Plato’s Theory of Forms. Plato posited that there is an immaterial realm of ideals, or essences, that things in the real world strive towards mimicking. Imagine it as a perfect parallel world that everything in the imperfect actual world tries to associate itself to. It’s not just a blueprint - it’s imagined as a literal realm where pure essences live, and from where they can lead by example.

Plato in his academy

This might sound kind of spacey, but it’s extremely common to find this in language. For example, when someone says ‘I believe in Freedom’, they are speaking as if Freedom was a stand-alone essence floating in the universe. There is in fact no pure form of freedom without some kind of messy trade-off, but the world of Platonic Forms gives us an abstract language of uncontradictory ideals. Furthermore, it culminates in a ‘form of forms’, or an essence of essences, the ideal that all the other ideals are attempting to emulate. This is… voila, the concept of a monotheistic God, a singular perfect uncontradictory meta-entity that everything else references itself to.

Let’s extend this detour a little. We’ll get back to money soon.

This world-view was co-opted by medieval Christianity, providing a vision of God as a kind of invisible structure holding the universe together, and giving people a direction to emulate. Notice some features of this situation. The people cannot see this structure, and yet they believe it has some definite - if unknowable - form. They pray vertically upwards towards the invisible meta-entity, and attempt to give it a human face whilst struggling to look it in the eye.

But what if you were actually just mumbling to people horizontally around you as you said your prayers? This was the fear struck into the hearts of Christians when science began to provide competing accounts of the universe. If you stop looking upwards, and rather look around you, you face the existential void of an implosion of belief. This is the spectre of nihilism.

Monetary nihilism

Nihilism is first experienced as a type of quaking feeling, in which something that was once solid and meaningful threatens to melt into nothingness. It can either be embraced or fought off, but it’s original use is in this Christian context: upon glimpsing the possibility that the solid external structure of God may just be a flimsy story held internal to human culture, a type of moral panic emerges. We must hold onto belief!

Strangely enough, this ‘quaking’ feeling is lurking under the surface of much monetary thought. It partly emerges from the fact that people experience a monetary system in much the same way as they experience a ‘God’. Firstly, they cannot see its structure (a major theme of this newsletter more generally), but feel internal resistance in trying to pinpoint it, preferring to name an oblique and abstract set of surrounding ideals (the ‘functions of money’ paradigm). Perhaps they fear the existential dread that may emerge if they seek out its structural core, or its shadow. Let’s go deeper into this.

One of the most peculiar features of monetary thought is a type of ‘harking back’ to some imagined time when money was solid, and in which it - apparently - had some uncontroversial, and even ‘godlike’, value (the normal ideal exemplar for this is cited to be gold). The typical move is to then assert that there was some kind of fall, in which this solid structure evaporated into ‘mere belief’ in fiat currency. In conspiracy formulations this sometimes comes packaged with the idea that corrupt rulers have forced people into believing in their deceitful meaningless money, creating a Ponzi waiting to collapse. Versions of this pervade into the mainstream, where it takes on a Wizard of Oz form - the idea that ordinary mortals stand behind what is supposed to be a godlike force.

This leads to the very common idea that money is ‘mere numbers’ or ‘just paper’, which has to be ‘held up by belief’. When gazing upon a bridge, we may not understand the exact engineering that goes into keeping it up, but we can see the solid structure and would never suggest that it is ‘held up by belief’. Money, though, is often thought of as being akin to an invisible bridge which will collapse and dump you into a canyon below the moment you lose faith in it.

The ‘leap of faith’ as a reaction

It turns out that this has a parallel in our story of Christianity and nihilism. A medieval farmer didn’t exactly have a wide range of competing theories for why the moon appeared in the sky, but if better structural theories emerge - such as scientific theories - the church is forced to compete more heavily on faith. This was articulated in more advanced terms by the Swedish Christian existentialist Soren Kiekegaard, whose work led to the popular concept of the ‘leap of faith’, a type of stepping into something despite having no good reason to.

Much modern language around money assumes that something like this is going on. Money is apparently ‘mere numbers’, but we all step into it and thereby make it real, almost like a bridge that constructs itself as we step out into the void.

It makes me think of the ‘leap of faith’ scene from Indiana Jones and the Last Crusade…

I love this scene because it has a great twist. The bridge, which at first appears to be based on faith is actually revealed to be a pre-existing solid structure, but one that is camouflaged in a way that renders it near invisible. Indiana is held up by a real bridge that’s only invisible when viewed from a specific vantage point.

From ‘Leap of Faith’ to Interdependent Network Structure

This situation in which something may be invisible from a specific vantage point, but visible from a wider vantage point, is a problem of partial vision. It is particularly acute in large-scale systems, where a small-scale individual struggles to see the Big Picture, and so may instead focus upon small parts of the big picture, which themselves may seem very flimsy. In the case of monetary systems, the ‘small parts of the big picture’ are the visible tokens and numbers, which people have a way of obsessing and fretting about.

The overall monetary structure may not be solid in quite the same way as Indiana’s bridge, but it is certainly not ‘gaseous’ or ephemeral. The best way to start to get a more subtle view on it, is to visualize a type of strong but flexible web held in play within a large-scale human community. There are different fields that take different approaches to articulating this - for example, the modern science of networks points to the fact that networks may seem invisible, and yet are very real structures. Sociology turns to institutional theory.

The sociological concept of ‘institutions’ is confusing, because in common parlance 'institution' tends to mean 'organisation’. In sociology, however, the term has a much broader meaning, which I’d crudely summarise as ‘something that structures our world and is resistant to change’. A good example of the sociological concept of an institution is the English language. It technically 'resides in our heads', but it is not experienced like that by those who use it. Rather it experienced as an ‘external’ system. A Chinese-speaking person in an English-speaking country will literally feel something akin to a silent forcefield that is rejecting them. Likewise, if an English-speaking person in China shouts out 'language is just a human invention that resides in our heads', it will fall on deaf ears. It seems as if they are trying to imply that it is therefore somehow 'ephemeral' and subject to change and collapse, when in reality language is flexible yet extremely entrenched and resilient, and is so deeply ingrained in people that it is far stronger than steel.

This is why the phrase ‘money is just a human invention that resides in our heads’ is complex. A person who says it may be trying to imply that it is an ephemeral belief prone to collapse, but that may be because they’re thinking of the individual conception of the term ‘belief’, rather than the collective one. In its individual version, belief refers to a personal view (‘It is my belief that X’), but in its collective version the term starts to refer to a kind of thought-form that transcends and dominates over an individual. In occult lore, this idea of a thought-form is a called an egregore, a type of ‘entity’ that is brought to life by a group of people. Anthropology deals with this in a more formal way in its studies of how groups of people generate cultural forcefields that transcend the individuals, and which each individual thus simultaneously experiences as both external to them, and internal to them.

All of these concepts are useful to getting an intuition for systems that transcend individuals, but to go even further you need to be able to see individuals as being constituents of a broader ‘super-organism’ that they cannot be separated from.

Classical liberal philosophy has a habit of considering people as if they were atoms that can exist independently, but consider a mother with a newborn baby. There are technically two individuals, but for the baby the most vital thing is the relationship between them - a literal lifeline exists between them. If the mother shuts down the lifeline, the child dies. This relationship is not ephemeral from the perspective of a child. It is a very real ‘thing’ with very real power. Given that all humans come into the world this way, and all of us have a survival instinct, those connections have the ability to form a mesh stronger and yet more flexible than any metal.

To understand how these networks are held together, we need to extend this concept of lifelines. Most adults do not think of themselves as children, but ask yourself this question: how long would you survive on your production alone? By this I mean on what you literally produce. The answer is not long. An engineer cannot eat the engineering plans they design. The only way they survive is if someone else is making the food while they draft their sketches, and that person making food relies on others who are making bricks for homes (who may in turn be relying upon engineering sketches). The webs of interdependence in our economies are extremely complex, but the result is that each person ends up in the position not that different to our newborn: we have very limited capacity to survive alone, and must rely upon a collective ‘lifeline’ provided by others.

What appears as inviduals is a tangled super-organism

Modern economics has an atrocious tendency to present markets as being mere collections of individuals, but markets are first and foremost collective networks - a super-organism if you will - that individuals experience as being simultaneously internal and external to themselves, and thereby always consisting of two parties: You and Everyone Else.

You might be able to choose which specific individuals amongst ‘Everyone Else’ you will interact with, but regardless of those specifics you will always in general be totally dependent on Everyone Else. Everyone Else, though, is not necessarily dependent on you, which is the core fear at the heart of any market-based economic network. You cannot survive without the collective, but the collective can probably survive without you.

Being able to see this interdependence is a prerequisite before a monetary structure can be glimpsed, but it only gets us part of the way. It still doesn’t really describe much about money itself. Even if someone knows that money facilitates, or is immanent within, some kind of web of interdependence, they are still left thinking that if everyone just simultaneously stopped believing in it, money units would be rendered useless, like pressing ‘off’ on some electro-magnetic field. One thing I’d immediately say is that getting collective consensus to simultanously do that would be extremely hard, but there is a more fundamental point to get through first, which is that monetary systems are only partly a collective endeavour. There are actual organisations that engineer whole sections of the system.

Look both around, and up

Earlier I described the angst of person who is used to looking vertically upwards and praying to a meta-entity in the sky, but who suddenly experiences the lurching doubt that maybe everyone else praying upwards around them is just a deluded horizontal network. The key to breaking past such angst in monetary systems is to realise the structure is simultaneously vertical and horizontal. In this piece I’ve been looking mostly at the horizontal component. That’s the view from the interdependent network, where you see money as the thing that gives you access to others. But there is an entirely different dimension to money that has a far more vertical orientation, which co-evolves with the horizontal. This may sounds abstract right now, but we shall build on this in the next episode. We shall soon dismantle the idea of money units being ‘mere numbers’. See you next time!