Brilliant by putting the finger on the wound! I am completely with you. The functions of the money in the textbooks are relicts from 18th/19th century thinkers who tried in a physical sciences approach to describe money as a phenomenal entity. This outdated view is completely misleading us today. Time to look closer and go to a structural view!
Waiting for your next consciousness newsletter....
When economists define money by its functions its usually unclear how those functions relate, whether by AND or by OR.
This functional definition also overlooks the legal dimension, which says that money is defined by law, not by whatever happens to be used for those functions.
I broadly agree, albeit the law is sometimes ambiguous as well. While legal systems are clearly a major part of how monetary systems work (legal tender laws etc), how lawyers have defined money doesn't always correspond to that. Case law often concerns surface experience (e.g. a countertrade object with a money-like appearance can, in the context of a dispute between two antagonists in a legal case, be treated as money even if it is technically a 'money-priced object')
My brother uses the analogy of people who think that they understand the entire hydroelectric power system because they know how to operate a light switch.
It seems like you referred to the (design) concept of 'affordances', though it wasn't mentioned in the text - it's worth reading about, amongst others in the book The Design of Everyday Things by Don Norman.
It’s absolutely true that most people don’t have any idea of the structure. In learning about MMT, I was surprised by a whole money system and institution that I had been blind to. I thought of money only as something to exchange for goods and services and thought it was the same for governments as for households.
I like this angle, but I suspect that consensus on a definition of the structure of money depends upon consensus on what its function ought to be. Would you critique my simplistic understanding of money as a trusted metric of the debt that we owe strangers (as opposed to friends and family)? Should the structural definition say something more about what causes us to believe in or trust a particular metric of debt?
As I suggested in the conclusion, the important point is not necessarily whether we have exact consensus on structure, but that we foreground it. For example, in your understanding of money as a 'trusted metric of the debt that we owe strangers', there is no actual description of why that would have active power in the world. Indeed, that is more a functional description, in the sense that a mere metric normally doesn't have the ability to command people to action.
Centrimeters, for example, are a trusted metric, but how would a centimeter compel someone to actually do something? You'd need to incorporate a centimeter into some kind of structure to give it active power (as a far-out example, a machine like a Roomba might measure distances in centimeters and have processes that activate it or stop it in response, thereby tying a measurement into an action in the world). Similarly, you might see money as having the ability to measure things, but - in the first instance at least - that cannot actually describe why it will mobilise people
Isn't this where we say that money is a social technology that we use as a collective means of directing productive action and settling the debt from that directing?
Isn't it fair to say that the other trusted metrics of science and industry do coordinate and inspire people to action? Not as powerfully as a circulating metric of our purchase over others, presumably because status seeking is a more fundamental human motivation than sense making. I'm looking forward to your next installment!
Brett, you have done some pretty amazing things... This is at the top. This is such a special piece.
Glad you like it Steven!
Hi Brett
Brilliant by putting the finger on the wound! I am completely with you. The functions of the money in the textbooks are relicts from 18th/19th century thinkers who tried in a physical sciences approach to describe money as a phenomenal entity. This outdated view is completely misleading us today. Time to look closer and go to a structural view!
Waiting for your next consciousness newsletter....
Thanks Jens!
When economists define money by its functions its usually unclear how those functions relate, whether by AND or by OR.
This functional definition also overlooks the legal dimension, which says that money is defined by law, not by whatever happens to be used for those functions.
I broadly agree, albeit the law is sometimes ambiguous as well. While legal systems are clearly a major part of how monetary systems work (legal tender laws etc), how lawyers have defined money doesn't always correspond to that. Case law often concerns surface experience (e.g. a countertrade object with a money-like appearance can, in the context of a dispute between two antagonists in a legal case, be treated as money even if it is technically a 'money-priced object')
My brother uses the analogy of people who think that they understand the entire hydroelectric power system because they know how to operate a light switch.
Dear Brett, thanks for another fantastic effort.
It seems like you referred to the (design) concept of 'affordances', though it wasn't mentioned in the text - it's worth reading about, amongst others in the book The Design of Everyday Things by Don Norman.
Keep it up!
Thanks Mark, will check it out!
It’s absolutely true that most people don’t have any idea of the structure. In learning about MMT, I was surprised by a whole money system and institution that I had been blind to. I thought of money only as something to exchange for goods and services and thought it was the same for governments as for households.
Hi Heather, you might want to see this piece I did about that https://brettscott.substack.com/p/mmt-is-entish
What is a scholarly contribution
I like this angle, but I suspect that consensus on a definition of the structure of money depends upon consensus on what its function ought to be. Would you critique my simplistic understanding of money as a trusted metric of the debt that we owe strangers (as opposed to friends and family)? Should the structural definition say something more about what causes us to believe in or trust a particular metric of debt?
As I suggested in the conclusion, the important point is not necessarily whether we have exact consensus on structure, but that we foreground it. For example, in your understanding of money as a 'trusted metric of the debt that we owe strangers', there is no actual description of why that would have active power in the world. Indeed, that is more a functional description, in the sense that a mere metric normally doesn't have the ability to command people to action.
Centrimeters, for example, are a trusted metric, but how would a centimeter compel someone to actually do something? You'd need to incorporate a centimeter into some kind of structure to give it active power (as a far-out example, a machine like a Roomba might measure distances in centimeters and have processes that activate it or stop it in response, thereby tying a measurement into an action in the world). Similarly, you might see money as having the ability to measure things, but - in the first instance at least - that cannot actually describe why it will mobilise people
Isn't this where we say that money is a social technology that we use as a collective means of directing productive action and settling the debt from that directing?
Isn't it fair to say that the other trusted metrics of science and industry do coordinate and inspire people to action? Not as powerfully as a circulating metric of our purchase over others, presumably because status seeking is a more fundamental human motivation than sense making. I'm looking forward to your next installment!