An Anthropology of Money

A Critical Introduction

Tim Di Muzio, Richard H. Robbins, Richard Robbins

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138645981
• eBook ISBN: 9781315453439
• Topic: Social Sciences
• Subtopic: Anthropology
• Index: Social Sciences

An Anthropology of Money: A Critical Introduction shows how our present monetary system was imposed by elites and how they benefit from it. The book poses the question: how, by looking at different forms of money, can we appreciate that they have different effects? The authors demonstrate how modern money requires perpetual growth, an increase in inequality, environmental devastation, increasing commoditization, and, consequently, the perpetual consumption of ever more stuff. These are not intrinsic features of money, but, rather, of debt-money. This text shows that, through studying money in other cultures, we can have money that better serves the broader goals of society.

1
Introduction

The Confusion over Money

Apart from the most basic human emotions of love and fear, there is probably no more powerful motivating force in our lives than money.

—Robert Guttmann

Money is the last great taboo … still shrouded in darkness, assumed by many to be untouchable.

—Bernard Lietaer and Jacqui Dunne

There is probably nothing as important to our lives of which we know so little as money. But money does, as we’ll try to show in this short book, lay the groundwork for what is possible. Money manipulates us and is manipulated by us in so many ways that definitions and descriptions by economists never do it justice. Our present monetary system is over 300 years old, devised by elites in England to finance William III of England’s war on France. In fact, as we’ll see, the history of money—over the last 5,000 years or so—is tied intimately to war, violence, slavery and revolution. But, as we will argue, while money in the form most of us know it contributed to the massive growth of the global economy over the past three centuries, it also contributes to massive environmental despoliation, growing economic inequality and the centralization of power in the hands of a tiny global elite.

Yet, if money is so central to the daily lives of billions of people around the world, why don’t we, including many economists, know more about it? The economic crash of 2007 and 2008 surprised the most vocal experts on money. Households in the United States lost almost $20 trillion. Globally, $35 trillion disappeared (a trillion, incidentally, is 1,000 billion, and a billion is 1,000 million). Where did that money go? When the English economy lost about £25 million during the financial crisis, Queen Elizabeth asked academics at the London School of Economics why, if the crisis was so large, no one saw it coming? After some scrambling, leading academics at the University wrote a collective letter to the Queen in response to her query:

Figure 1.1 The artwork on money suggests that the money is created by governments. It is not. It is created primarily as interest-bearing debt by private corporations (Source: ThinkStock).

The failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.

(Stewart 2009)

But economists do understand risk. What they don’t understand is money (see Figure 1.1).

Most economic theorists see money as a ‘neutral veil’ over the economy, a simple vehicle to facilitate exchange, and find the roots of modern money in barter. Ancient civilizations solved the problem of swapping things of unequal value by exchanging durable tokens such as cowrie shells, woodpecker scalps and stone disks, and by merely keeping accounting records of debts and credits (Einzig 1966; Ezzamel and Hoskin 2002; Garfinkle 2004; Keister 1963; Powell 1996; Weatherford 1997). But modern money is not a ‘neutral veil,’ simply helping us circulate goods and services. Anthropologists, historians, political economists, sociologists and others analyze how, culturally and historically, monies are created and used and how their mode of creation and use can either sustain societies or impoverish them (Akin and Robbins 1999: 3).

This book is an introduction to the creation and uses of money. Its aim is not only to educate, but also inspire readers to contribute their own ideas to the growing controversies that surround modern money. We clarify areas of confusion and create a platform for productive public debate on monetary reform. There is much to learn, discuss and debate. We hope that the extensive bibliography leads our readers to explore further.

In the remainder of this introduction we want to do two things. First, we will examine the nature of money and its impact on our lives and illustrate why treating money as a ‘neutral veil’ is either naïve or deceptive, and we argue, politically dangerous. Second, we will outline the main points about money that we wish to make in this book.

Some Basic Notions about Money

What Is Money and Why Does It Matter?

First, we might ask, what is money? A more or less standard textbook definition of money would be something like: “Money is any object that is generally accepted as payment for goods and services and repayment of debts.”¹ The definition might include a list of its common functions as a ‘means of exchange,’ ‘a store of value’ and a ‘unit of account,’ functions we’ll examine in some detail below. But it can take many different forms. If you have ever used airline miles, or received credits for buying something, you have used a form of ‘loyalty’ money, customer rewards that can then be exchanged for other goods or services. Beginning in the 1930s, customers at many stores in the United States and Great Britain would be given stamps (e.g. Plaid Stamps, Green Stamps, Pink Stamps) as a reward for shopping to be pasted into books and then exchanged for thousands of products (see Figure 1.2). Essentially this was a form of money. Before Congress passed the Federal Reserve Act of 1913 that standardized the monetary system in the United States to match monetary policy in other wealthy countries, there were thousands of forms of money issued, not only by banks, but also railroad companies, drug stores, grocery stores and private clubs.

During periods of financial crisis, people have found ways to create money. Richard A. Radford’s (1945) classic article on the economy of prisoner of war (POW) camps during World War II described how cigarettes became the currency of choice. More recently, because of a decline in the quality and quantity of food in privately run American prisons, ramen noodles are becoming a popular currency (Sidahmed 2016). A sweatshirt, worth about $10 in the prison commissary, can be bought for two packs of noodles and bunks cleaned for one pack. And, as we’ll discuss later, there are thousands of local and alternative currencies present in the world today, not to mention emerging digital currencies such as Bitcoin, Dash, Dogecoin, and Mastercoin, to name just a few.

Figure 1.2 S&H Green Stamps were a form of ‘loyalty’ money given to shoppers with each purchase that they could exchange for goods (Source: Getty).

Ultimately, however, we need to understand money as a means of transferring value from one person or entity to another (Maurer 2015: 28), and the different ways this has been accomplished, as well as the social and cultural consequences of these variations. But because money is ultimately an abstract claim over society and resources measured in a unit of account, money is also about power relations. The more money you have, the more claims you can make upon society and natural resources.

Why Do We Need Money?

At first this may seem a strange question; we need money to purchase whatever it is we want and need. However, consider that for millennia, people, for the most part, got what they needed without money. They either provided for themselves, or they shared basic necessities and even luxuries with others. To understand how important this question is, note that even today, in a market economy, economists estimate that virtually half of our needs are met without monetary exchange. Edgar Cahn (1992; Hallsmith and Lietaer 2011) refers to that as the “Core Economy.”

To illustrate, one physician asks his students who delivers the most health care in the United States, doctors, nurses or allied health professionals? The answer is mothers! In 2000, when an economist calculated the unpaid work done by family, friends and neighbors to keep seniors out of nursing homes, it totaled over US$250 billion, which was six times greater than the money spent to purchase formal home health care for the elderly and twice what the federal government spent on nursing home care (Hallsmith and Lietaer 2011: 68). The point is that a significant portion of economic activity occurs outside the market. The problem, as we will discuss later, is that less and less of what we need is available without money; because of the structure of our monetary system, the unpaid work that families, neighbors and friends do for each other, is continually decreasing. For example, economists calculated the value of nonmarket household labor—childcare, cooking, household maintenance, gardening and so forth—and found that from 1965 to 2010 it declined relative to the GDP from 39 percent to 26 percent (Bridgman, Dugan, Lal, Osborne and Villones 2012).

While it may seem remarkable that people, largely women, do that much unpaid work, equally significant is the fact that more and more of what we do for and with each other requires money. We need to understand why.

How Is Money Created and Why Does It Matter?

Interestingly there is considerable confusion and even disagreement among even economists on the question of money creation, and even anthropologists studying exchange in traditional societies often neglected this question. It is important, of course, because creating money confers enormous power on whom or what has that right. Among the people of the Trobriand Islands of Papua New Guinea, for example, women are obligated, with the help of their husbands, to prepare bundles of banana leaves to be used to finance the funerals of members of their kin groups (see Weiner 1988). The power to make this ‘money’ helps cement the power that women have in their society. Most people, if asked, would probably say that governments created all the money in circulation. Given the design of modern currencies and the symbols of governmental authority that adorn them, it is an easy mistake to make. While governments typically have control over the issuance of notes and coins, in modern economies, the majority of new money is lent into existence largely as interest-bearing debt by commercial banks and other financial institutions.

But, as we’ll see, there is a good deal of debate and confusion regarding how modern money comes into existence, and we will be focusing on this process in considerable detail. Suffice to say, by granting the right to private parties to literally create money, as well as deciding on who gets it or not, creates many questions regarding the distribution of power in our society.

What Are the Kinds of Money and Why Does It Matter?

We generally assume that money is money; that it ultimately refers to a single standard, generally identified with government-backed legal tender. But it’s not quite that simple. Different kinds of money or monetary systems produce very different effects in society and serve to illustrate how we can’t take money for granted. We’ll focus here on four sorts of distinctions: the distinction between special- and general-purpose money; the distinction between commodity- and what is variously called debt-, fiat- or credit-money;² the distinction between what economists and banks call M1, M2, and M3 monies; and how money users themselves categorize money. These are not necessarily the only kinds of distinctions we can make (and we’ll examine other ways to categorize money, such as the distinction between dominant and subordinate money, or real and virtual money, as we go along), but we want to use these distinctions to illustrate the differences each of these types can have on people’s lives.

The Distinction between Special- and General-Purpose Money

The distinction between general- and special-purpose monies has to do with boundaries. Airline or frequent flyer miles, for example, are primarily for purchasing airline tickets, although you can also use them to pay for hotels, rental cars, Broadway show tickets or even gift cards. You can even buy and sell them.³ But, it is a special-purpose money (see Bohannan 1959; Dalton ...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Preface
• Acknowledgments
• 1 Introduction: The Confusion over Money
• 2 Theory, History and Money
• 3 Modern Money: Credit Money and the Consequences
• 4 The Future of Money and Its Possibilities
• Bibliography
• Index