Cambridge Journal of Economics 2016, 40, 961–996
doi:10.1093/cje/bew006
Advance Access publication 12 April 2016
Social positioning and the nature of
money
Tony Lawson*
The question of the nature of money is pursued drawing on results generated in
the field of social ontology as well as on observations from history. The conception of the nature of money found in this manner to be the most sustainable is
compared to various other prominent, if usually held to be mutually incompatible, theories.
Key words: Money, Commodity, Credit/debt, Value, Social ontology, Social positioning, Social relations, Functions, Rights, Obligations
JEL classifications: A1, B00, B1, B2, B3, B4, B5, N00, P00, P1
1. Introduction
What is the nature of money? This is a central question for social theory, not least
economics. It is also one that is intermittently addressed, albeit not always especially
successfully.1 How do I justify adding yet another paper to the literature on this topic?
Is there even anything more to be said?
Contributors concerned with the opening question have tended to concentrate on
putative examples or forms of money and their (actual or imagined) histories and
therein sought to uncover the mysteries of their subject matter. In consequence, debates
over the nature of money have tended to be bound up with competing accounts of
money’s emergence.
My alternative strategy is to proceed by drawing instead on insights developed under
the head of social ontology, generally conceived. Specifically, I seek to utilise results
Manuscript received 2 September 2015; final version received 18 January 2016.
Address for correspondence: Faculty of Economics, Sidgwick Avenue, Cambridge CB3 9DD, UK; email:
[email protected]
* For helpful comments on an earlier draft, I am indebted to Andrew Brown, Geoffrey Ingham, Jamie
Morgan, Roy Rotheim and four referees of the Cambridge Journal of Economics. The research on which
this paper is based was in part funded by a generous grant provided by the Independent Social Research
Foundation.
1
Consider some notable reflections on the explanatory successes of accounts of the nature of money: ‘Let
me then raise once more the vexed question—What is money? … [there is an] ‘intellectual vertigo’ which has
been said to attack all writers who approached this fatal theme’ (Henry Sidgwick, 1879); ‘Gladstone, speaking
in a parliamentary debate on Sir Robert Peel’s Bank Act of 1844 and 1845, observed that even love has not
turned more men into fools than has mediation on the nature of money’ (Karl Marx, 1970, p. 64); ‘The study
of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade
truth, not to reveal it’ (John Kenneth Galbraith, 1975, p. 5); and ‘Fundamentally different answers to the
question of the ontology of money have endured for at least two millennia’ (Geoffrey Ingham, 2011, p. 15).
© The Author 2016. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.
All rights reserved.
962 T. Lawson
achieved in this field that reveal features seemingly common to all social stuff. Working
from a presumption that money will share these features, a conception of the nature
of money is advanced. I am interested in examining the extent to which a conception
obtained in this manner coheres with others derived in very different ways. As far as
I can see, this orientation and approach, at least when systematically pursued, though
not without precedent,2 remains relatively novel.
I might quickly add that although my basic orientation is one in social ontology, the
analysis that follows is not, and could not be, one that is thereby somehow other than
situated in, and concerned to a significant degree with, history. All social material by
definition depends on human beings and their interactions and therefore all social
stuff, the nature of which is the focus of social ontology, will be of a specific geohistorical and cultural form. I certainly aim in what follows to ensure that the more widely
accepted and grounded insights uncovered in historical studies are accommodated.
The point, rather, is that I will not be focusing at any length, or in detail, on how or
when or the order in which money and any other basic components of a monetary
system originally emerged. I believe it is possible to make progress on understanding money’s nature, to develop an ontology of money, without addressing in detail all
aspects of money’s early history.
Elsewhere I have defended at length the idea that processes of social positioning are
central to the constitution of all of social reality (see Lawson, 2012A, 2012B, 2015A,
2015B, 2015C, 2016A). Therefore it will not be surprising to find that I argue that
such processes bear too on how money is constituted. Indeed, a main thesis of the
paper is that a feature of most, if not all, previous contributions to the topic is precisely
a failure to elaborate in a sufficiently explicit and systematic manner, the role of social
positioning in money constitution.
Traditionally, the more serious commentators in the field have tended to assign
conceptions of money to one or other of two thought-to-be incompatible kinds or
categories. On one side are commodity theories, with Karl Marx often identified as a
contributor; on the other side are claim or credit theories, associated very often with
John Maynard Keynes, Alfred Mitchell Innes, Georg Friedrich Knapp and in recent
times Geoffrey Ingham, various Post Keynesians and, most recently, proponents of
Modern Money Theory.
As the terms used suggest, commodity theories are presented as holding that certain
commodities (and most especially gold and silver) are central to the constitution of
money, whilst credit or claim theories are presented as highlighting instead the role
of debt/credit. Contrasts that are drawn do vary slightly, but most observers seem to
concur in interpreting the two types of theory in question as essentially oppositional
and indeed incompatible, and have long done so. It is a situation that Schumpeter thus
summarises as follows:
There are only two theories of money which deserve the name … the commodity theory and the
claim theory. From their very nature they are incompatible. (Schumpeter, 1917, p. 649)
Here I shall suggest that once or if we recognise that money like everything else is a
result of social positioning then these two theories are found to be, although different,
2
A forerunner is the contribution of John Searle (1995, 2010), whose conception of money I occasionally reference below (see especially footnote 5). Various important and prominent accounts of money are
reasonably explicitly ontological if not adopting the method taken here (see, e.g., Ingham, 2004; Smithin,
2009, 2013).
Social positioning and the nature of money 963
and frequently associated with contrasting histories,3 as accounts of the nature of
money, not incompatible at all. Rather, they are quite reconcilable, being merely different instances of a general conception, ontologically derived.
Actually, given the continuing persistence of the two ‘opposed’ interpretations, the
ability to encompass them both would seem to be a minimum requirement of any
sustainable conception of money. It seems unlikely that two traditional accounts could
be endlessly maintained if they did not each capture something of the actual situation.
2. Social positioning
Let me start out, then, by briefly outlining various results of ontological analysis, and
specifically features of social positioning, defended elsewhere. In that I have previously
argued that everything social is constituted via (or in relation to) processes of social
positioning, I will, if to repeat, be working from the supposition that this is the case
with money. Because I have defended the ontological framework in question rather
frequently before (again, see Lawson, 2012A, 2012B, 2015A, 2015B, 2015C, 2016A),
I will do little more here than summarise the various features relevant to theorising the
nature of money.
I mean by social reality or the social realm, the domain of all phenomena whose
existence depends necessarily on human beings and their interactions.
My starting point is an assessment, often defended, that social reality is constituted
in large part by emergent totalities, where people and things (broadly conceived)
become incorporated as components.
In the case where an emergent totality includes people amongst the components,
it comprises a community. A common form of totality with no human components is
an artefact (whose components typically comprise other artefacts). Sometimes whole
(sub)communities may be so harnessed in the formation of yet larger totalities, as
when communities qua firms become components of a wider industrial or business
community (see especially Lawson, 2015B, 2015C). Language is a further form of
emergent totality.
Social positioning is the term for the process whereby, through general acceptance
throughout a community, human individuals, things or other phenomena become
incorporated as components of these emergent totalities. In all cases, social positioning involves the generalised acceptance of the following three elements regarding any
item that is thereby positioned: (i) the allocation of an agreed status; (ii) its practical
placement as a component of a totality; and (iii) the harnessing of certain of its capacities already possessed to serve as one or more system functions of the totality. In the case
of human positioning, the third element is achieved via the allocation or ascription of
certain positional rights and obligations.
Thus human beings in a university, for example, may be positioned as lecturers, students, librarians, etc. Each instance involves both the acquisition of a status or identity (of
lecturer, student, etc.) and a practical placement as a component within the teaching and/
or research structure of the university. In this, rights and obligations are acquired, where
3
For recent accounts that provide histories that support the view that credit/debt is the more basic (and
perhaps the only) form of money, see especially Geoffrey Ingham (2004), David Graeber (2011), Randall
Wray (2012) and Mark Peacock (2013). For recent accounts that provide histories that support the view
that commodities and market exchange are more basic for a theory of money, see, e.g., Costas Lapavitsas
(2000, 2003 and especially 2005A).
964 T. Lawson
each right (obligation) of one position is associated with an obligation (right) associated
with a different position. Thus the right of students to attend lectures is matched to the
obligation of lecturers to prepare and give them. The right of both lecturers and students
to use specific lecture halls is matched by the obligation of others to fund, service or maintain them. These matching rights and obligations are social relations. They are also power
relations (see, e.g., Lawson, 2012A, 2012B). It is positions, rights and obligations, and
the collective practices associated with them, that provide the organising structure of the
communities of which they are a part. In the case of the university, the rights and obligations acquired are such as to ensure that the positioned participants can and do engage
in ways that serve the university’s aim of dispensing education and facilitating research.
Similarly, panes of glass may be positioned (identified and practically placed) as
windows in a house and blocks of wood as doors, etc. In this process, certain capacities
of the positioned objects get to serve as system (here house) functions. Thus amongst
the numerous capacities of each pane of glass is that of allowing light to pass through
whilst resisting most of the elements that constitute weather. On being positioned as
a window, it is the noted capacity that comes to serve as the glass pane’s system/house
function. Similarly, a block of wood may be identified as a door and placed specifically
at the ‘entrance’ to a house and get to function as a door does because of capacities
already possessed by the item so positioned.
In most cases of social positioning, the position and its occupant(s) (or the latter’s
status) take the same name. To distinguish the two, I shall capitalise the first letter
of the former but not of the latter. Thus the organising structure of UK universities
includes such positions as Lecturer and Student where every occupant of these positions gains the respective identity or status of lecturer or student.
Both the establishment of a given position as well the allocation of people or objects
to it are ultimately a matter of community acceptance. By acceptance, here, I do not
suggest necessary agreement, but more compliance, a preparedness to go along with,
a recognition that something is the case. The creation of a position or the allocation
of people or things as position occupants can come about by a legitimate community
authority in effect declaring something to be so (a position and its occupants can be
determined by different authorities), or more spontaneously. Thus a university appointments committee may select a new lecturer (may allocate an individual to the position
Lecturer); or less formally, an emergent protesting group may quite spontaneously position and rally behind say a (perhaps even somewhat reluctant) leader or spokesperson.4
If positional rights and obligations are features of the organising structure of human
communities, the glue that holds it all together at any point of time includes the human
capacities of trusting and being trustworthy. Without the exercise of these capacities,
human society would (and where they are not sufficiently exercised, it does) fall apart.
Notice that trust is especially important where interests are opposed. And opposition
4
Of course the power relations connecting or governing, and so the functionings of, position occupants
can and do evolve over time, often in unplanned and less than fully appreciated ways. Thus where a positioned individual or object happens at some stage to serve a particular (system) function, this fact in itself
should not be thought automatically to explain the emergence of the position or of its occupant(s). How
and why things emerge and the paths whereby they end up functioning as they do, rather, are always matters
for historical study, i.e. it is a mistake to adopt rationalistic/functionalist styles of analysis of the sort that
dominate modern economics. Menger (1892) provides an early analysis that seeks to explain the emergence
of money just in terms of its supposed functions. Of course there are obvious cases (e.g. house design) where
planning is centrally involved and so the function served may indeed be a major part of the explanation of
some phenomenon. But the more interesting cases are where this is not so.
Social positioning and the nature of money 965
of sorts is to be frequently expected. For, as we have seen, the act of an individual actualising any right means, in effect, exercising her or his positional power over someone
with a matching obligation.
The emergent totalities of which individuals and things are organised as components are, qua organised systems, irreducible to the sum total of the elements that
come to serve as components just because these totalities are constituted in part by the
manner in which the components are arranged or relationally organised; the relational
organisation too is an emergent. As a result, ontological reduction of any emergent
totality to the pre-existing elements alone, considered apart from their being relationally organised, is proscribed.
Take apart the bits and pieces that comprise the components of a house and reassemble them in a blind or random fashion and it is unlikely that the causal powers of
the house will re-emerge. The structure makes a difference. Similarly, absent the positions, rights and obligations that organise communities and human society falls apart.
A football team, university or hospital can achieve results that none of the individual
participants can achieve in isolation.
The ability of the organising structure to make a difference is an example of formal causation. And being causal, then, like the (emergent) totality it organises, this (equally emergent)
organising structure of a totality must be recognised as real (see Lawson, 2012A, 2013).
Of course elements of social structure such as positions, rights and obligations may
not be wholly physical (if by physical is meant stuff and principles studied in physics).
However, if in part mind dependent, the various elements of the organising structure
are consistent with, and dependent upon, having emerged out of, stuff of a sort that
is studied in physics and other sciences, and so remain naturalistic as well as real. The
conception defended is a form of emergent powers materialism.
One final element of this ontological conception of relevance here is that all social
phenomena constituted by way of social positioning are properties of specific communities and so are community relative. This means that the question of whether a social
entity emergent in any one geohistorically located community exists in others is always
something to be determined empirically; everything social, to repeat, is in human history.
I believe the above-noted aspects of social positioning, all elaborated and defended
elsewhere (once more, see especially Lawson, 2012A, 2012B, 2015A, 2015B, 2016A),
are each necessary and collectively sufficient when combined with empirical insights
from the history of money and elsewhere, to facilitate a framework via which a conception of money can be developed.
3. The nature of money
In keeping, then, with the just-noted social ontology, the obvious hypothesis to explore
is that money itself is a positioned item. That is, I will be be working from a presupposition that money does not reduce to ‘what money does’5, but rather is a positioned
5
This, incidentally, is where my own account parts company from that of Searle, who also theorises the
nature of money by way of elaborating it as a component of a broader ontological framework (Searle, 1995,
2010). Specifically, Searle is wary of all talk of social object(s), believing that any such notion is ‘at best misleading’ (Searle, 2003, pp. 302–3). So where I recognise cases of the positioning of social objects Searle must
adopt a different strategy. That chosen is to suppose instead that there are cases where positions exist unoccupied, or, in his terms, where status functions are ‘freestanding’ or not attached to anything (2010, p. 20).
It is through this latter device (of freestanding status functions) that Searle seeks to accommodate phenomena such as corporations and modern money. Searle supposes that in such cases, mere representations are
966 T. Lawson
thing or stuff, the latter being thereby incorporated as a component of a wider system,
whereupon certain of its capacities (that are already possessed prior to its being positioned) are effectively harnessed to serve one or more system doings or functions that
have come to be associated with money.
This being the case, an obvious way of proceeding is as follows. It is first to identify
a fundamental set of money’s system functions and then to pose the ‘ontological question’, namely to ask: given the identified set, what properties must an object or stuff
possess prior to being positioned as money in order to be able successfully to serve
these functions (on/if appropriately positioned)? This, indeed, will be my strategy.
So a first challenge is to determine a reliable account of money’s system functions.
Here my starting point is to examine those functions that have traditionally been associated with money and remain so in just about every prominent economic text on
money. Needless to say, every entry point for analysis is fallible and questionable. So
here, as always, it is essential to proceed critically and with caution.
Simply put, money, traditionally, has almost invariably been held to function as (one
or more of) the following: (1) a common unit of account; (2) a store of value; (3) a
(general) means of payment; and (4) a medium of exchange.
At first glance, the property of being a ‘store of value’ does not appear like a necessary system feature at all, whilst a ‘common unit of account’ seems more like a component of a monetary system than a function of any kind (or if it is a function, it is one
served by a mathematical device or system rather than an economic one).
Still, whether we interpret these four features as functions or not, the important
point here is that this list is widely accepted as expressing features or properties associated with money and notably is so, in part or whole, by most commodity and claim/
credit theorists alike. Therefore, the above observations notwithstanding, this list presents a compelling starting point here.
Of course differences of interpretation and emphasis exist in the literature, not least
over the order and manner in which these functions or properties emerged in history,
how any functions are served and which is/are the more important.
In particular, through prioritising historical analyses, credit theorists (in locating the
emergence of money and its functions/properties in early debt recording and payment
systems) tend to prioritise (1) and (3), whilst commodity theorists (in locating the
sufficient for the functioning of associated deontic powers and so forth, with the relevant status functions
(positions and positional powers) always able to somehow ‘bottom out in actual people who have the deontic
powers in question’ (2010, pp. 21–2). This, specifically, is how Searle accommodates ‘electronic money’,
interpreted as a mere representation of money. For Searle, paper currency is money and even here it is held
that the material of the (positioned) object is only ‘arbitrarily related to the performance of the function’
(1995, p. 41). With electronic money interpreted as a mere representation (of money), or (and as with the
corporation) ‘just a placeholder’, Searle suggests that the ‘owner of the money [has …] the relevant powers’
(2010, p. 22), that representations of money are sufficient for money’s functions to be performed.
I have compared Searle’s basic framework and my own at length elsewhere (see Lawson, 2016B) and do
not have the space to repeat the exercise here. Rather, I merely point to a significant difference in our basic
lines of reasoning. Contra Searle, I am arguing that the performance of system functions is always due to
the practical placement of individuals, communities, material (if sometimes perhaps unobservable) objects
or other phenomena, already possessing capacities appropriate to system functions eventually served, as
components of social totalities (including of wider totalities if the positioned item is already a totality).
This indeed is the point of social positioning. Where the functions in question are successfully performed,
this is always because the positioned items already possessed the capacities or properties relevant to that
performance prior to positioning. Positioning serves to allow those capacities or properties to be effectively
harnessed.
Social positioning and the nature of money 967
emergence of money and its functions/properties in market exchange [or commodity
circulation]) tend to emphasise (4).
By here prioritising ontological analysis (rather than focusing on historical questions of emergence), the feature or function that is seen to warrant most immediate
attention, I suggest, is, in contrast, (2), namely that of being a store of value.6 For if we
question the set of properties that must be possessed by any stuff positioned to serve
any or all of these functions, the unavoidable answer is that of being a form of relatively
trustworthy (i.e. a store of) value.
Certainly, and most fundamentally, any item that is to serve the functions of money
has to be a form of value. For without value there is presumably nothing to measure
(or to store) or in which to ground any means of payment or exchange. The existence
of forms of value seems indeed to be presupposed by all these supposed functions of
money. And if the stuff cannot be trusted as reliable, i.e. be interpreted as a relative
store of value, there is unlikely to be much that can be done with it if positioned within
a system. So whatever else money is, it seems that it must be, first of all, a form of value,
and in particular a reliable one.
The inference I draw, then, and so the contention I intend to advance and explore,
is that the property that must be possessed of any item or stuff, prior to it being, and
in order for it to be appropriately, positioned as money (where it is), just is that it is a
reliable form of value.
This contention, needless to say, begs the question of the meaning of value in the relevant context. The term can, of course, be construed in different ways. Clearly, if I am
correct, value of the relevant sort must be something that exists apart from (and indeed
that existed historically prior to the emergence of) money. But to say more about the
appropriate conception here, it is necessary to consider further some of the noted supposed functions of money, functions that the relevant property of value must facilitate.
Here it is essential to recognise that at least some of these traditional functions are fundamentally bound up with the creating and discharging of obligations. Let me elaborate.
The activity of discharging an obligation is actually basic to the very meaning of
payment. The term pay derives from the Latin pacare, meaning appease. In Middle
English, ‘to pay’ meant ‘to pacify’. The very notion of payment arose from the sense of
pacifying or appeasing one to whom an individual (the payer) has an obligation.
The discharging of an obligation is also at the heart of market exchange, the latter
(whatever may be its relation to the emergence of money) being but a special case. This
is clearly seen where, with two objects exchanged, there is a significant lapse of time
between the first object being transferred and the second being moved in the opposite
direction. For with the transference of just one item, an obligation on the part of the
receiver is created and this is discharged only with the full exchange being completed.
But most exchanges are made with some lapse of time occurring between the two
transferences, with obligations thus being formed however temporarily. The idea of
spot or punctual exchange is then but a degenerate special case and can be thought of
as an obligation or debt being simultaneously made and discharged.
6
A prima facie difficulty with examining these functions in terms of historical priority is that these properties are highly interdependent. As with every other kind of established social system, human beings everywhere confront a modern monetary system as they find it and through the sum total of individual practices
that system is reproduced and/or (in part, at least) transformed. The monetary framework (like every other
social totality) thus consists of a system in process. In this transformative process, various properties now
(contingently) cohere together whatever has been the historical path of their coming into being.
968 T. Lawson
That being so, it follows that the medium-of-exchange function of money is covered
by the means-of-payment function, though of course it is not exhaustive of it: payments
can occur in ways other than via market transactions, such as in the paying of taxes.7
It is already apparent, then, that the notion of value relevant here is bound up with
the making and discharging of obligations. If, in wider discussions of value, the latter
term is most frequently interpreted as something like a property possessed of an item
that has the capacity of meeting some human needs or wants, with the item limited
in availability, the relevant notion here is different. Rather, the notion implicit in, or
presupposed by, various central statements of the functions of money is just the ability
or potential to discharge or create obligations.
Let me refer to this latter notion, which is perhaps most appropriately termed ‘payment value’, simply as ‘value’ (to conform with most of the literature) and to the
former notion (relating to the meeting of needs and wants) as ‘use value’ (again conforming with widespread convention).
Of course the two are not unrelated. In early communities, it was eventually the
case that certain material objects (e.g. animals or crops) of limited availability were
used to meet very basic obligations, whether of the community as a whole to its ancestors and/or to the deity of the cosmos, or to representatives of the deity in form of the
priesthood, and, at some stage, of individuals to each other. Where so, it will have
been objects of significant use value that were employed, so that use and payment values became associated.8 Indeed, this itself will have been a case of social positioning,
wherein sets of items (that were limited in availability), because possessing of use value,
were (occasionally and perhaps in very localised cases) positioned as forms of payment
value in order that they be used to discharge actual or presumed obligations.9
Whatever the precise path and details of the early historical record, it is clear enough
that with time, particular items that constituted individual forms of (payment) value
became (further) positioned as generalised (payment) value, serving as the general
basis for meeting obligations throughout the community in which they were so positioned. That is, at various stages in history, certain items of value were, in different
communities (perhaps taking material forms specific to each community), positioned
as forms of generalised obligation dischargers or (payment) value.
The items used would presumably have possessed various convenience properties
such as transferability (of at least rights of use), accessibility to all, etc. Most fundamentally, they would have been trusted stores of value, for a stuff would not be a particularly
convenient general means of payment if its value depreciated the minute it was acquired.
7
Of course the terminology in itself in no way necessitates any presumption as to whether money did or
did not originate in market exchange.
8
Alternatively put, it is easy enough to imagine both (i) that in early communities, human beings simply
made sacrifices (inducing privation) and/or shared, gifted or whatever, different, very specific items of use
value, whether to the spirits or with others, especially those known to them, with all such sharing or other
activities based on a recognition of that use value; and (ii) that, with the notion of obligation being fundamental to the structuring of any community and so familiar (see Lawson, 2016B), various obligations were
eventually created and/or met by the transference of objects of use value, thereby interpreting the same
objects as forms of (payment) value.
9
Notice that although, once the notion that useful things of limited availability could be used to discharge
obligations, it follows that any such item might in principle have been so used, it does not follow that all
or most were or that different subcommunities employed the same items (any more than it follows that
all nutritional items are positioned as food or that the set of those that are so positioned is everywhere the
same). In short, not everything that has the relevant feature (use value) necessary to serve successfully as
individual payment value if appropriately positioned will have been so positioned.
Social positioning and the nature of money 969
Of course the very act of positioning can induce stability, and therefore engender trust,
in whatever is socially positioned (as I have argued at length elsewhere; see Lawson,
2016A). But still, if a positioned item was not already (prior to positioning) considered
reasonably reliable as a store of value, it is implausible to suppose it would last long in
this position (of a general form of value) or even that it would be placed there at all.
An equally fundamental consideration is that, given the conception of value found to
be relevant, a historical precondition for an individual item of value to be positioned as a
general form of value would have been the additional emergence of a community-wide
system of value measurement or accounting, however basic. For, in order for some item
to be positioned as a generalised form of value, one that is used to discharge obligations that are variously incurred throughout the community, there must be a common
measure of value accepted across the community. In particular, all obligations and the
item(s) or stuff(s) used to discharge them must be measured in the same units.
Needless to say, all specific assigned or derived value measures (or ‘exchange values’)
could only ever have been (and can only be) relative evaluations. Like weight, temperature, age, length, etc., the value of any item can only ever be expressed in terms of
something other than itself (as ‘exchange value’). In addition, all systems of measure
are human constructions. Thus at any point, such a value measure for any one item is
a social construct and has meaning, or conveys insight, only when viewed in relation to
measures of other items determined in the same units.10
It follows, though, that once a form of value is positioned as a general form, all
the features traditionally associated with money (whether appropriately interpreted as
functions or not) are effectively in place and (or at least) practically implicated. For it is
evident that an accounting system, including a common unit of account, is a necessary
condition for the position in question to exist, the means-of-payment function (incorporating the medium-of-exchange function) is facilitated and the system works if any
item or stuff appropriately so positioned is a form of value and a reliable one. Money
then, or so I am suggesting, just is a positioned individual form of value, one that community participants accept has been positioned as a general form.
On this conception, the basic function of money is as a means of payment and a
common unit of account turns out to be not really a function of money, but more a
precondition or component of a functioning monetary system.
At what stage in the evolution of money did any value-accounting system, with a
generalised unit of account, emerge (one that was accepted or in force throughout)?
Numerous possibilities are imaginable for any community. It is just about conceivable
that such a system could have been created in a situation (if such ever existed) where
all obligations or debts were paid only by human sacrifice, or at least where the latter
10
In principle, the units of account utilised in any community could be anything. There is no logical
necessity that these units have names that relate to any X (or property of X) that happened at a point in
time to be positioned as money. The condition that must be satisfied is that a determinate unit of X (if X is a
commodity, say a fixed weight of X) is somehow associated with a fixed value in terms of some all-prevalent
value unit of account Y (euros, shekels, etc.). Therefore a pound weight, say, of X has a value that is fixed
in terms of some unit Y. Where this is the case, the relative values or prices of all (other) commodities can
be set or determined in relation to it. Traditionally, of course, the names of units of value have very often
coincided with those used for units of weight (pound, livre, shekel, etc.). Although there is no necessity in
logic for this, there may have been a historical inevitability about it. Commodity theorists such as Marx have
tended to interpret this as indicating that it was commodities identified by weight that were the first form of
money, giving their unit name to the first units of account, or anyway at one point encouraging transference
of the name of a unit of commodity to a unit of value. Others, though, suggest that these names were merely
prompted by (and abstracted from) their use in other domains.
970 T. Lawson
were dominant and units were determined only with regard to the sacrifice. A second possibility is that it emerged at the same time as, and indeed as part of the process whereby, individual items with use values, and presumably of limited availability,
started to be positioned (perhaps in addition to human sacrifices) as (payment) values
and utilised to discharge obligations. A third possibility is that it emerged somewhat
later, at the same time as, and again as part of the process whereby, a pre-existing form
of value became accepted/positioned as a generalised form of value. A yet further possibility is that it emerged somewhere in between these developments or that some (or
all) of these developments were effectively part of the same process.11
Whatever the historical record, a common system of value accounting would not
have emerged without there being some (prior or simultaneously emergent) notion of
value to ‘measure’; just as a general form of value would not have emerged without there
being some (prior or simultaneously emergent) basis or system for assigning common
units of value to different value items and obligations.
For my purposes here, namely to elaborate an account of the nature, i.e. an ontology,
of money, it ultimately does not matter which of these scenarios is correct. The point
is that in early communities, accounting frameworks, each involving an abstract unit
of account that was everywhere accepted, did emerge, as did general forms of value.
Forms of value, then, or so I am suggesting, are the basics out of which money
emerged. Thus if and where, at various stages in history, items of value (conceivably
varying in form according to community and time) were positioned as forms of generalised obligation dischargers, or (payment) value, this development, I am suggesting,
was nothing less than the emergence of money.
Further, it appears to be the case that certain features traditionally identified as functions of money, namely a common unit of account, means of payment and store of value,
are all (whether appropriately viewed as functions or not) essential to a monetary system. For whenever a certain stuff of value is positioned as the general form, then these
features are necessarily all implicated (whether as system functions or preconditions).
Clearly, the phenomenon of value, along with a common value-accounting system,
is crucial to it all. They are preconditions for a money system to exist.
But so equally, and even more fundamentally, are community-based processes of
social positioning. For they are essential to the constitution of social reality everywhere.
Thus an item of value (itself a positioned form of use value) can be constituted and
function as money only when it is generally accepted as being positioned as such, i.e.
only when it achieves community-wide acceptance as the legitimate general expression
of value, meaning it is accepted as the legitimate such component of a wider accounting
and (possibly eventually) trading system. Indeed, this acceptance (based on long-term
trust) is essential even (or perhaps especially) where disparate community members do
not fully trust each other. The constitution of money involves both general acceptance
of the position Money as well as trust in the stuff positioned as its occupant.
At the same time, a common unit of account can exist only when, or rather it entails
that, a particular system of value accounting has also been generally accepted as
11
Notice that there is no presumption in any of these scenarios that either barter or market exchange were
involved. This is clear with the first noted possibility. But in all the other cases, it is quite plausible that an
accounting system evolved either to determine penalties on individuals for the transgression of community
norms (and in particular compensation schedules developed to discourage blood feuds in primitive societies;
see, e.g., Grierson, 1977; Ingham, 2004) or for the centralised redistribution of use values in early (agrarian)
forms of command economies (see, e.g., Goldsmith, 1987; Hudson, 2004; Ingham, 2004).
Social positioning and the nature of money 971
appropriately positioned, and specifically positioned as the common or shared system,
as the legitimate basis for ascribing measures of (relative) value.
Very often, monetary positions and occupants, to qualify as such, will require state
authorisation and legislation, or at least the state’s collusion in the process of community acceptance (whether the state’s interest in this be political, legal or/and economic).
But it takes what it takes; the point is that collective acceptance must be in place for a
stuff to be constituted as money and thereafter to function as money does. And such
considerations as these apply equally, of course, to the positioning of a device as a
community-wide common unit of account.
In setting out this conception, I have clearly avoided developing detailed positions
on how, historically, the various elements of the money system precisely evolved and
specifically on whether money preceded or emerged through/with market exchange.
I have also not indicated a view on how value measures at any point are determined.12
To address these issues in any detail would clearly make a lengthy paper even longer,
but in any case, I believe it unnecessary. For the ontological conception outlined is
invariant to positions taken in these debates.13 Indeed, different standpoints in these
debates are often (mis)interpreted as differences in ontological conceptions of money,
thereby frequently generating confusion over where divisions really lie. Hopefully, such
confusion is lessened here by my not setting out detailed positions at all.
12
This, of course, does not mean I am open to any historical narrative, however implausible. As it happens, my assessment on the first matter, very briefly summarised, is that (the historical evidence suggests
that) money emerged prior to and conditioned the emergence of market exchange. Certainly, I can find no
basis for supporting any narrative along the lines (often repeated in modern economics) that barter came
first, from which emerged commodity forms of money, out of which emerged credit money. Indeed, the
evidence actually appears to suggest a reverse of this ordering.
On the second issue, to once more briefly summarise my own view, I see no obvious reason to suppose
that emergent systems of value measurement or assignment have been other than relative/specific to different
communities across time and space, or even always unitary within any specific community across different
sorts of value items. On the latter issue, I might, however, note that two broad approaches for making these
relative evaluations are conceivable, employed either separately or in combination. The first possibility is that
a feature or property is identified as intrinsic and common (in varying degrees or measure) to all those objects
of value that are accepted to be used to meet obligations, and this commonality (rendering the different items
of value commensurable) is used in the determination of relative value measures. Examples are the degree of
difficulty of obtaining or (re)producing the relevant items—perhaps gauged in terms of human labour power
expended in their production under certain specific conditions or perhaps the amount of suffering involved
in a loss of some item, possibly including body parts or family members. The second possibility is that a set of
relative evaluations (or rankings) is subjectively determined, on the basis of something extrinsic to the value
objects, perhaps being (arbitrarily) imposed by some authority, or determined collectively on the basis of preferences say within a community or even on the whim of owners of value items. In truth, it is difficult to imagine anyone being willing to accept a high valuation for something they seek that is easy to reproduce, even if
essential, so that even subjective evaluations will, wherever feasible, tend to follow (and likely seek to estimate)
some intrinsic features, an assessment reinforced by the observation that actual measured or exchange values
are often very stable (for a development of this reasoning, see Andrew Brown, 2008). Whatever the details,
the point of central relevance here is that relative evaluations were (and are) somehow made on some basis.
13
As I say, my belief is that the conception so far elaborated is adequate to encompass the more serious
contenders, albeit if warranting in some cases a change in terminology and perhaps a narrowing of focus to
specific communities and stages of development. Marx, of course, restricts value to being a feature of capitalist commodity production. This might be called produced (under certain capitalist conditions) value. For
Marx, value results from the expending of (certain forms of) labour power in the producing of commodities
(under a particular set of specified capitalist conditions). Although Marx (occasionally) identifies value with
congealed (typically meaning solidified) labour (or ‘homogeneous human labour’), i.e. not with labour per se,
he is very clear in the view that value is not a natural/physical feature of any product and does not exist unless
the product is (positioned as) a commodity; though where a commodity is the outcome, value is intrinsic to
it (rather than say determined in exchange). Although I cannot develop the argument here and although it
972 T. Lawson
In any case, here I merely note that community-positioned forms of generalised value
and systems for assigning/determining common measures of value did both emerge
and continue to exist. And a condition for such developments having been feasible in
the first place is that value, in some form, was at some stage recognised, either appearing along with or conditioning the emergence of systems of value accounting. The
ultimate result was that at certain historical junctures, various (community-specific)
items of significant stable value (likely associated with various convenience properties
such as ease of transferability and accessibility to all) came to be positioned in various
communities as the generalised form of value, i.e. as money.
Ontological reasoning, then, leads me to the view that the main function of money
is as a general means of payment, whereas a common unit of account is a precondition
and any stuff that can be appropriately positioned as a money will already be a reliable form of value. In short, I am suggesting that money can be, provisionally at least,
conceptualised as follows:
Money is constituted where it is accepted throughout a specific community that a thing or stuff
of value is positioned as a generalised form of value, to function as a general means of payment,
in conditions of an equally accepted and appropriately positioned common or shared system of
value measurement. Money just is that positioned form of value.
I describe this conception as provisional only because I have yet to consider the less
traditional functions, or better (in some instances at least) capacities, properties and
outcomes, often associated with money. Most obviously, I need to address the idea
that money is power and, as such, a fundamental conditioning factor in the structuring
and continuous restructuring of modern capitalist societies. As it happens, I think all
additional attributed features of money do not so much compete with as stem from the
conception given above, so that the latter remains adequate. Let me elaborate.
4. System properties of money
First, I want just to reiterate that, apart from the store (or reliability) of value property, the features traditionally identified as the functions of money (a common unit of
account, a general means of payment and a medium of exchange) are indeed quintessentially community-wide system properties; they necessarily not only rest upon the
acceptance/compliance of all members of a relevant community, but exist only as part
of the organising structure of a community and in particular its accounting, trading
and/or production system.
I have suggested that the basic or most fundamental emergent system function of
money is as a general means of payment. Here I draw a clear distinction between
notions of a means of payment and a device for effecting (an eventual) payment. By referring to some stuff X as serving as a means of payment, I understand the positioned stuff
functioning directly as payment and so being the means of, or medium for, discharging an obligation or debt or whatever. Only if a general ‘means of payment’ is in this
way understood can it be interpreted coherently as a function of money. In contrast,
any method or instrument by way of which the money stuff is transferred by a community
is in any case not a requirement of the conception of money I am developing, I believe this theory of value
is coherent with the more general framework outlined in the text (a framework that in being more general is
not intended to apply only to a set of specific circumstances of capitalism and its development).
Social positioning and the nature of money 973
participant to a payee thus allowing the money stuff thereby to serve/function as a
general means of payment, I refer to below as a means of, or an instrument, device
or technology for, effecting payment. Modern examples include the employment of
cheques, debit or credit cards, mobile pay apps, electronic blips on a computer, etc.
If, as I have argued, money functions most fundamentally as a general means of
payment, then money itself can be understood simply as the bearer of general transaction power, including purchasing power or potential. Economists often define purchasing power to mean simply the sort of bundle of commodities a unit of money can
acquire. This is not the notion of power I have in mind here. Rather, by purchasing
power I mean the ability or potential to be used throughout a relevant community as a
means for paying for any and all other items of value, not only in the present but also
(certainly in the modern community) at any time in the future; it thus also entails the
power of withholding or deferring payment.14
In turn, this idea of money functioning as a generalised means of payment, resulting from its generalised transaction power in a system of a common unit of account, is
closely related to that of liquidity. A particular asset is said to be highly liquid if it can
be sold quickly without a significant price reduction. Money is the most liquid asset
and can indeed be described as liquid (or as liquidity) in that (at least in a stable economy) it can be ‘sold’ for any goods and services instantly, at any time and place, with
no apparent loss of value.15 Therefore to describe money as liquid is much the same as
to say that it serves as a generalised means of payment or is the bearer of generalised
transaction power.
Numerous consequences arise as a result of this power of money. Most significantly,
the emergent power of money underpins processes of additional value creation and, in
doing so, plays a conditioning role of transformations in the very structure of society.
For, if the prior existence of value is a precondition for the emergence of money,
where a money is in place as the accepted means for conducting any and all transactions, then community participants will, for this reason alone, pursue it. And, amongst
much else, this leads to their generating ever-more services or products, rendered in
terms of the money unit of account, i.e. providing numerous additional individual
forms of value, motivated ultimately by a desire simply to acquire or accumulate money.
In its turn, this pursuit of money for its own sake encourages technological developments and applications and (consequent) structural transformations that serve first
and foremost to facilitate this endeavour.
No doubt this pursuit of money for its own sake has in this manner been consequential wherever a money (regarded as the accepted means for conducting all transactions) has been in place. But with the emergence of capitalism, a stage of development
is reached such that much of society is structured primarily just to facilitate activities
concerned with its pursuit. Indeed, this very generalised pursuit is seen to be a main
factor that serves to coordinate (via its pursuit) otherwise seemingly separate, independent and dissimilar features of modern community life. Where previous systems
required active central intervention in the planning of activities of production and
distribution, under capitalism the employment of money in the pursuit of more money
ultimately allows much overall coordination of highly decentralised activities without
14
I am referring to money in terms of being the bearer of transaction power rather than of purchasing
power, because transactions (involving money as means of payment) are wider than purchases in that they
include the ability to meet taxes and other imposed obligations measured in the money unit of account.
15
Of course what is apparent is not always the case.
974 T. Lawson
plan, design or even necessary intention. Ultimately, the forces of accumulation even
shape the manner of organising such matters as education, sports, health provision
along with all other caring activities. For even these sorts of activities are increasingly pursued not for their own sake, with quality the main goal, but in a manner to
most easily allow some parties somewhere to make money from them. Eventually, the
numerous disparate activities of modern communities turn out to be mutually conditioning or internally related, as each component or subsystem is ultimately shaped by,
rendered subservient to and eventually constituted in a manner that is totally dependent upon the dominant overall driving force of money accumulation.
Money is thus far from being the veil postulated in much of modern economic
theory; rather, it is a factor central to the very structuring of the modern world. Indeed,
very likely few social contrivances have made more of a difference to the structure of
society as a whole.
The range of functions served by, or (perhaps more appropriately) the causal consequences of, money, then, are significant and far reaching. They are also continuously
evolving. They have varied from community to community and over time, and under
capitalism are continually emerging and expanding.
Modern accounts of money that recognise all this, and in particular the speed of change,
tend to focus on features such as time discounting, methods of deferring payments, debt
financing, debt discounting, etc. All such accounts and proposals are especially insightful.
But, that recognised, it is evident that in the end none of the foregoing gives reason
to question the basic conception of money outlined above. Rather, all noted properties
and developments stem from money’s basic function as a general means of payment.
Certainly, all depend on the fact of value and specifically that an individual form is positioned as a general form making a general means of payment feasible. Rather than constitute a challenge to this basic conception, all additional and ongoing developments are
seen to presuppose it. The conception of money given above thus remains adequate.16
To this point, I have set out a conception of money in general terms, writing of a particular sort of stuff with relevant properties being appropriately positioned. Indeed, the
conception advanced is precisely a suggested general theory of the nature of money. In
this, I have avoided tying the material of money to any particular thing or stuff (whether
to credit, commodities or whatever). Of course the conception being advanced, being
set up as it is in terms of positions, allows, as a theoretical possibility at least, that different sorts of things can be so positioned. Where or if contributors suppose that only
one type of thing can be money, they are likely to (or it is feasible that they will) elide
the categories of position (Money) and positioned object (money) anyway. But this
would always be a mistake even in such a scenario. For even single occupants of a position get their identity through being so positioned.17
Hence in turning to examine credit and commodity theories of money, I will be
maintaining that whatever the historical experience, the position Money and that
which historically has been positioned as money are separate and, unless grounds are
16
There are some additional emergent projects and proposals, such as bitcoin, a virtual currency and
payment system based on computer code, that appear somewhat different in nature and may appear to challenge the conception set out (see especially Satoshi Nakamoto, 2009). Personally, I expect this venture (and
others like it) to fail just because or where it does not obviously rest on any pre-existing form of value. Of
course, even if I am right in this, it does not mean there will not be various optimistic individuals speculating
in bitcoin, etc., in the meantime.
17
As perhaps with capitalism, earth’s moon, the Roman Empire or World War II.
Social positioning and the nature of money 975
provided to suppose otherwise, the positioning of some X as money is/was a matter of
historical contingency.
Let me, then, now indicate just how the credit and commodity theories of money
can be seen as particular instances of the somewhat general conception so far developed, as in each case particularising what is essentially a concrete universal. I start with
the former.
5. The credit theory of money
It may seem that claim or credit theories of money are prima facie the least likely, and
perhaps even unlikely, to fit with the conception outlined. For, or so it is often held,
these theories are not concerned with objects of value at all. Or at least this is so where
such theories hold that items such as cash in the form of notes and coins are forms of
money.18 For, as is often remarked, this stuff is intrinsically almost worthless. Yet I have
suggested that in order to be positioned as money, the relevant stuff must already be a
form of (transferable, accessible and trusted) value, that the latter property is essential
to any material that is to qualify as a candidate for (being positioned as) money. Thus
whilst it might be quickly anticipated that, and how, the conception I am defending can
accommodate the idea that certain commodities, viewed as forms of value, can at least
in principle qualify to be positioned as money, it perhaps will be even more speedily
concluded that the conception I have advanced cannot possibly accommodate the case
of fiat money and the like.
It is presumably in some part because certain commodities (such as gold) are
widely held to be a form of value, whilst notes and coins are not, that so many have
insisted that, even when questions of historical paths of emergence are put aside,
commodity and credit theories, qua accounts of the nature of money, are incompatible. My claim, though, is that the two theories, as accounts of the nature of money,
are compatible after all. Therefore it appears that the puzzling task I face is to explain
how the bits of paper and metal positioned as modern cash can possibly be said to
possess value.
One conceivable explanation or thesis is to suggest that the notes and coins acquire
value precisely through anticipations of their being used continually as a means of
payment including as a medium of exchange. It happens through self-fulfilling expectations.19 In truth, though, a stuff could not in practice be relied upon in this way
without its possessing value prior to its being positioned as money. The system, at
best, would be just too unstable. Though positioning may add stability to the value
form involved, for a successfully functioning system where general acceptance is vital,
18
This is Searle’s conception of money (briefly discussed in footnote 5 above). The stuff in question is
seemingly intrinsically almost worthless, certainly prior to being positioned, fitting with Searle’s view that, in
the case of cash as money, the object that is allocated to a position (or, in Searle’s terms, the entity that has
a status function attached) is such that its ‘physical structure is only arbitrarily related to the performance
of the function’ (1995, p. 41).
19
This hypothesis seemingly fits well with Searle’s conception, at least with respect to money (as paper
currency, see footnote 5). Searle does not actually refer to self-fulfilling expectations as playing such a role.
But nevertheless, any argument along such lines (that expectations of being accepted as a means of payment
might underpin the value of an item) would serve at least to reinforce and perhaps to give an explanatory
grounding to statements such the following: ‘In the case of commodity money the stuff is a medium of
exchange because it is valuable, in the case of fiat money the stuff is valuable because it is a medium of
exchange’ (Searle, 1995, p. 42). Of course Searle recognises that not any old pieces of paper or whatever can
976 T. Lawson
the stuff will need already to be a form of value and one that is trusted even prior to
positioning.
But if the noted scenario is not sustainable, the question that remains is, how to
make sense of money in the form of notes and modern coins and such like?
My contention is simply that these notes and coins are not only of minimal value,
but never do serve as a means of payment anyway, whether as a medium of exchange
or otherwise, and so on my conception are not after all a form of money. Rather, just
as with passports, identity cards, wedding rings, documents of ownership or concert
tickets, they serve (are positioned in order) to identify their holders as occupants of
particular community positions or as standing in specific community relations. The
one (system) function that each of these listed items can serve, for which it possesses
the appropriate (intrinsic) capacity prior to being positioned within a relevant system, is that of being a (transferable) identifier. In the case of cash, specifically, the
notes and coins are used to identify specific social relations (and so the individuals
standing in them). It is these social relations that are of value. Let me elaborate this
assessment.
The position occupied by those who hold cash is, as with any other, one that has
associated with it certain positional rights (obligations) matched to specific obligations
(rights) associated with related positions elsewhere. Specifically, the positional rights
of holders of cash take the form of credit rights internally related to the debt obligations of the issuer of the cash. It is these (depersonalised forms of) credit/debt relations
that constitute the relevant components of the value system; in a credit economy, it is
these, and not cash in the form of notes and coins per se, that are positioned as money
understood according to the conception so far laid out.
Debt, in particular bank or state-backed debt, but more generally any debt where
the debtor is, and is throughout the relevant community recognised as being, reliable
and trustworthy and possessing the capacity and willingness to honour/redeem it in
some way, is a form of value. Debt will be an especially secure item of value where the
debtor can insist upon, or have some authority insist upon, it being used as a means
for the discharging of taxes, fines and other state-imposed and -related obligations. If
this debt is additionally (though there is no necessity of it being) backed up by (legal)
laws of tender guaranteeing its acceptance in the settlement of business or personal
debt and the such like, it may then be a particularly highly trusted (and sought after)
form of value indeed.
In cases such as these, the debt in question, being a reliable transferable form of
value, can be positioned as money. Money, in such circumstances thus consists of
stuff (credit/debit relations) that is regularly identified by the holding of cash and other
tokens. That is, money is a specific positioned set of social relations, where the latter, like
all social relations, are real; cash is a specific positioned set of identifiers or tokens of
such relations.
count as money. Of those that can he writes: ‘These pieces of paper satisfy certain conditions that constitute
satisfying the X term. The pieces must have particular material ingredients, and they must match a certain
set of patterns … Anything that satisfies these conditions (X term) counts as money, i.e., US paper currency
(Y term)’ (Searle, 1995, pp. 45–6). There upon, though, they automatically become a medium of exchange,
a store of value, etc. Or at least this is how Searle seems to argue, for he immediately adds: ‘But to describe
these bits of paper with the Y term “money” does more than provide a shorthand label for the features of
the X term; it describes a new status, and that status, viz money, has a set of functions attached to it, e.g.,
medium of exchange, store of value, etc.’ (Searle, 1995, p. 46).
Social positioning and the nature of money 977
There are clearly (in practice as well as principle) many variations on how a form
of debt (relation) can be a form of value. Typically, certainly in modern times (though
conceivably throughout), if a community is of a certain size, the state will be involved
at all levels, i.e. in determining the unit of account, the Money position, the stuff that
counts as money, the means whereby trust is maintained in the latter, etc.
But that said, all forms of value are ultimately determined in the system as a whole,
the product directly or otherwise of human beings interacting in the whole gamut of
social relations. The point here is simply that debt, which in some fashion is redeemable, is a form of value.
In the end, given the nature of the conception I am setting out, it does not really
matter for my purposes how, precisely, a form of debt is rendered appropriate and
recognised as satisfying the criteria (a trusted transferable source of value); the point is
that it is. The debt (social relation) satisfying these criteria is constituted as money on
being appropriately positioned.
Perhaps at this point it is useful briefly to recall the nature of a social relation.
Certainly, it is something unobservable. But then phenomena such as gravity, magnetic fields, curved space, etc. are equally unobservable. We know these features of
reality because they are found to be causal; they make a difference to things we can
observe. They can thus be shown, and known, but not seen, to exist.
As with these non-social phenomena, the causal criterion of existence can be used to
establish the reality of various social phenomena such as social relations. The latter are
part of the organising structure of society. Organising structure is always causal (a form
of formal causation) and temporally located. Take away the organising structure of
society and the latter itself disappears. No longer are there any kings or queens, teachers or students, employers or employees, universities, firms or sports clubs, norms and
regulations or any other forms of coordinating factor. The organising structure, made
up in particular of positions, rights obligations and collective practices, makes a difference to all forms of human practices and their coordination and so can be recognised,
because causal, as real. Of course rights and obligations will be significantly mind
dependent and possibly, at least in some cases, mind determined.20 But they are no
less real for being so.
In all instances, positioning is fundamental. I cannot stress this enough. In particular, when the social relation that is credit/debt serves as money, it is not any old credit
that is money nor credit per se that is money, but rather a specific form of credit that
(with its being perceived for whatever reason as a reliable, transferable form of value)
has been accepted as appropriately positioned throughout a specific community. The
feature of being accepted as positioned (as thereby constituted as the legitimate form
of general value) is essential to its constitution as money.
Here, then, I take slight issue with the expression formulated by Minsky, and often
reproduced by credit theorists and others, that ‘everyone can create money; the problem is to get it accepted’ (Minsky, 1986, p. 228). I am arguing instead that although
anyone can indeed create debt, unless and until something is everywhere accepted as
appropriately positioned as the general form of value in the relevant community, i.e.
unless and until it is accepted as such, it is not money.
20
Rights and obligations are essentially the content of previous acceptances including agreements (see
Lawson, 2012A).
978 T. Lawson
How does an economy based on positioned (typically state-backed) debt as money
work precisely? Consider the case where cash is involved. When a purchase is made,
say of commodity X, the latter is passed to the purchaser, creating a momentary debt
credit/relation between the purchaser and seller—one that in most situations is almost
immediately cancelled using money. Although cash may be used to effect this cancellation of debt, it is strictly speaking not the cash per se that cancels the debt. Rather, it
is the credit that the purchaser holds with the issuer of the cash that is used to cancel
the temporary debt of the purchaser to the seller of X. The cash itself functions as a
marker of the debt relation and therefore of whom at any point holds the credit with
the cash issuer. So when cash is described as legal tender, the implicit regulation is that
specific debts that are backed up by it (which it marks) may be used in payment, i.e.
can be used to cancel the pending debt obligation involved with a purchase.
Of course a specific payment made may actually be a payment in advance of delivery, or deferred payment, as well as payment ‘on the spot’. Indeed, as noted earlier,
payment on the spot is really a degenerate special case of the other two, of situations
of exchange where private debt in some form is extended. But in all cases, the statebacked or positioned debt can be used in this manner to offset/cancel any debt that
would be, is or has already been incurred in acquiring the commodity or whatever.
Needless to say, and as noted above, credit/debt can be moved around and payment
effected without the use of cash. Personal cheques, credit cards, debit cards, mobile
apps and similar non-cash methods of facilitating a payment work differently, but each
can be used to achieve the same end. Such devices are mostly not markers of a credit/
debt relation per se. Instead, they may identify specific individuals as standing in credit/
debt relations with some reliable authority that, on issuing the individuals with credit
or debit cards and the like, will ultimately guarantee any purchases the individuals
make (subject to conditions). But the law does not relieve any user of these cards of a
debt obligation entered into in acquiring some commodity or whatever until payment
is tendered, i.e. until it is cancelled by something regarded as state-backed debt (or
something otherwise of value). The point, though, is simply that all such devices serve
as components of mechanisms that allow various forms of debt/credit of a community,
many of which can be used to cancel other debts, to be recorded and traced.
6. Terminology
At this point I do need to face up to a terminological difficulty. Various commentators
and numerous community participants, refer to the tokens and such like themselves
(rather than the credit/debt relations that the tokens mark) as money. Even amongst
commentators who recognise that credit/debt relations are involved, there is frequently
an uneasy slippage between credit relation and token, with either or both being labelled
money, as if they are one and the same thing.21
Of course we can make words mean what we want them to. But clarity is not facilitated when a specific term frequently switches meaning, often in ways not easily detectable, and seemingly frequently without full awareness of the slide on the part of the
user of the term.
21
Thus Geoffrey Ingham (2004), for example, in a rightly acclaimed contribution, has it that ‘All money
is constituted by credit–debt relations—that is social relations’ (Ingham, 2004, p. 72), whilst observing that:
‘Cash—portable things we take to be money—is still used in 85 per cent of all transactions’ (2004, p. 5).
Keynes, we will see in due course, does essentially the same.
Social positioning and the nature of money 979
Others have introduced additional terms. Chartal or chartal pieces are examples.
Chartalists, or neochartalists (including the new money theorists; see, e.g., Wray,
2012), who are basically credit theorists who emphasise the role of the state especially
(not least in forcing obligations on a community to be discharged in state-backed
debt),22 take their name from Georg Friedrich Knapp’s referencing of such tokens
using these terms; the tokens are referred to as chartal or chartal pieces.23
Perhaps a feasible strategy is to refer to the noted identifiers as ‘token money’ or
‘chartal money’ and such like, and to refer to the positioned store of value serving as a
means of payment simply as ‘money’ or perhaps ‘money proper’.
Numerous terminological conventions are feasible. Here, anyway, I restrict the use
of the term money to the conception already elaborated, to the specific object or stuff
of value positioned as the general object of value (that functions as a general means
of payment), rather than to its marker or ‘chartal’. And I refer to items like notes and
coins as tokens or monetary or accounting devices, or devices for effecting payments.24
Therefore cash, to repeat, is not money as I am employing the term. Wherever in
human history there has existed a system of value creation, measurement and transference, there has been a need for devices or mechanisms to ensure that some kind of
value balance is achieved. Numerous instruments have been created to facilitate this.
Cash is just one step on the path from clay tablets, tally sticks and such like to modern electronic contrivances including those bound up with internet banking. These, as
I say, are all items I refer to as accounting devices. Some at least serve as a means of
effecting payment. In the modern UK, these, to repeat once more, currently consist in
cash, cheques, debit and credit cards, mobile apps, etc.25
The terminological strategy accepted here at least has the advantage of associating
the term money with something that causally relates directly to properties that are
22
See especially the output of L. Randall Wray on chartalism (e.g. Wray, 2014) or Mark Peacock (2003–
04; 2013, ch. 2).
23
Knapp writes: ‘When we give up our coats in the cloak-room of a theatre, we receive a tin disc of a
given size bearing a sign, perhaps a number. There is nothing more on it, but this ticket or mark has legal
significance; it is a proof that I am entitled to demand the return of my coat. … The “ticket” is then a good
expression … for a movable, shaped object bearing signs, to which legal ordinance gives a use independent
of its material. Our means of payment, then, whether coins or warrants, possess the above-named qualities:
they are pay-tokens, or tickets used as means of payment … Perhaps the Latin word “Charta” can bear the
sense of ticket or token, and we can form a new but intelligible adjective—“Chartal”. Our means of payment
have this token, or Chartal, form. Among civilized peoples in our day, payments can only be made with paytickets or Chartal pieces’ (Knapp, 1973 [1924], pp. 31–2).
24
An alternative strategy is adopted by advocates of ‘modern money theory’ such as Randall Wray.
Although repeatedly arguing that ‘money is debt’ (see, e.g., Wray, 2012, p. 272), Wray also insists (and
almost in the same breath) that money is a unit of account (see, e.g., 2012, p. 269). In my own conception,
anyway, these are different (if internally related) things and I see no good reason to label them both with the
same term. Also, in my own conception, neither is actually money, though the object positioned as money
may take the form of (a specific type of) debt (with value measured in a community-specific and accepted
unit of account).
25
No doubt for many participants in the modern community, there is at best a superficial understanding
that the real stuff of payment is positioned bank or state-backed debt (or something similar). But when, say,
a tradesperson in the modern UK says to a customer ‘How would you like to pay?’ this truly is a ‘How?’
question. It is not a ‘What?’ question (to be answered by bushels of wheat, dozens of cows, grams of silver
or an amount of state debt). If the answer to the ‘What?’ question (e.g. state-backed debt) is not always fully
understood, there is seemingly an understanding that it (the stuff that serves as the means of payment) is
not generally an option. The option rather concerns how a transfer of the means of payment is to be effected,
so that a debt just incurred (for the work done) can be discharged. Any manner of meeting this goal, of
answering this ‘How?’ question, can be termed a ‘means of effecting payment’. As I say, the latter can involve
handing over cash (and so the bank debt it marks), using a credit or debit card (to effect a transfer of credit
elsewhere in the system), making a bank transfer (accessing debt held with banks more directly), etc.
980 T. Lawson
traditionally interpreted as functions associated with it. Tokens, as mere identifiers,
can do no such thing. No more can cash in the form of modern notes and coins, or
cheques or debit cards, serve the traditional functions of money, than passports can
exercise rights and obligations of citizenship or a wedding ring can fulfil the rights and
obligations of a wedding partner. Where cash is involved, it functions only to mark or
identify a relation of credit and debt and so serves as an accounting device.
As with any other positioned stuff, of course, that which is positioned as cash must
already have those properties that, with positioning, come to serve as its system functions. The relevant properties possessed by the bits of paper and metal that get to
serve as cash are ease of transportability, durability, difficulty of copying/counterfeiting, determinate authenticity, bearing symbols of (so many) units of account, etc.
I note, finally, that if the foregoing is correct, then Searle (2010, see footnote 5 above)
is right to suppose that magnetic traces on computer disks in banks that record bank
balances are not actual money, at least in the sense that I am using the term, but wrong
if he supposes that they represent currency interpreted as actual money (so that if cash
is materially absent, so is money).26 Indeed, such magnetic traces do not represent cash,
however we employ the term money. Cash, rather, is just like the magnetic traces on computer disks in being an accounting device that can serve as means of effecting payment.
Real payment in a credit economy is the discharging of debt using debt, i.e. of discharging typically private, very often consumer, debt using positioned (bank or state-backed)
debt or some such. In a modern credit economy, it is the stuff successfully positioned as
state-backed debt that can fulfil the functions traditionally associated with money.
7. The commodity theory of money
How about the commodity theory of money? The likely issue of contention here is not
so much how the framework set out would accommodate it, but whether, given the
account of money I am defending, commodity money has, in the course of human history, in fact ever existed. I will be suggesting that there is evidence that it has.
More importantly for my main concern, though, is that there clearly is not a problem
in principle for the conception I am advancing of accommodating the idea of a commodity being constituted as money. For a commodity form of money would simply
be any commodity that, being perceived as a transferable form of value, is positioned
within some community as a generalised form of value to serve as a general means of
payment, including medium of exchange. As in the case of credit money, this requires
that a specific unit of account be held in common throughout a community and that
commodities are rendered commensurable in terms of values.
The process of social positioning, in the case of commodity money, is (or would
be) once more an essential feature. In the same way that money in a credit economy
is never credit per se but credit appropriately positioned, so money could never be a
commodity per se but rather a commodity appropriately positioned. But if or where a
relevant commodity is accepted as being positioned as the general form of value, then
it is constituted as money. It is this symmetry of positioning of credit and (in principle
26
Searle writes: ‘Another case is the case of electronic money, where what exists are electronic representations
of money; for example, magnetic traces on computer disks in banks. There need be no physical realization of
the money in the form of currency or specie; all that exists physically is the magnetic traces on the computer
disc. But these traces are representations of money, not money’ (2010, p. 20, emphasis in the original).
Social positioning and the nature of money 981
at least) of a commodity as money that I am suggesting renders both the credit and the
commodity theories compatible as accounts of the nature of money, and indeed as two
instances of the positioning theory being defended.
What sorts of commodities might be harnessed in the manner suggested? Clearly,
not any commodity that is quickly perishable or of which it is easy to produce/supply
additional quantities, except perhaps in unusual circumstances. The commodity needs
to be recognised as a transferable, accessible, reliable, though restricted, form of value.
But where, or if, an appropriate commodity is so positioned, then identifiers (such
as cash) need not be employed; passing around units of the positioned commodity
(assuming fixed units can be determined) would be the means of payment. That observation, though, does not mean that payment could not be effected using say convertible paper representatives for reasons of convenience (e.g. gold certificates to represent
a holding of gold). The latter, though, may not be necessary.
As I say, the issue of contention here is not whether a commodity could so serve, but
whether in fact any ever has. A common presumption is that gold and silver have. But
the counter position is that the real money was always (a positioned form of) debt and
that in times where technology was such that any equivalent of modern counterfeitproof notes and coins of limited intrinsic value could not be produced, then gold or
silver circulated to render difficult the task of forging or augmenting these markers of
underlying relations of debt. Therefore according to these interpretations, even when
gold and/or silver circulated, perhaps as early coins, the latter were the means of effecting payment but never the means of payment itself; the latter always was constituted by
(appropriately positioned) debt.
Gold and silver have not been the only items held by commodity theorists to have
served as money, however. In particular it is widely held that in early North American
history, and specifically during parts of the Colonial Period 1612–1776, beaver fur and
wampum were used as money in some parts of the country, whilst fish, corn and rice
were so used in others.
Many of these claims may not withstand scrutiny. Interestingly, though, everyone seems
to agree that tobacco was positioned as money for a period in the state of Virginia and
surrounding areas. Not only was this particular item of value employed as a generalised
form of value and used as a general means of payment for purchasing goods, this tobacco
currency was also used to pay fines and taxes. Because of a scarcity of coins, Virginia,
and indeed Maryland and North Carolina, used tobacco as currency throughout most of
the colonial period. In 1619 the Virginia legislature ‘rated’ high-quality tobacco at three
shillings per pound and in 1642 made it legal tender (see Breen, 2001). Most business
exchanges in Maryland, as well as levies, were conducted in terms of tobacco. North
Carolina used tobacco as a general means of payment until the outbreak of the Revolution
in 1775. In 1727, because of fluctuations in tobacco prices, Virginia introduced a system
of ‘tobacco notes’, certificates issued by inspectors of government warehouses.
The weaknesses of tobacco as currency—notably, lack of portability and variability
of value—became more apparent with time and tobacco money was eventually abandoned in the second half of the eighteenth century (see Scharf, 1967; Breen, 2001).
But at no stage was tobacco interpreted as a token of some central authority’s (redeemable) debt, which somehow underpinned the use of tobacco to discharge individual
debts. It was the tobacco itself, with given quantities (so many pounds) valued in the
prevalent unit of account (shillings) and positioned/accepted as the general form of
value, that (was the value item that) served these functions.
982 T. Lawson
As I say, it is not that credit theorists deny this account; even the most ardent appear
to acknowledge it. Rather, most respond by describing those periods where commodity money of the sort just described emerged as exceptional, as not normal. That is as
may be. But if such episodes happened, then any conception of the nature of money
must be one that can accommodate the form of money that prevailed. This, as we have
seen, is something the conception I am defending can certainly do.
Therefore I think it clear that the framework laid out can accommodate the historical
record, whether or not the stuff positioned as money has mostly taken the form of debt
and however exceptional or unexceptional are the occasions when the positioned item
has been a form of commodity.
In short, a conception of the nature of money has been elaborated that both coheres
with such historical evidence as is widely accepted and can encompass supposedly
incompatible prominent accounts as particular instances.
The discussion has, given my objectives, necessarily proceeded in a rather analytical
fashion, rather than drawing on existing sources. As such, I suspect it might be useful,
before concluding, to examine how the account advanced does compare to some existing contributions to theorising the nature of money, particularly those contributions
that are seemingly the most prominent, influential and/or familiar.
In the following sections I focus in particular on the contributions of Karl Marx,
Alfred Mitchell Innes and John Maynard Keynes.
Perhaps Knapp’s State Theory of Money (Knapp, 1973 [1924]) should also have been
included. But the current paper is already overly long, whilst it can be argued that
Innes27 essentially (albeit implicitly and seemingly unknowingly) encompasses Knapp’s
conception in fundamental respects within his own credit theory, an assessment modern state theorists seemingly accept (see, e.g., Wray, 2014). As my concern at this point
is to indicate that prominent accounts are compatible with, and are perhaps manifestations of, the account I am defending, I hope that a focus on the apparently more general
contribution of Innes, which encompasses Knapp’s basic position, is sufficient.
I will consider the three contributions for examination in reverse chronological order
and therefore start with Keynes. In each case I must be especially brief.
8. John Maynard Keynes’s theory of money
Keynes opens his A Treatise on Money as follows:
Money of account, namely that in which debts and prices and general purchasing power are
expressed, is the primary concept of a theory of money. (Keynes, 1971 [1930], p. 3, emphasis in
the original)
By money of account, Keynes means a system of measurement, including a unit of
value, for expressing the relative values of items. It is the primary concept for Keynes
in the sense that it is a necessary precondition for recording debts, prices and the like:
debts and price lists, whether they are recorded by word of mouth or by book entry on baked
bricks or paper documents, can only be expressed in terms of a money of account. (ibid., p. 3)
27
Although the family surname at some stage was apparently Mitchell-Innes (with a hyphen—having
originally been Mitchell in fact, though also with ancestors called Innes) in his publications this author wrote
only as Alfred Mitchell Innes (without the hyphen). Two very short publications on the nature of money
appeared in The Banking Law Journal in 1913 and 1914 respectively. The second of these starts with an
editor’s note that, in referring back to the 1913 article, refers to its author as Mr Innes. This was presumably done with the author’s knowledge and blessing. Indeed, the author himself, in his 1914 article, quotes
Social positioning and the nature of money 983
For Keynes, ‘money itself’ just is that thing or stuff that discharges debts and takes the
form of a store of value or general purchasing power:
Money itself [is] … that by delivery of which debt contracts and price contracts are discharged,
and in the shape of which a store of general purchasing power is held [...]. (ibid., p. 3, emphasis
in the original)
This conception as so far elaborated fits easily with the one I am defending. Or at least
this is my interpretation. Others see things differently, however. It is sometimes suggested that, for Keynes, (i) money has no value, that to suppose it has is to confuse a
ticket for a performance with the performance, and/or (ii) any stuff used as money gets
the title money (or a character of ‘moneyness’) conferred by the money of account. Let
me indicate why I believe neither assessment is quite right.
The passage by Keynes that seems most to support the first alternative assessment
is the following, found in a 1914 Economic Journal review by Keynes of a book by
Friedrich Bendixen:28
Money is the creation of the state … money is the measure of value, but to regard it as having
value itself is a relic of the view that the value of money is regulated by the value of the substance
of which it is made, and is like confusing a theater ticket with the performance. (Keynes, 1914A,
p. 418)
First, I should acknowledge that Keynes does occasionally talk of fiat money and interpret it as ‘token money’, defining the latter as ‘something the intrinsic value of the
material substance of which is divorced from its monetary face value’ (ibid., p. 7). To
use the same term in different ways is, of course, always likely to confuse.
But it is clear enough from the (third) passage by Keynes noted above that ‘money
itself’ (without any qualifier ‘token’) is conceived in terms of ‘a store of general purchasing power’. This is value.
Furthermore, if we turn to Keynes’s Economic Journal review of Friedrich Bendixen,
we find that the extracted passage derives from a stage where Keynes is listing a set of
views that are not his own but Bendixen’s. The passage excerpted expresses these and
Keynes immediately adds:
With the exception of the last … these views are doubtless of the right complexion. (Keynes,
1914A, p. 418)
How about the second part of the alternative interpretation, the idea that any stuff obtains
the title money (or a character of ‘moneyness’) only due to its relation to the money of
account? The passage by Keynes that most encourages this reading is the following:
Money itself … derives its character from its relationship to the money of account, since the
debts and prices must first have been expressed in terms of the latter … Money proper in the
full sense of the term can only exist in relation to a money of account.
Perhaps we may elucidate the distinction between money and money of account by saying that
the money of account is the description or title and the money is the thing which answers to the
description. (Keynes, 1971 [1930], p. 3, emphasis in the original)
criticisms of his 1913 piece that make reference to Mr Innes. Moreover, in a review of the 1913 article
published in the Economic Journal, Keynes (1914B) also refers to Mr. Innes. All this certainly has led to the
convention thereafter of referring to the author in question as though the surname is Innes. As this practice
is now so widespread and ingrained in the literature I shall follow suit.
28
Published, incidentally, in same edition of the Economic Journal in which Keynes reviews Innes’s 1913
paper ‘What is Money?’
984 T. Lawson
Clearly, the money of account and the positioned stuff that is money are internally
related as components of the monetary system. This much is clear. However, whilst
I can nowhere find a reference by Keynes to the term ‘moneyness’, the stuff positioned
as money gets its title from the position of Money that it occupies (just as an individual
obtains the title teacher, and any quality of teacher-ness, just by being allocated to the
position or post of Teacher).
The only title that a system of accounting or unit of value can confer, which the
money thing could answer to, is precisely the names of those units, namely dollars,
pounds, euros, etc.
Strictly speaking, of course, there are no such things as pounds, euros and dollars;
these are mere abstract accounting units and money itself, or the material of money,
I am suggesting, is always a rather more concrete (if not always observable) thing or
stuff. However in everyday activities it is a commonplace to hear references to money
(and money tokens) in those terms. Of course where money is debt/credit, instances
of the latter will only be brought into existence as stuff to be positioned in a system
where a pre-existing component is an accounting device denominated in units of
value. So it will be natural perhaps, if ultimately a conflation, to refer to and describe
the debt/credit itself in terms of these units of value, i.e. as so many dollars, euros or
pounds.
Therefore I maintain that Keynes’s basic account of money fits in substance with the
one I am advancing; there are differences of presentation, terminology and emphasis,
but not concerning issues of substance or significance.
A feature of Keynes’s account that does carry significance (one, though, that I again
interpret as indicating commonality with my own) is that he clearly allows that the
term money to be also associated with stuff other than credit/debt (and its token markers). In particular, commodity money is also accommodated in his thinking:
‘Commodity money’ is composed of actual units of a particular freely obtainable, non-monopolised commodity which happens to have been chosen for the familiar purposes of money, but
the supply of which is governed—like that of any other commodity—by scarcity and cost of
production. (ibid., pp. 6–7)
What are these familiar purposes of money to which Keynes refers? Keynes, we have
seen, remarks that the delivery of money allows debt contracts and price contracts to
be discharged and a store of general purchasing power to be held. Thus, presumably,
Keynes’s commodity money allows these functions to be served too, at least as a theoretical possibility.
In fact Keynes does appear explicitly to acknowledge not merely the real possibility
of commodity money so functioning, but also its actuality. For he not only gives examples of forms of commodity money that have prevailed (ibid., p. 6), he even suggests
that ‘In the 18th century commodity money was … the rule’ (ibid., p. 14)
Here, I am not seeking to take a view on the historical accuracy of the details of
Keynes’s assessments. The point, rather, is that the account of Keynes, if less than fully
elaborated in terms of essential ontological categories—and I do though think that the
clarity would increase from having the category of ‘position’ explicitly and systematically elaborated—nevertheless fits quite well with the broader ontological conception
that I am advancing.
Social positioning and the nature of money 985
9. Alfred Mitchell Innes’s theory of money
According to Alfred Mitchell Innes, at least most of the time, the notion that commodities ever served as a medium of exchange is essentially without foundation. It is a notion
that Innes29 spends much effort seeking to refute and for which he seemingly holds
Adam Smith largely responsible (see Innes, 1913, p. 391). For Innes, instead, any ‘sale’:
is not the exchange of a commodity for some intermediate commodity called the ‘medium of
exchange’, but the exchange of a commodity for a credit.
There is absolutely no reason for assuming the existence of so clumsy a device as a medium of
exchange when so simple a system [employing debt obligations] would do all that was required.
What we have to prove is not a strange general agreement to accept gold and silver, but a general
sense of the sanctity of an obligation. In other words, the present theory is based on the antiquity
of the law of debt. (ibid., p. 391)
And so we arrive at Innes’s credit theory of money. Money is credit that has value and
constitutes movable and transferable purchasing power:
A first class credit is the most valuable kind of property. Having no corporeal existence, it has no
weight and takes no room. It can easily be transferred, often without any formality whatever. It
is movable at will from place to place by a simple order with nothing but the cost of a letter or a
telegram. It can be immediately used to supply any material want, and it can be guarded against
destruction and theft at little expense. It is the most easily handled of all forms of property and
is one of the most permanent. It lives with the debtor and shares his fortunes, and when he dies,
it passes to the heirs of his estate. As long as the estate exists, the obligation continues, and under
favorable circumstances and in a healthy state of commerce there seems to be no reason why it
should ever suffer deterioration.
Credit is the purchasing power so often mentioned in economic works as being one of the principal attributes of money, and, as I shall try to show, credit and credit alone is money. Credit and
not gold or silver is the one property which all men seek, the acquisition of which is the aim and
object of all commerce. (ibid., p. 392)
For Innes, then, it is clear that it is obligations taking the form of credit/debt that matter and constitute the basis of money. It is credit that is the transferable form of value.
In its turn, any value possessed by credit depends on the financial situation and
trustworthiness of the debtor:
The value of a credit depends not on the existence of any gold or silver or other property behind
it, but solely on the solvency of the debtor, and that depends solely on whether, when the debt
becomes due, he in his turn has sufficient credits on others to set off against his debts. (ibid.,
p. 393)30
And in a manner similar to the state theory of money associated with Knapp and the
chartalists, Innes notes how state-backed credit has value not least through its being
rendered a compulsory means of paying taxes:
It is the tax which imparts to the obligation its ‘value’. A dollar of money is a dollar, not because
of the material of which it is made, but because of the dollar of tax which is imposed to redeem
it. (Innes, 1914, p. 165)
See footnote 27 for an explanation of the reference here to Innes rather than to Mitchell Innes.
Or: ‘The … value of credit or money does not depend on the value of any metal or metals, but on the
right which the creditor acquires to “payment”, that is to say, to satisfaction for the credit, and on the obligation of the debtor to “pay” his debt and conversely on the right of the debtor to release himself from his debt
by the tender of an equivalent debt owed by the creditor, and the obligation of the creditor to accept this
tender in satisfaction of his credit’ (Innes, 1914, p. 152).
29
30
986 T. Lawson
However, whilst insisting that all money is credit, Innes at times writes as though it is
equally the case that all or any credit is money. Thus at one point, making reference to
some A and B that seemingly could be anyone, he suggests:
Money, then, is credit and nothing but credit. A’s money is B’s debt to him, and when B pays his
debt, A’s money disappears. This is the whole theory of money. (Innes, 1913, p. 402)
Of course, and as already noted, we can each make words mean what we like. But if
any and all credit/debt were money, then money per se would be rather unremarkable
and certainly incapable of serving the various functions (traditional or otherwise) that
are regularly associated with it, including serving as a general means of payment. In any
case, and unsurprisingly, credit theorists have tended to ignore this aspect of Innes’s
account and instead provided alternatives wherein, even if the essential category of
social position is unelaborated, it is only certain very restricted forms of debt that
constitute money.31
A broader question that is of interest here, given the conception I am elaborating, is
whether credit has been the only sort of thing that has ever been (and could ever be)
positioned as money. Given that Innes seems to hold that positioning is not involved even
when credit serves as money, it is unsurprising that he is reluctant to allow that commodities could ever function as money. And, as noted, Innes’s contribution is indeed essentially a relentless historical debunking of any notion that money could ever have been
other than credit.32 Nevertheless, at one point, albeit only momentarily, Innes does seem
to allow that his thesis is not as universal as his rhetoric mostly suggests, at least with
respect to all forms of commodity money. For he writes (with italics added by myself):
There is not and there never has been, so far as I am aware, a law compelling a debtor to pay
his debt in gold or silver, or in any other commodity; nor so far as I know, has there ever been a
law compelling a creditor to receive payment of a debt in gold or silver bullion, and the instances
in colonial days of legislation compelling creditors to accept payment in tobacco and other commodities
were exceptional and due to the stress of peculiar circumstances. Legislatures may of course, and do,
use their sovereign power to prescribe a particular method by which debts may be paid, but we
must be chary of accepting statute laws on currency, coinage or legal tender, as illustrations of
the principles of commerce. (Innes, 1913, p. 393)
Even so, all circumstances that actually came about are part of human history, even if
appearing peculiar to Innes. If tobacco, and possibly other commodities, denominated
31
Thus Ingham writes: ‘But not all credit is money. My personal acknowledgment of debt in the form of a
promise of deferred payment/settlement (IOU) of the credit extended to me by my particular creditor is not
readily transferable. That is to say, it cannot be used by her to pay an anonymous third party’ (Ingham, 2011,
p. 18). And: ‘On the one hand, it is oxymoronic to view “personal credit” as money. This would make sense
only if all agents were able to issue their own liabilities (IOUs) and get them widely accepted as a transferable means of payment. In capitalist economies, this “top” means of payment consists in the issue of a state’s
mint and in its liabilities, drawn on the central bank, which are injected into the economy in payment for the
goods and services that the state purchases’ (Ingham, 2011, p. 20).
32
Innes summarises some of his arguments as follows: ‘Now if it is true that coins had no stable value,
that for centuries at a time there was no gold or silver coinage, but only coins of base metal of various alloys,
that changes in the coinage did not affect prices, that the coinage never played any considerable part in commerce, that the monetary unit was distinct from the coinage and that the price of gold and silver fluctuated
constantly in terms of that unit (and these propositions are so abundantly proved by historical evidence that
there is no doubt of their truth), then it is clear that the precious metals could not have been a standard
of value nor could they have been the medium of exchange. That is to say that the theory that a sale is the
exchange of a commodity for a definite weight of a universally acceptable metal will not bear investigation,
and we must seek for another explanation of the nature of a sale and purchase and of the nature of money,
which undoubtedly is the thing for which the commodities are exchanged’ (Innes, 1913, p. 390).
Social positioning and the nature of money 987
in the prevailing unit of account, were positioned as general forms of value to serve the
function of being a general means for cancelling debts in the process of trade and so
forth, then they were indeed constituted as money. This conceptual possibility became
an actuality and so credit positioned as money and the position in which it is placed
are not identical, however much the former may hog the latter.
Ultimately, then, Innes’s account of money, as with that of Keynes, is found to be a
version of the conception I have set out. It is somewhat fundamentalist in emphasis,
more so than that of Keynes anyway, in that credit is clearly regarded as the stuff of
money and Innes is seemingly reluctant even to afford specific types of credit a special
(positional) status.33 But, in the end, in briefly, albeit reluctantly, recognising tobacco as
a (peculiar and provisional) commodity money, Innes effectively, if implicitly, acknowledges (and certainly presupposes) something like the category of the Money position.
Ultimately, then, Innes’s account, as I say, constitutes a conception that does cohere
with that which I am defending.
10. Karl Marx’s theory of money
Finally, I briefly want to consider something of the contribution to this topic by Karl
Marx who, unlike Keynes and Innes, is seemingly inclined towards a commodity theory of money. Certainly, this is so in volume I of Capital (Marx, 1974A) where the
focus is on simple commodity circulation. Indeed, here Marx starts his chapter on
money by announcing that ‘Throughout this work, I assume, for the sake of simplicity,
gold as the money-commodity’ (Marx, 1974A, p. 97).
Marx set out his conception of money in numerous different places and his views
continuously evolved. In later volumes of Capital, his account becomes more complex and developed as he considers a fully advanced capitalist mode of production.
Moreover, his intended meanings at any point are widely contested and I cannot enter
the debate here other than very partially. But I think I can briefly establish that Marx
33
I might note in passing that as soon as Innes’s theory first appeared in 1913, it was reviewed by Keynes
(1914B) for the Economic Journal, which he edited, and not overly sympathetically. Thus in the review
Keynes starts by saying straight out that: ‘The fallacy—if I am right in thinking that his theory of the effect
of credit is a fallacy—is a familiar one, and it will not be worthwhile to discuss it in this review. The distinctive value of the pamphlet arises from a different source, as indicated below, and the writer’s strength is on
the historical, not on the theoretical, side’ (Keynes, 1914B, p. 419). But nor, it emerges, is Keynes overly
impressed by Innes’s use of the historical evidence, with Keynes complaining that: ‘This position Mr. Innes
endeavours to establish by an historical inquiry, the value of which is, unfortunately, much diminished by
an entire absence of any references to authorities’ (Keynes, 1914B, p. 420). Further, in his 1930s’ A Treatise
on Money, Keynes appears to be addressing Innes when he argues explicitly that the idea that money is, or
can be, a commodity is not undermined by a historical change in units, by coins having a greater value than
their metal content or by the practice of clipping: ‘Commodity Money does not cease to be such merely
because the unit of commodity is changed in kind or diminished in quantity. There is no evidence, until
long subsequently, of money which was, in any significant degree, representative or token. A coin might
have a value somewhat superior to that of its metal content, because of the convenience and prestige of the
coin, or because the stamp was a guarantee of fineness and acceptability, or merely because of its aesthetic
qualities—as the dollar of Maria Theresa has, in modern times, commended itself to the nomadic Arabs of
Africa. A seigniorage, too, might be charged for the service of mintage. There were token coins for very small
denominations of currency. And clipt or worn money might circulate amongst the vulgar at its face value.
But the characteristic of these examples are not enough to constitute Representative Money in the proper
sense of the term. The true link between Commodity Money and Representative Money is to be found,
perhaps, in Commodity Money, the supply of which is limited by absolute scarcity rather than by cost of
production, and the demand for which is wholly dependent upon the fact that it has been selected by law or
convention as the material of money and not upon its intrinsic value in other uses—as, for example, in the
case of the primitive stone moneys of Polynesia’ (Keynes, 1971 [1930], p. 12).
988 T. Lawson
made many remarks that suggest his basic conception of money does also fit with the
framework advanced above, even in his writings on simple commodity circulation in
‘volume I’. Let me quickly elaborate (focusing primarily on the latter).
A first feature to observe is that, for Marx, money is certainly a form of value,
indeed the general form of it. Each commodity, of course, is an individual form
of value. When one such individual form becomes the universal equivalent (in the
terminology of the current paper, becomes positioned as the general form of value,
one that can thus be exchanged for—is rendered equivalent to—any other), it
becomes money:
The universal equivalent form is a form of value in general. … The particular commodity, with
whose bodily form the equivalent form is thus socially identified, now becomes the money commodity, or serves as money. (Marx, 1974A, p. 74)34
What is involved in money’s constitution? Marx starts his analysis of money (as later
did Keynes) by noting in effect that the primary concept is a money unit of account,
one in which the values of other items can be expressed. Of course Marx does so in a
scenario where it is presumed that the money object is a commodity. As a result, the
prevailing unit of account, whatever the manner in which value-accounting systems
emerged, will necessarily be directly related to specific quantities of the commodity
used. Thus quantitative units of it will in effect serve as (be directly related to) a money
unit account. In consequence, in such a system, the material of money, namely that of
the commodity accepted (positioned) as money, will supply the substance in terms of
which the values of all other items of value can be expressed:
The first chief function of money is to supply commodities with the material for the expression of
their values, or to represent their values as magnitudes of the same denomination, qualitatively equal,
and quantitatively comparable. It thus serves as a universal measure of value. And only by virtue of this
function does gold, the equivalent commodity par excellence, become money. (Marx, 1974A, p. 97,
emphasis in the original)
Values or prices expressed in terms of the units of any commodity money are, of course,
worked out in the heads of participants to processes of exchange or payment (and are in
this sense ‘ideal’). Such prices as relative values will thus vary according to which commodity is employed to provide the material of money.35 This scenario presupposes that
commodities are already commensurable in terms of value,36 that the basic unit of the
34
This is taken from Capital volume I. But, of course, it is held throughout that money is a form of value.
Thus in volume III, for example, we find: ‘But what is money? Money is not a thing, but a definite form of
value, hence, value is again presupposed’ (Marx, 1974B, p. 863).
35
Marx writes: ‘When, therefore, money serves as a measure of value, it is employed only as imaginary
or ideal money. … But, although the money that performs the functions of a measure of value is only
ideal money, price depends entirely upon the actual substance that is money. The value … contained in a
ton of iron, is expressed in imagination by such a quantity of the money-commodity as contains the same
[value …] According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of
iron will be expressed by very different prices, or will be represented by very different quantities of those
metals respectively. If, therefore, two different commodities, such as gold and silver, are simultaneously
measures of value, all commodities have two prices—one a gold-price, the other a silver-price’ (Marx,
1974A, p. 99).
36
As Marx insists: ‘It is not money that renders commodities commensurable. Just the contrary. It is
because all commodities, as values, are … commensurable, that their values can be measured by one and
the same special commodity, and the latter be converted into the common measure of their values, i.e., into
money. Money as a measure of value, is the phenomenal form that must of necessity be assumed by that
measure of value which is immanent in commodities’ (Marx, 1974A, p. 97).
Social positioning and the nature of money 989
money stuff is divisible and combinable37 and that for the system to work at all, the valueaccounting system, including a unit of account, is accepted throughout a relevant community, a condition ultimately requiring that the money standard be regulated by law.38
For Marx, of course, a central focus is market exchange, the buying and selling of
commodities. Certainly, this is so in volume I of Capital. Specifically, with his conception
of money in place, Marx’s primary concern is how such a money functions as a medium
of exchange or, in his terms, a means or medium of commodity circulation; the system
function served is precisely that of facilitating a circulation of commodities between owners. As commodities circulate, money moves in the opposite direction, thus becoming an
expression of commodity circulation (though giving the impression of being the prime
mover).39 This is possible because, with money being a general form of value, the individual values of all commodities have an independent reality when expressed in terms of it.40
The foregoing are features often reproduced in discussions of Marx. An aspect of it all
that seemingly figures less, but which is significant given my own perspective and concerns, is that, in developing these various arguments and analyses, Marx never equates
any commodity per se with money. When considering gold specifically, Marx repeatedly
uses phrases such as ‘gold, the material of which money consists’ (1974A, p. 110) or
‘the value of the material of money, i.e., the value of the commodity that serves as the
measure of value’ (1974A, p. 119), often stating explicitly that ‘gold, when a mere commodity, is not money’ (1974A, p. 106). More expansively, Marx writes in Grundrisse:
Gold and silver, in and of themselves, are not money. Nature does not produce money, any more
than it produces a rate of exchange or a banker. … To be money is not a natural attribute of gold and
silver, and is therefore quite unknown to the physicist, chemist etc. as such. (Marx, 1973, p. 283)
Marx, then, or so I am suggesting, in effect separates money qua positioned commodity from the commodity per se that happens to be positioned as money. To become
money, a commodity or whatever has to be accepted (appropriately positioned) as a
component in the wider totality, which is or includes a system of commodity exchange.
In order to be successfully positioned, the stuff in question must have value. On being
positioned, the commodity or whatever gains a new identity and stands in new relations
37
Though arbitrarily selected, this unit measure must of course be divisible and combinable: ‘They are
now capable of being compared with each other and measured, and the want becomes technically felt of
comparing them with some fixed quantity of gold as a unit measure. This unit, by subsequent division into
aliquot parts, becomes itself the standard or scale. Before they become money, gold, silver, and copper
already possess such standard measures in their standards of weight, so that, for example, a pound weight,
while serving as the unit, is, on the one hand, divisible into ounces, and, on the other, may be combined to
make up hundredweights’ (Marx, 1974A, p. 100).
38
Whatever the basis on which the names of units are chosen, they necessarily change over time and in
due course at least, because they need to be everywhere accepted, the system is regulated by law: ‘These
historical causes convert the separation of the money-name from the weight-name into an established habit
with the community. Since the standard of money is on the one hand purely conventional, and must on the
other hand find general acceptance, it is in the end regulated by law … The prices, or quantities of gold, into
which the values of commodities are ideally changed, are therefore now expressed in the names of coins, or
in the legally valid names of the subdivisions of the gold standard. Hence, instead of saying: A quarter of
wheat is worth an ounce of gold; we say, it is worth £3 17s. 10 1/2d. In this way commodities express by their
prices how much they are worth, and money serves as money of account whenever it is a question of fixing the
value of an article in its money-form’ (Marx, 1974A, pp. 102–3, emphasis in the original).
39
Thus Marx writes: ‘Hence although the movement of the money is merely the expression of the circulation of commodities, yet the contrary appears to be the actual fact, and the circulation of commodities seems
to be the result of the movement of the money’ (Marx, 1974A, p. 117).
40
‘Again, money functions as a means of circulation only because in it the values of commodities have
independent reality’ (Marx, 1974A, p. 117).
990 T. Lawson
to everything positioned differently, and most especially to (other) commodities, with
the value of its material becoming a measure of value of all commodities.
If Marx, then, albeit without using the category, effectively recognises a distinction
between position and that which is positioned, there is no reason in principle for him to
oppose the possibility of something other than a commodity being positioned as money, so
long as it is a trusted form of value. Of course the possibilities imagined may well depend
on the theory of value maintained and from where it is thought that value originates.41 But
clearly, for Marx, the basic precondition is that money is a positioned form of value.
With this in mind, I note too that Marx does always accommodate the notion
of credit money. This is most obviously the case when in volume III of Capital he
turns his attention to developed forms of capitalism, focusing on ‘capitalistically
developed nations, which to a large extent replace money, on the one hand, by credit
operations, and on the other by credit-money’ (Marx, 1974B, p. 516).42 But it is
present in the analysis of simple circulation of volume I as well. Moreover, Marx
there suggests, just as credit theorists do, that credit and debt qua money took root
in the non-market sphere serving as a means of payment for discharging debts and
the like.
Two observations might be emphasised here. First, Marx uses the phrase ‘means of
payment’ to refer to a functioning of money in this context, but only outside the sphere
of commodity circulation. Within the sphere of circulation, this function is referred to
only under its medium of exchange or circulation aspect. Second, Marx distinguishes
not only money based on credit and backed by tokens but paper representatives (certificates) of commodity money. In Marx’s scheme, the latter is the only ‘true paper
money’ and whereas ‘credit money’ arises in the course of the means-of-payment function being served, true paper money, like the commodity money it represents, arises in
the sphere of commodity exchange to aid as a medium of circulation:
just as true paper money takes its rise in the function of money as the circulating medium, so
money based upon credit takes root spontaneously in the function of money as the means of
payment. (Marx, 1974A, p. 127)
Credit-money springs directly out of the function of money as a means of payment. Certificates
of the debts owing for the purchased commodities circulate for the purpose of transferring those
debts to others. On the other hand, to the same extent as the system of credit is extended, so is
the function of money as a means of payment. (Marx, 1974A, p. 139)
I note, furthermore, that Marx is very clear that his ‘true paper money’ is but a
token or symbol of the real thing.43 He recognises, moreover, that in order for it
41
As is well known, Marx focuses on (produced) value as specific to capitalism, taking the commodity
form, and relating the value of any commodity directly to the amount of (socially necessary) labour power
expended in its production. Clearly, this theory is not something to elaborate upon here (for elaborations
see Fine, 2001, 2003; Brown, 2008).
42
In volume III, Marx observes that: ‘The credit given by a banker may assume various forms, such as bills of
exchange on other banks, cheques on them, credit accounts of the same kind, and finally, if the bank is entitled
to issue notes—bank-notes of the bank itself. A bank-note is nothing but a draft upon a banker, payable at any
time to the bearer, and given by the banker in place of private drafts. This last form of credit appears particularly
important and striking to the layman, first, because this form of credit-money breaks out of the confines of mere
commercial circulation into general circulation, and serves there as money; and because in most countries the
principal banks issuing notes, being a peculiar mixture of national and private banks, actually have the national
credit to back them, and their notes are more or less legal tender; because it is apparent here that the banker
deals in credit itself, a bank-note being merely a circulating token of credit’ (Marx, 1974B, p. 408).
43
Marx writes: ‘Paper money is a token representing gold or money. The relation between it and the
values of commodities is this, that the latter are ideally expressed in the same quantities of gold that are
symbolically represented by the paper. Only in so far as paper money represents gold, which like all other
commodities has value, is it a symbol of value’ (Marx, 1974A, pp. 128–9).
Social positioning and the nature of money 991
to so function as a token/symbol, it too must be accepted as being appropriately
positioned (to use my terms) or, equivalently (in Marx’s own terms), as possessing
objective social validity. Such validity is aquired by virtue of its ‘forced currency’ by
the state:
One thing is, however, requisite; this token must have an objective social validity of its own,
and this the paper symbol acquires by its forced currency. This compulsory action of the
State can take effect only within that inner sphere of circulation which is coterminous with
the territories of the community, but it is also only within that sphere that money completely
responds to its function of being the circulating medium, or becomes coin. (Marx, 1974A,
pp. 129–30)
I suspect I do not need to go on. My intention here is not to elaborate all aspects of
Marx’s thinking and I am consciously seeking to avoid (as unnecessary) any engaging
of his theory of value or his monetary history. My point is that Marx lays out a conception that, as an account of the nature (rather than history) of money (rather than of
value per se), is seen to be an instance of the conception I am defending.
For Marx, money, whatever its roles or the consequences of its generalised pursuit
in advanced capitalist society, serves first and foremost as a medium of circulation
(resting on its means-of-payment function). In order for some X to be able to serve
this function, it must, prior to positioning, be a transferable form of trusted value and
circulation can occur in conditions where all commodities are measured in the same
units of account.
Marx, at least in volume I of Capital, focuses on various commodities as the most
appropriate stuff or things to be positioned as money. But he does not confuse money,
as a positioned commodity, with the commodity itself. Rather, a commodity, on being
positioned as money, must and inevitably does assume ‘a form of social existence separated from the natural existence of the commodity’ (Marx, 1973, p. 145). In distinguishing money and (any) commodity (i.e. in distinguishing in effect the Money position and
stuff to be positioned), Marx, like Keynes after him, does, conceptually at least, avoid
reducing the material of money to a single entity (even if, quite unlike Keynes, he seemingly believes everything emerged from forms of commodity exchange and credit money
is basically a derivative form). At the level of ontology, Marx’s account does not require
that the material of money is a commodity or anything particular,44 so long as it is a reliable form of value.45
As with all the other contributions, Marx’s output would, I believe, benefit from rendering a notion of social positioning more explicit and systematic.46 But his numerous remarks reveal, I suggest, that something like it is presupposed or even embraced
throughout and that, whatever else is going on, Marx’s basic analysis, as an ontological
44
I am not of course the first to interpret Marx’s account as not necessitating that money is a commodity
(see, e.g., Williams, 2000, p. 435).
45
Marx believed that in times of crises it is value in the form of any money commodity that is most reliable and sought out.
46
In commodity exchange, it is not just money that is constituted via positioning. Commodities qua commodities are too. Thus on the occasion that a useful item or product is positioned as a commodity, it (i) gains
the identity of commodity, of an item for sale (usually involving having a price associated with it), (ii) is placed
as an item/commodity in a system of market exchange (perhaps in a shop window) and (iii) qua commodity
has its capacity (resting on its possession of value) to be exchanged for other things, and most especially
for money, interpreted as, or assigned as, its (system) function. Marx, it seems (see Scott Meikle, 2007),
could not make up his mind whether a product became a commodity prior to being exchanged or through
exchange. The conception of positioning helps us to see that (where the two are distinct) it is the former.
992 T. Lawson
account of money per se, is, if to repeat, a further instance of the general conception
I have been advancing.
11. Final comments
Like everything else that is social, money, I am suggesting, is constituted by way of
processes whereupon emergent social totalities are organised. Fundamental in this
are mechanisms of social positioning, whereby pre-existing items become incorporated as system components. Indeed, Money is precisely a social position. An
occupant of the position is incorporated thereby as a system component and a set
of its features harnessed to serve the system function of a general means of payment
(and thereafter any other system roles at any time given, or otherwise attached, to
money). An additional, presupposed and internally related, positioned component
of the same system is a particular subsystem of value measurement, the latter’s
properties being harnessed to serve throughout the relevant community as a common value-accounting device.
Any stuff or thing that constitutes a reliable, transferable form of value could in
principle be positioned as money. Traditionally, the items thought to have been so positioned are, or include, forms of debt/credit and commodities. Some observers doubt
whether commodities have been so positioned other than in extraordinary times; most,
though, agree that modern money stuff consists mostly or only of forms of debt/credit.
But in all cases, or so I have argued, in order to be constituted as money, the relevant
material, whatever it is, has to be appropriately positioned.
But so what? Most obviously, the framework provided can and does accommodate
various frequently held-to-be opposed and incompatible alternative theories of the
nature of money as essentially instances of the same basic conception.47 This recognition in itself is a significant clarification, entailing various implications, not least
regarding debates between those who suppose otherwise and support/dismiss one or
other of the thought-to-be incompatible views.
But at least as significantly, and as in previous studies of social positioning, the
results obtained render apparent the location and nature of forms of power that mostly
are hidden from view, yet are very significant indeed, not least in terms of their bearing
47
A number of studies focused in some way on the nature of money have appeared in recent years (see,
e.g., contributions by, Bell, 2001; Dodd, 1994, 2005; Fine and Lapavitsas, 2000; Goodhart, 1998; Graeber,
2011; Ingham, 1996, 2001, 2004, 2006, 2011; Lapavitsas, 2000, 2003, 2005A, 2005B; Peacock, 2003–04,
2006, 2013; Orléan, 2014; Smithin, 2003, 2009, 2013; Wray, 1998, 2004, 2014; see also those collected in
Pixley and Harcourt, 2013; Smithin, 2000). In fact, within this literature is a development systematised as
modern money theory (sometimes ‘modern money realism’), a sort of neochartalist approach that seeks
basically to transform all of modern macroeconomics by way of seeking a more realistic account of money.
An excellent primer on this theory is provided by Wray (2012).
Although in an already overly long paper I cannot survey this literature or explore even one contribution to it in any detail (in an earlier version of the paper I included a critical commentary on
the theory provided by the Cambridge sociologist Geoffrey Ingham, but the journal, understandably,
insisted on cuts to an overly long paper and this proved the easiest section to remove), my impression
is that in most if not all cases the emerging accounts provided, at least where intended as conceptions
of the nature of money, do also fit with the conception here defended. (I might note that not all recent
accounts are intended as theses on money’s nature, however. In particular, Mark Peacock, in an excellent text in which a modest style belies the impressive scholarliness of the contribution, adopts just the
opposite orientation to my own; Peacock explicitly avoids addressing questions concerning the nature
of money and concentrates instead on historical accounts of how things—with functions some associate
with money—evolved.)
Social positioning and the nature of money 993
upon the social structuring of the contemporary world and the real possibilities for
human freedom and general well-being.48
For in a world where the pursuit of money has become an end in itself, taking on the
appearance (as a result of long-term restructuring of society induced by this pursuit)
of being something that is normal or natural and seemingly driving almost everything,
the ability/right to create money (the money thing: how much, when and for what end)
is a form of power indeed.
As it happens, in most modern economies, control of monetary creation is a contested affair wherein state and private bank activities are mediated by the actions of a
public/central bank (with clearly conflicted interests). If a consequence is that no single
agency controls the outcome, it is clear enough, nevertheless, that private banks can
and do contribute significantly to money creation49 as and when they want, and for
whatever purpose.
Yet banks, as well as their individual agents, are themselves caught up with the goal
of accumulation, of seeking money or ‘profit’ for its own sake. This will inevitably
affect the manner in which bank credit is created, i.e. for whom, when and for what
purposes, as will the recognition that the state (i.e. all of us) is guaranteed to back
them up in the face of significant losses. In all this there is no reason to suppose that,
in creating money, banks would act in ways that are especially beneficial to many in
the community.50
At the same time, the government retains responsibilities to an electorate who, as
well as pursuing the accepted means of payment, are concerned with their survival and
the meeting of human needs. The result is that state representatives, regulatory bodies
and (or the government via) the public/central bank, will often take actions that seek
to curb various excesses of banking activities, albeit actions that are frequently resisted
and often, at least in part, circumvented.
It is easy to see, then, even from this brief sketch, that the underlying monetary
reality is a contested affair of continually evolving, often mutually conflicting, structures, mechanisms and potentialities, many of which support tendencies that can be
48
Previously, I examined how firms qua communities have gained access (in the name of incorporation)
to a position not designed for them, namely that of Legal Person, and thereby to certain associated positional
rights that were intended for natural (human) persons, including rights of ownership. It is this form of positioning, along with the idea of limited liability for shareholders, that allows multinationals to own (the shares
of) subsidiaries interpreted as legally separate entities and for which they have only limited liability in law.
Given such a legal contrivance, the scope for manipulating the resources of the world and simultaneously
escaping the effects of local regulations, not to mention responsibility for damages incurred by subsidiaries,
are truly astonishing (on this see especially Lawson, 2015C). Yet lacking the positional framework to orientate discussion, critical responses have mostly focused on effects rather than structural conditions/causes and
so are mainly restricted to designing incentives that encourage multinationals to act in ways that minimise
the extent of local damage and exploitation and the like (see Lawson, 2015B, 2015C). For a development of
that assessment, see Morgan and Sun (2016).
49
As I say, although they can create money, they do not control its creation; nor do they control its value
(the latter is determined by the interactions and contestations of all in the community, as well as of many of
those outside it where, if amongst other things, national currencies are traded as commodities).
50
Currently, the significant mechanism of money creation by banks is through the construction of customer deposits, which constitutes making loans to others. Banks though do not use this mechanism to seek
to meet the monetary needs of the community. Rather they are profit seekers, and the overriding incentive
is to loan money where short-term returns are judged as most lucrative and preferably guaranteed. Thus
banks are especially keen to support the purchase of existing assets (rather than stimulate the production of
new ones), particularly real estate (for a recent persuasive discussion see Turner, 2012, 2016; for an earlier
discussion see Keynes, 1971 [1930]), or to lend large amounts to the government, where the reliability of
the borrower is indeed more or less assured. Given the latter situation, it is easy to understand the banks’
traditional encouragement for costly state-led adventures such as wars.
T. Lawson
994 T. Lawson
as antagonistic to the interests of the community as a whole as they are hidden, and
certainly absent, from general perception and understanding.
Therefore as everything evolves, the task of understanding the situation in any depth
will always be a demanding one. At the heart of any endeavour to this end, a continuous questioning of the nature of money and of its place in the whole system will
remain a fundamental feature. Questions concerning the size of the money supply and
its consequences, the demand for liquidity, whether or not tax payers should pay for
banking disasters, the use of monetary targets, whether more, less or different forms of
regulation are required, how to treat the shadow banking system, the (dis)advantages
of a universal (worldwide) currency, etc., are all important and regularly pursued. But
they cannot be adequately addressed without a continual systematic elaboration of the
nature of money itself, and in a fashion coherent with revealing how it fits with and/or
is frequently being readapted to the wider processes of social constitution and societal
transformation in general.
Of course once, or if, a theorising of processes of social positioning takes centre
stage, it may well be that we spend more time assessing not just the sort of stuff (or
even type of credit) that is best used as money, the terms on which new money is
created or which agencies may or may not do it or control it, including the merits of
outlawing altogether the various practices of private/commercial bank money creation,
but also whether we, the community as a whole, should still be ‘accepting’ the position
of Money (and so any occupants of the position) at all—and in consequence imagining ways of organising ourselves, and living life, without it. Whatever the case social
ontology remains central.
As a final general observation or inference, it appears in the end that there is little
limitation as to the sorts of phenomena that human ingenuity can subject to processes of social positioning. If human beings are themselves positioned as components
of communities (Lawson, 2012A), artefacts are (amongst other things) positioned as
components of other artefacts (Lawson, 2012A), collective practices are positioned
forms of the coordinating structure of a community (Lawson, 2016A) and corporations are examples of positioned (sub)communities harnessed as components of the
wider capitalist industrial community (Lawson, 2015A, 2015C), it is forms of value
that are positioned as money. And in a credit-as-money economy at least, this means
that relational elements of the social structure themselves, namely specific forms of
social (debt/credit) relations, are positioned items. However strange the latter form
of positioning may seem, and however precarious may be the outcome, we should
recognise that this is a condition around which the capitalist economy everywhere is
organised.
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