Money, The Fallacy of - LEAN LOGIC (2024)

(Argumentum ad crumenam)

The fallacy that money speaks the truth, that it is the unchallengeable basis for judgment, and that argument can be reduced to financial calculation.

Money in the form of coins was invented by the Greeks in the seventh century BC (see “Money” sidebar above), and the implications of this innovation were profound. A society without money has to organise all its exchanges and reciprocities in other ways.

In fact, there are three ways of doing it, only the first of which is benign:

1. Community. Here we have a network of duty, loyalty, belonging, love, gifts and cooperation within the family and the locality—relationships of reciprocal obligation and mutual dependence which come together to build a texture of common purpose. The distribution of goods and services is integrated into the tissue of social interdependence. Deals are not closed with the payment of an invoice, and the network of open-ended, unsettled obligation joins people together and sustains the social order.M25

2. Contest. This means of distribution and reciprocity without money is what remains after the failure of a state. There is no money; there is no settled community; there is violence, fear, uncompromising power and control. Tightly-knit groups, rivalries and chance do not underpin anything that is permanent or attractive, but they are the default position when all else has failed. It is possible, over time, that they can learn, recover and establish a legal or cultural framework for the recognition of rights and contracts, but here and now—for a long first phase—we have grief mitigated only by proof that, when things are life-and-death critical, it is possible to get by without money.

3. Autocracy. A society that is organised around absolute control over what its people do has no use for money as a means of giving material expression to individual choice. As the historian Glyn Davies summarises:

The greater the stratification of society and the more efficiently meticulous the planning system, the less necessary is it for people to use money.M30

We meet some extremely autocratic regimes in Unlean, and one of the uses to which the authorities put their power in these regimes is the construction of supergiant projects such as the Grand Canal in China and the Pyramids in Egypt. There is no freely entered contract, no agreement on wages, in political economies such as these.

Our word for the labour contract in such autocracies would normally be “slavery”, but not all unpaid work is slavery; the “informal economy”, which includes working without pay in one’s own household, in voluntary organisations, in the community or as an intern for work experience, are not forms of slavery. On the other hand, working in an autocratic economy and receiving no income from any source because money has not yet been invented is slavery, but in a special sense for which we have no word. “Moneyless employment” sounds like a terrible euphemism, but maybe it will have to do. In a pre-monetary society, all obligations—wherever they fell between the extremes of voluntary/benign and enforced/cruel—belonged somewhere in this range between local-family loyalties and control by the absolute power of the state.

So, a moneyless economy may or may not mean a profound absence of freedom, but as a means of maintaining resilient freedom under changing conditions, the effectiveness of money in the setting of a market economy has been proved. That does not diminish the central importance of the informal economy of mutual aid that to some extent we still have—not least in our own homes, in our communities and among our friends—nor the case argued by Lean Logic for substantially informal, moneyless community as the model for human society with a long-term future. But it is a reminder to do nothing to dismantle the money-based market economy before, all too soon, it starts to disintegrate of its own accord.

Let us now go back to the first of the three forms of moneyless economy, that of benign reciprocity. Ancient Greece was in many ways an authoritarian society, and its work was done on the basis of moneyless employment. But Greece did also develop a strong concept of citizenship. Its politics varied, and it went through some bad times but, basically, it was not an obedience-based, power-based autocracy. It recognised the shared rights and obligations of citizenship and conversation. It devised its own democracy on several occasions. It had a rich mythology. It produced scientists and philosophers of enduring world standing. The network of obligations that enabled it to exist as a complex society was based on a mixture of duties and loyalties, involuntary and voluntary, intended and unintended, oppressive and relaxed.

Then—rather suddenly, and as an event outside anyone’s experience—came the new development: money. Exchange would now be impersonal. Transactions—the supply of goods and services—were concluded when the payment was made, with no remaining sense of obligation. This is a convenient system, but it can be lonely, and we see the early shock of discovery of this new loneliness in the Athenian theatre of the time. Rules about unconditional obligations towards kin, and between subjects and rulers, seemed suddenly to vanish, and Greek tragedy explored the implications: the breakdown of relations; incest and murder within families. Money became the value, ‘the bottom line’; it put the grim into reality. We see this being recognised in the first decades after money’s establishment: the Theognidea, an anthology of elegiac poetry noted, with regret, that ...

For the mass of humankind, the only virtue is money, compared to which self-control, knowledge, rhetoric, speed of foot are of no account. [Here we have] the power of money to displace all other values.M31

Greek myth drew a moral from all this: spontaneity and money do not mix. Money makes you plan ahead. Midas, for example, is pleased to discover that everything he touches turns to gold—until he realises that this includes his food. Erysichthon, as a punishment for cutting down a sacred grove to build a banqueting hall, has the curse of insatiability placed upon him; after eating everything in sight, he eats himself. And money disempowers by weakening and, in places, ripping up, the network of connections by which we recognise each other, and which keeps us sane. It gears up error: if you make a mistake and there is money involved, you will be in big trouble.M32

In fact, there have been long periods since its invention when the significance of money has been relatively subdued. Greece learned to live with it, to a considerable extent; and in the English medieval period, though it was by no means a money-free economy, most of the transactions of daily living were based on kinship and loyalties, on payments in kind (e.g., contributions of labour, or a share of the harvest), on the obligations of common ownership, or on the duress—which could be harsh—of many forms of land tenure. Later on, the change brought by the Industrial Revolution was a slow process of the erosion of all other values by the market’s single convenient abstraction—money. But it was not the lurking existence of money that was the root of the trouble; rather, it was the market’s dominance which allowed money to become the core value—the unit in terms of which ethics became substantially defined.

In the mature market, it is taken to be self-evident, despite some hard-fought exceptions, that money and prices are an accurate, if incomplete, calibration of ethics. Rising incomes are taken to be a reliable sign of rising living standards and well-being; the life of a traditional people can sometimes, carelessly, be taken to be benighted because their incomes do not register on the scale of money; equality of income and wealth is a core political aspiration; carbon trading can be judged a success because of the wealth that comes from it; the case for genetically modified food crops is borne out by the wealth of the industry.M33

Money can bring numerous benefits, such as security, power, food, housing, music—and freedom, when combined with institutions such as democracy. These are tasks for which the record of other models of large-scale social order is poor. But when money emerges as the unchallenged value, there is vacancy. Money does not love, or remember, or tell stories; it does not care, recognise you or lick your face. It confers power, for good or bad, but in itself it is empty of meaning, and values and philosophy that are based on it are empty, too.

If money is the only criterion for justice, the only justice is equality, but at a time when the convergence of economic, environmental, energy and social problems threatens to destroy us, there may be larger aims—such as mitigating the crash, or recognising the human ecology as a complex system, or the defence of freedom, or maintaining human ecologies on the small scale which makes them possible. Such aims might not only take priority over an egalitarian distribution of money; they could be impaired or even blocked by it.

In fact, as Richard Wilkinson and Kate Pickett show in The Spirit Level, equality can indeed help to procure the conditions for many of the properties which we would recognise as essential for a decent life: mental and physical health, and low levels of crime, drug-dependence and obesity. But they do not show that it is equality itself that does it—the connection that matters is not that between equality and well-being, but a more nuanced and well-established link from social capital and community to well-being; and equality may take its place there as a property of community.M34

To see this, we need to be clear what scale of community we are talking about, for it is possible for a community with equality to exist in a nation in which there is inequality. For example, English villages for a millennium or so enjoyed, in varying degrees, cooperation, reciprocity, social capital and trust, making the best of their equality of disadvantage, relative to those on whose manorial estates they lived. Some were too paralysed by poverty to do any such thing but, in the case of those that did build social capital, it is not evident how much, if at all, this was impaired by the existence of inequality within the nation as a whole. And Wilkinson and Pickett cite the example of the Chicago heatwave in 1995, where two communities with different degrees of social capital and trust responded in very different ways: African-American communities, with low trust and high levels of crime, were too frightened to open their windows or doors, or to leave their homes to go to local cooling centres and—since neighbours did not check on neighbours—hundreds died, whereas . . .

... in equally poor Hispanic neighbourhoods, characterised by high levels of trust and active community life, the risk of death was much lower.M35

In a modern nation, in which local holonic community is weak, equality is, by default, measured on a large, nationwide scale. There is almost no such thing as a self-contained community, significantly distinct from the rest, and able to use the benefits conferred by its local equality and social capital to the full, despite inequalities at the national level (Local Wisdom). In this context, Wilkinson and Pickett’s evaluation of equality at a national level makes sense: here, the loss of community has led to intensive competition for relative advantage: now you have to look after yourself, for the community isn’t going to do it for you. The failure of social capital and community exposes people formerly protected by community—with its common destinies and equalities—to the inequalities endemic in the nation. And that means that failing to achieve equality or relative advantage is a much tougher and more miserable state than it would be if strong community still existed. So the cause-and-effect is from the loss of social capital and community to the loss of well-being; inequality and its resentments are symptoms.

But the usefulness of this nationwide perspective is, in a sense, a special case. It is only helpful when studying industrial societies where strong communities of equality-within-inequality have declined, along with the overall decline of social capital. Where the complex layers and deep structures of other societies’ local communities and local equalities are taken into account, it turns out that inequality at the national level can coexist with community, social capital and trust.

The poverty—in food, water, shelter, liberty, money and opportunity—of some half the population of the world is extreme, indefensible, and dangerous for all of us. Nonetheless, “equality” has acquired the standing of an abstract good, the commonplace ethic of progressive first world politics for which it is equality as a monetary value—rather than empowerment, social capital and a future—that dominates. In that context, equality and well-being do not converge. The idea that they do, and that money has the solution, is a self-evident, often paralysing ideology that leaves a trail of tears. Writing as someone who has done more to enrich lives than any mere philosopher, and who knows how essential imagination and focus (lean means) are to getting results, Andrew Mawson does not recognise such presumptions as helpful. He writes that they . . .

... bedevil real change in the public sector and threaten to destroy initiative and enterprise. My experience ... suggests that admitting the world is fundamentally unfair and unequal—but full of glorious diversity—is ironically the first step to simulating greater participation, a widening of opportunity for all and an increase in wealth creation. ...

Anyone who wants to know what [the overriding objective of] equality means in practice has only to look around the poor-quality housing on our estates to know just how unjust this thinking is. Here everything is fair and equal—equally mediocre.M36

It is when people are able to take their minds off the equality problem and the resentments it builds that a sense of trust can be created, and social capital developed. Then we can . . .

...grow a strong and honest sense of belonging and community, focused around a shared practical task.M37

Money’s distant, impartial measurements take the pressure off having to be present, as the Greeks discovered to their dismay. The age of economics is in awe of money, and deferential towards it, as are some of the liberal critics who have grown up in it.

Despite priding itself on its truculent lack of deference in any of its forms, the market economy defers to money as the real value, the bottom line, that everyone can believe in. Deference crowds in with every sweep of the broom intended to get rid of it. And this dominant, expert, sycophantic, infantile vision, seeing only monetary value, and full of certainty that it is true, eats its way through the human ecology.

Related entries:

Economism, Dollar-a-Day Fallacy, Empowerment, Nation, Local Currency.

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