Catherine Cowley
It is very easy with this subject to spend one’s time stunning people with the sheer size and complexity of global finance. The figures are so far outside our experience that it is a struggle to imagine them. A US Senator famously remarked, “a billion here, a billion there, and pretty soon you’re starting to talk serious money.” Well, the activities of the finance sector can be measured, not in billions, but in trillions of dollars per day. The speed at which the sector operates is likewise hard for the ordinary person to grasp. So important is speed that one financial institution spent US$36 million on its computer system in order to gain access to the Tokyo stock exchange two seconds quicker than its rivals. Even a cursory examination of the consequences of how global finance operates reveals features which are potentially destructive. But that is not the approach I shall be taking in this paper. Instead I want to look at the subject at a more fundamental level.
If one wants to move from situation A, where one is now, to situation B, where one wants to go, one needs to work out the appropriate steps to take. This process relies on having as exact a description of situations A and B as one can muster. If the description of situation A is inaccurate, or missing an important element, it is difficult to move in the desired direction. The purpose of the first part of this paper is an attempt to re-describe part of situation A, that is, the nature of finance in a global economy. The second part briefly indicates some of the consequences of that re-description.
It is a commonplace to suggest that economic factors are pivotal in driving globalisation forward. A globalised economy is far more advanced than a globalised politics. However, in this paper I am going to suggest that, if we are to understand what is happening, we need to refine that assumption. What I will argue is that economic factors are themselves driven: they are the working out of underlying phenomena. Of these, the most pervasive and influential is money.
Despite a widespread obsession with money, it is one of the most nebulous concepts in economic activity. Most of what counts as money has no physical existence – it is merely electronic traces in computer memories. That last sentence contains one of the basic problems: not the statement about its non-physicality, but the phrase “what counts as money”. Because “what counts” is in a constant state of flux.
At the individual level we think we know what money is. Yet money, like time for St. Augustine, tends to become more elusive the closer it is examined. Economics, and with it monetary policy, has no generally agreed definition. There is a vigorous, and, so far, inconclusive debate about how it is to be measured, rendered almost insoluble by the impossibility of defining what we want to measure. Hence the proliferation of definitions: MO, M3, M4 and so on. Yet these definitions are forever mutating – a problem which has come to be known as “Goodhart’s law”. As soon as a particular instrument or asset is publicly defined as money in order to be controlled, that asset ceases to be used as money because substitutes will be produced for purposes of evasion. This leads to difficulties in monetary policy and regulation. “Failure to define money satisfactorily renders its measure and control mostly a matter of educated guesswork and psychological gerrymandering, a craft rather than a science.”
Despite that, money is taken for granted by ecomics in the sense that it is abstracted from its social and cultural context, and treated in isolation from its deep symbolic functions. It is not possible, therefore, for economics to debate many of the ethical issues attached to money, simply because there is no suitable framework for such a discussion. Neither does the standard approach of business ethics towards the financial sector help, as it treats money, by ignoring it, as if it were simply a commodity like any other commodity. It is not. Nor is it even a commodity with significantly different characteristics to other commodities produced and consumed. The obscuring of its essential differences from other commodities has prevented a clear analysis of the very nature of the ethical implications of money, particularly for the finance sector operating as it does within a mature money economy.
In money, finance possesses a distinguishing characteristic which in part explains the fascination and power which the sector exercises. It is money itself which determines the nature of the sector, its activities, and the relationships within it and with the rest of the economy. Most contemporary discussion of money and monetary problems has been highly mechanical, focusing on the technical details. However, money is not, as both classical and neoclassical economics suggest, simply a neutral, transparent token which mediates the exchange of goods and services. Whenever and wherever money is used, it is not defined by its properties as a material object but by symbolic properties. There is a need to focus on the social relationships that monetary transaction involves, not the objects which mediate those relationships. Because of its cultural and symbolic associations, money has had, in ways seldom adverted to in the standard literature, a profound influence on features of the free market such as freedom, individualism, power and the very nature of the market. What has become increasingly important is money’s ability to represent economic value symbolically. These qualities are linked to the ideal of unconstrained freedom and empowerment, unlimited possibilities for its use, being co-extensive with the idea of economic empowerment in itself.
Certain properties are intrinsic to money. They include: mobility, transportability, potentiality, dynamism. It has a fiduciary character backed by the state and by an extraordinary atmosphere of generalised trust in its symbolic reality – a reality which expresses the mutual exchangeability of things to satisfy our desires. In a paper of this length I am unable to explore the significance of all these features. Instead I shall focus upon just a couple, that is, the instrumentality of money and its impact on freedom, and suggest how they are implicated in the nature of international finance and the moral issues they generate. What follows is, inevitably, merely an outline of their consequences.
The first of these features is the instrumentality of money. It is the ultimate tool. Tools extend our intention and decision far beyond the present moment by enabling us, perhaps in roundabout ways, to construct a teleological series of actions. Purposive human action is characterised by the tendency to engage in series of actions where the attainment of the end is only achieved by the attainment of intermediary ends. This requires the use of means. These teleological series are chains of means which are co-ordinated to produce a certain goal.
A tool is increasingly valuable to the extent that it has various and extensive uses for which it is, relatively speaking, the best. In doing so, the tool must become more neutral and more objective in relation to particular interests and more remote from any specific purpose. Consequently, money is the ultimate tool. In function of its lack of relationship to any specific purpose “money is the tool that has the greatest possible number of unpredictable uses and so possesses the maximum value attainable in this respect.” It becomes the ultimate way to construct and co-ordinate these series of means to given ends in purposive action.
Money, in its role of an instrument or tool, allows the construction of longer and longer means-ends chains in which more and more of the apparent goals have no ultimate significance, but matter purely as way-stations to further goals. This leads to fewer and fewer points of satisfaction for purposive action. Satisfaction – in any ultimate sense – is endlessly deferred as money enables these teleological chains to extend themselves on and on.
Not only that. Because the extension of the length of teleological means-ends chains implies a greater distance between the person and the object of his endeavour, it increases the probability that ends become obscured and that means tend to become ends, or for ends to be confused with means. This is because money becomes conceived as purpose and, in consequence, things that are really ends in themselves are thereby degraded to mere means. But since money itself is an omnipresent means, the various elements of our existence are caught up in an all embracing teleological nexus in which no element is the first or the last. We lose our ability to distinguish between means and ends.
But the way that money constructs these longer means-ends sequences has advantages. Not only can they be highly differentiated and complex, money enables us to side-step potential disputes about intended ends or goals. A worker does not have to agree particularly with the ultimate ends of the productive process she is engaged in because she is paid in money. This allows her to pursue independently her own ends. However, even here a disadvantage emerges. Through money “exchange relations become increasingly complicated and mediated with the result that the economy necessarily establishes more and more relationships and obligations that are not directly reciprocal.” Distance in relationships is structurally obligated; the humanness of our interactions is going.
Turning now to the second feature of money, that is, its shaping of freedom. Money obviously empowers its holder by virtue of its purchasing power. It also gives freedom of choice. It adjusts with equal ease to every form and every purpose that the will wishes to imprint it with. It gives “to consciousness that free scope, that… self-extension through an unresistant medium, that self-absorption of all possibilities without doing violence or denying reality, all of which are part of any aesthetic enjoyment.” Yet it has not led to greater human creativity. Rather, it has diminished it, limited it. We can contrast freedom from something with the freedom to do something. What money gives in a mature money economy is something closer to the first possibility, that is, freedom from. It is a freedom empty of any content, having only the negative connotation of the removal of constraint. It opens up freedom of choice, but does not enhance our freedom in choosing. In itself freedom is an empty form which becomes effective, alive and valuable only through the way it serves the development of other life-contents. Money opens more options but it does not enhance our essential ability to choose between them.
What it does, though, through its emphasis on quantitative assessment and acquisition, is to become the central and absolute value. Objects become valued only to the extent that they cost money and the quality of value with which we perceive them appears only as a function of their monetary cost. The significance of money replaces the significance of things and of relationships. This implies that money will enhance real freedom only when it is grounded in essential freedom which is able to evaluate the multiple goods of human life. The other option is that “those life contents will be stunted whenever money is treated as an end in itself. This is exactly what has happened in modern society. Money, as the ultimate economic instrument, has turned into the ultimate economic goal. It has imploded in on itself as mammon.”
An example which brings together the earlier point about non-reciprocal relationships and obligations, with this latter aspect of freedom was in sixteenth century Italy. It demonstrates the beginnings of the move from money as an instrument to money as a goal. Two City Republics stood in contrast to each other: Venice, where private citizens were fairly wealthy but the state was extremely wealthy, and Genoa, whose citizens had enormous private wealth in an impoverished state. The reason for this was that Venetians traded in goods and Genoese in money.
Trading in goods is complicated, especially over long distances. You have to look for cooperation and employees within adjacent groups since this sort of trade, of its nature, imposes bonds. Elaborate physical and relational infrastructures are required which are predicated on continuity and the quality of relationships. With money, however, the relational nature of the transaction has changed from one which required close and continuing links within a specific community to one of impersonality, independence and differentiation. Its owners are able to detach themselves from groups which are perceived as heavily restricting their freedom. As Simmel observed, it enables the independence of the individual from the group. It emphasises individualisation and autonomy; the ability for individuals to refer primarily to their own beliefs, values and preferences in conducting their own existence and, indeed, to fashion for themselves those ideas.