Orrell & Chlupatý, The Evolution of Money

We’ve been on this journey before, but writers keep returning to the fascinating story of money. In The Evolution of Money (Columbia University Press, 2016) David Orrell and Roman Chlupatý offer a new take, one that is more conceptual than historical, one whose final chapter is titled “Utopia.”

First, on a purely historical note, they set the record straight about the origin of money. It is not the case, as is commonly accepted, that money arose out of a barter economy. “Coin money did not supersede barter; rather it was predated by state-backed systems of credit. And rather than emerging naturally, with government and its legal system only stepping in at the last moment to claim credit by putting its stamp on everything, the use of coin money was imposed by government in the first place. It was forced on the population….” (pp. 28-29)

Money, they argue, is inherently dualistic and reflects the unstable relationship between number and value. Moreover, the history of money oscillates between periods of virtual and physical money. “During a virtual phase, money is seen primarily as mathematical debt—a score in a ledger—while in a physical phase, money is seen primarily as material wealth. However, the two sides cannot be separated, so money always retains the essential characteristics of each.” (p. 54)

The authors use this dualistic framework to trace attitudes toward money over time. For the most part they reorganize the familiar in a new way. But, in describing the cycles of virtual and physical money, they sometimes wander off in strange directions.

Here’s one instance. They claim that “the psychology of money … has much to do with our attitude toward femininity. For example, it is often said that market behavior is driven by the twin emotions of greed and fear. These responses both shape and are programmed by our scarcity-based monetary system. But while they have been treated as normal by economists … psychologists might argue that there is something else going on. In his book The Mystery of Money, Bernard Lietaer points out that this fear, which affects so much of our economic life, is related to our repression of the life-giving abundance of the feminine principle.” (pp. 115-16)

And a few paragraphs earlier: “Today, currencies such as the dollar and pound, with their Federal Reserve and Old Lady of Threadneedle Street, are in a state of transition. They retain many of the trappings and pretensions of their old scarcity-based, gold standard versions, but in fact are completely virtual. They are male-principle virtual currencies dressed up as female-principle physical currencies—money in drag.” (p. 114)

At its best, the authors believe, “money is virtual and can exist in a variety of forms.” (p. 195) Once we accept this view of money, they argue, our attitude to it changes. For instance, ”the strongest impediment to basic income is psychological—it seems unfair to give scarce funds away for nothing. But if basic income were delivered using a complementary currency, similar to Alberta’s old Prosperity Certificates, it would be more clear that the funds represent a kind of birthright.” (p. 195)

I appreciate the authors’ agenda, and I have no doubt that we will see a range of currencies, mostly digital, in the future as well as an increase in non-monetary transactions (such as gifting and, sometimes, sharing). I also think they are correct in predicting that “some of the most interesting [social, intellectual, and economic] developments will take place in the areas that are least well-served by our conventional money system, where the gap between number and value is the greatest.” (p. 236) But since money can never shed what the authors see as its inherently dualistic nature, even they concede that “money will continue to be a source of human drama and tension, no matter what form it takes.” (p. 237)