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Tag: philosophy of money

Georg Simmel’s Philosophy of Money: 2. The Value of Money as a Substance

  1. Georg Simmel’s Philosophy of Money: An Introduction
  2. Georg Simmel’s Philosophy of Money: 1. Value and Money
  3. Georg Simmel’s Philosophy of Money: 2. The Value of Money as a Substance
  4. Georg Simmel’s Philosophy of Money: 3. Money in the Sequence of Purposes
  5. Georg Simmel’s Philosophy of Money: 4. Individual Freedom
  6. Georg Simmel’s Philosophy of Money: 5. The Money Equivalent of Personal Values
  7. Georg Simmel’s Philosophy of Money: 6. The Style of Life

Having laid the philosophical groundwork for the conception of money, Simmel’s second chapter provides, loosely speaking, a genealogy of money, showing that as money is introduced into a barter economy, it gradually loses any specific character as it swells to encompass and merge distinct notions of value. Money becomes a totalizing, unifying substance, reifying the unity of a polity. Simmel develops a couple concurrent analogies in this chapter, particularly between money and love and money and politics. Working them out is tricky, particularly because Simmel seems to be invoking Kant’s first and third critique simultaneously, and I’m going to leave some gaps here in order to keep this entry at a manageable length. What I’ll present are the core schemata that Simmel sets up for conceptualizing money in terms of these other things.

The fundamental contrast is between the specific and the general. In this passage, Simmel analogizes money’s role to that of Kantian cognition (i.e., providing categorical, abstract form for concrete, sensible content), and specifically the transcendental unity of apperception. As money becomes more generic, it becomes less tangible and more conceptual:

The greater the role of money becomes in concentrating values—and this occurs not simply through the increase in its quantity, but through an extension of its function to more and more objects and the consolidation of even more diverse values in this form—the less it will need to be tied to a material substance; for the mechanical sameness and rigidity of a substance will become increasingly inadequate compared with the abundance, mutability and variety of values which are projected upon and consolidated in, the concept of money.

This process might be called the growing spiritualization of money, since it is the essence of mental activity to bring unity out of diversity. In the sensible world, things exist side by side; only in the sphere of the mind are they integrated. The elements of a concept form a unity, as do subject and predicate in a proposition; there is no equivalent in the world of directly perceived phenomena. The organism, as the bridge between matter and mind, is the first step towards such an equivalent; interaction merges its elements and it strives constantly for an unattainable perfect unity. Only in the mind, however, does interaction become real integration. The interaction of exchange brings about a mental unity of values. The spatially extended substance is only a symbol of money, because the disconnectedness of what exists as substance contradicts the nature of money as an abstract representation of interaction. Only to the extent that the material element recedes does money become real money, that is a real integration and a point of unification of interacting elements of value, which only the mind can accomplish.

Simmel stresses, however, just how alien this universality is to our own most intuitive systems of values. Just as he ended the previous chapter on money’s role in the singular calculus of human suffering, he begins by describing two incommensurable value systems, those of pleasure and pain:

The basic assertion of pessimism is that there is in life a considerable excess of suffering over happiness, that living beings, considered as a whole or on the average, experience much more pain than pleasure. It is quite impossible to make such an assertion, which presupposes that pleasure and pain can be directly balanced and set off against each other as two qualitatively equal magnitudes with opposite signs. In reality this is impossible because there is no common measure. When we suffer we cannot experience what amount of pleasure would be necessary to compensate for the suffering. How then can we explain that such comparisons are always being made; that in everyday affairs, in a coherent destiny, in the sum of an individual life, we judge that the quantity of enjoyment has fallen below or has exceeded the amount of pain? It is possible only because the experience of life has taught us, more or less strictly, how fortune and misfortune are actually distributed, how much suffering has to be accepted in order to attain a certain amount of pleasure, and how much of each is man’s usual portion. Only when we have formed some notion of this kind, no matter how unconscious and vague, is it possible to say that in a particular case a pleasure has been paid for too dearly—i.e. with too large an amount of suffering—or that in one individual life the pain exceeded the happiness. The average itself cannot be ‘disproportionate’ because it is the standard by which we determine whether the relation between feelings in an individual case is fair or not. In the same way, it is impossible to say that people on the average are tall or small, since the average provides the standard by which the individual is measured; and it is misleading to say that ‘time’ passes quickly or slowly, since the passage of time—i.e. the average experienced pace of events—is the measuring rod by which the quickness or slowness of the passage of single events is measured, while the average itself is neither quick nor slow. Thus, the pessimistic assertion that the average human life contains more suffering than enjoyment is methodologically just as impossible as the optimistic assertion of the contrary. The sensation of the total quantities of pleasure and pain (or, differently expressed, the average of them for an individual or for a period of time) is the original phenomenon, whose components cannot be compared with each other because this would require a measure independent of both and yet comprehending both equally.

…In so far as, in individual cases, the elements repeat the proportions that occur in the total quantities, then the elements have a’correct’, i.e. normal, average or typical relation, and deviations appear as a ‘preponderance’ or ‘disproportion’ of one element. In themselves, the elements in individual cases have no more a right or wrong, an equal or unequal, relation than have the totalities; they acquire such a relation only through the total quantities being established as an absolute, in terms of which the singular, the relative, is calculated. The absolute is not subject to the rules of comparison that it makes possible for the relative.

In other words, it is through a process of cognition, abstraction, and holistic conceptualization that we arrive at a way to reconcile two independent systems of value (in this case, pleasure and pain). It’s only because we have some common, societal conception of what are expected amounts of pleasure and pain that we can say that a person has a deficit of one in favor of the other. But that is really only calculated as a deviation from the two averages, not a reconciliation of the two value systems. This is a crucial point, for it is the same way that money operates–not by literally reconciling value systems, but by providing a universal, numerical unit of measure by which values of differing systems can be exchanged. Yet the establishment of these measures is purely an “objective” societal construct which floats free of any single system of values. If Platonism were true, then money could be said to embody the Form of value. But since Simmel is a nominalist, money is merely value-agnostic, and its abstraction is purely a human construct:

The value of things— ethical as well as eudaemonistic, religious as well as aesthetic—hovers, like the Platonic ideas, above the world; a realm that is governed by its own alien and intangible inner norms, but that lends relief and colour to reality. Economic value originates by derivation from these primary, directly experienced values, by weighing the objects in which values are incorporated against each other, so far as they are exchangeable. Within this area, however, economic value, no matter how it has constituted itself, has the same peculiar relation to the individual objects as has value in general. It is a world apart, in which the objects are classified and arranged according to particular norms which are not inherent in the objects. Objects that are ordered and related by their economic value form a cosmos that is entirely different from that formed by their natural and immediate reality. If money were really nothing but the expression of the values of things external to money, it would be related to things just as the idea, which Plato conceived also as a substantial, metaphysical entity, is related to empirical reality.

Thus, as value-neutral symbols (money) replace “real” goods, there is simultaneously a homogenization, a loss of specific significance, and a gain in commensurability:

One of the greatest advances made by mankind—the discovery of a new world out of the material of the old—is to establish a proportion between two quantities, not by direct comparison, but in terms of the fact that each of them relates to a third quantity and that these two relations are either equal or unequal. Two performances of entirely different quality are given; they become comparable if they display the same strength of will and self- sacrifice in relation to the required effort. Two destinies reveal very different degrees of happiness; yet they acquire a measurable relation if each is interpreted according to the extent to which its bearer deserved his fate. Two movements with quite different velocities can be related and equated if we observe that the acceleration from the initial stage is identical in each case. A kind of homogeneity emerges—and not only for our feelings —between two elements which, differing in their substance, have an equal relation to a third or fourth element. The one thereby becomes a factor for the calculability of the other. Furthermore, no matter how incomparable two people may be in their ostensible qualities, the relation of each to another person establishes an equality between them; as soon as one of them shows the same degree of love or hatred, domination or subjection, towards a third person as the other does towards a fourth person, these relations have established the separateness of personal identity. As a final example: the perfection of works of art of different kinds could not be compared and their values could not be arranged on a scale, unless each of them first had a definite relation to the particular ideal of its own kind. From the problem, the material and the style of each work of art, there evolves a norm which the actual work approaches more or less closely; and it is this relation that makes it possible to compare even the most diverse works of art. The possible conformity of such relations to a norm produces an aesthetic cosmos, a precise order, an ideal homogeneity in relation to value, from the individual works which are initially quite heterogeneous. This is not only true for the world of art. Out of the material of our isolated valuations there develops a pattern of graded significance. Disharmony is experienced only as a result of the desire for a consistent order and an inner relation of values. We owe this essential feature of our world view to our ability to balance against each other not only two things, but also the relations of these two to two others, and so unite them by judging them equal or similar. Money, as a product of this fundamental power or form of our mind, is not only its most extreme example, but is, as it were, its pure embodiment. For money can express the value relation between things realized in exchange only by equating the relation between a specific sum and some general denominator, with the relation between a corresponding commodity and the totality of commodities available for exchange. Money is not, by its nature, a valuable object whose parts happen to have the same proportion to each other or to the whole that other values have to each other. The significance of money is only to express the value relations between other objects. It succeeds in this with the aid of man’s developed intelligence, which is able to equate the relations between things even though the things themselves are not identical or similar. This ability only gradually evolves from the more primitive capacity to judge and express the identity or similarity of two objects directly, which is the source of the phenomena mentioned earlier that reflect the attempt to establish a direct relationship between money and its exchange values.

But the commensurability is grounded in nothing but the sensus communis. In keeping with Simmel’s dynamism, he paints the process of human experience as a back and forth journey between the sensible and the abstract–between form and content. This is exactly in keeping with Kant’s famous line “Thoughts [form] without content are emptyintuitions [content] without concepts are blind,” except that cognition has been naturalized into a dynamic system of life and experience. We do not synthesize them so much as oscillate between them to varying degrees. We lose substance as we move toward the universal, which is always inadequate to capture reality; we lose coherence as we move toward the specific, which can never be grasped in its immediacy. While moving away from wholly particular content is necessary for society to grow, a total embrace of a particular static symbolic form would result in a meaningless, boring existence. Consequently, any single symbolic form is inevitably taken apart, revised, and reconstructed.

On the one hand, the symbolic representation of reality increases, but at the same time, as a counter-movement, symbols are constantly analysed and reduced to their original foundation.

Only through the fact that the value of things has become detached from the objects and has acquired an independent existence in a specific substance is it possible for money to develop interests, movements and norms that, on occasion, act contrary to those of the symbolized objects. The activities of private enterprise, which are connected with money, promote the social interest of the production and consumption of goods so long as they remain merely endeavours, whereas the final attainment of their ends might undermine the aims of society. This type of situation is most frequently and decisively produced in those cases where emotional impulses strive for a final objective without being aware that all the hoped-for satisfaction is the consequence of relative advances, and may perhaps turn into its opposite when the goal is reached. I would call your attention to love, which receives its content and colouring from the desire for the closest and most permanent union, and frequently loses both when its object is attained; or to political ideals, which provide the strength and spiritual fervour in the life of whole generations but which, once they are realized, do not bring about an ideal condition, but practical materialism, torpidity and philistinism; or to the longing for a peaceful and undisturbed way of life, which is the goal of all effort and labour, yet which once accomplished often ends in idleness and inner dissatisfaction. It has indeed become a platitude to say that even happiness, though it is the object of all our endeavours, would be mere boredom if it were ever achieved as an eternal state.

So the point of money, just as with political ideals or love itself, is not to provide an ultimate goal. Rather, they make certain processes possible (commerce, politics, love) that would be beyond our conception without universalist abstraction. The telos of any of these things, however, is a mirage provided by the sheer generic emptiness of the symbol. “Love” gains meaning in the context of a particular relationship; “politics” gains meaning through a particular implementation.

In a passage that anticipates Karl Polanyi’s The Great Transformation, Simmel paints the back and forth political movement between individualism and socialism as a similar process of journeying toward a symbolic ideal, only to find that as progress is made, the original ideal loses its connection to the concrete circumstances which produced it:

The proportion in which an element and its opposite are combined and co-operate are naturally variable, sometimes in the sense that one element steadily increases while the other declines, so that the trend of the development appears to be one in which one element will finally supplant the other. But as soon as this happened and every trace of the second element disappeared, the sense and effectiveness of the first element would also be paralysed. This happens, for instance, with the opposition between individualism and socialism. There are periods in which the latter determines historical development, not only in reality, but also as an inference from ideal convictions and an expression of a developing conception of society which strives toward perfection. But if, in the party politics of such an age, it is then concluded that, since all progress depends upon the growth of the socialist elements, their triumph will produce the most advanced and ideal state of things, this overlooks the fact that the whole success of socialist measures depends upon the circumstance under which they are introduced into an individualistic economic system. The progress resulting from the relative increase of socialist measures does not justify the conclusion that their complete implementation would represent further progress. It is the same with periods of increasing individualism. The significance of individualistic measures depends upon the fact that centralized socialist institutions continue to exist; these can be progressively reduced, but their complete disappearance would lead to unanticipated results differing widely from those that individualism had previously brought about. In the field of art, the contrary tendencies towards naturalism and towards mannerism show a similar pattern.

By discussing the symbolic and the concrete in the context of politics and art, Simmel lays the ground for the case of money. Money is special. It is more difficult to grasp than “love” or “socialism” or “naturalism” because it has no conceptual ideal. It is, at best, a meta-ideal, a container for particular ideals–which, without content, are themselves empty. For you programmers, money is the base class, java.lang.Object. Money is only pure exchangability, the ability to move between any value systems. It is “the mere expression of the reciprocally measured value of things.”

The relationship between the intrinsic value of money and its purely functional and symbolic nature may develop in analogous fashion; the latter increasingly replaces the former, but a certain measure of the former has to be retained because the functional and symbolic character of money would lose its basis and significance if this trend were brought to its final conclusion. It is not only a formal analogy that is in question here, but the unity of the deeper meaning of life, which is expressed in this external similarity. In practice, we can only cope with the variety of elements and tendencies that make up life by allowing our behaviour, in every context and at every period of time, to be governed by a uniform and one-sided principle. But in this way the diversity of reality catches up with us again and again, and weaves our subjective striving, along with all those factors that oppose it, into an empirical existence which allows the ideal to enter reality. This does not imply a denial of the ideal; life is adapted to such absolute strivings as its elements, in the same way as the physical world is adapted to motions that, if left unimpeded, would have inconceivable consequences, but that, as a result of their meeting with counterforces, produce the orderly world of natural events. If the practical world is formed in such a way that our will is focused upon eternity and only attains the world of reality by being deflected and rebuffed, then here too the structure of practical life has predetermined the theoretical structure. On innumerable occasions, our concepts of things are made so unalloyed and absolute that they do not reflect experience, and only their qualification and modification by opposing concepts can give them an empirical form. However, these concepts are not for that reason thoroughly bad; it is precisely through this unique procedure of exaggeration followed by retraction in the formation of concepts and maxims, that a view of the world which is in conformity with our understanding emerges. The formula through which our mind establishes a relation with the oneness of things, which is not directly accessible, by supplementing and reproducing it, is in practice as well as in theory a primary too-much, too-high, too-pure. It gains the consistency and scope of reality and truth only by means of restraining contrasts. Thus, the pure concept of money as the mere expression of the reciprocally measured value of things, which has no intrinsic value of its own, remains completely justified, although in historical reality this concept is consistently disparaged and limited by the contrary concept of money as possessing intrinsic value. Our intellect can grasp reality only as a modification of pure concepts, which, no matter how much they diverge from reality, are legitimized by the service they render in the interpretation of reality.

Money is the transport between the sensible and the formal, and is itself something by which we make that journey. (This dual nature is confusing, which is why Simmel started with love and politics and art.) We go back and forth between thinking of money as an abstract (and meaningless) measure of absolute value, then assessing a particular object or service in (concrete) monetary terms. Money constrains reality into a monodimensional conception of value, making it graspable for us, the returns us to reality when we are brought to another particular monetary exchange for a good or service.

Playing this powerful role, money orders and regulates our sentiments, as all value systems tend to accrue and be sublimated to it, such that all the potential value wrapped up in money can have monumental and catastrophic effects on the tenor of society:

Alongside the influence of local conditions, it is the stability and reliability of social interaction or, as it were, the consistency of the economic domain that prepares the dissolution of money as a substance. This is illustrated by the fact that money brings about a continually increasing number of effects while it remains itself immobile. The notion that the economic significance of money results simply from its value and the frequency of its circulation at any given time overlooks the powerful effects that money produces through the hope and fear, the desire and anxiety that are associated with it. It radiates these economically important sentiments, as heaven and hell also radiate them, but as pure ideas. The idea of the availability or shortage of money at a given time produces effort or paralysis; and the gold reserves that lie in the bank vaults as cover for their notes demonstrate clearly that the merely psychological representation of money is fully effective. In this instance, money can truly be described as the ‘unmoved mover’.

And, rather presciently, he describes the function of material money, either coin or paper, as basically an archaic residue, not something actually needed for money to function as a symbol. The physical instantiation of money is deceptive, belying its wholly abstract, wholly generic, and wildly diverse function.

Thus, to return to the analogies used previously, while the deepest and most sublime love may be that between two souls, which excludes all carnal desire, so long as such love is unattainable, the sentiment of love will develop most fully where a spiritual relation is complemented and mediated by a close sensual bond. Paradise may fulfil the promise of eternal bliss under conditions in which the consciousness of bliss no longer requires the contrast of opposite emotions, but, as long as we remain human, positive happiness depends upon the contrast with our other experiences of pain, indifference and depression. Thus, although money with no intrinsic value would be the best means of exchange in an ideal social order, until that point is reached the most satisfactory form of money may be that which is bound to a material substance. This condition does not imply a deviation from the persistent trend towards the transformation of money into a purely symbolic representative of its essential function.

The greater the role of money becomes in concentrating values—and this occurs not simply through the increase in its quantity, but through an extension of its function to more and more objects and the consolidation of even more diverse values in this form—the less it will need to be tied to a material substance; for the mechanical sameness and rigidity of a substance will become increasingly inadequate compared with the abundance, mutability and variety of values which are projected upon and consolidated in, the concept of money.

This process might be called the growing spiritualization of money, since it is the essence of mental activity to bring unity out of diversity. In the sensible world, things exist side by side; only in the sphere of the mind are they integrated. The elements of a concept form a unity, as do subject and predicate in a proposition; there is no equivalent in the world of directly perceived phenomena. The organism, as the bridge between matter and mind, is the first step towards such an equivalent; interaction merges its elements and it strives constantly for an unattainable perfect unity. Only in the mind, however, does interaction become real integration. The interaction of exchange brings about a mental unity of values. The spatially extended substance is only a symbol of money, because the disconnectedness of what exists as substance contradicts the nature of money as an abstract representation of interaction. Only to the extent that the material element recedes does money become real money, that is a real integration and a point of unification of interacting elements of value, which only the mind can accomplish.

Instead, money becomes an empty symbolic container for value (any value), pure form.

In the development that I have outlined, money tends towards a point at which, as a pure symbol, it is completely absorbed by its exchange and measuring functions. There are many parallels in the history of thought. Our original, untutored interest in phenomena usually comprehends them as undifferentiated wholes. They confront us as a unity of form and content, and our valuations are bound to the form because it is the form of this specific content, to the content because it is the content of this specific form. In higher stages of development these elements are separated and the function as pure form is appreciated in specific ways. The diverse contents of these forms are often treated as irrelevant. Thus, for instance, we appreciate the religious mood while being indifferent to the dogmatic content. We consider it valuable that this elevation, striving and appeasement of the soul, which is the universal element in the many different historical creeds, should exist. Similarly, an exhibition of strength often elicits a respect which is denied to its consequences.

So while the movement from the particular to the formal grants structure, organization, and “meaning,” it also draws us away from particular individuating features of the particular, so that it threatens eventually to disconnect us from worldly matters (and worldly meaning) altogether. We end up with form and no content, and an attitude of total disinterest. Since money is, more or less, a conduit for exactly this movement, the implications of this disconnection from content will weigh very heavily on Simmel’s further analysis.

Georg Simmel’s Philosophy of Money: 1. Value and Money

[Continuing from my Introduction to Simmel’s Philosophy of Money.]

The first part (of six) of Simmel’s Philosophy of Money is the most abstract and the most philosophical. The whole book never quite descends to earth, but it’s at the beginning that he comes closest to Kantian transcendental-style arguments about how the categories of value affect our cognition of the world, though he ironically uses these in the service of attacking the a priori and theories of the a priori. And the central theme he uses is the idea of commensurability: that money provides the lubrication to reconcile and ultimately synthesize systems of value that are initially entirely distinct and incommensurable. It is without a doubt the hardest-going of the six parts, but it is the necessary foundation for everything that comes after, and possibly the most original and far-reaching.

We assign value to a human life, an animal, a romantic relationship, a friendship, to food, to sex–but by instinct and by the initial circumstances of human culture, these values are only very loosely comparable if at all, and quantifying the values and exchanging between them is something that either rarely comes up or is painful and dispute-ridden when it does. Limited ad hoc systems of exchange spring up, but they are arbitrary and unsatisfactory, and thus impossible to adjudicate consistently. Think of the Iliad and Achilles’ demand for some sort of compensation for the loss he’s suffered when Agamemnon took away Briseis from him. The arguments are vague, the values are ill-specified, and ideas of fairness and logic are inchoate. Value is not given to us by nature; it is human-generated in the messiest manner imaginable:

Their equality before the law of nature, the constant sum of matter and energy, the convertibility of the most diverse phenomena into one another, transform the differences that are apparent at first sight into a general affinity, a universal equality… The value of objects, thoughts and events can never be inferred from their mere natural existence and content, and their ranking according to value diverges widely from their natural ordering.

For Simmel, it is only with the introduction of neutral, intrinsically valueless currency that allows such negotiations to be made. Money is the mediating force that makes incommensurate systems of value commensurable. Since money is free of the bias and specificity of one or another particular system of value, you simply translate your values into quantified monetary figures (or even more concretely, your valuable but particular objects into generic currency), and you have now built an exchange between the two value systems.

Since the basic characteristic of all knowable existence, the interdependence and interaction of everything, also refers to economic value and conveys this principle of life to economic material, the essential quality of money now becomes comprehensible. For the value of things, interpreted as their economic interaction, has its purest expression and embodiment in money.

Only money, in terms of its pure concept, has attained this final stage; it is nothing but the pure form of exchangeability. It embodies that element or function of things, by virtue of which they are economic. It does not comprehend their totality, but it does comprehend the totality of money.

From this wellspring comes pretty much all the phenomena Simmel discusses. What begins as a nearly awe-struck tone at the power of money to absorb disparate values and build commerce grows more despairing and melancholic as the book goes on. Unlike Smith and certainly unlike Marx, Simmel does not see the benefits and deficiencies of modern economies to be separable from each other or from modern life itself. In this he echoes Henry Adams’ model of the dynamo, though Simmel displays less of Adams’ nostalgia and innate pessimism. Rather, his philosophy is one of pure dynamism, like that of Denis Diderot and Charles Sanders Peirce before him. Everything in life is part of a great system that participates in both sides of every extreme. But there is no Hegelian Aufhebung; there is no progression to a new level where contradictions are reconciled. Rather, the tensions and oppositions define the system. A static metaphysical conception of reality, sought by much philosophy as an endpoint of certainty, is a dead-end illusion, guaranteed to produce an “Is that all there is?” reaction in all but the truest believers. Dynamism and contingency are the order of the day.

There are several core components of Simmel’s overall philosophical view to keep in mind:

  1. Dynamism and processualism
  2. Fallibility (in the pragmatic sense)
  3. Holism
  4. Coherentism
  5. Anti-teleology
  6. Heuristic reasoning

This next passage is rough going. I’ve highlighted the key terms, but please skip it if it proves too impenetrable.

The true unity of apprehension is secured only by such a dissolution of dogmatic rigidity into the living and moving process. Its ultimate principles become realized not in the form of mutual exclusion, but in the form of mutual dependence, mutual evocation and mutual complementation. Thus, for example, the development of the metaphysical world view moves between the unity and the multiplicity of the absolute reality in which all particular perceptions are based. The nature of our thinking is such that we strive for each of them as a definite conclusion without being able to settle upon either. Only when all the differences and variety of things are reconciled in a single aggregate is the intellectual and emotional striving for unity satisfied. However, as soon as this unity is attained, as in the concept of substance by Spinoza, it becomes clear that there is nothing one can do with it in understanding the world, and that a second principle at least is necessary in order to make it fruitful. Monism leads on to dualism or to pluralism, but they again create a desire for unity; and so the development of philosophy, and of individual thinking, moves from multiplicity to unity and from unity to multiplicity. The history of thought shows that it is vain to consider any one of these viewpoints as definitive.

To recap: Simmel performs the Hegelian move of showing an opposition in philosophical thought between unity and multiplicity. But where Hegel would progress forward to some new magical category of spirit or logic, Simmel doesn’t introduce any new terms. (For you Hegelians, Simmel is effectively saying that all final philosophy is akin to stoicism.1This is it, he says. Life for us is defined by oppositions that do not get resolved, and for the proof, you don’t look to logic but to our experience.

The structure of our reason in relation to the object demands equal validity for both principles, and attains it by formulating the monistic principle of seeking to bring unity out of multiplicity so far as possible—i.e. as if we ought to end with absolute monism—and by formulating the pluralistic principle of not resting content with any unity, but always searching for yet simpler elements and creative forces, i.e. as if the final result should be pluralism. The same is the case if one explores pluralism in its qualitative significance: the individual differentiation of things and destinies, their separation according to quality and value. Our innermost vital consciousness oscillates between this separateness and the solidarity among the elements of our existence. Sometimes life only seems bearable by enjoying happiness and bliss in complete separation from suffering and depression, and by keeping these rare moments free from any remembrance of less exalted and contradictory experiences. Then again it seems more admirable, and indeed the very challenge of life, to experience joy and sorrow, strength and weakness, virtue and sin as a living unity, each one being a condition of the other, each sacred and consecrating the other. We may seldom be aware of the general principle in these opposing tendencies, but they determine our attitude towards life in our endeavours, our aims and our fragmentary activities. Even when a person’s character seems to be completely oriented in one of these directions, it is constantly thwarted by the other tendency, as diversion, background and temptation. People are not divided into categories by the contrast between differentiation and unification of their life experiences. This contrast exists in every individual, although his innerpersonal form evolves in interaction with his social form, which moves between individualization and socialization. The essential point is not that these two trends constitute life, but that they are interdependent in a heuristic form. It seems as if our life employs or consists of a unified basic function which we are unable to grasp in its unity. We have to dissect it by analysis and synthesis, which constitutes the most general form of that contradistinction, and whose co- operation then restores the unity of life..

Here Simmel pulls out a Kantian backstop to Hegelian reasoning. He argues that baked into our brains are limits of our ability to understand cognition and the world itself. Our scrawny outlook on the world requires us to observe opposing trends in tension and assess reality in heuristic rather than definitive form. This was the move toward fallibilistic science that neo-Kantianism took, divorcing itself from any firmly a priori investigations. Simmel in particular wants to avoid any further abstraction than is necessary (though as seen above, quite a fair bit appears to be necessary), because abstractions only retain the ability to match up to reality when they remain connected to some general conception of everyday lived experience as it is lived by a large proportion of people, not just a few philosophers sitting in Jena. What are the abstractions with which we deal with everyday? More than anything else, they are financial. We may experience via Kantian categories, but most people give no thought to them or anything like them. But abstractions of value, as defined and regulated by money, are something we all are forced to deal with, negotiate, share, and be subjected to.

As soon as one realizes the extent to which human action in every sphere of mental activity operates with abstractions, it is not as strange as it may seem at first glance that not only the study of the economy but the economy itself is constituted by a real abstraction from the comprehensive reality of valuations. The forces, relations and qualities of things— including our own nature—objectively form a unified whole which has to be broken down by our interests into a multitude of independent series or motives to enable us to deal with it. Every science investigates phenomena that are homogeneous and clearly distinguished from the problems of other sciences, whereas reality ignores boundaries and every section of the world presents an aggregate of tasks for all the sciences. Our practice excludes unilateral series from the outer and inner complexity of things and so constructs the great systems of cultural interests. The same is true for our sentiments. When we experience religious or social sentiments, when we are melancholy or joyful, it is always abstractions from total reality that are the objects of our feeling—whether because we react only to those impressions that can be brought within the scope of some common cultural interest, or because we endow every object with a certain colouring which derives its validity from its interweaving with other colourings to form an objective unity. Thus, the following formula is one way in which the relationship of man to the world may be expressed: our practice as well as our theory continually abstracts single elements from the absolute unity and intermingling of objects, in which each object supports the other and all have equal rights, and forms these elements into relative entities and wholes. We have no relationship to the totality of existence, except in very general sentiments; we attain a definite relation to the world only by continually abstracting from phenomena, in accordance with our needs of thought and action and investing these abstractions with the relative independence of a purely inner connection which the unbroken stream of world processes denies to objective reality. The economic system is indeed based on an abstraction, on the mutuality of exchange, the balance between sacrifice and gain; and in the real process of its development it is inseparably merged with its basis and results, desire and need. But this form of existence does not differentiate it from the other spheres into which we divide the totality of phenomena for the sake of our interests.

Alongside this pragmatism comes a Quinean holism, which Simmel explicitly declares, painting himself in opposition to the nascent verificationist movement (I have no idea to what extent Simmel was aware of it). In the broadest sense, a system of thought, be it communal values or geometry, gains its truth in respect to the entire system corresponding en masse to reality.

The whole system of geometry is not valid at all in the same sense as are its single propositions. The latter can be proved by each other, whereas the whole is valid only in relation to something external, such as the nature of space, our mode of perception and the strength of our ways of thinking. Individual judgments may support each other, since the norms and facts already established substantiate others, but the totality of these norms and facts has validity only in relation to specific physio-psychological organizations, their conditions of life and the furthering of their activity.

As Quine said, “The unit of empirical significance is the whole of science.” But since we are finite beings, our epistemology is primarily fallible, and if our theories are not informed by this fallibility at the most fundamental level, they lack any relation to reality. Conceptual abstractions can never be said to have a guaranteed relation to reality; at best they are heuristic approximations. (As William C. Wimsatt memorably calls scientific theories, “piecewise approximations to reality.”) Metaphysically, Simmel is more or less a nominalist, believing that no universals (at least none that we can grasp) are sufficient to encapsulate the totality of reality. We participate, Kant-style, in a shared, “objective” space of conceptual abstracta as a tool for understanding the world. But this objective space is a shared social construct, not a metaphysical absolute. So in his most metaphysical passage, Simmel declares his fundamental opposition to the absolute:

Only a relativistic epistemology does not claim exemption from its own principle; it is not destroyed by the fact that its validity is only relative. For even if it is valid— historically, factually, psychologically—only in alternation and harmony with other absolute or substantial principles, its relation to its own opposite is itself only relative. Heuristics, which is only the consequence or the application of the relativistic principle to the categories of knowledge, can accept without contradiction that it is itself a heuristic principle. The question as to the grounding of this principle, which is not incorporated in the principle itself, constitutes no difficulty for relativism, because the ground is removed to infinity. Relativism strives to dissolve into a relation every absolute that presents itself, and proceeds in the same way with the absolute that offers itself as the ground for this new relation. This is a never-ending process whose heuristic eliminates the alternative: either to deny or to accept the absolute. It makes no difference how one expresses it: either that there is an absolute but it can be grasped only by an infinite process, or that there are only relations but that they can only replace the absolute in an infinite process. Relativism is able to make the radical concession that it is possible for the mind to place itself outside itself. The epistemological principles that remained content with one concept and thus excluded the continuing fruitful development of relations ended in self-contradiction: that the mind is supposed to judge itself, that it is either subject to its own definitive statements or exempt from them, and that equally each alternative destroys its validity. But relativism fully accepts the fact that for every proposition there is a higher one that determines whether this proposition is correct.

The absolute signifies a road stretching to infinity whose direction is still marked out no matter how great the distance we cover.

I read Simmel here as laying out a pragmatic ladder akin to that of Peirce, though less rigorously. Where Peirce wanted to ground truth, Simmel is trying to explain how it is that we live. So while Peirce sought to ground truth in a particular scientific method, Simmel seeks to ground value in particular human practices and limitations.

The pragmatic provisionality of our thoughts, in fact, links directly to the need for money: a non-teleological, mediating force with no intrinsic final ends. It is a coping mechanism for finitude.

Reality and value are, as it were, two different languages by which the logically related contents of the world, valid in their ideal unity, are made comprehensible to the unitary soul, or the languages in which the soul can express the pure image of these contents which lies beyond their differentiation and opposition. These two compilations made by the soul, through perceiving and through valuing, may perhaps once more be brought together in a metaphysical unity, for which there is no linguistic term unless it be in religious symbols. There is perhaps a cosmic ground where the heterogeneity and divergencies that we experience between reality and value no longer exist, where both series are revealed as one; this unity either being unaffected by the two categories, and standing beyond them in majestic indifference, or signifying a harmonious interweaving of both, which is shattered and distorted into fragments and contrasts only by our way of regarding it, as if we had an imperfect visual faculty.

These limitations are reflected not only in our cognition but in our will, and our chronic dissatisfaction with stasis. The dynamism of life, which only increases in modernity, is reflected in our need for a system that allows both for familiarity and novelty, in experience as well as in values, the shifts between them being guided by (you guessed it) money.

Life in general is determined by the proportion of these two facts: that we need variety and change of content just as we need familiarity; and this general need appears here in the specific form that the value of objects requires, on the one hand, scarcity—that is to say, differentiation and particularity—while on the other hand it needs a certain comprehensiveness, frequency and permanence in order that objects may enter the realm of values.

The economy transmits all valuations through the form of exchange, creating an intermediate realm between the desires that are the source of all human activity and the satisfaction of needs in which they culminate. The specific characteristic of the economy as a particular form of behaviour and communication consists not only in exchanging values but in the exchange of values.

Money grounds our own abstractions of value. It is a simultaneously an abstract, symbolic, and concrete entity. It has a physical instantiation, but more importantly, it is the thing by which any private and particular value can be quantified in a abstracted, universal manner, enabling us to journey from the subjective to the communal objective.

The projection of mere relations into particular objects is one of the great accomplishments of the mind; when the mind is embodied in objects, these become a vehicle for the mind and endow it with a livelier and more comprehensive activity. The ability to construct such symbolic objects attains its greatest triumph in money.  For money represents pure interaction in its purest form; it makes comprehensible the most abstract concept; it is an individual thing whose essential significance is to reach beyond individualities. Thus, money is the adequate expression of the relationship of man to the world, which can only be grasped in single and concrete instances, yet only really conceived when the singular becomes the embodiment of the living mental process which interweaves all singularities and, in this fashion, creates reality.

Money is, bizarrely, both the most universal and the most banal thing (like Spinoza’s substance), the most useful and the most ultimately useless.2 It concretely cements values in the most provisional and unstable of ways (reflecting, as it does, human judgment).

Norms are the types and forms of relativity that develop among, and give form to, the specific phenomena of reality—whether they are termed ideas, as with Plato and Schopenhauer, logoi as with the Stoics, the a priori as with Kant or stages in the development of reason as with Hegel. These norms are not relative in the same sense as the objects subjected to them, because they themselves present the relativity of the objects. Thus it becomes comprehensible that money as abstract value expresses nothing but the relativity of things that constitute value; and, at the same time, that money, as the stable pole, contrasts with the eternal movements, fluctuations and equations of the objects.

So money is really the best term in which to consider abstractions of reality, because unlike Plato’s forms and Hegel’s stages, money indisputably exists and we all have to deal with it, despite it being the most abstract and undefined thing ever, an empty container for whatever values we choose to put in it. Yet it forms the basis without which modern society would literally be impossible. 3

At this point, you may be wondering whether money can possibly support the titanic role which Simmel has assigned it. Part of this is due to money’s sheer banality; Plato’s forms just seem a lot more profound because they’re so mysterious. Simmel’s answer to that is to invoke, finally, the sheer consequence of money, in which its concrete importance is made viscerally palpable:

Money is a specific realization of what is common to economic objects and the general misery of human life is most fully reflected by this symbol, namely by the constant shortage of money under which most people suffer.

Take that, Plato.

  1. “The True and the Good, wisdom and virtue, the general terms beyond which Stoicism cannot get, are therefore in a general way no doubt uplifting, but since they cannot in fact produce any expansion of the content, they soon become tedious.” Phenomenology of Spirit §200.
  2. As Danny DeVito said in David Mamet’s Heist, “Everybody needs money! That’s why they call it money!”
  3. Hence, then, why post-capitalist visions are so hazy and vague. Having been forced to reject the free flow of value embodied by money, such systems are forced to either put up or shut up. They have to either give the exact pre-specified allocation of those values (as with communism) or else trust to individuals that an organic system of exchange will emerge in the absence of capital (as with anarchism). Simmel would say that either approach would effectively require undoing the modern world and retreating backwards into local, parochial communities. But only the most severe Luddites are willing to explicitly embrace this prescription, and so such systems are mostly left incredibly vague, because they simply cannot recover enough of our present life in their visions. Money is not everything, but it is so much that its absence eliminates life as we know it. Its elimination would entail a regression to a more subjective, less spontaneous life, because there would cease to be any sufficiently universalized, neutral mechanism for the negotiation of value itself.

Georg Simmel’s Philosophy of Money: An Introduction

  1. Georg Simmel’s Philosophy of Money: An Introduction
  2. Georg Simmel’s Philosophy of Money: 1. Value and Money
  3. Georg Simmel’s Philosophy of Money: 2. The Value of Money as a Substance
  4. Georg Simmel’s Philosophy of Money: 3. Money in the Sequence of Purposes
  5. Georg Simmel’s Philosophy of Money: 4. Individual Freedom
  6. Georg Simmel’s Philosophy of Money: 5. The Money Equivalent of Personal Values
  7. Georg Simmel’s Philosophy of Money: 6. The Style of Life

Sociologist Georg Simmel published his magnum opus, The Philosophy of Money, in 1900 in Germany. Drawing on Kant, Marx, and Weber among many, many others, the book has Simmel’s singular style that separates him from pretty much every other sociologist that has ever lived. The closest analogue I know might be C. Wright Mills in his more poetic moods, but where Mills is fiery and desperate, Simmel is far more reflective. In looking at money as a ground and metaphor for modern human social existence, Simmel often seems awestruck and overwhelmed by the sheer power and meaning of money in our society. Just as often he expresses reserved horror at the injustice and inhumanity that is lubricated by monetary commensurability.

The Philosophy of Money is a hybrid work of philosophy and sociology, perhaps a “philosophical anthropology” similar to that which Ernst Cassirer and Hans Blumenberg would later engage in. It is only loosely an economic work, because Simmel never gets to the point where he can generalize over the behavior of economic populations. Rather, he focuses on the psychological and sociological effects of money as a cultural determinant. And it’s very much the idea of money rather than capital or work. He is fascinated by the implications of the introduction of a universally commensurable measure of value that has no intrinsic value of its own. Rather than focusing on how people argue over the allocations of values, he looks at how the prior requirement, the nature of valuation itself, influences those discussions.

The main themes, as I read them, are the following:

  1. Money as a structural metaphor for human existence (almost every aspect of it)
  2. The dual nature of the word “value,” moral and monetary
  3. The physicalization, universalization, and commodification of value (through money or otherwise)
  4. The effects of valuation and commensurability on human relations

The final theme ultimately becomes most important, but Simmel spends time laying the groundwork for it by examining the nature of value and how it is assigned and fixed, before he then moves on to how value is standardized and made portable and universal by money. Simmel’s treatment of “value” is heavily influenced by Kant’s first and third critique, which isn’t too surprising given that Simmel came out of the 19th century neo-Kantian movement which wanted to reclaim Kant’s worth after Hegelianism had petered out. Value, being something not assigned by nature but by creatures, becomes a crucial cognitive category in life, despite being something that each of us has comparatively little control over. (Language is also a category of this sort, though at least in 1900 “value”‘s constructed nature was a bit more clear than that of language.)

Simmel makes clear just how philosophical it is by declaring in the introduction that money has attracted his attention because it is the purest and most ubiquitous manifestation of the perennial problem that has vexed philosophers, the relation between the universal and the particular:

Money is simply a means, a material or an example for the presentation of relations that exist between the most superficial, ‘realistic’ and fortuitous phenomena and the most idealized powers of existence, the most profound currents of individual life and history. The significance and purpose of the whole undertaking is simply to derive from the surface level of economic affairs a guideline that leads to the ultimate values and things of importance in all that is human.

In the tradition of early modern philosophers, Simmel writes with no notes, footnotes, or references, and mentions of other authors are sparing. In a dense, 500-page work, this is quite foreboding, and Simmel seems to have been one of the last to get away with it to this extent. In compensation, though, he adopts what I can only call a sonata-like stye. Unlike James Joyce in the “Sirens” chapter of Ulysses, Simmel isn’t consciously trying to fit a musical form onto his writing. It’s just that because he is writing in a semi-casual yet resolutely abstract manner, he develops a very particular technique for keeping readers (and himself) located in the flow of the work. He repeats his major themes quite often, rephrasing them but leaving the underlying points unmistakable. (In fact, by rephrasing the points over and over, he makes it easier to grasp what is essential among those points.) So where Joyce’s chapter is one of the less successful conceits of Ulysses, because the form and content do not reach enough of a unity (similar to “Oxen of the Sun”) to give the feel of an organic whole, The Philosophy of Money feels very organic, through-composed, and linear. This, as well as Simmel’s comparatively plain German style, are helpful features, because Simmel is doing deep conceptual work rather than case studies or data analysis.

Alternatively, you can think of The Philosophy of Money as following a tree structure, points and subpoints emerging from a common root and diverging, except where most philosophers simply present their overarching root theses and then cover the tree branch by branch assuming the root theses have been fully assimilated, Simmel repeats some of the root and main branch material every time he finishes one subbranch or leaf and goes to another. This makes the book redundant at times, but also makes it far easier to absorb.

Simmel was aware that he was going against the current of both anthropological and philosophical investigations. His book is closer to Robert Musil’s The Man Without Qualities than it is to Durkheim or even Weber, except Musil manifested his archetypes as “characters” and developed his themes through the stretched conceits of fiction. (Musil attended Simmel’s classes around this time.) Simmel just thinks and thinks and thinks, touching on specifics only as the urge strikes him. He is aware of the dangers of this approach, yet he finds his anchor in the concrete existence of money, the substance which we see and feel and count, something that is right before us and lacks the abstruse invisibility of “cognition” or “being.”

The unity of these investigations does not lie, therefore, in an assertion about a particular content of knowledge and its gradually accumulating proofs but rather in the possibility which must be demonstrated—of finding in each of life’s details the totality of its meaning. The great advantage of art over philosophy is that it sets itself a single, narrowly defined problem every time: a person, a landscape, a mood. Every extension of one of these to the general, every addition of bold touches of feeling for the world is made to appear as an enrichment, a gift, an undeserved benefit. On the other hand, philosophy, whose problem is nothing less than the totality of being, tends to reduce the magnitude of the latter when compared with itself and offers less than it seems obliged to offer. Here, conversely, the attempt is made to regard the problem as restricted and small in order to do justice to it by extending it to the totality and the highest level of generality.

Philosophy has become too windy, he says, and no longer touches down on anything that most people can recognize. Money is something that we all know.

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