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HANDOUT 1: Perspectives on Role and Purpose of Money

Some purposes and roles assigned to money:

  • Money stands in for things of tangible value in the world. It is fundamentally representative of work and value creation.
  • Money allows us a way to come into relationship with one another, regardless of distance and prior knowledge of one another. Money expresses power and reflects and transmits meaning in ways that are particular to individuals, families, and communities.
  • Money enables us to transfer value over time. In so doing, it grants us a very limited power of transcendence since it can influence the world beyond the reach of our living and our lifetimes.

In all of its roles, money can be used in morally positive and morally negative ways.

AN ECONOMIC PERSPECTIVE

From "Of the Origin and Use of Money" by Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations (London: Methuen & Co., Ltd.,1904)

Adam Smith articulated the way that money is a necessary tool for reallocating things of value between people who do specialized work, making it possible to exchange the surplus of one person's efforts for the surplus of another's and for each to meet their broader needs and desires within a social system.

When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

... every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.

A SOCIOLOGICAL PERSPECTIVE

From "The Sociology of Money" by Wayne E. Baker and Jason B. Jimerson, The American Behavioral Scientist, July/August 1992

... Money takes fewer forms but has more "uses" in the sociological conception. Economists focus only on the limited bundle of impersonal and neutral traits conferred by market integration: a medium of exchange, a means of payment, a store of value, a unit of account, and a standard for deferred payment... Sociologists recognize such money uses but consider a much broader range, especially the use of money as power... Weber (1922/1978) ... emphasized control and power in economic action: "Money prices," he argues, "are the product of conflicts of interest and compromises; they thus result from power constellations...

A PSYCHOLOGICAL PERSPECTIVE

From The Psychology of Money by Adrian Furnham (Michael Argyle, 1998)

... There are probably two rather different fairy tales associated with money. The one is that money and riches are deserts for a good life. Further, this money should be enjoyed and spent wisely for the betterment of all. The other story is of the ruthless destroyer of others who sacrifices love and happiness for money and eventually gets it but finds it is of no use to him/her. Hence all they can do is give it away with the same fanaticism with which they first amassed it....

Money is, in and of itself, inert. But everywhere it becomes empowered with special meanings, imbued with special powers. Psychologists are interested in attitudes towards money, why and how people behave as they do towards money, as well as what effect money has on human relations.

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Last updated on Friday, November 22, 2013.

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