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Abstract
The article puts forward a case against the nominalist ontology of money, that is, the heterodox notion that moneyness – the quality of being money – is conferred by the money of account. From the nominalist perspective, money is essentially a balance-sheet phenomenon: a credit-debit bookkeeping entity whose origins can be traced back to ancient Near Eastern practices of accounting. This ontological position, which is often erroneously traced back to Keynes’ Treatise, mystifies and obscures the actual history of the money of account as a regime of monetary governance and a mode of speculation that only made sense in the European late medieval context of bimetallism. The article thus provides a critique of monetary nominalism based on Keynes’ reflection on the value of money in the Treatise and the General Theory. In turn, it proceeds to historicize the phenomenon of the money of account, building on the seminal contributions of Marc Bloch and Luigi Einaudi.
Notes
1 For instance, Georg Simmel pointed out in his respect that “[v]iewed from the sociological perspective, there is no doubt that metallic money is also a promise and that it differs from the cheque only with respect to the size of the group which vouches for its being accepted” (Simmel Citation1900 [1907], 177). In the same vein, Arthur Dunning Macleod, Scottish political economist and father of credit theories of money, boldly claimed that “gold and silver money may […] be justly termed metallic credit” (MacLeod Citation1883, 40), a statement that echoed George Berkeley’s famous query: “whether all circulation be not alike a circulation of credit whatsoever medium – metal or paper – is employed: and whether gold be anymore than credit for so much power” (1737, part III, query n.10). As appealing as they may sound from a heterodox perspective, these proto-chartalist arguments about the ontological unity of money as credit throughout history will be challenged in this article.
2 Nicomachean Ethics, 1133a.
3 On the catallactic character of money as a chartal means of payment, see Peacock (Citation2004).
4 The word ‘heterodoxy’ literally means ‘another dogma’, from Greek ‘heteros’ (other) and ‘doxa’ (opinion).
5 “Both the logical and historical origins of money are to be found in the state. Only an authority can overcome the anarchy of barter and impose a uniform money of account” (Ingham Citation2004, 57).
6 The point should not be to establish whether money is ontologically a creature of the market or the state, but to investigate how, historically, practices of money-making have entailed at once processes of state- and market-making.
7 For a more nuanced critique of Ingham’s argument, see Sgambati Citation2015.
8 For a summary of Saussure’s semiotics, see Silverman and Torode Citation1980, 249–256.
9 The rate of interest is “nothing more than the inverse proportion between a sum of money and what can be obtained for parting with control over the money in exchange for a debt for a stated period of time” (Keynes Citation1936, 166–167, emphasis added).
10 I am here paraphrasing Keynes’ dismissal in the General Theory of “the new-fangled view that there can be saving without investment or investment without ‘genuine’ saving'” (Keynes Citation1936, 83). For Keynes “the old-fashioned view that saving always involves investment, though incomplete and misleading, [remains] formally sounder” (ibid.).
11 Interestingly, alchemists used to refer to electrum as tertium quid, a third something. For a discussion of why early coins were made of electrum, see Wallace (1987), Schaps (2004, 93–110) and Seaford (2004, 121–122).
12 An ontogeny, or ontogenesis, is a discourse on the origins and development of being. The suffix -geny in ontogeny, from the Greek geneia, stands for ‘genesis’ or ‘mode of production’.
13 Given the importance of this work, it is quite unfortunate that Bloch’s Esquisse, originally published in 1954, was never translated in English. Regrettably, the original French edition is out of print and the few remaining copies are highly expensive. The in-text quotations from Bloch are the author’s own translations from the Italian edition, Lineamenti di una storia monetaria d’Europa, published in 1981 by Giulio Einaudi.
14 Both Bloch (1981 [1954]) and Spufford (1988, 413–414) thought that the names of medieval monies of account were derived from, and in some cases still attached to, material coins that pre-existed them.
15 Knafo points in particular to money-changing and merchant banking as two main avenues of financial innovation in late medieval times. Notably, both practices were deeply enmeshed with currency exchange as they “were associated with the rise of long-distance trade and were often born out of pragmatic solutions to the problem of dealing with multiple currencies” (Knafo Citation2013, 44) in a context of anarchic bimetallism. Here moneys of account served not only as ‘public’ instruments of monetary governance but also as ‘private’ technologies for arbitraging among currencies (see also Boyer-Xambeu et al. Citation1994). This point will be reiterated later in the article.
16 Debasements were performed for a variety of reasons. On the politics of debasement and how they related to the international problem of exchange, see Munro Citation2011; Pamuk Citation2015; Allen Citation2016; Boyer-Xambeu et al Citation1994, 51–57; Dyson Citation2014, 128–133.
17 In the same way the monetary revolution in Archaic Greece deeply influenced the development of Greek philosophy, so the peculiar financial developments and innovations in monetary governance taking place in late medieval Europe affected its conceptual landscape, promoting a transition “from a world of fixed and absolute values to a shifting, relational world in which values were understood to be determined relative to changing perspectives and conditions; and from a philosophy focused on essences and perfections to one dominated by questions of quantification in respect to motion and change” (Kaye Citation2004, 1).
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Notes on contributors
Stefano Sgambati
Stefano Sgambati is a lecturer in international political economy at City, University of London. His research focuses on theory, history and politics of money and finance. His latest work is “The art of leverage: a study of bank power, money-making and debt finance”, published by the Review of International Political Economy.