The relationship between money and community is not very obvious if only because we tend to regard money as a “real thing,” not an artificial social creation and abstraction. Fortunately, a recent essay in Cultural Anthropology Online (May 2012) offers some helpful insights into the ways in which money and community are inextricably connected.
In “Community and Money, Local and European,” Luigi Doria of Centre Maurice Halbwachs, Paris, and Luca Fantacci of Bocconi University, Milan, ask us to consider the “very co-belongingness” of community and money. The authors start by noting that “knowingly or unknowingly, monetary institutions always embody a representation of man in society. The functions that are given to a certain form of money correspond to a certain conception of what exchange, debt and credit mean for a society.”
And what might that be in modern, industrialized societies? It is to be socially independent and disconnected. Modern humans make a “fetish” of liquidity, as John Maynard Keynes put it. It is considered a supreme virtue to be able to hold as much of one’s wealth as one can in forms that can be easily converted into cash. Liquidity = freedom. The dirty little secret is that not everyone can achieve this ideal because if everyone tried to cash in and hold liquid assets, the entire system will collapse.
Doria and Fantacci write:
Keynes calls it [liquidity] a fetish because, from a strictly macroeconomic perspective, “there is no such thing as liquidity for the community as a whole.” In fact, from the viewpoint of the entire economy, money is not wealth, and investments cannot be readily converted from one form to another. Hence, modern financial systems suffer from an intrinsic contradiction between what is possible for individuals and what is true for the community. This contradiction makes financial systems liable to recurrent crises, whenever individuals decide to hoard money and to refrain from spending and investing, thereby withdrawing from the fundamental uncertainty that characterizes the future and the relationship to others.
Keynes believed that money ought to “disappear” from view by constantly circulating and in so doing, facilitate productive social exchange and wealth creation. Instead, money itself tends to become a commodity subject to speculation, hoarding, lending, etc. Its circulation is impeded, which excludes some people from the benefits of circulating money.
We must begin to ask if money is treated as a community resource or as something that clever individuals can game for their private advantage. Doria and Fantacci write:
A community can establish a clearing system [money that “disappears” from view] only if it thinks anew the economic relationships that interweave its members, if its members accept not to withdraw from the circle of “economic communication” by seeking refuge in money, and if they question the idea that debtor-creditor relationships can be secured by an indefinite commodification and procrastination of debts.
Recognizing money and community as tightly linked has some serious implications for the European debt crisis, the authors note. Instead of creditors being allowed to insulate themselves from the risks and uncertainties of the future at the expense of debtors, both creditors and debtors must somehow come to “share the common burden of uncertainty towards the future.”
But this relationship toward money is precisely the problem. Creditors are able to use money to insulate themselves from future uncertainties by commoditizing their relationships with debtors, which the law will then enforce. This securitized relationship forces debtors to make all the sacrifices. Having become accustomed to their political advantages through debt-securitization, creditors are loath to give them up. (Witness Wall Street’s resentment toward Obama, Elizabeth Warren and others seeking reforms of the financial industries.)
The real challenge in redesigning money, then, is to more closely link actual communities with the ways that money can circulate. This will help prevent private parties from exploiting money at the expense of the community, whose social trust and backing are critical to the value of currency. Of course, achieving this realignment of money and community is fundamentally a political change, which is why it is extremely difficult to achieve.