The Philosophy of Money

The Philosophy of Money (1900) is a book on economic sociology by the German sociologist and social philosopher, Georg Simmel. Probably considered Simmel's greatest work, Simmel saw money as a structuring agent that helps us understand the totality of life.

Simmel believed people created value by making objects, then separating themselves from those objects and then trying to overcome that distance. He found that objects that were too close were not considered valuable and objects that were too far away for people to obtain were also not considered valuable. What was also considered in determining value was the scarcity, time, sacrifice, and difficulties involved in getting objects. In the pre-modern era, beginning with bartering, different systems of exchange for goods and services allowed for the existence of incomparable systems of value (land, food, honor, love, etc.). With the advent of a universal currency as an intermediary, these systems became reconcilable, as everything tended to become expressible in a single quantifiable metric: its monetary cost.

Simmel's outlook, while gloomy, is not wholly negative. As money and transactions increase, the independence of an individual decreases as he or she is drawn into a holistic network of exchange governed by quantifiable monetary value. Paradoxically, this results in greater potential freedom of choice for the individual, as money can be deployed toward any possible goal, even if most people's sheer lack of money renders that potential quite low much of the time. Money's homogenizing nature encourages greater liberty and equality, even as it minimizes exceptional, incommensurable achievements in art and love.

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