In the NPR Broadcast called The Invention of Money, Jacob Goldstein put forth the idea that “money is fiction.” As a person with a vivid sociological imagination it is easy for me to understand the concept of money being a fictional one that we create. I would like to expand on this idea of the fictional nature of money by comparing and contrasting our own monetary system with one exceptionally foreign to ours and then considering what these similarities and difference imply, if anything.
In Milton Friedman’s essay The Island of Stone Money, Friedman talks about the financial system of a group of people living on the island of Yap in Micronesia. In 1903 William Henry Furness III, an anthropologist, studied their way of life. He gave particular inspection to the Yap’s monetary system. The Yap used large stones called fei to make their purchases- the pricier the item, the larger the stone. The Yap are perfectly fine with not moving the large stone coins after a transaction is made but simply acknowledging that it is owned by someone new. We may think that Furness’ findings make the Yap appear primitive and humorous. However, it is only when we turn our scrutiny to our own monetary system that we find striking similarities between the Yap and ourselves.
Like the Yap, Western society uses objects (namely dollars and coins) to make transactions and advance the economy. We can say that our objects are easier to handle, but the Yap do not live in industrial, overpopulated areas and are therefore fine with using large stones. The Yap’s system work perfectly fine for them. Also the Yap seem to be conscious, as are we, that money is but an abstract idea and while objects provide a concrete way of seeing it, money is kept in existence by society. In fact one family was able to claim they were wealthy because they had a large fei that was lost at sea when trying to transport it during a storm. Rather than saying the family didn’t own the fei anymore, the society believed the family and allowed them to maintain the purchasing power that stone would have lent them. Similar to how Western society has learned to represent money using paper checks and numbers on screens, the Yap (again, being a small scale society) is able to simply remember which stones belong to whom.
The similarities and differences between the Yap’s and our own monetary system open us up to the idea that money is socially constructed. This means that money exists because society says it does. Much like language, how money is expressed is a product of culture. For the Yap, large stones were naturally good material for currency because they were available and functional in the environment. In America, a fast-paced industrial society, millions of new dollars and coins are produced every day. Today we have Bitcoin, a digital currency system that doesn’t require any physical manifestation to be considered real and is a natural product of our high tech, digital lives. Money is just as real and made up as language is. True, as individuals we cannot change either of these systems completely, but we can make choices in our own lives with how we spend money or use language and these little choices end up making what our economic and linguistic systems respectfully are.
Saying money is socially constructed is not to say that money isn’t necessary. We certainly wouldn’t be where we are today without it. But it does mean that without humans money would not exist. Money is not only part of the fictional universe (society) that humans create but it is also a huge part of its narrative. Narratives help humans understand and create the world around them. Countries are not simply in debt to other countries for no reason. There are events that transpire that cause the debt in the first place. This is true for any economic event or situation. It’s precisely because humans crave the continuity of a story that we structure our money, and frankly our entire lives in a sequential, story-like format. We keep track of who we give our money to, with the belief that we will be payed back in time. None of these observations decrease the importance of money at all. Obviously, the story of our money emerges out of necessity and debt is necessary for a fair and just society. As long as we exist we are necessarily going to have money and therefore money will continue to remain a cornerstone of what makes us unique as a species. But this does not change the fact that debt and other financial circumstances are socially created or that money is, in fact, a fiction.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.