Essay on Money ⋆ Sociology Essay Examples ⋆ EssayEmpire

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Significant theoretical contributions to a sociological understanding of money were made by Marx, Simmel and Weber, among others. According to Marx, money is a commodity, and its quantitative relationship to other commodities – its function as a universal measure of value” – is made possible by the amount of labor-time that it contains. This is not only true of precious metals but of other forms of “credit” money, such as banknotes, which derive their value from a commodity such as gold. Thus to view exchange relations merely as monetary” relations, or as a series of prices determined by supply and demand, is to overlook the social relations of production – and, of course, exploitation – on which they fundamentally depend. Weber focused primarily on the legal status of money, broadly agreeing with Knapp’s characterization of money as a “creature of the state.” Simmel took a quite different view of the value of money. By his reckoning, money represents an abstract idea of value that is underwritten by society”: its value, in other words, ultimately depends on a form of trust in society that Simmel likened to ”quasi-religious faith.” On the basis of the characterization, Simmel (1994) explored the roots and consequences of the development of the ”mature money economy,” whereby an increasing number of social relationships are mediated by money.

In economics, money is usually defined in terms of three main functions: money is a medium of exchange, a store of value, a unit of account. Classical sociologists were mainly concerned with money’s role as a store of value. Marx explored the relationship between money and gold, for example, while Weber discussed the distinctiveness and viability of state issued paper” money. Even Simmel, who used money as a means for a much wider philosophical investigation into the role of exchange in modern culture, began his study with the question of value.

At the beginning of the twenty-first century, sociologists are addressing a rather different set of concerns than their classical forebears. The central question no longer concerns the value” of money once its connection with gold has been severed. Instead, sociologists, together with scholars in related disciplines, have been exploring an apparent decline in the relationship between money and the state. This development is not a straightforward process, and its implications remain contested.

Recently, however, a number of sociologists have produced major publications in which they sought to develop a systematic sociological treatment of money. Zelizer (1994) argued against an image of money as neutral” and impersonal” through an historical analysis that examined money in relation to the social context of its use. Dodd (1994) sought to elaborate Simmel’s concept of money as a ”pure instrument” by relating it to consumerism and the globalization of finance. More recently, Ingham (2004) has brought sociological arguments to bear on theories of money in orthodox and heterodox economics.

The present-day world of money is characterized by two countervailing trends. To some degree, these reflect contrasting approaches to the sociology of money. On the one hand, large-scale currencies such as the US dollar are increasingly circulating outside the borders of their issuing states, and in some cases are actually replacing smaller currencies. This process constitutes a trend towards increasing homogeneity. On the other hand, the range of monetary forms in circulation that are not state-issued currency is increasing, primarily through the development of e-money and complementary currencies. This constitutes a trend towards increasing diversity. For sociologists, these developments offer some exciting research opportunities.

Bibliography:

Dodd, N. (1994) The Sociology of Money. Polity Press, Cambridge.
Ingham, G. (2004) The Nature of Money. Polity Press, Cambridge.
Simmel, G. (1907) The Philosophy of Money
Zelizer, (1994) The Social Meaning of Money. Princeton University Press, Princeton, NJ.