“Money” in the Currently Prevailing Economic Theory
- Universal medium of exchange. Any type of good or service (including capital goods, financial and intangible assets, …) should be tradable in a currency.
- Storage of value. The purchasing power of the currency should be sufficiently stable in time to permit savers to postpone consumption and hold on to it in view of future expenditure.
- Unit of account. Money should be able to be used as a measure of value in time. It means that one should be able to use it as a unit for accounting and other financial calculations such as discounting.
However, mainstream monetary theories omit to address another, fundamental dimension of money: its symbolic character.
Currencies as Symbols
Currencies are symbolic in nature, in fact they are a very specific kind of symbol. They are essentially signifiers referring simultaneously to no particular signified and potentially to all signifieds. They allow the imagination to hop from one object of need or desire to another until the dance is interrupted by the decision to exchange the universal signifier (currency) for a specific signified (good, service, or experience).
My Tailor is Rich
I understand the notion of “being rich” as a perceptive relationship in which one person possesses currency to such an amount that it suggests levels of value of signifieds (goods, services, or experiences) that can potentially be acquired, which are superior to the level of the beholder of the other person’s riches. “I can only dream to be as rich” does not only mean “I can only dream to possess that much currency”, but also – and perhaps more fundamentally – “I can only dream of fantasising about goods, services, or experiences at such a level of value”
On the other hand, a lot of people who are perceived to be, do not feel rich. “Being rich” is not a state (of mind), but a perception. Richness is thus the perception of relative levels of fantasy, and ultimately of choice.
The relativity of richness does not imply that it is an arbitrary concept. There is a measurable aspect to the possession of currency in that it provides access to goods, services, or experiences at different levels of value. The perceptive relationship of evaluation of relative richness is not purely phantasmal and is not to be assimilated with daydreaming of the kind: “What if I were to win the lottery?”. There is an objective side to richness that is realised external signs of richness or the possession (of luxury objects). In other words, “richness” is mainly connected to the concept of money as medium of exchange, or currency. As such, “richness” is associated with the notion of spending (consuming or investing).
My Tailor is Wealthy
The concept of wealth is at once more straightforward and more complex than “richness”. One can measure one’s wealth by establishing a personal balance sheet that reflects one’s net worth.. From this perspective wealth is a state revealed through accounting.
In this context money is only one form of asset amongst others and is determined as “cash” expressed as a quantity of currency.
From this perspective the notion of wealth is more related to the notion of saving and the accumulation of not only money, but assets in general. Money is here put in competition with other forms of storage of value.
Furthermore the notion of wealth is to be associated with ownership, rather than with possession. The former concept is more intricately related with legality than the latter. Ownership outside a legal framework is impossible, possession is.
Copyright © 2018 by Christophe J. J. de Landtsheer.
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1 In the sense of “control of property without regard to ownership”.
2 Net worth = net assets – net liabilities, or in common language, net worth is the subtraction of what one owes of what one owns.