Is money a social construction?
Updated: Jan 11
Money has existed in various forms and across civilisational systems over time, however the core meaning remains constant: money is value in tangible form. The way we use and understand money is changing however, most recently through the emergence of cryptocurrency and the gradual transition into cashless society. This increasing conceptualisation of money and its decreasing palpability raises the destabilising question of whether it can be considered anything but a social construction. As aforementioned, money is a concept. Social constructionism highlights the subjectivity of concepts within society (Andrews, 2012) and describes the idea that some concepts- such as gender and social class - are simply entities in the human realm and exist only within the context of said society (Holmes, 2019). Social constructions can have tangible meanings within and effects on reality once they have been historically, socially and ideologically accepted as being attributed with power and meaning (Hacking, 1999). In this essay, I will explore the extent to which money can be considered a social construction, looking at the implications of our changing conception of money through technological advancement, whether it is inherently a construct due to its exclusive existence within human societies, and whether the very core meaning behind money - being value itself - is socially constructed, or simply the way in which we commodify and use it.
A key question when discussing whether it is a social construction is whether money, or comparable concepts or processes, can be found elsewhere in the natural world outside of human society, as if money is a social construction it can only exist within it. A study at Georgia State University explored whether existent trading behaviour in chimpanzees could be extended to incorporate the use of tokens, a symbolic form of money. Trade and barter is exclusively found in human societies, however the basic cognitive and conceptual prerequisites for these processes such as trust and conception of value can be found in other species (Brosnan and Beran, 2009). Chimpanzees have been known to perform transactions such as grooming or support in combat in exchange for food. Evidently, chimpanzees are able to recognise the value of certain commodities that are useful to them, however such exchanges are very rare. Although the primates were able to grasp and use the concept of money to trade food within the closed context of Brosnan and Beran’s study, this quickly deteriorated when experimenters ceased to uphold the structure of the study or enforce behaviour. This supports the idea that although value and recognition of the value of commodities and services is certainly present in the natural world outside of human society, money as a concept is not, suggesting that it is an exclusively social construction. Nevertheless, this study demonstrates that the underlying concepts necessary for transactions involving money such as trust between both parties as well as a power dynamic (Bryan and Rafferty, 2006) are not exclusive to humans or human society, therefore a core element to the functionality of money is not necessarily socially constructed.
As the way in which we use, generate and store money shifts into the digital realm, however, the core interactional structures and prerequisites which underpin it shift too. A central aspect of socially constructed concepts is their fluidity as social environments change. One example is the increasing use of online banking: 96% of money is now stored electronically (Bank of England, 2019) and can be regarded as a hypothetical balance rather than tangible, palpable goods or assets. Similar shifts in our understanding and use of money have occurred in the past, for example through the elimination of commodity money and subsequently successive systems such as the gold standard in 1931 (Bryan and Rafferty, 2006). Commodity money is money of which the medium itself has a tangible value, such as gold coins, the gold standard being the ability to exchange cash for its equivalent value in gold (Bryan and Rafferty, 2006). In fact, the emergence of electronic storage and management of money as well as cryptocurrencies such as bitcoin could be regarded as the next conceptual or symbolic ‘layer’ of money; it is the assignment of value to digital goods which hold a symbolic value for further goods with a symbolic value, namely cash as a symbol or promise of commodity money. The increasingly hypothetical and abstract nature of money and significance of underlying social prerequisites such as trust in banks that one’s digitally stored capital is real and can be withdrawn or used in the future as well as shifts in the very conceptualisation of forms and systems of money, suggests that it is actually becoming more socially constructed as technology advances. Nevertheless, it can be argued that although money exhibits fluidity in form within changing social climates - one of the core aspects of socially constructed concepts - its underlying function and real-world application remains constant, regardless of its changing form or value. Money therefore exhibits a concept-internal conflict, incorporating both aspects of socially constructed and non-socially constructed concepts.
In order to further extract why money should be regarded as a social construct, we can glean what exactly it functions to serve. As aforementioned, money began as arbitrary objects which were assigned a value and used for trade; cash is essentially comprised of pieces of paper which are socially positioned to provide it with a level of power within the system it functions in (Lawson, 2012), which is not necessarily directly related to the object’s nature itself. For example, past civilisations commonly used cowrie shells as currency, and money came in a much larger variety of forms and values, currencies sometimes varying even between social classes, according to gender or location within one nation. After the 20th century, homogenisation and the emergence of national currencies led to a more universal conception of money, allowing for simpler conversion and trade between regions (Coombs, 2019). Regardless of the past diversity of money, however, it has always been clear that all money serves as ‘value storage’ (Bank of England, 2019). If value is the essential underpinning concept behind money, perhaps we can better understand to what extent the latter is socially constructed by examining to what extent value is socially constructed.
Marx’s theory of an economic base and superstructure describes the mutual influence between means and relations of production - which determine the mode of production - and social superstructure, namely ideologies or cultural practises, law, politics and the like (Harman, 1986; Coombs, 2019). This theory can be used to support the idea that money is socially constructed in two ways. Firstly, it is evident that money, as a relation of production must be socially constructed by definition, as its exchange is intrinsically an expression of a trade relationship between two parties: money must therefore exclusively be a social relation (Lawson, 2012). Secondly, we can consider the role of value and money in the context the mode of production within which it works. The idea of value begins at the root of civilisation, from the creation of the idea of ownership, and the emergence of increasing division of labour throughout history. The concept of ownership is a social construct in itself, and is co-influential with division of labour in creating an inability for the individual to simply retrieve resources from nature to satisfy their basic needs. We can apply this concept to the previously mentioned study on chimpanzees’ understanding of money; their use of tokens ceased when experimenters stopped upholding the structure of the experiment or requiring tokens. This is because the only need or occasion for the use of money or money-like objects is when it is artificially created by a social power relationship, where one party has ownership of the resource which the other desires. In nature, chimpanzees simply find and take the resources they require, which provides an explanation as to why trade and by extension money is not used by any other species; it is simply not required due to a lack of socially constructed concepts such as ownership, commodification and division of labour.
The idea of value in the sense that we understand it in modern society is therefore borne out of other social constructions, and must also be a social construction. This can be observed most poignantly in view of seemingly arbitrary, skewed values assigned to certain commodities in society, specifically within capitalism. According to Forbes, the highest paid football player in 2018 was Lionel Messi, whose annual income in 2018 came to an average of $304,000 per day. In 2018, Messi earned $27 million solely from endorsements for major transnational corporations such as Adidas and Pepsi (Forbes, 2018). Capitalism, a system built on commodification and an ultimate aim of the generation and accumulation of profit (Coombs, 2019), lends itself to such disproportionate and exaggerated values for services and commodities which have no tangible value for the individual. A successful athlete’s salary will significantly outweigh that of even the most skilled orthopedic surgeon at around $519’000 a year (Forbes, 2012), simply because the mode of production and the sociocultural climate in this case place value on profit itself rather than tangible service or skill. Messi’s earnings from endorsements are so significant because the influence of the general public for the generation of profit is valued extremely highly within the Capitalist system; the benefits of sponsorship outweigh the costs. Meanwhile, the average UK citizen could survive by spending only £12 a week on food: a basic need. This is an example of how value is socially constructed, rendering money, its storage system, also socially constructed.
In conclusion, money satisfies all characteristics of a socially constructed concept. It is a symbolic medium of exchange of value facilitating a transaction or social relation between two parties, and is only necessary or even usable within the context of a society in which commodification, value assignment and ownership has taken place. Money mediates social relationships and is influenced by, as well as influences, individual and collective positions in society, power relations between parties and access to resources. Money is volatile, its value and form changing temporally and within the context of sociopolitical and cultural shifts, further supporting its status as a social construction. It is an increasingly abstract and intangible concept, through developments in technology and the ‘layering’ of symbolism for value through cryptocurrencies and electronic storage of capital. The only aspect of money which defies this status is its constant function and universality: it is always a medium for transactions of commodities and services which acts as a storage of value. Although money is a social construction, the recognition of this is not particularly norm-destabilising or liberating as that of other social constructions such as gender or race can be (Holmes, 2019). This is because money heavily displays one important aspect of social constructs as put forth by Hacking: it has become validated and thus real, with the power to exert a tangible impact on individuals and societies through its real-life application and universal acceptance throughout history.
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