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Money is an abstraction that observers make from social interactions. It is a matter of degree, to the extent that interactions transfer rights to goods and services by means of tokens that could also serve transfers of other such rights; we call those tokens money. The more generalizable across social locations, varieties of goods and services, interaction partners, types of rights, and physical forms of the token itself is that capacity to facilitate transfer of rights, the more readily people recognize the token involved as monetary. International currencies, nationally issued legal tenders, electronic monies, bank accounts, and other highly liquid tokens of transferable rights represent one extreme of a continuum running from such generalized forms to the narrowly limited circuits of such other monies as credits in baby-sitting pools, casino chips, or investment diamonds.
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After a review of previous thinking about money in sociology and other social sciences this research paper outlines an agenda for the sociological analysis of money.
1. Money In The Social Sciences
Since 1900, unfortunately, analysis of money’s production and distribution has remained chieﬂy the preoccupation of economists (see e.g., Eatwell et al. 1989). Other social scientists and historians have concentrated on money’s consumption—on monetary practices and their consequences. Within that realm, views of money run from considering money as an impersonal, autonomous force to examining money as a set of culturally and structurally embedded practices. Existing approaches also split over their assessment of money’s eﬀects: they range from money as a force for liberation, eﬃciency, and individuality, to money as a source of corrosion, corruption, and oppression.
In anthropology, for example, ethnographies of nonliterate communities long documented the cultural and social variability of currencies. Yet when it came to modern money, anthropologists typically adhered to economic models of an eﬃcient, fungible, market-based currency. The introduction of modern currencies, in such accounts, not only neutralized but corrupted the more vulnerable cultural or social particularisms of simple societies.
Starting in the 1980s, however, anthropologists began to revise such causal assumptions radically, as they explored the close interplay between monetary transactions and the construction of social relations and meaning systems. A case in point is Jane Guyer’s Money Matters (1995), a collection of studies on West African currency history challenging the view that generalized European currencies drove out the earlier localized, ‘primitive’ monies of Europe’s African colonies. In a similar vein, Jonathan Parry and Maurice Bloch’s inﬂuential volume of essays, Money and the Morality of Exchange (1989), disputes money’s universally homogenizing powers by documenting money’s cultural variability with persuasive ethnographic detail. The dominant ‘economic mythology’ of money, Bloch (1994) tells us, is not only debunked by the exotic cultural distinctiveness of non-Western societies. Even in the most advanced of capitalist states, Bloch insists, people’s meaningful social relations mark their monetary transfers (see also Znoj 1998).
Within sociology, such luminaries as Karl Marx, Max Weber, and Georg Simmel made two diﬀerent contributions to the understanding of money: ﬁrst, an analysis of monetization as part of the creation of modern economic institutions; and second, an examination of eﬀects of monetization in the contemporary world. The second contribution has had a more durable inﬂuence than the ﬁrst. Classical theories treated money as an impersonal neutral medium of economic exchange suitable for the increasingly rationalized market-driven contemporary world. A money economy, Simmel (1900) argued, increased individual freedom to select terms and partners of economic exchange. At the same time, but more ominously, money inevitably undermined meaningful social ties, reducing interpersonal connections to instrumental calculation.
Sociological theorizing long stayed close to such conceptions of money, framing money not only as separate from but also as a threat to the social sphere (see e.g., Habermas 1989). Even Talcott Parsons’ (1967, p. 358) analysis of money as a symbolic language restricted money’s symbolism to the economic domain. Since the 1980s, however, North American and European sociologists have challenged the theoretical segregation of economic transactions, portraying economic institutions and activities, including money, as socially contingent phenomena.
Consider, for instance, Wayne Baker’s (1987) analysis of the construction of money in ﬁnancial markets. Rejecting the view that governments and their central banks deﬁne and create money, Baker argues that nongovernmental ﬁnancial institutions play the key part in the creation of money. The more central the location of ﬁnanciers and their ﬁnancial organizations within the economy, the more their activity inﬂuences monetary ﬂows. On a smaller scale, other sociologists have examined monetary practices, showing their embedding in complex webs of meaningful social relations (Zelizer 1994; for other work in the sociology of money, see Baker and Jimerson 1992, Poggi 1993, Dodd 1994, Mizruchi and Stearns 1994, Carruthers and Babb 1996, Wuthnow 1996, Singh 1997, Ingham 1998, Mongardini 1998, and Zelizer 1998).
Pressing problems for the sociology of money include the following four controversial questions: (a) what is money? (b) where does money come from? (c) how do monetary transactions work? (d) what are their consequences? A useful way to address these problems is to distinguish among three partly in- dependent phenomena—monetary media, transfers, and meaningful social relations—examining their reciprocal interactions (for a similar set of distinctions see Akin and Robbins 1999). Monetary media are representations of rights to goods and services, usually in the form of concrete tokens; transfers are social practices and accounting systems that convey media; meaningful social relations are connections among persons and groups involved in monetary transactions. Thus, a ﬁrm awards vouchers (media) for a paid vacation (transfer) to its top salesman (relationship) while giving a weekly check (medium) summing hourly wages (transfer) to a temporary receptionist (relationship).
1.1 Monetary Media
While classical interpretations portrayed modern money as a single, homogeneous, liquid medium for economic exchange, current analyses map out a continuum involving a wide variety of monetary media. They include highly generalizable tokens such as electronic currencies which transcend social location, multiply interaction partners, activate a variety of rights, and cover a broad array of goods and services. Toward the other end of the continuum monetary media include subway tokens, telephone cards, food stamps, and the now proliferating local currencies, such as the British LETS (local exchange and trading schemes) or the ‘Ithaca money’ of a college town in New York State. In these days of the euro and electronic currencies, state-backed legal currencies have moved toward an intermediate position on the continuum.
Contrary to the presumption that eﬃcient money automatically follows the expansion of markets, each one of these currencies builds on an extensive process of social reorganization. As Eric Helleiner (1999) has shown, even state-issued legal tenders only displaced a wide variety of other currencies incompletely and through strenuous eﬀorts by nineteenth-century state builders. Similarly the rapid disintegration of the ruble as the money of account in the former Soviet Union demonstrates the complexity and fragility of the social infrastructure supporting any particular currency (Woodruﬀ 1999).
Monetary media, therefore, do not exist in an autonomous economic sphere with its own laws of operation undisturbed by cultural or structural constraints. Which media people adopt, when, and how depends on the type of transfer and social relations involved.
Analysts have often presumed that monetary media circulate in a single form of transfer, the quid pro quo exchange. In fact, monetary media articulate with a great variety of transfers, including donations, bribery, theft, tipping, gambling, loans, and auctions (see Davis 1992).
The broadest distinctions people make separate compensation (direct exchange), entitlement (rightful claim to a share), and gift (one person’s voluntary bestowal on another). Money as compensation implies an equal exchange of values, and a certain distance, contingency, bargaining, and accountability among the parties. Examples include the price charged by a painter for a portrait or the annual salary of a college professor. Money as entitlement implies rights not contingent on the recipient’s current performance. Cases in point are alimony awards and state guaranteed family allowances. Money as gift implies intimacy, commitment, and/or inequality plus discretion on the donor’s part, as in a parishioner’s donation to a church.
Of course ﬁner and multiple distinctions appear within these three categories and at their boundaries. Among gifts, for example, tips, bribes, wedding presents, and charitable contributions diﬀer signiﬁcantly from each other. At the core of all of these cases, however, is not quid pro quo exchange but the assertion and representation of particular kinds of meaningful social interaction. That is why people often struggle bitterly not only over amounts of money but over forms of payment. For example, controversy over whether welfare recipients should work for their income, receive services in-kind, or beneﬁt from regular cash payments centers on deﬁning the relationship of these recipients to public authorities and donors. Westerners have been debating these issues vigorously for 200 years.
The conjunction of monetary media and transfer routines matters, because together they convey the character of the transaction.
1.3 Social Relations
The full meaning of any monetary transaction, however, also depends on the relationship between the parties. Contrary to the view of money as a great equalizer, people actively distinguish transfers and media according to the social relations involved. Parent–child, priest–congregant, welfare oﬃcial–aid recipient, legislator–constituent, courting couple—all these relations sometimes involve monetary payments, but each calls for a very diﬀerent combination of media and transfer routines.
Why do people make such distinctions? This pervasive diﬀerentiation of monetary media and transfers serves to support signiﬁcant diﬀerences in the meaning and quality of people’s commitments to each other. People work hard to maintain such distinctions: they care greatly about diﬀerentiating monies because payment systems are a powerful way in which they mark apart diﬀerent social ties. Each of these ties has a diﬀerent quality and each one therefore calls for diﬀerent forms and rituals of payments. Long-time emigrants, for instance, distinguish carefully between money they send home to support their immediate families, contributions to their home churches, and money paid for taxes in their country of origin.
That is why people will respond with anger, shock, or ridicule to the ‘misuse’ of monies for the wrong circumstances or social relations, such as oﬀering a salary to a wife, a gift to a traﬃc policeman, or a tip to a friend. People care deeply about making such distinctions; the wrong transfer challenges, confuses, or violates the deﬁnition of particular social relations.
To be sure, the three phenomena—monetary media, transfers, and relationships—inﬂuence each other. Observers have commonly thought that monetary media predominated, but have divided sharply between the economists’ notion that the primary eﬀect of monetization is eﬃciency and a moral view that sees monetization as creating corruption and desiccation. Mutual inﬂuences are in fact much more varied. They involve a matching process among media, transfers, and relations. The three interact: the establishment of local currencies promotes monetary interchanges with neighbors and local merchants; the creation of well-deﬁned routines for gift giving permits the treatment of gift certiﬁcates and crisp new bills as equivalents; the surrounding of rich people with paid service providers fosters the elaboration of routines for the bestowal of tips; and so on through other combinations of media, transfers, and relations.
Each of the three elements, however, brings to any particular interaction its own history and complex array of meanings and symbolism, a fact that limits the number of possible correspondences among the three. Legal tenders associate with particular governments and national histories, systems of pay convey various degrees of honor and commitment, friends bring to any particular monetary transfer memories of previous loans, gifts, and shared expenditures. Close observation reveals people negotiating matches among relations, transfers, and monetary media.
One crucial procedure in this matching we can call earmarking: that is, signaling the nature of the relationship and transfer by a particular treatment of the medium. Techniques of earmarking include:
(a) Establishing social practices that sort otherwise identical media into distinct categories. Depending on how it is used, when, and most importantly for what type of social relation, the same physically indistinguishable medium (e.g. a euro or a dollar) can serve as a wage, a bonus, a tip, a gift, an allowance, charity, or a remittance. Each calls for a diﬀerent set of routines representing its character.
(b) Creation of segmented media in the form of tokens, coupons, scrip, chits, ‘time-dollars,’ food stamps, aﬃnity credit cards, money orders, vouchers, or gift certiﬁcates, which are appropriate for restricted sets of relations and transfers, and in many cases are not legal tender within the larger economy.
(c) Transformation of selected objects into monetary media, as with cigarettes, postage stamps, sub- way tokens, poker chips, or baseball cards.
Negotiation includes both the creation of consensus about the character of the relation and the transfer, on one side, and the elimination of mismatches, on the other. In fact, legal disputes over contested payments commonly pivot on disagreements not about just one of the elements but about the proper match among medium, transfer, and relation: was that transfer of money from an industrialist’s checking account to a politician’s campaign fund a loan between friends or a bribe for political services rendered?
Creation of new forms of money such as international legal tenders, electronic credit, and specialized local currencies will surely transform monetary practices during the twenty-ﬁrst century. Such innovations set an important challenge to sociological analysis. Students of money face two major tasks. First, to specify regularities in the process of matching monetary media, transfers, and relations, by establishing and explaining correspondences among the three. We have abundant evidence that such correspondences exist, but little knowledge of how they occur. Second, sociologists must examine cases where dramatic changes occur in one of the three phenomena, for example (a) the introduction of a new medium such as the euro, or the dissolution of an established media, such as the ruble, (b) innovation in transfers, such as electronic auctions, or (c) creation of new social relations such as gay families, new international ﬁnancial institutions, and transnational social movements.
In the long run, sociologists face the further challenge of making a much stronger connection with economists’ studies of such classic questions as money supply, inﬂation, central banking, and international trade. Economics and sociology both suﬀer from the current segregation between their approaches to money.
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