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Society, Politics & Law

Taking cash in hand: Improving money's image

Updated Thursday, 30th July 2015

Money gets a bad press. Nigel Dodd thinks it's time to take a stand.

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Laurie Taylor:
Pink Floyd unequivocall extolled the virtues of money [on the track of the same name]. Grab that cash with both hands and make a stash. But should we philosophically share their concern about the value of that substance? Well Benjamin Franklin thought so:

“If you would know the value of money, go and try to borrow some,” he said.

But Karl Marx had a rather more ironic manner of calculating monetary value, he wrote:

“I, who can have, through the power of money, everything for which the human heart longs, do I not possess all human abilities? Does not my money, therefore, transform all my incapacities into their opposites?”

A collection of Scottish bank notes. Creative commons image Icon Tree Santos under CC-BY-ND licence under Creative-Commons license

Well sociologist Georg Simmel answers Marx's question:

“Money, with all its colourlessness and indifference, becomes the common denominator of all values; irreparably it hollows out the core of things, their individuality, their specific value, and their incomparability.”

Might our lives, then, be enhanced by a proper understanding - a better understand - of how money works? Vice president of America John Adams certainly thought so in his 1787 letter to Thomas Jefferson, he wrote:

“All the perplexities, confusion, and distress in America arise, not from want of honour or virtue, but from the downright ignorance of the nature of coin, credit, and circulation.”

Well, I'm now joined in the studio by someone who I suspect might happily endorse those latter sentiments, he'sNigel Dodd, Professor of Sociology at the London School of Economics whose new book is called The Social Life of Money.

As I was sort of indicating already Nigel, attacks upon money are pretty common in the literature aren’t they, sociological, philosophical literature, it’s got a bad name, if you like.

Nigel Dodd:
And they still are Laurie, there’s still books, bestselling books, that attack money and see an obsession with money as a symptom of a pathological society. I’ve been working on money since 1987 and I wrote a book called The Sociology of Money quite early in my career. There weren’t many of us in sociology working on money then and the first sociologists I read about money were the likes of George Simmel and Karl Marx.

And most of them, I have to say, gave money a pretty bad name and they saw money as something that corrupts social life. And so I’ve been fighting, not a one man campaign, but certainly a campaign with a growing number of people ever since to argue that actually money can enhance social life in all sorts of interesting ways.

Laurie Taylor:
You’ve put in some rather nice thing didn’t you on the way morality gets attached to money, I think it was Walter Benjamin, wasn’t it, about the way Christian morality of guilt connected to it?

Nigel Dodd:
Yes well that was interesting. I mean Benjamin picked up on what Nietzsche found which was the German word for debt, Schuld, is also the word for guilt and that got him off on saying that our debt economy is intimately connected to lots of moral assumptions which he likened to a Christian moral economy.

Laurie Taylor:
So being in debt is bad, being in credit is good?

Nigel Dodd:
Yes and universally that’s the case, it’s one of very few things that you could say this about but in every single society debt is something that’s generally seen in negative terms and credit in positive – even though they’re the same thing fundamentally, it’s two sides of the same relationship. And debtors we tend to regard as morally inferior to creditors.

Laurie Taylor:
Now you want to in a way interfere with these characterisations by saying that there’s nothing really intrinsically wrong with money but rather more with the way it is organised, the way our financial systems are organised? Expand on that for me.

Nigel Dodd:
Yes I mean part of this comes from what happened in 2008 of course but I think from before then, so I wouldn’t want to make this a post-crisis argument. I think for quite some time now there has been in advanced industrial societies a growing awareness that there are alternative ways of organising money.

Now this is nothing particularly new, we’ve lived with a state feared currency system only for about a hundred years, it’s not something which has lasted forever but we’ve tended to naturalise it, we tend to see that as the natural state of things, so we just accept that there is one form of money that circulates in society.

That’s been increasingly challenged on a number of levels, you have instances like the Bristol pound….

Laurie Taylor:
Yes let’s talk a little bit about these. I mean these in a way I suppose in many ways these people who are moving away – I mean they’re quite often anarchistic or libertarian attempts, aren’t they, to get away from a system of money transactions which depends upon the banks. I mean having seen what the banks – how they operated – we want something different.

Nigel Dodd:
I think that’s true of Bitcoin, I think Bitcoin does appeal to a libertarian/anarchist…

Laurie Taylor:
Tell me very briefly what Bitcoin is because although I know the name I’m not sure everybody’s familiar.

Nigel Dodd:
Well imagine a piece of software that’s extended across a massive network of computers and that software was programed to produce a certain number of coins every few minutes, every 10 minutes in fact, when this huge mathematical problem is resolved within that network. And in that way the supply of money is strictly controlled and automated.

Laurie Taylor:
So there are only a certain number of Bitcoins in circulation?

Nigel Dodd:
Yeah, there will never be any more than 21 million Bitcoins.

Laurie Taylor:
So that is the way the value is established?

Nigel Dodd:
Well that’s the claim that’s made and it appeals to people because it seems a little bit like gold, in fact even better than gold.

Laurie Taylor:
So we can trade across countries without paying any costs or anything like that or involving banks at all by using this system?

Nigel Dodd:
Yeah and I think Bitcoin appeals to people for that reason, I think it appeals because it gives you a bit of privacy, we’re becoming a little bit worried about the amount of data that the banks have and the credit card companies have.

Bittcoin is just, if you like, the most well-known version of alternative currencies. There are lots of others that I think are much more viable, I mean local currencies and time credit systems…

Laurie Taylor:
Let me just ask you about a couple of those because I mean you talk – I know you talk in the book about the ways in which money has a way of bringing together, I mean you’re quite nicely ironic about the way the euro sort of brings people in Europe together but then sort of doesn’t bring people… but what about this Bristol pound, the Brixton pound – what are these?

Nigel Dodd:
Well the aim of those is that they sort of mirror mainstream currency, so they’re based on the same unit of account – they’re pounds – you can cash them in for pounds, the value is one to one.

The idea of a local currency is to keep money circulating within a community, so you accept the Bristol pound as payment, you can only spend it within Bristol, so the idea there is partly to – it’s what economists call the multiplier effect – partly to generate more value within the community, so to make sure that the pound stays in Bristol, but it’s also I think to encourage – and this is possibly the more important thing – it’s to encourage people to think locally and to act locally.

Laurie Taylor:
But you’ve already indicated that there have been many attempts in the past, if you like “utopia” and I’ll put that in quotes, but I mean attempts to try to get away from money based upon banking systems and based upon the power of the state but they haven’t been particularly successful, is there any reason to think that these new developments are going to be successful, that they’re going to bypass traditional state empowered systems of money?

Nigel Dodd:
Yes, I think technology’s one of the reasons for that but I also think ingenuity, what I’m seeing are people who are organising these systems, who are incredibly smart and they’re learning lessons from the past.

I was at Spice yesterday which is a time based currency which operates with people donating time and receiving credits for that. And the people that run that system have learnt an awful lot from the past and there’s a strong group of people around alternative or complementary currencies, they prefer to be called, who are – who really know how to do these things. So I think there’s a lot of trial and error in these systems but they’re also making them work.

You can see Brixton pound is still working quite well, the Bristol pound is a huge experiment, if you like, which is – which has a lot of businesses attached to it. So I mean I think there are network effects too. So I’m pretty optimistic about these.

Laurie Taylor:
But isn’t it slightly naïve of me to say behind all these ….. alternative currencies, places like Brixton here and whatever, Bitcoin, but behind it all isn’t this banking system going to go on enduring because these systems, although they’re alternatives, don’t fundamentally threaten, do they, the international banking systems?

Nigel Dodd:
I think if they did threaten the international banking systems we’d know about it and they wouldn’t have such an easy time. I don’t think anybody’s – I mean this is why most complementary currency enthusiasts reject the notion of alternative currency, they’re not looking to take the world over.

What they’re looking for is to add to what we already have and there are clear pockets, many, many pockets, across the country where because of financial exclusion of various kinds, economic injustice, there is a demand and a need for alternatives. So these are very much complementary to the system we have. If they could challenge and bring down the banks I’m sure there’d be a few listeners cheering but it’s not going to happen any time soon.

Laurie Taylor:
Nigel Dodd, thank you very much, I’m sure you’re doing a great deal to give money a good name.

This interview was originally broadcast as part of Thinking Allowed on BBC Radio 4 on 9th March 2015.

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