This is KZSU Stanford. Welcome to entitled opinions. My name is Robert Harrison.

I'm coming to you from the Stanford campus.

[Music]

Six score and seven years ago, the hour was high noon.

Nietzsche's madman went into the marketplace with a lantern in his hand

to announce the news that God is dead and that we, the citizens of the modern world, were responsible.

We have killed him, you and I. We are all his murderers, he shouted.

The people fell silent and stared at him in astonishment.

Then they forgot all about him and carried on with business as usual.

Question. Why did the madman go into the marketplace?

Answer? Because that's where the transvaluation takes place.

That's where good and evil acquire their exchange value.

That's where faith, hope and charity get translated into money.

Behold, the transubstantiation of all values.

"Lashofiligah" money makes war. Napoleon once said,

"It makes a whole lot more than wars though.

It makes an unmakes and remakes just about everything these days.

That's why the madman went into the marketplace to proclaim the death of God at the scene of the crime."

[Music]

Money may not buy happiness, but those who have it hold onto it for some reason.

Turn in your hours for a handful of times. Go to your grave for a fistful of dollars.

Just how much do those seats in the Imperium cost?

[Music]

I have nothing against money, nothing at all, but just for the record.

I have never received any peculiar remuneration for hosting this show.

I have never paid a guess to be on this show.

I have never received any course relief for doing the show.

The rewards are all in the thing itself.

To Pragma Otto, as they say in Greek,

which happens to be the native language of my friend and colleague,

Nicholas De Meers, who joins me in the studio today.

Nicholas is here to talk with us about the history and philosophy of money.

I told you, you get it all on entitled opinions.

A few words about Nicholas De Meers,

he pursued his graduate work in physics and then turned social theorist,

investigating money's role in organizing human existence.

He's an adjunct professor at the University of Lugano in Switzerland and a visiting scholar at Stanford,

where he recently gave a graduate seminar course on the philosophy of money.

He's also the author of the genesis of economic value money as a quantum phenomenon

to be published by SemioText, MIT, in 2016.

In treating title, to be sure, we'll ask about that title of his, or subtitle later in the show.

Nicholas is also currently consulting for a research and development outfit in Silicon Valley,

working with other physicists on quantum social science, an emerging field that goes beyond behavioral economics

and social media analytics.

It's a pleasure to welcome him to the program.

Nicholas, thanks for joining us today.

Thank you, Robert.

Well, how to begin.

Let me begin by saying that I am not a big fan of Gertrude Stein.

In my view, she tried too hard to be a clever,

aferist and succeeded only very rarely at that.

And a case in point, she wants to clear or is reported to have declared,

like, "What distinguishes man from other animals is not language, not the opposable thumb,

not art, but money.

No other species has or understands money."

Well, no other species has or understands golf or newspaper ads or rock concerts,

but let's humor Gertrude Stein for the moment and say that she's right.

What in your view is so special about money?

What I think Stein was really trying to get at is that unlike other animals,

human beings have besides communication and family a much more complex form of organizing,

which is very much mediated and helped by the presence of money.

So in that sense, money makes human social life much more complex,

and I think that is what distinguishes them from other animals.

Well, yes, I'm going to take issue with Gertrude Stein and not with you,

but with your characterization of what she meant by that, because one can't say that money is endemic to the human species,

because for a long time before there was money in our history or prehistory,

there was Homo sapiens sapiens.

So it seems to me that as human beings, we existed for a good long time in our evolutionary history,

prior to the advent of money, and that therefore perhaps it's not as endemic to our species as she might make a sound.

In fact, let me ask you, we don't want to get caught up in Gertrude Stein, and what did she know about money anyway?

She had some of her own, she had some I know if you did.

But in at least in Western civilization, the first time we get any thinking, reflective thinking about money,

I gather is among the pre-socratics and Greece, is that correct?

I think that is correct, and I think this is also why the Greeks still have a lot of appeal to us,

is because there were the first who basically organized themselves in the so-called famous Greek police,

using money as a means of transacting both within and outside the police, primarily outside the police.

And I think unlike other very complex civilizations of the time, like the Sumerians and the Egyptians,

we can still connect with the Greeks of back then, precisely because like them, then we now also use money.

As very much part of our social complex organization.

Well, maybe the new Greeks are the Germans who know how to manage it a little bit better than the contemporary Greeks.

Yeah, I doubt.

Yeah, I guess.

They are not very pious towards their forebearers.

Apparently not.

So why would the pre-socratic philosophers, now we're talking about people like Thales, Heraclitus,

Anaximander, and Aximanes, and so forth?

What did they have to say about money? Why were they interested in money at all?

The basic idea behind the work of people like Anaximanes and Anaximander and Thales was to find out where something has started from.

What is its mode of existence? How does it come about?

So they each came up with a prima material, like Thales thought that everything was made of water.

Anaximander thought that it was made, it was the appearance of the infinite Anaximanes thought that it was air.

But basically all of these things were an attempt to explain a similar role that money seemed to perform in society at the time to be the substance that seemed to engulf everything.

And that was a pretty mysterious thing that something like money was able to transform or transmute something as air or water can do in the physical world.

So in the societies they were living in money was already a kind of general common currency that was in the first place.

It was becoming a fairly common thing, correct?

And you used the term prima material and then you also used the English word substance to describe money in this period.

Now, as far as I know, the word substance in Greek, Uzzia, which is such a huge, I mean that's an immense history in Western metaphysics as we know.

And in Christian theology and almost the substance of Christ, whether he's the same or of the same substance of God and so forth.

However, from what I remember, Uzzia originally belongs to the sphere of the household of the orchos where it is the substance, namely how many cattle or how many sheep you have and what are your actual goods, the substance in the most concrete sense of the term.

Am I right about that?

I think you're right about that, yes.

After the pre-socratic when Aristotle speaks about money in the Nicomachean ethics and the politics, the politics, Aristotle makes a fundamental distinction in his Nicomachean ethics between

Oriconomia and Crematistics.

What is that distinction? Is economy, Oriconomia, the substance that belongs to the household, the traditional household independently of money, and if so, what is Crematistics there?

Yes, I think Aristotle basically understood the household that's been a self-subsisting unit that was able to sustain itself and that was the whole purpose of the household's existence to basically take care of those who were supported by it and in turn, their work reproduced it.

So when the merchants started becoming more dominant, namely when the surplus from household production was needing a place to go, the merchants then used it to exchange it for money by selling it to some other town or to some other place outside the police households.

So this whole activity became pretty soon a self-supporting one in its own right, but it was now independent of the concern with the households' reproduction and well-being.

Well, relatively independent, but if a household was producing too much oil for its own consumption and the Crematists would come along and see if it could be some of this oil, I will take it over somewhere and I'll sell it.

Well, I think you are correct and Aristotle understood that, but also being a real Greek, he was also an ethical concern with ethics in everything.

So he somehow stigmatized this activity because he put more weight on what he would say going beyond the use value of things and emphasizing more what we could call what he also called the exchange value of things.

So that shifting emphasis is what he condemned, even though he is the one who made the analytical distinction between use value and exchange value of a good.

Well, what did he have against exchange value?

He really thought exactly that after a while you do not exchange one thing for another thing, you exchange another thing for money which becomes the goal of the exchange.

So the terminus becomes the money rather than another thing that you want.

So at that point, money becomes more important than the things for which it is exchanged.

Yes, but let's say a common senseical response would be, I sell my goods, I can't consume them all.

I receive in a currency a value that the value that they are worth.

And with that currency, I can dispose of it as I like.

In other words, I don't see what the animus is against the rise of a kind of merchant class which enables trade, commerce and flourishing in the market.

Actually, you're asking a very important and interesting question.

I think this was understood even by Aristotle, but at the same time the kind of merchant class that we are just describing is one that already allows for a certain form of individual to emerge.

Aristotle was much more concerned with the family and the police as community units that pre-existed the individual who takes the initiative that we associate right now with the merchants and the risks that such individuals would take in order to benefit both themselves and indirectly the larger realm of the commons or something.

Well, wasn't Aristotle getting paid for his services to Alexander the Great as a tutor or some other?

Wasn't what is under condemnation there, the very presupposition of the kind of police that Athens had become and that enabled philosophy itself to arise and liberate people from their bondage to the land as it were.

Well, I think this is again, as always, your interesting questions about the scene at the time.

In fact, the whole distinction between philosophers and sophists was exactly based on the sophists were those who explicitly did their educating practice on money on pecuniary basis, whereas Aristotle, not Aristotle only, but also Plato, were supposedly not wanting that or not wanting this.

As a reward for their services. They felt that the participation of the students in the academy was and supporting themselves, however they did, was the reason the academy existed in the first place.

So we've talked about use value exchange value and when most people hear those terms, they think about Karl Marx, and I know it's a big jump across the millennia to go from Aristotle to Karl Marx, but there's a lot that takes place in the modern era when it comes to the history and philosophy of money.

So what does Karl Marx contribute to this history and philosophy of money, but especially on use value and exchange value?

Yes, I think it is interesting that you bring up Marx precisely because I think he, we can easily say that he was the one who took Aristotle very seriously on both the distinctions that we spoke a minute ago.

In other words, he revived both the primatistic key versus economy distinction as well as the use and exchange value considerations and made them the central pieces of his analysis of them emerging industrial society in the 19th century that he we associate his critique with and his important statements with capital and everything else as based on.

He took a lot of his clues from Aristotle precisely because he thought that what is happening in the 19th century in the new economic world is that all of these familiar distinctions are changing, are overcome by something else, what he came to call capital.

So capital is not Uziya, it's not substance, it's something else, it's something distinctly modern.

Yes, and what does he mean by capital?

This is a very deep and controversial subject matter. He wrote extensively about it, of course the three volumes of Daskapital is the most famous.

He wrote before that earlier book in preparation of this De Gundrese, which was one of the texts I was discussing in my class at Stanford this past quarter.

And basically he was making an attempt to come to terms with the power of money as a force if you like in social life that becomes larger than any political or social mediated constraints.

So that is sort of his understanding of money as something that changes social life profoundly and when a particular class of people like the capitalist dominate, then a lot of others who are producing are finding themselves controlled by those who have access to this capital.

So, Nicholas, you referred me to it rather excellent, I thought a really terrific book by Felix Martin called Money, the Unauthorized Biography, published by Knopf in 2013, and I, in reading that I became very sensitive to how ambiguous is the concept of money.

So, I think that's a very interesting thing to be using money and capital interchangeably in your account now of Carl of course, the thesis theory.

But if Felix Martin is right, there is a distinction between those two because money is not, there's been money for many ages prior to the modern era and maybe capital is to be distinguished from money or is it, or do you just collapse capital into money?

No, I do not want to collapse capital into money, but what I think Marx was trying to do is to break away precisely from the view of money as some kind of a thing.

So, the emphasis instead should be on money and be in a form of relation.

So, capital is also a way of capturing the relational aspect of money, something that takes it away from its more tangible thing like characteristics with which we start in familiar terms, but then we find it very difficult to extrapolate how from such a thing.

You can move to capital instead is the other way around.

You start with them, capital has been a very intense social relation that money fast among other things through currency or whatever is the good that is used as money for exchange and payment.

By social relations, I presume you also mean class relations and class conflict.

Correct, absolutely, exactly.

Yes, both at work and outside of that precisely.

And Marx was extremely alert and maybe too alert because he lived in England to the class relations that they British society of the time and to this day has.

So, the connection between the proletariat, the middle class and the capitalist class was very much construed as a struggle among them, all of them fighting for capital.

That is, and its benefits.

And this suspicion or animus that he had against modern capitalism in its crudest form, what was it all about?

I think the surprise Marx and I think he's still a surprising thing and surprises and upset us is that he recognized that with the introduction of capital in all its forms, because capital more familiar definition of capital pertains to the physical goods to the

materials with which an economy gets started.

But now we can also extend these materials to knowledge and other skills that human beings bring to producing things that they then share.

But then the value that they create in this manner becomes something that is hard to know to whom to attribute it to.

So, do you attribute it to the worker who did the work? Do you attribute it to the person who invested in the project that the work was part of?

So, at that point, where did you attribute it to nature from which all the resources are right?

Thank you, exactly.

So, then it becomes exactly a matter of debating.

Where is the value coming from?

And once we find its source, how does that source share it with others who maybe have contributed less or more?

And so, for Marx, the primary source of value was labor.

That is one interpretation.

I'm not necessarily subscribed to that, even though I mean for now, I think that's safe to say.

The interesting thing is that the labor theory of value, which is how he's known, makes it appear that then money is something that labor itself is exchanged for.

And I think that is a misunderstanding. I think Marx wanted to say that the labor together with money create value, and then the laborers are entitled to the profit or the benefits that is collaboration between money and their labor has generated.

So, here again, like capital, you are using the word value almost interchangeably with money, and that deliberate I'm presuming.

Yes, correct. Yes. So, money value capital is how to value is a very enigmatic concept to share.

So, definitely. And maybe that brings us to a person who understood that very much, and precisely because these terms, money, capital, value are so interdependent.

He tried to somehow separate distinguish them analytically, a bit differently than Marx.

And he is here referring to Zimel, who was just more or less almost a contemporary of Marx.

And he basically decided to counter Marx's analysis by emphasizing value rather than capital, even though he understood, as we just said, that they are interconnected.

So, Zimel spent a lot of time in his famous book, The Philosophy of Money, tried to understand how value, economic value becomes the driving force of modern life.

How did he distinguish between value and capital if that was his response to Marx?

The way he distinguishes is that he thought that Marx put too much emphasis on production.

So, the emphasis on production was one that he wanted to downplay instead emphasizing exchange.

So, the moment you put the emphasis on exchange, then the place of money, as the means by which you facilitate the exchange of value, becomes more prominent.

So, he decided to leave out the conditions of production and the mode of production, and instead pay attention how value circulates, how values exchanged, and using, and look at the mechanism that enables that.

At that point, looking at money in the familiar senses of how we use it to pay, how we use it to credit each other, and so on, so forth, becomes the point of his analysis.

I've never read The Philosophy of Money by Zimel. Is it a fascinating book? It is a special relevant today.

I think it is still relevant today. I think it is, he claimed to be his special book, and he was very proud of it.

I think the interesting about it is that he, even though he wants to say things about the Ucia, as well as the chapter on the substance of value in the book,

I think he's ultimately the book becomes more a description of what one can do with money once it permeates the social sphere.

So, rather than looking at the origin of money or the connection in a more philosophical sense of how does money create value or contribute to value, instead he takes its presence for granted, and then looks at its effects, how that transforms people into Meissers, or into willing to go into an unknown area, just because they feel empowered when they have money.

They are pockets, and they feel rather weak when they don't. So, like, right now, if you were a refugee without money in your pocket in a inhospitable town, you feel differently from being there but having money in your pocket.

Zimel was describing the conditions of the urban life, and the money being the big motor behind it.

Certainly, money creates a number of effects that are not reducible in my view, either to exchange value or to use value.

Indeed.

Because there is such a thing as an economy of the imagination, with the economy of needs.

I'm reminded of a story in Bocatra's De Cameron, where a character named Landolfo Rufolo, who lives in the town of Rabelo, beautiful town on the Amalfi coast, very rich merchant.

But he's not satisfied with his fortune, and he would like to double it, and so he invests all his money in what we today would call perishable goods, commestable goods, goods that have a short shelf life as it were.

And Biza Shippany, and he off he goes to the island of Cyprus, and realizes that there was a glut there in Cyprus, and he was not able to sell his perishable goods, and so he basically almost goes bankrupt, and he takes to piracy, which is the other form of a capital.

And then he then finds himself captured by the Genovese merchants. Anyway, a long little mini epic, there's a shipwreck, and he's the only person to save himself by grasping onto a chest that's floating in the sea.

And then he falls unconscious, and the sea actually, the waves just take him to the coast of Corfu in your home country.

And there an elderly woman saves him from the water and brings him in, and when he wakes up, she gives him the chest, and lo and behold he discovers that his full of precious jewels, and gems and things of that sort, and being a typical merchant, he puts a price on how much that woman's saving of his life is worth and gives her a gem or something.

But then he goes home, double, double-eberish, then he was when he set out with a bunch of goods that are not commestable, and they're not usable, but they have some kind of value, the source of which remains mysterious.

Is it the value that comes from gold being the simulacrum of the sun, or because a precious stone has the eternity that might be associated with salvation?

Here is what Katra is saying that the economy of need is only part of the story, and not actually even the biggest part of the story, because the economy of the imagination is quite fascinating, and I think that might be an effect of the accumulation of a certain amount of capital in a given society.

I could not agree more, I think as a matter of fact, I would like to re-for from that, namely that precisely that you can say, money is once you separate it from meeting most basic needs, it becomes the thing that drives our imagination, and it becomes a force of the imagination in another key, if you like.

As poetry is one way in which imagination acts on the world, I mean, in language, you can say investing with money, and with the hope that your investment and the risks that you take will bring you something back is something that certainly money now as capital brings out profoundly and strongly.

At the same time, it also brings out the fact that the potential for value that the world has is something quite remarkable, and is on a par, if a paraphrase Einstein, with his remark that the universe, what is remarkable and miraculous about it, is that it's understandable.

And now we can say what is miraculous about the universe is also that it is valuable, and now we can say that the interesting thing about money is that it makes the valorization of things an imperative.

And from that point on, especially in the form of investment, it becomes a way in which you see that imperative, both that it's meanest and most effective as the case may be.

And is the traditional moral objection to that, that it is neutral, and that it can valorize the good as well as the evil and the weapons of mass destruction, as well as charities that it all traffics in the same promiscuous currency?

Yes, I mean, at that point though, I think unfortunately there are people who confuse the message with the messenger, and I think to blame money for that really means to misunderstand the very significant role that he plays in getting the thing of the ground in the first place.

Well, Nicholas, I'd like to go back to a few historical moments, and maybe you think that the founding of the Bank of England in 1799.

Actually 1694, yes, I'm sorry.

Yes.

This was a huge moment in the history of money, and you see in the Bank of England the precursor to our Fed and other central banks.

Absolutely.

Can you say something about that moment of the Bank of England's founding?

Yes, the Bank of England, which is about 300 years, a little bit over 300 years ago, which is not that long ago in the scheme of things, but still started the modern era.

And basically what is allowed is for the first time to have a very interesting balance between private interests and the interests of the state.

Because up to that point, the king would go out to fight and basically bankrupt the state, and wherever he would go and bankrupt, that his lords, they would not be able to get back to him for getting what he owed them.

The institution of the Bank of England allowed all of a sudden the debts of the king to become social debt to belong to the whole society, at the same time he was beholden to the society.

The society through its representatives who loaned him the money.

So it was a very interesting reproachment between the politics and the moral of the monarchy and the beginning of the new society that we associated with the merchant class and the ultimate leader bourgeois society that we know.

So does that mean that for the first time the king was responsible for his debts?

Correct.

And that he was a comfortable, a comfortable, a good act.

And we are still in this kind of regime when it comes to the relationship between the sovereign states and their credits and debts.

Yes, yes.

Because at the same time for a long time as you know the king had what is called siniorage.

In other words, he had the monopoly on issuing money which then he would cry up or down meaning he would determine their exchange value whenever he felt he was losing.

He would take away the gold that he was built into the coins and then he would collect them back and therefore he would allow others to inflate the marketplace with worthless coins and debt he would be able to have all the goods that people would still give him as taxes, as benefit.

So the king in essence was able to control through taxation and through monopoly of the issuance of the currency, the economy of the whole society that he ruled over.

With the Bank of England right now you have another institution that determines how money is introduced in the society and therefore who gets indebted and how the debts are paid.

And at that point the issuance of money and the power behind that is now maintained by the Federal Reserve and other institutions of that kind.

So I have a quote here by John Galbraith.

Yes.

Which you think is quite pertinent to this topic.

And he says the process by which banks create money is so simple.

Namely by the stroke of a pen, the mind is repelled with something so important a deeper mystery seems only decent.

Yes, I think this is a thank you for quoting this. It's a very interesting quote indeed because to go back very briefly to the history of how what did the Bank of England replace when it came into existence.

And you could say it replaced the previous money lenders in other words people who were keepers of the coins that people would bring to them.

Instead what in fact the make the bank interesting is the following is that he used double entry bookkeeping as a mechanism for over counting which allowed it to not only use the money that people deposited with it as something that it could then turn around and loan to other clients.

It also could use money that he was not deposited that's the stroke of a pen.

Some that he created with that stroke of a pen to loan to others.

So he was able to make something that look as good as money to be the same thing as the money that supposedly people deposited with the bank in the first place.

So this is an amazing slate of hand that was still live under and it takes a lot of thinking to I mean it requires reflection why banks have such a power.

How can they issue the stroke of a pen something that has value to begin with and why are there only ones who have monopoly over this activity of lending money when in fact others could be issuing money in the similar fashion.

Nicholas I'd like to quote from the Felix Martin book that you referred me to I find it very interesting.

He writes in his introduction quote money is not a commodity medium of exchange but a social technology composed of three fundamental elements.

The first is an abstract unit of value in which money is denominated.

The second is a system of accounts which keeps track of the individuals or institutions credit or debt balances as they engage in trade with one another.

The third is the possibility that the original creditor in a relationship can transfer their debtors obligation to a third party in settlement of some unrelated debt.

And then he goes on to say it's that third element that is vital because while all money is credit not all credit is money and it is the possibility of transfer that makes the difference.

So if you and I contract an IOU and I write you down that you let me $50 and IOU that $50 that piece of paper might mean something between you and I because we're friends.

But if you take that piece of paper and give it to Dylan and say well here Dylan IOU $50 this is an IOU from Robert he said no I don't trust Robert no but it's only when it's transferable this transferable credit that does credit become money.

Do you agree with Felix Martin that these are the three fundamental.

Requests for credit to become money.

I know actually I think these are all the three important prerequisites for money through as banking money as we currently know it.

In other words the quote of Martin's reveals in a sense his presupposition to quote back that all money is credit but not all credit is money.

The assumption is that money starts as credit and that is a questionable assumption.

So that is one that we can debate because the issue of how money is comes into existence as a unit of account is something that precisely as doubt brave says it's very problematic.

I mean what are you introducing when you're just making a writing scribble on a piece of paper you're not introducing a quantity in the familiar sense of the term.

How have you denominated something in terms of someone else will recognize as being a standard by which then you're going to measure value.

But that's why Martin calls it a social money is ultimately a social technology because it presupposes a society and he speaks about the primitive yap society where there is an agreement in a given community that this is going to be our standard of measurement for debt and credit and transfer the transferability.

of credit and so forth.

And that and what fascinates me in this whole debate is the terms that are used.

If you take even the word credit yes yes the word credit comes from the Latin credit it comes from it's comes from belief and you speak about the trust.

about the trust is another word for faith.

Absolutely.

Therefore, the credit system relies on a certain trust

and faith in your federal citizens of the kind of community

and the currency, the money, whatever form,

this sort of credit takes when it takes the form of money,

is something that always still relies upon a certain faith

or trust in the institutions in the community,

in those who have agreed that this shall be

a standard measurement of value between us.

Yes.

And that's, I think Felix Martin might be

on very solid ground.

No, actually, I think there's a confusion here.

I think Felix Martin confuses the faith,

confuses credit as something that someone has,

because he has been loaned money versus the credit

that has or the belief that someone has

in order to make something in two months.

So in other words, first of all, you have to believe

that something is a unit of account

that you're going to allow to circulate

precisely because issues of trust

and other considerations enter.

And then the particular object becomes stands

for the belief and the faith in your federal citizen,

not in the object itself.

And so therefore if citizens have faith or trust in each other,

well, if not in each other in certain kind of institutions,

noble and institutions, then the economy works

in ways that it doesn't work, if there is no such trust

and he gives the example of those months in Ireland

in the 70s when all the banks were shut down,

but that there was some kind of sense

that checks still had a value.

Therefore he associates credit with the,

that it needs a certain sovereignty,

where people in a nation or in a society

will believe almost unconditionally

that the credit system is as trustworthy.

- Yes, yes.

- And therefore he thinks that money,

the management of money or say the regulation of money

does have to hand over a great deal of its management.

Management too, what he calls the state or government

or because it's a social technology in that sense, no?

- Yes, but I think there are two issues here

that I think we need to be more clear about.

One has to do with money in whatever form

is the carrier or the expression of that faith

and believe that we have in each other

in the community in which is supposed to circulate.

And second, that somehow it captures a value

that then circulates and used by those who accept the form

by which it enters their transaction.

So the value aspect of money somehow mediates and the faith

that also requires for this, for its circulation

are too related by separate things.

- They are, but until a few decades ago

the dollar had a gold standard

and you could go to Fort Knox and trade your dollars in

for there were all these gold and bars.

And then that kind of nourished the illusion

that money was not just a--

- Yeah, I had a restaurant called it, yes.

- But that it had some kind of so-called substantial value

even though you can't eat gold,

you can't drink it, you can't build a house with it.

Nevertheless, we abolished the gold standard

and it didn't do anything really to interfere

with the system of exchange and commerce and credit and so forth.

So in that sense, where you put your trust,

I think is a crucial issue.

- I totally agree.

But I want to take off,

up from your last point about people still having

what I would call the atavistic beliefs

that somehow even if there is no gold anymore

to redeem the paper unit that you are having

or the plastic as you were using,

but still they believe that the value can be traced back

to this reference thing, the gold.

Instead, I think the real issue has to do that

if money, as we were saying earlier,

is something that fuels the imagination.

And in other words, deals with something that precisely

is the opposite of the tangibility of gold.

In other words, it opens your mind to potential

that is exactly not tangible in that fashion

and yet under certain conditions can become more actual

and more tangible, then these two possibilities

that you can in both cases, you rely on money

to get to is at odds with each other

and yet equally important.

I think right now we live in a world in which I think

thanks to investment and the way the financial system

has evolved where more using money or should be using money

are something that fuels the imagination

rather than supports some kind of a hoarding

of something that plays the role of gold of gold.

Yeah, it's a go out and chop you.

(laughing)

Well, I will not say something to that remark.

(laughing)

But are you a fan of Keynes?

I am a fan of, yes, of all the various economists

and I want to say this in the presence of

potentially my colleagues in Lugano might be listening to.

I think Keynes is probably the most important

and to this day, even though now he's ignored,

but he was one of the most important economists

of the 20th century.

Why do you think so?

I think because he understood now the importance

of money as a force in organizing civil life.

As a matter of fact, he made, and I would like here

to use his famous distinction,

he explained why do people want to hold money?

Keynes made a very important distinction

about what he thought are the most important roles

that money plays in society or the motives

that for people holding money

and what he called it the transaction motive,

the other one is the savings motive

and the other one is the speculative motive.

And the thing is that the different aspects

of phases of money or aspects of money

that we're using do not correspond to each of these functions.

What are these functions?

Can you describe them briefly?

I mean, yes, when the exchange,

when I talk about your transaction function

is there exactly when you use money to go out

and pay for the goods that you're going to be back home to cook.

When we're talking about your speculative motive

is when you have now stored money and it has stored value

which then you're using to buy stock

or speculate in the market or do things like that.

And the other one with the savings has to do precisely

what you're putting aside for the rainy day

or the excess that you don't use for transacting

and paying for goods.

- Yes, good.

One other character economist I'd like to mention is Hayek.

- Yes.

- And can you say something about why you think he's important

and who was Hayek to begin with?

- Yes, Hayek was a contemporary of kings.

He was like me, immigrants in the United States.

He arrived here at the end around the in the 30s

which was a very important time

because this was the time of the Great Depression.

And this was the time when Keynes was writing his famous book,

the general theory of money, interest and employment

which was putting in more or less setting the foundations

for government policy from ever since.

And Hayek now becomes important

because he had come from Austria

and from Europe which at the time was facing

the matters, the twin menaces of communism and fascism.

He thought communism was worse than fascism

because it centralized the decisions of how money

and other financial resources were to be allocated.

And this is precisely what Keynes was advocating

with a new deal in the form of the new deal

for the government to play a similar role.

So in the eyes of Hayek, Keynes was kind of replicating

this central planning mode of operation

that he felt was not adequate to the complexity

of the real economy.

Instead he felt that the best mechanism

for making decisions in an economic system that has money

is not to be driven by a central planning committee

but be the market itself

because the market has the price mechanism

as the term has it that allows people

to make decisions based on prices.

- So he was a free market capitalist.

He was the most articulate in my opinion

and the least rabid of the lot.

And he saw a lot of problems with it but certainly

he has become the patron saint by the likes of Reagan

and Thatcher later in the 70s and 80s

but he was very articulate of the role of the market.

- Well, the French thinker Bodhjia Jean-Bodhijia

is someone that you actually did bring into your course

here at Stanford when you taught your seminar.

But he's an unlikely kind of theorist

for you to put into play in this history of money.

Why Jean-Bodhijia?

- Yes, Bodhjia is indeed an interesting and controversial figure

and he was a social theorist

and he is known for a couple of things.

First of all, the critique of the capitalist system

and one of its byproducts, which is consumerism.

So a lot of his critique was of Marx, for example,

was based on the fact that Marx did not anticipate

that even the workers could become consumers

and consumption would become the driving force

of the whole economic system

and at that point production

that it was supposedly the source of valorization

in the previous Marxian approach

now consumption became the new force.

However, what makes Bodhjia more interesting yet

was that he got a lot of inspiration of another person

that I find even more important called Jean-Bodhijia.

Another French thinker.

- Yeah, we did a show on him here.

- Oh, you did, yes.

- Laura Whitman actually.

- Is that right?

Yes, but I of course, as you know,

then is a very interesting man,

but he's most interesting book,

which I don't know if you and Laura discussed on your show,

was the book called The Occursed Share.

And this is an interesting book that Bodhjia wrote.

For me is probably his best book

and it is a book basically about economics.

And I'll say a little bit about this

because Bodhjia was inspired

in this two-rightist book.

Based on conversations he had with a physicist,

the theoretical physicist, another Greek called

Zor's Ambrosinos.

And basically his idea is that an economy is based on access.

And that was rather than scarcity.

So this is a very important thing

because a lot of people to this day

imagine that the whole point of the market

and the way of a resource allocation, efficiency,

and all of these things are predicated on scarcity

being the driver.

Instead, Batais says no, if we live in an open world

in a world in which the resources that we know

coming starting from the sun are as plentiful

and endless as the solar energy that comes from the sun,

then that kind of economy, the only way to counter it

is to deal with this access by transgressing it,

by setting limits and overcoming them.

So you have a very interesting thing

instead of starting with a closed economy

that will always run out without ever understanding its limits.

Instead, you start with a world in which his open ended

is very rich and only by transgressing limits

that you set, that we set, are able to control

and live within our means.

I think that's a profoundly different approach

to the economy and Baudríja kind of understood that

by transposing these approach to the semiotic aspect

of present economic life.

- So finally, Nicholas, what can we expect from your book?

What contribution are you hoping to make

in this book of yours as coming out next year?

- Yes, I think in the spirit of what I just said

about Baudríja, I want to carry forward this view of money

as a symbolic system.

Baudríja basically claimed that the symbolic system

that older primitive societies were good at

and able to survive by, was superseded by money,

which has been by his lights and non-supportable system.

Instead, I'm claiming that if you really understand money

as a symbolic process, then some of the things

that he thought was impossible or are there only,

impossible for this system and only possible

for a more primitive symbolic one,

Karina also happened in a complex society like ours.

- So my last question for you is,

why did you not subtitle your book,

money a symbolic phenomenon, but instead you called it

a quantum phenomenon?

- Yes, because one of the things that I have learned from,

doing physics and interested still in physics is that

physics itself is the symbolic appropriation

of the world.

This is something that physics does not say

in so many words and yet that is what he has in common

with the economy.

In both cases, we're dealing with a symbolic mediation

that in the case of physics, we at least have a method

and a paratus.

- You mean mathematics?

- Mathematics and also other,

and some other symbolic structure, but basically

mathematics that allow us to perform this practice.

I claim that we need something similar

in terms of a method and a paratus to approach money

because a method and a paratus that performs a similar task.

- Excellent.

You get one guess on what song is going to lead us out

of our show today.

- I think it will be pink Floyd.

- I think you're right.

Take care, Nicholas.

We've been speaking with Nicholas Damiras,

who is a adjunct professor at the University of Lugano

in Switzerland and a course offer here at Stanford

and visiting scholar here with us.

I'm Robert Harrison for entitled opinions.

We'll be with you next week.

Bye bye, Nicholas.

Bye bye.

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