Markets and money in social theory: what role for economics?

This art icle was downloaded by: [ SOAS, Universit y of London] On: 23 May 2013, At : 12: 13 Publisher: Rout ledge I nform a Lt d Regist ered in England and Wales Regist ered Num ber: 1072954 Regist ered office: Mort im er House, 37- 41 Mort im er St reet , London W1T 3JH, UK Economy and Society Publicat ion det ails, including inst ruct ions f or aut hors and subscript ion inf ormat ion: ht t p: / / www. t andf online. com/ loi/ reso20 Markets and money in social theory: what role for economics? Ben Fine & Cost as Lapavit sas Published online: 08 Feb 2011. To cite this article: Ben Fine & Cost as Lapavit sas (2000): Market s and money in social t heory: what role f or economics?, Economy and Societ y, 29: 3, 357-382 To link to this article: ht t p: / / dx. doi. org/ 10. 1080/ 03085140050084561 PLEASE SCROLL DOWN FOR ARTI CLE Full t erm s and condit ions of use: ht t p: / / www.t andfonline.com / page/ t erm s- and- condit ions This art icle m ay be used for research, t eaching, and privat e st udy purposes. Any subst ant ial or syst em at ic reproduct ion, redist ribut ion, reselling, loan, sub- licensing, syst em at ic supply, or dist ribut ion in any form t o anyone is expressly forbidden. The publisher does not give any warrant y express or im plied or m ake any represent at ion t hat t he cont ent s will be com plet e or accurat e or up t o dat e. The accuracy of any inst ruct ions, form ulae, and drug doses should be independent ly verified wit h prim ary sources. The publisher shall not be liable for any loss, act ions, claim s, proceedings, dem and, or cost s or dam ages what soever or Downloaded by [SOAS, University of London] at 12:13 23 May 2013 howsoever caused arising direct ly or indirect ly in connect ion wit h or arising out of t he use of t his m at erial. Economy and Society Volume 29 Number 3 August 2000: 357–382 Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Markets and money in social theory: what role for economics? Ben Fine and Costas Lapavitsas Abstract This article addresses the issue of how the market and the non-market are to be understood especially by concentrating on the theory of money. For mainstream economics, the market is simply an institution facilitating exchange, money being the key instrument for alleviating the inefficiencies of barter. In contrast, recent work in other social sciences, such as that by Zelizer, distinguishes among markets, and various roles of money, depending on cultural and social content. While being sympathetic to such an approach, we claim that the commodity is a better analytical starting point than the market. Based on Marx’s work, we then show what commodities have in common and establish a common essence for money as generalized purchasing power. This is a peculiarly bland essence that allows money to undertake the variety of social roles identiŽed by Zelizer. Keywords: money; exchange; commodity relations; political economy; culture. Introduction Social theory is currently facing a number of daunting challenges. The Žrst is to respond to dramatic events on the world stage, ranging from the collapse of centrally planned economies to the success and crisis of the East Asian NICs. The second, to some extent self-created, is to accommodate the reaction against the extremes attached to the impact of post-modernism. While the latter’s inuence has been both uneven and varied across the social sciences, there is a growing impatience with its lack of contact with the economic and social transformations Ben Fine and Costas Lapavitsas, Department of Economics, SOAS, Russell Square, London WC1H 0XG. E-mail: [email protected] Copyright © 2000 Taylor & Francis Ltd ISSN 0308-5147 print/ISSN 1469-5766 online Downloaded by [SOAS, University of London] at 12:13 23 May 2013 358 Economy and Society that have marked the end of the millennium. Not surprisingly, these two challenges are closely associated with a third – how to incorporate an appropriate economic content into social theory. This leads, in turn, to the need to come to terms with economics as a discipline. Previously, particularly in its uniquely hegemonic mainstream version, neoclassical economics has studied the economy in a way that has precluded the participation of the other social sciences – because of its methodological individualism, the notion that technology and preferences are given, its concern with equilibrium, and so on. More recently, however, economics has begun to challenge the other social sciences rather than retreat into the formalism attached to its mathematical models and statistical methods. In the work of those such as Becker,1 the notion of the optimizing individual, as if in a market environment, has been extended, in principle, to every aspect of social life. Moreover, changes within neoclassical economics itself have allowed it to address the formation and functioning of social institutions and structures, albeit on an individualistic basis, as a result of analysis based on informational asymmetries and transaction costs. Each of these developments within economics has already had its counterpart within other social sciences, as in rational choice theories and network analysis, respectively. But the outward thrust from economics has been particularly strong, and there are those who welcome its incursions into other disciplines with open arms.2 Equally, there are those who do not. There does remain a strong commitment to theory in which the social is not considered reducible to the behaviour of individuals, even if allowed to evolve in aggregate over time. In addition, the cultural content of life, not least the meaning of activity and aggregate processes, is also irreducibly social. If post-modernism has appropriately reinforced one idea, it is that concepts such as the household, the nation, even the individual, cannot be taken for granted. They are themselves socially defined or constructed, as well as deconstructed and reconstructed, both materially and ideologically. The main purpose of this article is to address issues relevant to the increasingly porous boundary between economics and the other social sciences, and between economic and non-economic subject matter. The social theories that have emerged in this connection are necessarily uid. They are also inuenced by the direction in which the boundary is being traversed (or even eroded), and by the speciŽc analytical content taken as the starting point for what is inevitably an interdisciplinary journey. In this light, the present article concentrates on how the market and the non-market are to be understood, especially by focusing on the theory of money. For mainstream economics, the market is simply an institution facilitating exchange, money being its key instrument for alleviating the inefficiencies of barter. The economy has traditionally been perceived to be conŽned to the totality of exchange relations; non-economic relations, in the Žrst instance, fade into a necessary but supportive background role. Consequently, more recent developments within mainstream economics have adopted the following two Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 359 broad paths in broaching the non-economic. On the one hand, the non-economic is treated as if reducible to the economic. Both the economic and social components of life are perceived as a set of (economic) exchanges, even when the presence of markets and money is not directly observable. On the other hand, the separate and distinct nature of non-economic institutions is explicitly recognized, as in the new institutional economics. These institutions are often interpreted as the necessary counterpart to the incomplete or imperfect functioning of the economy as a purely market-based structure. Inescapably, this type of inquiry privileges the economic, however unsatisfactorily that may have been analysed, since the non-economic emerges at most as its extension or its alter ego. Social scientists traversing the boundary to such economics must either accept its hegemony or, alternatively, maintain a strong hold on the salience of the noneconomic as posing distinctive deŽning factors. Such an alternative informs the approach adopted by Zelizer (1987, 1988, 1994, 1996, 1998) in a wide-ranging, and much cited, set of contributions on what might be termed the sociology of markets (and money). The second section of this article comprises a brief outline of Zelizer’s view of the market and of market theory. This is because her work presents very sharply the analytical choice between stressing the homogeneity of the market and the heterogeneity of markets. Her own preference, as she stands up against the sociologically blind thrust of mainstream economics, is to distinguish markets for their different social and cultural content. For Zelizer, a varied set of social relations continues to permeate the market. These must be brought to the fore at the outset or otherwise be lost to a homogenizing economic theory that overgeneralizes the extent to which the economy, or market, has indeed reduced economic and social life to a vulgar materialism based on the cash/market nexus. The third section elaborates our own starting point, drawing upon Marx’s political economy. Other writers, such as Polanyi and Simmel, of whom we offer a critical, if brief, appraisal, have also taken a broadly similar approach. We depart from Zelizer in two ways. First, we reject the notion that the market is itself a sufficiently well-deŽned category from a social or historical point of view. It is hardly surprising that Zelizer should conclude that the market is heterogeneous, given that she ranges over an extraordinarily diverse set of social relations that underpin it both within and across societies. Second, we take the commodity and not the market as our basic category. We then seek to discover what it is that commodities have in common – how they are homogeneous – in order that we can subsequently understand the nature of their differences. As a corollary, we can identify how markets differ from one another since what all markets at least have in common is (the form of) commodities. Those familiar with old debates in political economy might, at this stage, be experiencing an uneasy feeling of déjà vu, suspecting that controversies about the qualitative validity of the labour theory of value are about to be rehearsed. Such debates are relevant to our argument but they are not of immediate concern. More important, and as presented in our fourth section in the course Downloaded by [SOAS, University of London] at 12:13 23 May 2013 360 Economy and Society of critically appraising Zelizer’s notion of multiple monies, is to demonstrate that the choice between heterogeneity and homogeneity in markets (or commodities) has its mirror image in the understanding of money. For Zelizer, money is bound by social factors and customs, hence it is heterogeneous in nature. We argue instead that, precisely because it possesses a homogeneous aspect, money can uidly express a variety of social relations. The same aspect, moreover, enables money to exercise considerable inuence over the social relations that it expresses, without necessarily determining these. Zelizer’s objectives of defending sociology against the incursions of the dismal science as well as confronting the speciŽcity of markets and money are laudable. We share these purposes with her but our broader concern is to advocate the reintroduction of political economy to social theory, while rejecting the method and content of mainstream economics, especially as the latter seeks to extend its scope of application beyond its traditional market terrain. A prerequisite of this is a general theory of capitalist commodities (if not of markets) and of money appropriately informed by economic analysis. Zelizer’s discussion of markets and market theory Zelizer’s (1988) review of the literature on the market, focusing on interdisciplinary content, displays a deep understanding of the issues involved. She recognizes, for instance, that there has been a separation between economics and the other social sciences, that economics has commanded analysis of the economy, and, in particular, that it has peddled an unacceptable notion of the market – one in which the market is perceived to be neutral and universal. In contrast, Zelizer (1988: 618) seeks to ‘analyse the historical, cultural, and social variability of markets’. Zelizer has also provided an organized account, from her own perspective, of themes within the non-economic literature on the market. First, there is the least satisfactory approach that views the market as ‘boundless’ in its invasive tendencies, undermining the social, moral, and personal content of the relations it comes across as its boundaries move forward (except for relations similar to the amoral cash nexus that lies at the market’s own core). Second, there is the contrasting ‘subordinate’ market model which considers not only that non-economic relations offer substantial resistance to the ‘boundless’ market, but also that a rigid dichotomy in this context between economic and non-economic is fallacious. Rather, economic and non-economic norms, values, and institutions mutually interpenetrate one another. Zelizer suggests that the ‘subordinate’ market comes in two forms: Žrst, as a consequence of the culture of the market, for example, as consumers construct their own meanings out of consumption practices and, second, through the reliance of markets upon social networks that go beyond the mere binary relations of economic exchange, as posited in the work of Granovetter (1981). Zelizer’s own approach is one of synthesis, which she terms the ‘multiple’ Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 361 markets model. With the exception of the ‘boundless’ model, with its rigid dichotomy between economic and non-economic factors and worlds, her only difference from other accounts is that they need to be more inclusive of one another. In conclusion, ‘The current alternatives to the economic model are overly dichotomised into cultural or social structural arguments. We should therefore aim toward an interactive theoretical model that will explore and explain the complex historical, cultural, and social structural variability of economic life’ (1988: 631). Zelizer (1983, 1987, 1994) has also provided empirically and historically grounded case studies dealing, respectively, with the value (or evaluation) of human life, the speciŽc changes in this value over time (and principle) in the case of children, and the failure of money to become simply abstract or a pure instrument of economic life. For her, each study is to be read as demonstrating the inevitable intrusion of the non-economic into the economic, not merely endowing it with social and cultural content but also affecting how the economic functions. To establish life insurance, human death demanded evaluation so that, ‘Friends, neighbors, and relatives, who had relieved the economic misery of the eighteenth-century widow, were replaced by a proŽt-making bureaucracy’ (1988: 630). The same has also applied to the death and the life of children – their loss being increasingly assessed by their sentimental worth as well as by a sale price, as in adoption and, most recently, surrogacy. Finally, money, despite the apparent homogeneity of its forms and functions, has continued to be used in a variety of ways, giving rise to, ‘Qualitative distinctions between four different types of “special monies”: domestic money, gift money, institutional money, and sacred money. Different cultural and social settings introduce special forms of controls, restrictions, and distinctions in the uses, users, allocation, regulation, sources, and meanings of money’ (1988: 631). However, Zelizer’s account also has weaknesses that make for our own point of departure. The most general problem is a lack of clarity in the deŽnition of the market itself, despite the warning that ‘the very deŽnition of the market is at stake’ (1988: 618). There are two reasons for this. On the one hand, as is apparent from the examples already given, the market is perceived to be present whenever something vaguely resembling a sale or purchase (or even a gift, as of money) is involved. On the other hand, the eschewal of an economic deŽnition leads to the market being speciŽed in terms of the coming together of the social, the cultural, and the economic. Zelizer seems to approve of a highly exible notion of the market, distinguished only by its being ‘one among many different possible arrangements, such as barter or gift exchange, that involve economic processes’ and by ‘its essence [as] the rational calculation of costs and beneŽts and the regulation of exchange by the price mechanism’ (1988: 618). Whether deliberately or not, the lack of analytical rigour and clarity in deŽning the market is compensated for by reliance upon empirical studies to identify the exact conŽguration of economic, social, and cultural factors that comprise particular instances of the market. This represents a research strategy and methodology in which the market in general is understood as a highly varied set Downloaded by [SOAS, University of London] at 12:13 23 May 2013 362 Economy and Society of differentiated instances of market relations, subject to the relatively weak general deŽnition suggested in the previous paragraph. Consequently, in emphasizing non-economic differentiation between markets, Zelizer is negligent in exploring and specifying what economic content they have in common. In a sense, this is hardly surprising since Zelizer’s motivation is one of discarding all general theories of the pure market, particularly that attached to neoclassical economics. Unfortunately, however, the result is a partial reading of the relevant economic literature. Because the neoclassical understanding of the market is based on universal and erroneous principles, it does not follow that any attempt to provide an abstract understanding of the common elements of markets is awed. Moreover, Zelizer inevitably interprets any theory that seeks to extract a common property as one-sided. She treats such theories as, at most, partial raw material for what appears to her to be a more rounded and comprehensive understanding of the varied empirical instances of market relations. However, it is not true that all such theories can be neatly slotted into Zelizer’s categories of ‘boundless’, ‘subordinate’, or ‘multiple’ markets. Marx, arguably the most sophisticated theorist of the market as embodying a core content, is mentioned by Zelizer only in so far as his early work points to the dehumanizing effects of the cash nexus. However, as shown below, Marx developed a theory of the market speciŽcally designed to unravel what it is that commodities have in common without losing sight of the broader social and historical content of differentiated market relations. Marx’s analysis of markets and money Markets, commodities, and labour Marx’s theory of markets in Capital commences with the analytical examination of the concept of the commodity rather than that of the market itself.3 The choice of starting point reects the complexity of the social relations comprising and sustaining markets, particularly capitalist ones. With an analytical starting point such as ‘the market in general’, it is very difficult to identify the relations of production and distribution of the social products exchanged in the various markets. Even worse, the process through which the products of human labour become commodities, and therefore markets come into existence, is obscured. In contrast, with a starting point such as ‘the commodity’, these social relations and processes can be clearly identiŽed, even if only in embryonic form. For Marx, as is well known, commodities are at once use values and values, both aspects resulting from the labour employed in producing commodities: concrete for use value, abstract for value. The social relations characteristic of the production of commodities, and underpinning their exchange, are immediately brought to the forefront, as will be seen below. Concrete labour is highly speciŽc to person, time, place, and skill. There is Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 363 close correspondence here with the particularity of each commodity as use value: our is different from steel, which is different from a haircut, and so on. The same evidently applies to the particular labours involved in producing these. More than this, various grades of our are different from each other, and even the same grade our of one producer differs from that of another. Minute particularity is an intrinsic element of both use value and concrete labour. The point is, though, that this particularity corresponds with a completely formless generality of the social relations under which concrete labour can be – and is – undertaken. Seen concretely, our-making is, above all, a set of natural/scientiŽc processes requiring human intervention, which are compatible with a wide array of social relations. Consequently, these processes reveal little about speciŽc social relations at a given point in time and place. That is not to deny that the calculus of use values has a determinate social content depending on social structure and custom, as for example in the list of goods entering Žnal consumption. Nor is it to claim that use value is not a legitimate object of economic inquiry. The use value of capital goods, for instance, is of critical importance in determining the productivity of labour, the proŽtability of capital, and the creation of depreciation funds. It is rather to stress that the concept of concrete labour is neither designed nor expected to reveal much about the social relations within which such labour takes place, and even less about the reasons why its product becomes a commodity, that is, a thing bought and sold. The particularity of commodities is a poor guide to the social relations underpinning markets. Abstract labour, on the other hand, is general, featureless, and homogeneous. It provides the social substance that makes commodities as values indistinguishable from each other: our (more exactly, the labour that produces it) is rendered the same as steel, which is rendered the same as a haircut, and so forth. Yet, acknowledging the featurelessness of value affords important insight into the speciŽc social relations that result in abstract labour. Two aspects of social organization allow our-making to become equivalent to steel-making, to haircutting, and so on (and, analogously, allow products systematically to become commodities): Žrst, a highly complex division of labour exists in society, comprising producers who are autonomous and in competition with each other, and, second, there is indifference among the many types of labour, typiŽed by lack of hereditary prerogatives over particular jobs and heightened geographical mobility of workers. By this token, the social relations of European feudalism at its peak could not have been associated with widespread commodiŽcation of products; equally, abstract labour reveals little about the social relations characteristic of such feudalism. On the other hand, advanced capitalism, characterized by independent, competing enterprises and by the existence of a working class for which the choice of employment is largely determined by monetary reward, requires reference to abstract labour. In short, the general aspect of commodities is an excellent guide to the social relations underpinning capitalist markets. 364 Economy and Society Downloaded by [SOAS, University of London] at 12:13 23 May 2013 The substance and the form of value under capitalist conditions Our argument so far is that abstract labour provides the common aspect of commodities but diverse concrete labours become systematically commensurate only under speciŽc social and historical conditions, that is, capitalism. For labour to produce value (and commodities), speciŽcally capitalist conditions must exist in the sphere of production, and the ability to labour must itself be traded capitalistically. Nevertheless, for Marx, not all labour undertaken in a capitalist economy results in value (and in commodities traded in markets). The labour of workers in retailing, wholesaling, banking, Žnance, insurance, in state-run education and health provision, and so on, does not produce commodities and may even lack the material basis for commensuration of diverse concrete labours characteristic of commodity production. Such workers might indeed be drawn from the common social pool of labour power, and they might even be employed by capitalists, but their output is not traded in an ordinary market, though it might acquire a price and result in money proŽts for employers. In other words, capitalist economic conditions are a necessary but not sufficient condition for the transformation of labour into value. For commodity markets to emerge, labour must be expended within the sphere of capitalist production and its output traded in the sphere of exchange. The precise nature of concrete labour is not decisive in this respect: the output of computer programmers working for software companies and of teachers in private schools, for instance, might well be traded in capitalist commodity markets. While labour might not result in value, the form of value can be appropriated by economic phenomena unrelated to labour (as can also happen with the culture and language of commercial exchange).4 Put as simply as possible, the form of value is what classical political economy called ‘exchange value’, that is, the quantitative ratio (equivalence) of one commodity with another. Exchange value is a formal property of all commodities and quite distinct from the substance of commodity value, i.e., from abstract labour. The point here is that, under capitalist conditions, quantitative ratios (equivalences) tend to be established not only between commodities but also between commodities and the products, consequences, and results of all economic activity (as well as among the latter). Capitalist economic activity tends generally to acquire the trappings of commodity markets and adopts a complex array of forms of value (money prices, demand, supply, proŽt rates, and so on), whether these truly reect the nature of the particular activity or not. Under capitalist conditions, the forms of value become the general means for facilitating economic intercourse regardless of the relation of particular activities to abstract labour. The market for insurance is a typical example of this development: a social mechanism for the concentration of money reserves to tackle accidents and disasters appears as a ‘market’ in insurance ‘products’, and risk premiums appear as ‘prices’. Forms of value are acquired by an economic activity that is inherently unrelated to the substance of value, i.e., to value creation in production that makes diverse concrete labours commensurate with each other. The analysis of Ben Fine and Costas Lapavitsas: Markets and money 365 capitalist insurance by social theory needs to be aware of the sui generis nature of this ‘market’: exceptional care is necessary in attempting to extract conclusions with general applicability to other capitalist commodity markets. Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Money and the forms of value The distinction between form and substance of value is of critical importance in understanding Marx’s theory of money. The Žrst issue here is the logical derivation of the origin of money. For the classical economists money typically provided a resolution for the well-known problems of direct exchange or barter.5 Imperfect divisibility, perishability, lack of homogeneity, incompatibility of wants and timing among commodity owners, all render direct exchange liable continually to break down. A money commodity can overcome these problems (and transform barter into monetary exchange) by functioning as a universally accepted means of exchange. The weakness of this argument, as Menger (1892) realized, is that it does not logically demonstrate how and why exchangeability becomes monopolized by the money commodity. Neoclassical economic theory has been no more successful in tackling this question. The strongest argument it can muster is that, if money is more generally accepted as a means of exchange than other commodities, it can reduce the transactions costs of barter.6 This is a fundamentally circular argument: what makes money unique among commodities? That it is money. The difficulties faced by classical and neoclassical economics in demonstrating the logical basis for the emergence of money arise because demonstration is sought in terms of money as means of facilitating exchange. Commodities are assumed to be directly exchangeable with each other, all the essential properties of markets are already present under conditions of barter, but somehow money must also logically emerge as a means of exchange. Successful or not, moreover, this approach inevitably leads to a very narrow view of the social role of money, identifying it with plain means of exchange. In contrast, Marx (1867: ch. 1, sec. 3) offered an original resolution for the riddle of money’s monopolization of exchangeability. This resolution has profound implications for the theory of markets and the broad role of money in economic life. For Marx, the answer to the riddle of money is already contained in the ‘simple, isolated, or accidental’ form of value, that is, in the most elementary relation of exchange of one commodity with another. When x of our requests exchange with y of steel, our is the active commodity (the relative) and steel the passive commodity (the equivalent), and exchangeability is represented by the material of the equivalent (steel). Since neither the reverse request for exchange nor the assent of the steel owner can be guaranteed, the relationship of the relative to the equivalent is not generally reversible. Naturally, our may at the same time request exchange with several other commodities, giving rise to the ‘expanded’ form of value and allowing exchangeability to be represented by a wide array of equivalents. However, each one of the latter is a partial representation of value Downloaded by [SOAS, University of London] at 12:13 23 May 2013 366 Economy and Society and cannot act as a uniform means of account for value. These weaknesses are overcome as particular commodities are chosen frequently (though without Žxity) by several other commodities to act as equivalents, giving rise to the ‘general’ form of value. The point here is that commodities temporarily acting as general equivalents acquire an additional use value, namely their exchangeability with several others. Possession of this additional use value enables one commodity eventually to become the universal equivalent that monopolizes exchangeability and allows value to be expressed generally in a uniform means of account – that is, money.7 One corollary of this derivation is that the emergence of money is not predicated upon the existence of social relations that give full rein to value as abstract labour, that is, capitalist relations. The forms of value, including the money form and hence price, emerge spontaneously from the anarchical relations among commodities in the process of exchange, capitalist or otherwise.8 This result coheres closely with our earlier claim that the form of value is frequently adopted by economic processes the inherent nature of which may be unrelated to value creation. Furthermore, it facilitates analysis of the historical (as opposed to the logical) analysis of money’s origin, as will be seen below. A further corollary is that money’s social functioning can be analysed in its full complexity, free from the self-imposed constraints of neoclassical theory with its focus on money as means of exchange. Rather, money is the universal equivalent and, as such, it must perform several functions in a capitalist economy. The universal equivalent inevitably functions as measure of value, since it provides the material in which commodity values are expressed; it also functions as means of exchange, since it has measured values and set prices. More importantly, since it monopolizes exchangeability, the universal equivalent functions as means of hoarding, means of payment, and world money, thus transcending the narrow conŽnes of commodity exchange. As means of hoarding, money allows the concentration of wealth in durable form, providing a source of social, political, and economic power, also making possible the construction of a credit system. As means of payment, money splits purchase from payment, giving rise to credit relations, to the balancing of opposite obligations, and to the continuation of production even if monetary returns have not yet accrued. As world money, it settles balances among capitalist nations and inuences the relations of power and hierarchy among them. Money’s functioning thus possesses considerable complexity – as well as several social aspects – much removed from the simple facilitation of exchange. This point can be further reinforced by turning briey to the historical dimension of markets and money. Money: the ‘nexus rerum’ of capitalism Markets, commodities, and money (not to mention banking, insurance, and commercial trading) are economic phenomena that long pre-date capitalism, and are also encountered today in evidently non-capitalist communities. This observation Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 367 can shed additional light on the social functions of money in a capitalist economy. For the classical economists, markets are a natural and inextricable component of human economic activity, rooted in the human propensity to ‘truck, barter, and exchange one thing for another’ (Smith 1776: 17). In contrast, for Marx (1867: 182, see also 1939: 103), ‘The exchange of commodities begins where communities have their boundaries, at their points of contact with other communities, or with members of the latter.’ In this view, commodity exchange is a phenomenon external to the essential reproduction processes of human society, until the rise of capitalism. Marx (1939: 223, 1895: 447–8) observed that the trading peoples of antiquity, Phoenicians and Carthaginians, were present in the ‘intermundia ’ of the ancient world, like the gods of Epicurus. They were in a sublime state, detached from the human world and indifferent to the affairs of men; analogously, trade in precapitalist societies was a self-contained phenomenon, largely indifferent to the reproduction of these societies. Pre-capitalist societies organized their affairs mostly on the basis of custom, hierarchy, and command; trade (and money) arose mainly where these societies came into contact with each other. At the same time, money in pre-capitalist societies possessed a corrosive and disruptive power because it provided, in principle, for the acquisition of goods and the projection of social power in ways not necessarily related to hierarchical and customary privilege. Money could penetrate pre-capitalist societies, maintaining a marginal presence within them, but could also potentially exercise disruptive and antagonistic inuence on the essential relations of social reproduction. In contrast, capitalism is a society premised on the creation of value (and surplus value), rendering the role of markets and money fundamental to capitalist reproduction. Capitalism incorporates a tendency to undermine social hierarchies and customs, potentially replacing them by social links articulated through the market. Thus, money as the universal equivalent emerges as the nexus rerum of capitalist society, the supreme encapsulation of capitalist social relations that revolve around value. The moral, customary, familial, and ethical aspects of capitalist social relations are increasingly reected through the lens of money. Capitalism also possesses social hierarchies but these are largely based on money. As Zelizer claims, the complex social relations contained in these hierarchies can force money to acquire Žner nuances according to the context in which it is used. Moreover, the meaning attached to these nuances can vary despite their common monetary outlook. SigniŽcantly, however, money can play this role precisely because it monopolizes a common aspect of commodities, i.e., exchangeability. Monopoly of exchangeability is a universal category, hence it lacks other determinations, and that is the reason why money can act as a blank screen on which more complex relations project themselves. By the same token, the broader aspects and meanings of social relations that are expressed through money Žnd themselves trapped within the featurelessness of universal exchangeability. This is evident in Zelizer’s own case studies in which the complex and multifarious social relations behind prostitution earnings, family gifts, bribes, Downloaded by [SOAS, University of London] at 12:13 23 May 2013 368 Economy and Society and wage payments receive an impoverished differentiation from each other as dollars earmarked into different boxes by their owners. Precisely because it is the universal equivalent, money can serve as the material through which a variety of social relations are expressed; for the same reason, it is incapable of projecting reŽned differentiation among these relations. Vespasian was essentially right to declare non olet (it does not smell) to proud Titus, even when money comes from public urinals. Thus, markets, commodities, and money, despite their great historical antiquity, become fundamental to society only under speciŽcally capitalist conditions. In this respect, there is some affinity between Marx’s and Polanyi’s historical analyses of markets and capitalism, especially Polanyi’s view that market trading, involving haggling, market prices, and private pecuniary gain for its participants, is a recent phenomenon in the vast expanse of human history (Polanyi et al. 1957: 250–6). Polanyi’s (1944: ch. 5) claim that nineteenth-century liberal European capitalism turned the market into the foundation of society, and, in the process, threatened the viability of society itself, is also remarkably close in spirit to Marx’s approach. Polanyi based his claim on the ‘unnatural’ commodiŽcation of labour, land, and money, things which he saw as intrinsically different from commodities. In particular, the complete absorption of money by the processes of the market gave rise to the gold standard, the blindly automatic functioning of which undermined the social solidity of liberal capitalism. Nevertheless, several critically important points of difference between Marx and Polanyi also need to be mentioned. First, and analytically the most important, the market indeed penetrates the core of social reproduction under capitalist conditions but this happens because the structure of society has itself changed, namely a capitalist class and a working class have emerged in the sphere of production. The creation of these classes involves far more profound processes than emergence of society-wide markets. Above all, it requires dramatic changes in ownership and control of the means of production, which typically involve dispossession of entire social strata. Such dispossession could happen through market- and money-related mechanisms, for instance, through ability to lend preferentially either privately or for purposes of national debt, but it always involves the exercise of power backed by actual or threatened violence. In short, in analysis of social structure, the independent variable is production relations rather than the degree of penetration of society by (and its integration through) market processes. Second, analysis of the relation between the ‘market’ and ‘money’ by Polanyi and his school represents an awkward mixture of deep insight and superŽcial generalization. As is well-known, Polanyi (1957) distinguished between ‘generalpurpose’ and ‘limited-purpose’ money. The distinction was further elaborated by Dalton (1965), who sharply differentiated between ‘advanced’ money that is ‘homogeneous’ and devoid of ‘personality’ and ‘primitive’ money that is ‘heterogeneous’ and often possesses ‘personality’. ‘Limited-purpose’ monies are, presumably, interchangeable only with very great difficulty, a point which anthropologists in Polanyi’s tradition, notably Bohannan (1959),9 have tried to Ben Fine and Costas Lapavitsas: Markets and money 369 Downloaded by [SOAS, University of London] at 12:13 23 May 2013 establish empirically. In this light, it is deemed incorrect to ascertain the ‘moneyness’ of ‘primitive’ money by checking how many of the functions of ‘advanced’ money typically acknowledged by economists – such as means of exchange, means of payment, standard of deferred payment, and so on – are satisŽed by it. The reason is that ‘advanced’ society is integrated by the market, which inevitably assigns pre-eminence to money as means of exchange, thus also dictating the order in which economists discuss money’s functions. For Dalton it follows that: To concentrate attention on what all monies have in common is to discard those clues – how monies differ – which are surface expressions of social and economic organisation. . . . In sum, money has no deŽnable essence apart from the uses money objects serve, and these depend upon the transactional modes that characterize each economy: as tangible item as well as abstract measure, ‘money is what money does’. (Dalton 1965: 61–2) As will be seen below, the similarities with Zelizer’s ‘multiple monies’ are striking, including denial of a general theory of money and rejection of money’s analysis by ‘economists’. The difference is that Zelizer has reected this argument back onto ‘advanced’ society itself. Despite its evident insights, the approach is deeply problematic. Purely as a matter of logic, that money performs limited functions in ‘primitive’ societies, which are frequently non-economic and vary widely, is no demonstration of the absence of a common character of money. Rather, enumeration of the limited functions of primitive money spells out the analytical problem clearly: can the essence of money be theoretically derived in a way that allows for systematic understanding of the multiple functions (social and economic) of money? Marx’s previously discussed analysis of money as universal equivalent goes a long way towards providing such a theory. It cannot be over-emphasized that Marx’s derivation of the common character of money amounts to a process of logical becoming, which inevitably appears whenever commodities come into contact with each other. That some societies might not possess a universal equivalent (‘general-purpose’ money) or might have several general equivalents (‘limited-purpose’ money) is a result of the peculiar features of those societies, not an indication of the futility of a general account of money. Even worse consequences follow from uncrititical acceptance of mainstream neoclassical theory as fully comprising the domain of ‘economics’. On the one hand, it hinders recognition of the simple fact that neoclassicism does not possess a theory of the common character of money, as mentioned above. On the other hand, ironically, it encourages adoption of the very neoclassical devices aimed at compensating for the absence of such a theory. SpeciŽcally, a list of arbitrarily postulated functions is adopted, and anything that fulŽls those is identiŽed as ‘money’. Thus, ‘money is what money does’, and the heterogeneity of what it does allows either for rejection of its common character or for it to be understood primarily as means of commodity exchange. That is a complete dead Downloaded by [SOAS, University of London] at 12:13 23 May 2013 370 Economy and Society end for analysis of both the essence and functions of money. In contrast, Marx’s approach to money implies that ‘what money does follows from what money is’: because money monopolizes exchangeability, it also measures value, facilitates exchange, settles debt, and so on. Seen in this way, there is order and internal cohesion to the functions of money – no arbitrariness.10 Moreover, it is particularly misleading to identify means of commodity exchange as money’s dominant function in ‘modern’ capitalist society. Intracapitalist trade, much consumption spending, international transactions – indeed the bulk of monetary transactions in value terms – are no longer mediated by money but by credit. Consequently, money in advanced capitalism functions primarily as means of payment and element of hoards. The implications are profound for the issue at hand. Money as means of payment and as hoard (both functions with which neoclassicism has considerable analytical difficulties) inevitably entails broad social functioning: who generates the means of payment, who holds the money hoards, who has access to them in times of distress, all are issues deeply enmeshed with power and authority in capitalist society. That neoclassicism is particularly inept at dealing with these aspects of money is not a reason for assuming that this is a weakness of ‘economics’. Political economy, especially its Marxist variant, offers much richer economic and social insight into the functioning of money in capitalism. In the same vein, Polanyi is right to claim that the extension of the form of value to labour and land is a peculiar development since neither of these traded things is capitalistically produced but, with respect to money, his argument is misleading: metallic money is a capitalistically produced commodity (gold), though valueless forms of money also exist. What is unique about capitalism’s encroachments in the monetary sphere is not the extension of market principles to money (money already encapsulates these). Rather, it is the systematic transformation of idle money into loanable money capital. Under capitalist conditions, loanable capital forms a peculiar commodity that is traded in money markets and has a sharply deŽned price in the rate of interest. Systematic generation of loanable capital allows emergence of the Žnancial system, an enormous structure of social relations, institutions, markets, and instruments that sharply differentiates capitalism from past social systems.11 Interaction between capitalist production and the processes of Žnance can seriously disrupt the cohesion of society as a whole. There is also affinity between Marx’s and Simmel’s work on money, though again the ground has to be trodden carefully. Similarly to Marx, Simmel claims that money is a ‘speciŽc realization of what is common to economic objects’ (1900: 120), speciŽcally that money ‘is nothing but the pure form of exchangeability. Money embodies that element or function of things by virtue of which they are economic’ (1900: 130). Simmel further saw money as a ‘tool’, the main means whereby human purposive actions are completed (1900: 210). The peculiarity of money is that it ‘psychologically’ grows into an ‘end’ as the cultural development of the epoch proceeds. On this basis, he analysed a variety of sentiments, including greed and avarice, extravagance, ascetic poverty, cynicism, and Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 371 so forth. What makes Simmel a leading candidate for Zelizer’s ‘boundless’ market current, however, is his view that money contradicts the notion of ‘distinction’ for groups and individuals, since it stresses what is common and without determination: money ‘forces an extraneous standard upon things, a standard that is quite alien to distinction’ (1900: 394). When social transfers are in kind or as material contributions to a common effort, the payer normally has the right to demand reciprocal social obligations from the receiver; when social transfers are transformed into money payments the social web of mutual obligations is destroyed. Thus, money levels off and at the same time creates a sense of disorganization and disorder. Simmel’s work contains no notion of the commodity, hence none of the social relations expressed therein. The value of objects is hopelessly confused with (undeŽned) ‘economic’ value and with the subjective and common-sense ‘value’ of events, occurrences, and services, making it impossible to identify the deeper social reality captured by value. Thus, though Simmel declares money to be the objectiŽcation of exchangeability, his claim is assertion pure and simple, conveying nothing of the logical and historical development of commodity value. Simmel’s money has no necessary connection with economic relations and the material transformation of nature to suit humanity’s purposes. Though he rightly identiŽes the elevation of money into an ‘end’, Simmel ascribes this phenomenon to the autonomous development of a money culture, whose counterpart is consumer society. Production, class, and value relations are lost, thereby forging a divorce from Marx (and demonstrating that there is no single and readily dismissed theory of homogenizing money).12 In contrast, following Marx’s approach, money becomes the ‘end’ of capitalist social activity because, Žrst, it itself results from the relations of commodity value, and, second, capitalist society is based on value (and its self-expansion). Seen in this manner, the ‘levelling off ’ and disorganization engendered by money can be more fully analysed than in Simmel’s work. If money appears to destroy ‘distinction’ that is because capitalist labour ensures that indifference prevails between jobs, and pecuniary reward determines the incentive to work. If money appears to unravel the web of social obligations characteristic of precapitalist societies that is because the division of labour has reached unprecedented complexity, and autonomous producers relate to each other primarily through competition in the market. Money is not the cause of these developments but facilitates and intensiŽes them. Moreover, to identify class relations of production as the foundation of value and of the homogenizing presence of money is not to ignore the complex structure of social classes. The relationship of the various components of the capitalist and the working class to each other is not always exclusively determined by market relations, though an economic signiŽcance might be attached to it. Social hierarchies and a web of moral, familial, and other relations with economic implications also emerge in capitalism. However, the point is (and in this respect Simmel’s work retains relevance) that such relations are much more precariously based than equivalent pre-capitalist ones because capitalism is founded Downloaded by [SOAS, University of London] at 12:13 23 May 2013 372 Economy and Society on the creation and self-expansion of value rather than on production aimed transparently at human need. That these social relations are also frequently permeated by money is altogether appropriate since the universal equivalent accords them a bland and featureless mode of expression in line with their precarious foundations. Preferential access to and greater choice in, for instance, schooling for one’s children, foodstuffs consumed, clothes worn, and entertainment enjoyed are marks of rank and hierarchy based on money and reected through it. The expansion of use values available for consumption under capitalist conditions, alongside rising living standards above physical subsistence, also has the effect of expanding the means and content of cultural relations. In so far as these relations are expressed through money, they are impoverished in their qualitative aspects by being tied to the quantitative dictates of (commercialized) monetary relations. It is an unintended but striking conclusion from Zelizer’s own work that quantities of dollars, regardless of how much ingenuity one shows in interpreting them, lack variety in expressing social meanings. That is how it should be: the dull expression of capitalist social distinctions in dollars and cents altogether matches these distinctions’ uidity and precariousness of provenance. Thus, it is the dual nature of monetization that must always be emphasized – universal and homogenized money creates scope for expressing relations that are socially and culturally speciŽc, though it does so in ways that necessarily lack reŽnement. As will be seen below, Zelizer is right to condemn ‘economists’ for sole emphasis on the homogenizing aspect of money, though she exaggerates their collective guilt in this respect. But she appears to swing unreasonably to the opposite extreme by denying the case for a general theory of money, and even the extent of its homogenizing inuence in practice.13 ‘Multiple’ markets and money The weaknesses of Zelizer’s approach Thus, in the light of the preceding discussion, Zelizer’s approach exhibits a number of weaknesses. First, despite considerable emphasis on incorporating the non-economic and the socially and historically speciŽc, her analysis of the general character of the market is ahistorical and asocial: the market appears to be a more or less rational economic arrangement involving exchange. As such, and contrary to her intentions, Zelizer’s approach is vulnerable to the colonizing attentions of neoclassical economics and its extension to non-market situations as long as rationality is present (though Zelizer’s insistence on the socially constructed cultural content of markets remains a considerable barrier to mainstream economics). Second, partly as a corollary of the Žrst, Zelizer is negligent of economics. No doubt, this reects a wish to bring a social and cultural content to the understanding of the market but this, surely, cannot be at the expense of an economic content. It is signiŽcant that her focus is upon the amorphous market rather than Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 373 the nature of the commodity as use value and value. Furthermore, she neglects (exchange) value and is preoccupied with use value. It is hardly surprising that there should be different markets for different use values, but the differences in the use values, and even the methods and motives attached to buying and selling, should not be taken for differences in the nature of the market itself. That the market ranges across different use values does not undermine its general properties; indeed, the latter allow for heterogeneity across individual products. The same point applies to the types and use of money. Third, in the absence of a clear deŽnition of what constitutes the market, Zelizer conates it with what it represents. Consider an analogy with another social institution, marriage for example: marriages are highly varied in their history and content but this does not imply an absence of a marriage system through which they are all represented. In the absence of an appropriate theory of what markets have in common, Zelizer is unable to distinguish between differences within a common market and differences between markets – except by way of case study. As will emerge below, this is particularly signiŽcant in her understanding of monies, which are treated as different simply by virtue of their being used for different purposes. Fourth, Zelizer’s preoccupation with the ‘multiple’ markets model has induced her to focus upon the markets for Žnal consumption. SigniŽcantly, quite apart from an analytical neglect of the nature of the commodity, her discussion is also remarkably free of discussion of capital not only as the most developed source of commodity production but also in its detailed functioning. The markets for labour power, except as a source of revenue, and for commodity inputs to production are notably overlooked. This reects a deeper feature of her case studies, namely the choice of extremely unusual markets – not least for life insurance and for children. For her purposes, these are especially useful since they necessarily incorporate the social and cultural aspects that she insists belong to a greater or lesser extent to all markets. However, as has already been indicated in the section on ‘Zelizer’s discussion of markets and market theory’, it is far from clear that such unusual markets are illuminating unless taken as exceptions. The commodity form and ‘marooned’ capitalist markets The last point can be further illustrated by considering in more detail the relationship between the commodity and the commodity form in the capitalist mode of production. In commercial retailing and wholesaling, for instance, a service is provided that involves the exercise of labour but, because it is conŽned to the sphere of circulation of commodities and money, neither commodities nor value are produced. The conclusion is similar in the case of unproductive labour in which a wage is paid for providing any service but without producing a commodity for proŽtable sale, as for domestic servants for example. In each of these cases, there might be markets for the output and for the wage labour involved Downloaded by [SOAS, University of London] at 12:13 23 May 2013 374 Economy and Society but, from a Marxist perspective, neither commodities nor value are produced. This is despite each having some of the appearance of involving a market like any other, especially for commercial activity where the motive is to appropriate a proŽt. A rather different example is provided where there is the appearance of value and commodity but no labour at all is involved. The most important example in this respect is provided by land. Although it is bought and sold and is often termed a commodity, the price of land is simply the discounted value of the rent that would accrue in the future, which is in turn a claim on surplus value. It makes no more sense, again from a Marxist perspective, to consider land to be an ordinary commodity than it does to term proŽt as the price of capital. The same considerations apply to interest, which might be termed the price of (loanable money) capital. Again, there are money markets in which interest is paid but there is also dealing in any number of paper claims to property (as in shares). None of these traded assets constitutes ordinary commodities. Complicating things further, the money form can also be assumed where there are no underlying systematic economic relations at all or, at least, where they are marginal or incidental. The most obvious example is provided by bribery. The same (the assumption of a market) applies to payments that are not systematically related to the economy: the price of a parking ticket does not reect a market any more than a sales tax reects the price of being able to purchase or an income tax the price of receiving income. That is not to say that the levels of taxation or the ‘price’ of bribery and corruption are not subject to systematic analysis at all, only that it is erroneous and misleading to bundle them together with other markets. Separating them out for their speciŽc social and cultural content is not sufficient: they are different from an economic perspective quite apart from their social and cultural differences. Interestingly, with the possible exception of the last set of examples, neoclassical economics would not distinguish such markets from others and would simply treat them, and their prices, in terms of the conditions of supply and demand.14 Zelizer’s position is similar in the limited sense of treating them all as markets in general, but also different since it distinguishes among them according to the social and cultural elements that they incorporate. However, from a Marxist perspective, they are different markets altogether, exceptional in not involving ordinary commodities at all. In short, they are distinguished by their economic content. The distinction goes beyond a mere categorization: what set these markets apart are features that lie outside the standard requirements of commodity markets, even if apparently assuming some of their trappings. This is not a mere formality, since the choice of what constitutes an ordinary commodity market is dictated by addressing the issue of commensuration of diverse concrete labours, namely the social relations of capitalist production. Other markets are not simply deŽned relative to capitalist commodity markets, they are also heavily inuenced by them. In the term coined by Cannadine (1983) for a system of royalty surviving into the era of political democracy, they are ‘marooned’: they are markets dependent upon productive capital, and even Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 375 appearing like it to a greater or lesser extent, but also entirely distinct from it. Analytically, ‘marooned’ markets need to be understood as sui generis, although an important investigative starting point is to consider why they have not been subordinated to capitalist commodiŽcation.15 There can be structural reasons for it: capital in exchange cannot become productive of surplus value; social reproduction, dominated by the family and schooling, cannot be reduced to economic reproduction under capitalism; the legal always deŽnes the illegal, thereby creating the illusion of a ‘market’ for bribery and corruption. In addition, the obstacles to incorporation within the orbit of productive capital can be social, historical, and cultural, leading to alternative forms of organization, as in welfare provision (although these necessarily tend to be marked by their being rooted within an evolving capitalist society). Such is the context within which two of Zelizer’s case studies should be located and which renders them remarkably insightful despite the analytical weaknesses of her approach. Both the markets for insurance and for children are ‘marooned’ markets, the Žrst increasingly conditioned by the Žnancial system. Both are constructed out of historically shifting economic, social, and cultural relations, and are thus set apart from capitalist production. Each can be formally construed as generating a price (for death or for a child, dead or alive, respectively). Yet, it is to succumb to the notion of the ‘boundless’ market to treat these and other ‘marooned’ markets as simply distinguished by their particular social and cultural, rather than their economic, content. Indeed, these two examples are clearly too favourable to Zelizer’s thesis of ‘multiple’ markets in that each lies outside the mainstream of economic life and cannot be taken as representative of it. They might have been deliberately chosen to demonstrate that social and cultural factors condition markets. Put another way, for any alternative approach based on a core notion of market, these examples would probably be considered the exceptions that prove the rule.16 Zelizer’s intellectual integrity means that she realizes this weakness of the case studies for her general hypothesis. Consequently, for her third case study, that of money itself, she deliberately chooses to engage with the very core of the market and commodity relations to prove her point beyond dispute. She intends to examine ‘the social construction of market money, confronting economists on their own turf ’ (1994: 34), with the intention of showing that, ‘it is very hard to suppress the culture, creative power of supposedly vulnerable social relations’ (1994: 35). It is argued below, however, that often opposite conclusions can be drawn from her study than the ones she draws herself. The critical points outlined above for the case of markets in general are particularly acute in the consideration of money. Zelizer’s analysis of money Zelizer offers no deŽnition of money at all. Instead, she considers a broad range of examples ranging over credit cards, food stamps, and payment in kind. She 376 Economy and Society Downloaded by [SOAS, University of London] at 12:13 23 May 2013 even considers that monies can be created by the various uses to which money is put, as Christmas bonuses or charitable donations for example. This is all in order to demonstrate that money ‘may well “corrupt” values and convert social ties into number, but values and social relations reciprocally transmute money by investing it with meaning and social patterns’ (1994: 18). Given the absence of a clear deŽnition of money, Zelizer treats money ahistorically and asocially and offers no economic theory of money itself. On the one hand, money is understood in terms of an arbitrary and ideal division of types of monetary intervention, with no explicit reference to capital (as a social relation) and a presumed greater or lesser economic content for each type: We need to distinguish among three possible ways of organizing monetary payments of any kind: as compensation (direct exchange), as entitlement (the right to a share), and as gift (one person’s voluntary bestowal on another). . . . All three forms of payment deŽne the quality of social relations between the parties. On the whole, entitlements and gifts imply a more durable social relation between them than does compensation. (Zelizer 1996: 482) On the other hand, Zelizer’s understanding of money is garnered from a chaotic ensemble of instances, ‘the proliferation of social currencies’, in which some form of exchange is accompanied by the presence of something termed money. The examples deployed range over prostitution, gifts, charity, tipping, welfare, gambling, intra-household allocations and management, and funeral expenses.17 The aim is to demonstrate how the social and cultural, the personal and the human continue to make their presence felt in these transactions despite their being mediated by the colourless presence of money. There is, however, a notable absence of examples drawn from the world of large-scale business.18 This leads Nelson (1995) to suggest that Zelizer should extend her approach to monies in the commercial sphere of exchange, a challenge that Zelizer (1996) appears to intend to take up by examining the sex industry and large bureaucracies such as offices, factories, schools, and prisons.19 She expects to Žnd that different forms of payments reect underlying social relations such as hierarchies. This is seen as indicative of active resistance to the dissolution of social relations by the incursion of a neutral and neutralizing money. Thus, in contrast to the ‘levelling off ’ view associated with Simmel, Zelizer argues that ‘people have reshaped their commercial transactions’ (1994: 2) rather than allow themselves to become subject to objectiŽcation, dehumanization, and quantiŽcation in their personal and social lives. Again in line with her general study of markets, Zelizer analytically conates what money is and what money represents or does: to whatever money attaches itself that continues to cling to money as a deŽning property. For Zelizer, the point is not that ‘These (monied) areas of social life resisted commodiŽcation. On the contrary, they readily absorbed monies, transforming them to Žt a variety of values and social relations’ (1994: 2). It is clear by now that Zelizer’s understanding of money, and of much of the Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 377 literature on money, fails to recognize the analytical motive of extracting and identifying the common nature of money. She proceeds by gathering together instances of forms and functions of money, thus supporting her view that money is social and cultural and dismissing the approach that seeks to understand money as purely economic in the Žrst instance. By the same token, she implicitly rejects the possibility of identifying the nature of money in its pure form and then examining the diverse variations in which it appears in practice. For Marxist analysis of money, exactly the opposite holds true, as was established in the second section of this article. It is precisely the economic nature of money, the monopolization of exchangeability in a society dominated by value, that allows it to assume the wide variety of social and cultural aspects identiŽed by Zelizer. As remarked earlier for Polanyi and his school, Zelizer understands money purely in terms of its functions and anything that facilitates the performance of such a function is designated as a form of money. This is most apparent in her treatment of ‘earmarking’, the setting aside of culturally or socially functional portions of money in principle or in practice for particular purposes such as funeral, marriage, Christmas, or holiday. Zelizer further suggests that budgeting is just a special case of ‘earmarking’: ‘Indeed, the standard practice of budgeting constitutes a special case of earmarking: the subdivision of funds available to an organisation, government, individual, or household into distinct categories, each with its own rules of expenditure’ (1994: 29). Here, the general and the particular have been reversed: contrary to what Zelizer suggests, ‘earmarking’, whatever its rationale and form, is a special case of budgeting. Businesses, for example, set aside an allowance for depreciation irrespective of the way in which the fund is, in practice, spent in renewing or extending Žxed capital. Consequently, ‘earmarking’, like budgeting, follows from the pure economic function of money as a unit of account. That money can perform this particular function follows from its abstract nature as monopolist of exchangeability. The same nature allows money’s applications to be so varied, including the incorporation of any amount or type of social and cultural content. This is not to suggest that money is simply neutral in performing a budgeting function or that it sweeps aside qualitative considerations in reducing them to quantitative calculation. Zelizer is quite right to reject such approaches outright. Her work is also invaluable in showing how the social and cultural content is retained and expressed despite being expressed in monetary form. But this is not the same thing as treating all such instances as examples of different types of money. On the contrary, there is one money, even though it assumes different forms which have complex and shifting relationships to one another in performing the various functions of money. The point is crucial in examining exactly how money is not neutral, and how its representation of social relations can be subverted or strengthened. The latter is something of which Zelizer is acutely aware in her discussion of welfare payments, which are intended for speciŽc purposes both in terms of what they are used to purchase as well as what they are to make of the recipient citizen. Nevertheless, in principle, any form of money is equivalent to any other and to any Downloaded by [SOAS, University of London] at 12:13 23 May 2013 378 Economy and Society commodity: food stamps could be exchanged for drug money, personalized gifts for their monetary equivalent. This makes it difficult to impose a particular social and cultural content on the welfare recipient or in the giving of a present from which the price tag is inevitably removed (or even ‘inadvertently’ retained to express the consideration of the donor). In short, money has the general property of representing – rather than being – social relations, though it undoubtedly has a real existence in and of itself and partially affects the substance of the relations it represents. This is apparent in the way in which the same monetary transaction can represent the opposite social relationship depending upon the circumstances. As Zelizer herself observes, tipping can either be appropriate or inappropriate depending on the recipient. It can be a welcome token of appreciation or understood as an unwelcome and even inappropriate symbol of patronage. Similar considerations apply to gifts. There is a general presumption, not entirely shared by Zelizer, that money impersonalizes, especially when it comes to gifts.20 Paradoxically, though, those closest within the family may give money as a present since the personal and the intimate is secure and, within capitalism, the nature of what can be purchased is appreciated. On the other hand, the extensive exchange of non-monetary gifts at Christmas can often take an impersonal and purely token nature, as the giving of the gift as such becomes more signiŽcant than what the gift is. Even money, despite or even because of being measured by quantity rather than quality, can acquire a personal quality. For Indian Parsis, it is customary to give money in round Žgures plus one in order to distinguish the transaction from commerce which is perceived to deal in large, whole Žgures.21 In short, when it comes to money, it is evident that it represents and embodies a variety of social relations. Zelizer is correct to emphasize this, but hers is primarily an empirically based observation.22 It is one thing to accept the presence of a variety of monies and of what they represent and achieve, quite another to deny that a general theory of money as such can be drawn from the political economy of capitalism. A general theory of money will inevitably include a tendency to transform social relations by expressing them more or less directly in commercial forms but without dissolving them – any more than a waged police force, for example, undermines an associated state monopoly of legalized violence. The strength of monetization is indicated by the lengths to which those who fall within its orbit must go in order to resist or amend its incursions, as has been so admirably demonstrated by Zelizer’s case studies.23 Concluding remarks We have offered a critical assessment of Zelizer’s work in this paper, but only because it has much to commend it and vividly exempliŽes the difficulties and dilemmas of interdisciplinary analysis of markets and money. Her notion of ‘multiple’ markets and monies is an explicit recognition that these are representations Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 379 of highly diverse underlying economic, social, and cultural relations. The presence of such monies and markets indicates that the underlying relations are neither neutral nor homogeneous. Moreover, the relations represented incorporate underlying tensions that result in shifting and complex resolutions, as in the deŽnition of the boundaries between domestic and commercial provision, the conditions and outcomes attached to growing participation of women in the labour market, and the conict between the welfare and the work ethic. It is important that Zelizer demonstrates such results empirically and historically through detailed and sophisticated case studies. Nevertheless, an alternative perspective on these factors has been offered here, based on Marx’s analysis of markets and money. The multiplicity of markets and monies is problematic as analytical starting point of departure from mainstream economic theory. Rather, that multiplicity is itself a consequence of the common content of markets and money, which has to be identiŽed and understood at the outset. In different but related terms, it is misleading to postulate opposition between economic and non-economic factors, then assume that the latter have been unduly neglected and subsequently attempt to bring them into prominence in order to correct, even transform, the economic. In contrast, economic factors have to be understood prior to, and precisely in order to facilitate analysis of, broadly deŽned and scattered social, cultural, and historical factors. Zelizer’s work is also notable for the absence of economic theory, or political economy, except as point of departure. Mainstream neoclassical theory is taken as evidence of inherent shortcomings (and hence impossibility) of any general theory of money and markets, in spite of the work of classical political economy and Marx. This is potentially reinforced by the lingering, and largely incorrect, proposition that Marxist political economy has been too irredeemably production-oriented and is precluded from appropriately considering social and cultural factors, especially when it comes to consumption.24 In short, and at the most general level, Zelizer observes the growing confrontation between economics and sociology with justiŽable alarm and seeks to bring an appropriate sociology to an inappropriate economics rather than vice versa. It is arguable that such a strategy to defend sociology against the incursions of mainstream economics is already proving ineffectual.25 In any case, the prior task is not to eschew economics but to reconstruct it on sound foundations, reproducing in thought the system of capitalist production, distribution, and exchange that forms its object of study. Notes This article was completed whilst Ben Fine was in receipt of a Research Fellowship from the UK Economic and Social Research Council (ESRC) under award number R000271046 to study ‘The New Revolution in Economics and Its Impact upon Social Sciences’. 1 See especially Becker (1996). Downloaded by [SOAS, University of London] at 12:13 23 May 2013 380 Economy and Society 2 For an account of what is taken to be a revolution in economics as it seeks to colonize the other social sciences, see Fine (1999a). See also Fine (1999b) in debate with Thompson (1999). 3 For discussion of the controversial issue of the rationale for Marx’s starting point, see especially Oakley (1984, 1985). 4 This is apparent in the notion of exchange as a system of signs and communication, as in Eco (1976), for example. 5 See, for instance, Smith (1776: bk. 1, ch. 4) and Mill (1848: bk. 3, ch. 7). 6 An inuential example of contemporary thinking in this regard can be found in Kiyotaki and Wright (1989). 7 That is not to imply that Marx’s analysis of the origin of money is entirely consistent and free of tensions. For example, in Capital (1867: ch. 1, sec. 1; ch. 2) and in Contribution to the Critique of Political Economy (1859: 37–52), Marx also posited money as a resolution for the problems of direct exchange, thus exhibiting the heavy inuence of classical political economy. For Marx, the problems of barter had their origin in the opposition between the commodity’s value (the general) and use value (the particular). Direct exchange breaks down because the commodity attempts to be both general and particular at once. The problem could be resolved if one commodity represented value generally for all others. Commodities could then ‘double up’: they could be use values in themselves and values relative to other commodities. Money, the representative of value, plays this role. If one adopts this argument, however, it is impossible to Žnd a logical basis for Marx’s own argument that the ‘expanded’ form of value becomes the ‘general’ form of value. The opposition between use value and value cannot explain why one commodity comes to represent value more generally, emerging as a general equivalent and paving the way towards the universal equivalent. In contrast, the analysis of the relative and the equivalent forms of value identiŽes the temporary possession of an additional use value (general exchangeability) as the catalyst for the emergence of the universal equivalent. 8 This observation is fundamental to the work of Uno (1980), and forms the cornerstone of the Uno school of Marxism. 9 Probably incorrectly, see Dorward (1976). 10 For a full exposition, see Lapavitsas (1991) and Itoh and Lapavitsas (1999: ch. 2). 11 Itoh and Lapavitsas (1999: chs 3, 4) discuss in more detail the analytical strands present in Marx’s work on this issue. 12 Dodd (1994) construes Simmel as offering a theory of the idea of money, not of money itself. This would, then, appear to conform to Zelizer’s own idea of a belief in the incursive and homogenizing understanding of money that has characterized economic and even social theory. 13 Ganssman puts it in neat dialectical terms: Is money along with other media . . . a sort of catalyst in the process of societal differentiation into more or less autonomous sub-systems? Or is it rather . . . a means of social de-differentiation in the sense of expressing in concentrated form all sorts of relations of social dependence and coercion? I think it is both. (Ganssman 1988: 312) 14 Although the economics of crime does treat Žnes and other penalties as the price of being caught. More generally, other payments would tend to be incorporated into the general framework of maximizing proŽt and utility. 15 The notion of ‘marooning’ is also used to examine certain consumption and certain labour markets in Fine et al. (1996: ch. 4) and Fine (1998: ch. 7), respectively, where each needs to be assessed in terms of being exceptional. 16 Even within Marxist value theory there is dispute over what constitutes the core. It might, for example, be argued that all labour that is exploited should be counted as commodity producing. This would still ‘maroon’ markets in which no labour is performed. Downloaded by [SOAS, University of London] at 12:13 23 May 2013 Ben Fine and Costas Lapavitsas: Markets and money 381 17 See Singh (1997) for an attempt to apply Zelizer’s approach to money in marriage and, implicitly, Lamont’s (1992) study of contrasting US and French attitudes to money. 18 This is perhaps what allows Zelizer to err on the side of exaggeration in suggesting that ‘The earmarking of informal monies is a phenomenon as powerful as the official creation of legal tender’ (1994: 21). 19 Nelson’s challenge has been implicitly taken up more appropriately, if erroneously from our perspective, by Leyshorn and Thrift (1997), who reject a general theory of money for one based on social networks, trust, coercion, and the like. 20 See Carrier (1995) for an excellent discussion of gifts under capitalism in the tradition of Mauss. 21 The opposite practice is to be found to some extent in the principle of commercial pricing at marginally below a round Žgure. 22 As is indicated in more mundane fashion, for example, by Furnham and Argyle (1998), who can cite over one hundred names and six pages of metaphors for money, reecting its sociability. 23 James Carrier suggested this point to us in a personal communication. 24 As has been shown elsewhere, Fine and Leopold (1993: part 4), this is simply fallacious. Indeed, in a way that conforms to Zelizer’s investigative approach to particular markets and monies, Fine and Leopold argue that it is essential to examine commodityspeciŽc chains of activities from production through to consumption, termed systems of provision, even if on the basis of general and abstract propositions concerning the economic and its relationship to the social and cultural. See also Fine et al. (1996). 25 See Fine (1999a, 1999b). References Becker, G. (1996) Accounting for Tastes, Cambridge, MA: Harvard University Press. Berg, I. (ed.) (1981) Sociological Perspectives on Labor Markets, New York: Academic Press. Bohannan, P. (1959) ‘The impact of money on an African subsistence economy’, The Journal of Economic History 19(4): 491–503. Callon, M. (ed.) (1998) The Laws of the Market, Oxford: Blackwell. Cannadine, D. (1983) ‘The context, performance and meaning of ritual: the British monarchy and the “invention of tradition” ’, in Hobsbawm and Ranger (1983). Carrier, J. (1995) Gifts and Commodities: Exchange and Western Capitalism since 1700, London: Routledge. Dalton, G. (1965) ‘Primitive money’, American Anthropologist 67(1): 44–65. Dodd, N. (1994) The Sociology of Money: Economics, Reason and Contemporary Society, Cambridge: Polity Press. Dorward, D. (1976) ‘Precolonial Tiv trade and cloth currency’, The International Journal of African Historical Studies 9(4): 576–91. Eco, U. (1976) A Theory of Semiotics, Bloomington: Indiana University Press. Fine, B. (1998) Labour Market Theory: A Constructive Reassessment, London: Routledge. —— (1999a) ‘From Becker to Bourdieu: economics confronts the social sciences’, International Papers in Political Economy 5(3): 1–43. —— (1999b) ‘A question of economics: is it colonising the social sciences?’, Economy and Society 28(3): 403–25. Fine, B. and Leopold, E. (1993) The World of Consumption, London: Routledge. Fine, B., Heasman, M. and Wright, J. (1996) Consumption in the Age of Affluence: The World of Food, London: Routledge. Furnham, A. and Argyle, M. (1998) The Psychology of Money, London: Routledge. Ganssman, H. (1988) ‘Money – a symbolically generalised means of Downloaded by [SOAS, University of London] at 12:13 23 May 2013 382 Economy and Society communication? On the concept of money in recent sociology’, Economy and Society 17(3): 285–315. Granovetter, M. (1981) ‘Toward a sociological theory of income differences’, in Berg (1981). Hobsbawm, E. and Ranger, T. (eds) (1983) The Invention of Tradition, Cambridge: Cambridge University Press. Itoh, M. and Lapavitsas, C. (1999) Political Economy of Money and Finance, London: Macmillan. Kiyotaki, N. and Wright, R. (1989) ‘On money as a medium of exchange’, Journal of Political Economy 97(December). Lamont, M. (1992) Money, Morals, and Manners: The Culture of the French and American Upper-Middle Class, Chicago: University of Chicago Press. Lapavitsas, C. (1991) ‘The theory of credit money: a structural analysis’, Science and Society 55(3): 291–322. Leyshorn, A. and Thrift, N. (1997) Money Space: Geographies of Monetary Transformation, London: Routledge. Marx, K. (1859) Contribution to the Critique of Political Economy, Moscow: Progress Publishers, 1970. —— (1867) Capital, Vol. I, London: Penguin/NLR, 1976. —— (1895) Capital, Vol. III, London: Penguin/NLR, 1981. —— (1939) Grundrisse, London: Penguin/NLR, 1973. Menger, K. (1892) ‘On the origins of money’, Economic Journal 2(March). Mill, J. S. (1848) Principles of Political Economy, Toronto: University of Toronto Press, 1965. Nelson, J. (1995) ‘Review of “The Social Meaning of Money” ’, Contemporary Sociology 24(2): 382–4. Oakley, A. (1984, 1985) Marx’s Critique of Political Economy: Intellectual Sources and Evolution, Vol. 1, 1844 to 1860; Vol. 2, 1861 to 1863, London: Routledge & Kegan Paul. Polanyi, K. (1944) The Great Transformation, Boston, MA: Beacon Press. —— (1957) ‘The economy as instituted process’, in Polanyi, Arensberg and Pearson (1957). Polanyi, K., Arensberg, C. and Pearson, H. (eds) (1957) Trade and Markets in Early Empires, Glencoe, IL: The Free Press. Simmel, G. (1900) The Philosophy of Money, London: Routledge & Kegan Paul, 1978. Singh, S. (1997) Marriage Money: The Social Shaping of Money in Marriage and Banking, St Leonards: Allen & Unwin. Smith, A. (1776) The Wealth of Nations, ed. E. Cannan Vols I and II, London: Methuen, 1904. Swedberg, R. (ed.) (1996) Economic Sociology, Cheltenham: Edward Elgar. Thompson, G. (1999) ‘How far should we be afraid of conventional economics? A response to Ben Fine’, Economy and Society 28(3): 426–33. Uno, K. (1980) Principles of Political Economy, trans. from the 1964 Japanese edition by T. Sekine, Brighton: Harvester. Zelizer, V. (1983) Morals and the Market: The Development of Life Insurance in the United States, New Brunswick, NJ: Transaction. —— (1987) Pricing the Priceless Child: The Changing Social Value of Children, New York: Basic Books. —— (1988) ‘Beyond the polemics on the market: establishing a theoretical and empirical agenda’, Sociological Forum 3(4): 614–34, reproduced in Swedberg (1996). —— (1994) The Social Meaning of Money, New York: Basic Books. —— (1996) ‘Payments and social ties’, Sociological Forum 11(3): 481–95. —— (1998) ‘The proliferation of social currencies’, in Callon (1998).