The Semiotic Theory of Money (2)

Article by Chris Waller 2012
Mensa emblem


The abstraction of money facilitated the development of intellectual richness. The abstraction of money facilitated the development of material wealth. The world was created through language. Money can likewise be creative. Hume saw that wealth consisted of goods, not money. Wittgenstein's thoughts on language have implications for our understanding of money.

In the first part of this essay I used a semiological perspective to show how money has common characteristics with language. A word is a signifier - a label- which we attach to an object to enable us to discuss it without requiring that object to be physically present. The meaning contained in a word is an abstraction from the object to which it relates. Money is also a signifier which we attach to an object. The value (meaning) represented by money signifies that something has been created upon which that value is premised. Money allows us to treat of wealth in the abstract.

The invention of language bestowed upon human beings the facility to manipulate in their minds the symbols of language and to exchange ideas. The flexibility and speed of communication made possible by language was essential to the future success of early hunter-gatherer peoples. The history of civilisation is in essence the history of human communication.

The creature without language lives in an environment, that is, it exists in a sphere of undifferentiated experience of which it is a component part. It experiences movement, noise and colour, and simply reacts on the basis of that experience. But the creature with language lives in a world. It differentiates its experience and labels those separate parts with words. Having labelled the various parts, it can take those abstractions into its mind and order them.

In the first chapter of the boom of Genesis we read the Creation myth. God, it is written, "divided the light from the darkness ...And God called the light Day and the darkness Night." Note that he divided (differentiated) and called (labelled). What the Book of Genesis is describing to us is the arising of the human mind with its capacity, through language, to differentiate and label, thus enabling our proto-humans to step out of an environment and into a world - their world. Adam and Eve partook of the fruit of the Tree of Knowledge (of Good and evil) and their eyes were opened. With the acquisition of knowledge (the capacity to discriminate) they were cast out of the environment of Eden and were alone ion their world. In this sense Genesis does actually describe the Creation of the world.

We see this repeated with each subsequent generation of human beings which arrives, as parents teach their children the names of objects around them and thus enable them to make the transition from the mysterious environment of undifferentiated experience into the world of words. By giving the child the currency of language we enable it to engage in the intellectual transactions of the human world.

This may seem a long way from money, but it serves to demonstrate the enormous power of the abstraction of language - its power not only to communicate, but to create. I want now to move on to look at the parallels with money.

The philosopher David Hume, a contemporary of and compatriot of Adam Smith, asserted in his 'Essays and Treatises' that wealth consisted not of money but of goods. This is beyond question since it is apparent that in the absence of physical goods, money is utterly valueless. (It is interesting to note at this point that originally the word 'wealth' meant 'one's being well' and later came to refer to those things which contributed to keeping one well, that is, they contributed to one's welfare. Its original antonym was not 'poverty' but 'illth'.)

He further asserted that the amount of money in circulation must be kept related to the amount of goods in the market. Again one could not argue with this but it remains unclear as to how this might be achieved. Adam Smith's 'dual circulation' (of goods and money) are quite separate and there exists no mechanism which binds the two in an absolute, algebraic relationship. The amount of money which is in circulation is largely arbitrary. Once could have a large number of units of currency, each with a low value, or a relatively small number of units, each with a large value. IT only requires that there is sufficient currency in circulation to permit all the required transactions and to allow sufficiently fine discrimination of value - a unit of currency with a high value would be inconvenient in that it would not permit the single purchase of a low value item. In that respect it is like language, in that there must be sufficient words to describe all the component parts of our world - there can be no 'holes' in the world, even the void has a name - and also to differentiate finely between things. (There is the apocryphal myth that the Eskimos have fourteen words for snow.) It is perhaps ironic, yet significant, that the erstwhile Chancellor Lawson found it necessary to increase the number of definitions of the money supply, none of which proved, in the final analysis, to be adequate to the task of preventing an explosion in same during the late nineteen-eighties. One might conjecture that the more definitions of money one creates, the more money one creates.

The creation of a wholly new concept requires the creation of a new word. Words such as 'television', 'microprocessor' and 'laser' would have been quite meaningless in the mid-nineteenth century. Whereas someone with a knowledge of Greek might have guessed at the concept of television, 'laser' would have remained mysterious since the word betrays nothing of the concept. With the advent of the Industrial Revolution, new concepts and new forms appeared, as did a new vocabulary. Contemporaneously, additional money had to come into being to permit all the transactions relating to the production and consumption of these additional goods.

We might further consider the relationship between goods and money by reflecting on the thinking of Wittgenstein with respect to language. In his Tractatus Logico-Philosophicus he began by with the assumption that the essence of language lay in its fact-stating function. This is said to be founded upon the ability of language to 'picture' facts. The components of a picture stand in a certain relationship to each other and this states how he corresponding real-world objects are arranged. In language, the parts are the names (labels, signifiers) and sentences are arrangements of these names.

From this position, Wittgenstein concluded that the only meaningful language was that of science and that attempts to use language to discuss the transcendent (ethics, aesthetics etc.) were doomed by the inappropriateness of language to such tasks. He further concluded - and this is significant - that even to seek to state the relationship of language to the world exceeds the limits of language. In other words, language, Wittgenstein asserted, must be rooted in the concrete, those things which can be verified by empirical observation. All else is rejected as metaphysical speculation.

It is in this latter point where lay the seeds of Wittgenstein's later dissatisfaction with his position as expounded in the Tractatus since it now appeared to him to fall within the ambit of 'unverifiable statements'. One can say nothing about the correspondence of a proposition to the reality it purports to describe, for any such propositions are not themselves statements of empirical fact.

Wittgenstein now shifted his view and rejected the notion that language had a single, essential function, structured by its correspondence with real objects. He now contended that the meaning of a term lay in its use. One can appreciate this view since, in the course of our normal conversations, many of the words do not relate to concrete objects but things such as hope, fear, disappointment - abstract concepts. Thus Wittgenstein concerned himself with language itself, regarding any putative relationship between language and reality as unnecessary. However, this stance earned him the disapprobation of both Russell - who condemned it as an abandonment of "the grave and important task which philosophy throughout the ages has hitherto pursued" - and Popper, who regarded it as tantamount to intellectual suicide.

I want now to consider the implications of Wittgenstein's thinking for my views on money. His position as expounded in the Tractatus would seem to confirm the view of Hume, that money signifies, but is not, wealth. It further indicates that there exists no calculus which might rigidly link the two. There is no intrinsic meaning in a word- nothing about the word 'table', neither its spelling nor its sound, would convey the actuality - and similarly, there is no intrinsic value in money. Such value as it has is conferred by convention.

While this would seem at first to be affirming that there should be a necessary relationship between goods and money, his later position would seem to suggest that the value of money should lie only in its ability to facilitate transactions, and that its value be determined only by the conventions of the culture in which it circulates, and even possibly, by the parties between which it passes. This would imply that, as language has its dialects and vernacular, so does money. It further implies that the value of money, far from being rooted immutably in goods, is determined by the value-system of its possessor. The question, "Is your money good?" might actually be asking the question, "Are you good?"

I support his notion by considering the ethical basis of the Tractatus which should be viewed in the light of Wittgenstein's collaboration with the Viennese political commentator Karl Kraus. Kraus identified moral corruption as revealing itself in the corruption of language - the 'newspeak' of the despot or the politburo. The most visible and corrosive corruption of money, inflation, is not a disease of money but a symptom of a more pervasive moral malaise. Language opens up to us an unlimited intellectual arena, but it also allows us to lie. The 'panic' noise of the rabbit cannot be falsified - a rabbit cannot 'cry wolf'- but through language the human being can conceal its true intentions. Money, while it offers us freedoms analogous to those of the spoken word, also permits us the financial equivalent of lying. The ultimate consequences of such monetary mendacity were amply evidenced by the demise of BCCI and the late Robert Maxwell, the self-proclaimed father of 'creative accounting'.

I believe that the obsession, in the late nineteen-eighties, with money and its manipulation has parallels with Wittgenstein's preoccupation with language. Popper, if I may paraphrase, accused the linguistic philosophers of constantly polishing their glasses but never putting them on to look at the world. Similarly, the constant manipulation of money, while it might be an enjoyable game, achieves no concrete results, that is, it brings no new real wealth into existence: it is not productive, merely distributive.

The consequences of this financial equivalent of linguistic analysis are all around us. Frequently, when asked to implement new social programmes, improve the railways, the health service, education etc., we hear government ministers saying that there is insufficient money. This is simply not true. There is, or can be, as much money as we want. All that is required is that we print it. It would, of course, result in galloping inflation, as we all know. But, the problem lies not in the amount of money, but in the shortage of goods available for purchase. Nigel - now Lord - Lawson once said, albeit in a moment of levity, that the answer to the problem of poverty was unlimited credit. In the late nineteen-eighties he seemed to be putting this theory to the test, and we now know where it leads.

We also hear ministry spokespersons warning of the problems that our ageing population will bring in terms of the amounts of money which will be required to pay pensions, and the levels of taxation this will necessitate. I have even heard one arguing for a programme to induce people to have more children in order to avert this future 'disaster'. This again is a distraction. Our future pensioners will, in the final analysis, require goods and services. The 'problem'- such as it might be - is not one of money, but of production. It is anticipated that by the end of this decade that computer processing power will have increased a thousandfold. Assuming the application of this power to production engineering and the whole gamut of current activities, production need not be a problem. The question we do need to address between now and then is that of wealth distribution.

Up to now the predominant means of distributing wealth - perhaps I should more precisely say 'income'- has been through the wage system, but in the future the wage-earner will be rare. Increasingly, 'intelligent' technology will render human workers redundant. How, then, will we distribute wealth? Already we are seeing the beginnings of this problem in the army of the long-tern unemployed. Many of these are unskilled and uneducated. Many, significantly, are inarticulate and, unable to express and assert themselves, are resorting to perverse and destructive behaviour as their mode of expression. Their situation - the low level of state benefits - also renders them economically inarticulate, unable to assert their presence and express their needs within the economic frame, as a result of their restricted purchasing power. The consequences of this economic excommunication, if not addressed, will be socially catastrophic.

I will close the second part of my essay by returning to The Bible, specifically the New Testament and the all to frequently misquoted passage from 1 Timothy 6.10 - "For the love of money is the root of all evil: which while some coveted after, they have erred from the faith and pierced themselves through with many sorrows". Note that Timothy does not say that "money is the roots of all evil", but condemns the love of (obsession with) it. We must become sharply aware of the dangers of an obsession with money, and concern ourselves rather more with understanding real wealth and its signification by money.


Cassirer, Ernst
The Philosophy of Symbolic Forms
Language and Myth

Hume, David
Essays and Treatises

Various authors
The Bible

Wittgenstein, Ludwig
Tractatus Logico-Philosophicus

Part 1  Part 1b  Part 2  Part 3  Part 4


Chris Waller - Permission granted to freely distribute this article for non-commercial purposes if attributed to Chris Waller, unedited and copied in full, including this notice.

Members can discuss this and other articles on the economics forum at International Mensa.

About Us

Economania is the website of Mensa's internationally recognised Special Interest Group dedicated to economics, trade and finance.