The Semiotic Theory of Money (4)

Article by Chris Waller 2012
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Part 4 and Epilogue

Note:- this was written in 1993 after Britain's ejection from the Exchange Rate Mechanism and the demise of same sometime later.

I began this series of essays by considering the way in which money represented value, that is, the prior creation of goods. I noted that David Hume and Adam Smith both adopted this view, that the value of money was rooted in goods and merely allowed such goods to be exchanged in the abstract. I drew the analogy with the earlier work of Wittgenstein on language where he asserted that for language to have meaning it must be rooted in the concrete, that is, its value lies in its fact-stating function. Later, he was to reject this stance and adopt a position where he asserted that the meaning of language was to be derived from the manner of its usage. This has important implications for my thinking on money.

I have argued thus far that, from a semiological perspective, money can be seen to signify goods. I have restricted my argument to goods because of their 'concreteness' and because services are rather nebulous. However, the same principle applies, and the value added by rendering a service can be signified by money, being the 'goods-equivalent' of the service. But - and here is the crucial point - money itself provides a service, that is, it facilitates the exchange of goods (and services). Therefore money adds value - money itself has a value above and beyond that premised upon the goods it represents. This might be termed the 'meta-value'.

There are now two aspects to the notion of monetary value. There is on the one hand the 'value IN money', that is, the value vested in money by virtue of its capacity to represent goods, yet, on the other hand, the 'value OF money', that is, the value vested in money by virtue of the service which it renders.

But what relevance does this have to the events within Europe over the last twelve months? What it has revealed is that within the economy as a whole there are effectively two 'cultures', one, typified by manufacturers, which is primarily concerned with the 'value in money', and another, typified by the foreign exchange dealers and currency speculators, which is concerned with the 'value of money'. Furthermore, those same events would seem to suggest, at least at the present time, that those two cultures are mutually antagonistic and irreconcilable. One can immediately see parallels with the languages which each culture would use; manufacturers would be concerned with the ability of words to describe the real world of materials and physical processes, while the language of the forex dealers would probably never even approach the real world but remain in the realms of abstract notions such as rates, thresholds, ceilings and so forth. One might further extend this analogy to the dichotomy between the scientific or technical writer to whom language is useful insofar as it may accurately describe real things and events, and the creative writer to whom words have a value in themselves and may be woven in an impressionistic manner.

As with any cultural conflict, there is a striving for dominance and during the nineteen-eighties in Britain the culture which held sway was the one which lived on the value of money, from its 'service-function' value. Financial services were the darlings of government policy and it was believed that Britain could earn its keep from this alone. That cannot be the case.

While language can be used creatively, it must retain a degree of connection with the world of real experiences to remain meaningful. Should the degree of abstraction become too great, as it has with a number of avant-garde writers, then the result is meaningless to other than a small clique which understands that language. This is language being used to exclude rather than include. It is a perverse use of language which alienates the majority. Similarly, if our use of the service-function of money should become too detached from the world of real activity, if our use of money should become perverse - and there were numerous examples of this during the nineteen-eighties - then the result can only be alienation. I believe we already have the evidence.

Service industries must therefore be founded upon manufacturing; one can only clean windows if windows have been manufactured; one can only insure ships if ships have been built. However, within and around a core of manufacturing, the intelligent use of money will fully realise its service-function value. It is worth noting that the countries which have a strong manufacturing base also have strong services. The largest German insurer is five times larger than the largest British insurer while the largest Japanese insurer is five times larger than that. Service industries must have things upon which to perform their services.

Speculation, however, demands further investigation. Speculators deal in commodities, anything which has a value. Money, because it has a value in itself, is also a commodity and thus subject to speculation. I shall return to this in due course.

While forces of seemingly geological magnitude pulled at the ERM, other forces were in conflict, forces which had their epicentre in France. The current round of GATT negotiations has for years followed a difficult path and has now foundered on the refusal of the French to cease protection of its farmers. Concurrently in France a rather more high-minded battle has raged over the French language itself, or more precisely, what the French authorities regard as its degradation by Anglo-Saxon linguistic incursions. Expressions such as 'le show' and 'le challenge' have crept surreptitiously in to 'la langue'. Jacques Toubon, the Gaullist minister for culture has, at the behest of three hundred intellectuals, unveiled the latest proposal for a law to 'protect the language'. Under this law, official bodies and businesses which use English or anglicised form, may be fined.

It would seem then that while the higher echelons have donned the mantle of cultural guardians, the jacquerie are taking the path of internationalism. This should not be surprising since the English, acknowledged possessors of the richest language in the world, have borrowed extensively and unashamedly from French, and for that matter, from German as well. Where would we be without laissez-faire and Angst? Laissez-faire means more than simply 'leaving alone' and Angst means much more than 'worry'. There are dimensions to the meaning of these words which exist implicitly by virtue of the cultures in which they arose. The English do not perhaps experience the same feelings about someone falling from grace as the Germans express through their 'Schadenfreude'. Does a Londoner experience 'ennui' like a Parisian?

It is this subtle cultural inflexion which perhaps accounts for the signal lack of success of 'universal language'. While there have been over two hundred attempts, from the Reverend Schleyer's 'Volapuk' in the eighteen-eighties to Ogden's 'Basic English' in the nineteen-thirties, nations have clung doggedly to their native tongues and eschewed the benefits of easier communication. This, I believe, tells us something about the likely prospects for a universal currency.

One can see here that the value of money might be similarly determined. That the ERM and EMS are not viable is cultural, not simply a matter of arithmetic. Bound up in a currency are all the cultural imperatives of its originating nation. The Deutschmark expresses the German experience of, and response to, the hyperinflation of the nineteen-twenties. The way in which cultural factors shape the response of each economy to various stimuli indicates that for a common currency to be viable all participating states would have to 'reshape' their economies to a common standard.

Addendum - 2005

The Euro is now the currency of the majority of the European Union. Its introduction was relatively smooth administratively. However, since its inception those countries with the Euro have experienced generally low economic growth and high unemployment. It is argued that the conditions imposed by the Stability and Growth Pact (known by the more cynical as the Stability and No Growth Pact) must be loosened to allow those economies to begin to grow once more. In the long-term however it is inevitable that all economies within the Euro-zone will become increasingly similar insofar as their components and mechanisms are concerned such that they will respond similarly to the same economic stimuli.


We speak of this entity which we call the economy as if it were something separate, an epiphenomenon. Politicians constantly invoke the term. But what is it in essence?

The economy, as we call it, is merely one logical view of the totality of human activity, that given to us by measuring amounts of money, whether static as capital, or moving as transactions. It is through these that we try to determine Gross Domestic Product, a measure once again popular with politicians, not least perhaps because of its nebulous nature. Even economists acknowledge that GDP is at best a very imperfect measure of prosperity. However, for all its faults it is currently all that we have to work with and is the accepted standard. But it must be accepted that it gives us a very limited view of the world.

In conclusion therefore, I argue that an essential prerequisite to a deeper understanding of economics is a reassessment of the nature of that bane of modern life, money.

Recommended Reading

  • 'The Death of Economics', Paul Ormerod, publ. Faber and Faber.
  • 'Debunking Economics: The Naked Emperor of the Social Sciences', S. Keen, publ. Zed Books.

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.

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