Commoditization of Money - Essay Example

?Rebecca Meng ECON 3520 Dyer 9 November Commoditization of money The money theme that I have chosen to investigate is: Money is not like other goods and services. I found that Lewis Hyde’s “The Gift” helped illuminate this concept for me. Specifically, Hyde’s differentiation between gifts and commodities introduces a social component to the exchange of goods and services. The commodification of money has resulted in both alienation and freedom for western societies. In investigating this question I am also compelled to question the virtue of freedom as it is experienced in the western world. Is it truly desirable to be free from the social bonds and obligations of a community? I am not convinced. I would argue that money, more than any good or service, has been commoditized in our economic system and created alienation. The last three decades have seen an explosion of money, commodity markets and communications which now beginning to bear the consequences. Whatever else this period of ‘globalization’ brings about, it represents a rapid society extension to a more comprehensive level than the 20th century norm which categorized society with a nation-state. So as to live in this world together, we must devise new ways of executing things for each other which go beyond our attempts on achieving local self-sufficiency (Holmes 13). I term this historical process ‘commoditization’. In history, commoditization has been closely related to the social extension by means of money and markets. Money is unique because its value is not inherent but ascribed. In a barter system absent of money there is obvious and immediate benefit for both parties in an exchange. When utilization of a fiat currency is employed, it means that benefits are not immediate (they are at least one step removed) and assumes that the currency will be recognized by future trading partners. In this system, money should function as a means to an end and be perceived as a proxy for goods and services. All value to money is ascribed – once a currency is no longer recognized as valid, it is useless or literally “not worth the paper it’s printed on” (Holmes 46). Since money must be widely recognized as legitimate in order to be useful, it also functions as a form of social control. The issuer of money implicitly offers a contract to users wherein the latter will follow the rules of the former. Participation in a nation’s economy is dependent on an individual’s willingness to use that nation’s form of currency. A few of my own journal works tie into this theme. The first pertains to the differences in lending that I have observed in my personal life and comes from a journal entry I wrote on September 24th. Specifically, if one friend lends another a good or service of relatively low value, there is no expectation of reimbursement. However, if the same value amount of money were to be exchanged between friends, an expectation of reimbursement would exist. This is an example of the commoditizing and alienating effects of money that Hyde discusses. It begs the question: why is the exchange of money an alienating and impersonal interaction? I believe part of the answer lies in the fact that money is not available for immediate consumption. It is instead a credit, or “IOU” that can be redeemed in a later transaction. Related to this is the fact that in the United States it is considered impolite to give money as a gift. Another journal entry was about an interesting news story I read on October 18th. The story, “Seizure of Ship From Argentina Forces Shake-Up,” by Emily Schmall, came from the New York Times. It was about a US hedge fund, Elliot Capital Management, which seized an Argentine ship that had docked in Ghana. The fund is owed $370 million by the Argentine government as a result of its 2001 default. I was struck by the fact that a private enterprise such as a hedge fund could find backing from courts in the US and Ghana to seize a government asset. Though Argentina is appealing their case to the United Nations, it seems unlikely that they will prevail. This story illustrates the power that money has – according to some nations excessive debt causes a nation to lose sovereignty. It is hard to imagine a manufacturer taking similar action against a government over the loss of real assets. Real capital seems to provoke a much more strong reaction. One final journal entry from November 2nd was inspired when I was watching the film The Dark Knight. In one especially memorable scene the villain, called “the Joker,” burns a mountain of money. A criminal that he is meeting with is understandably shocked and becomes convinced that the Joker is insane. Again, I believe this scene attests to the power of money. No good or commodity could evoke the same visceral reaction and impression of extreme waste. Money represents any and all goods and services, and it also holds a greater power for its cultural significance. Additionally, this makes the case for money as a social control mechanism: as the Joker burns money, he is by extension rejection the social control that comes with it. The government does not care whether it has $50 or 50 trillion; it maintains on whether it can convince citizens to sit in offices to fill out paperwork, pick up a gun to shoot the bad individuals of the decade out there, or to not demonstrate on the streets because they are unhappy on what the paperwork dictates or what is being done or not done to the bad people (Holmes 23). Money can at times be used to influence people to do these particular things, but they could also get convinced by other ways, such as media manipulation, insinuation of local community groups, and many other more. By using money, we agree to live within a system and play by its rules – thus the converse is true as well: a rejection of money represents a rejection of the system as a whole. But we have all become so accustomed to the debt-fueled affluence that we have enjoyed for many decades that it essentially feels "real" to majority of us. Regrettably, history has shown that it is simply not conceivable to grow your debt quicker than your economy indeterminately. At some point consumption will drop to a level much equal to production. Sometimes this adjustment can be slow, but other times it becomes extremely excruciating. In our case, money has mad us live have been living in a way above our means for along time that it would take sets of major economic miracles just to keep our correction to an "exceedingly excruciating" level (Holmes 81). Commoditization of money have taken us in a period of the largest debt-fueled affluence simmer in history, and our unsustainable and crashed economy and it may even crash further and burn up at some point. All these problems can be blamed on monetarism and commodification. The whole problem within our modern society is that it is become excessively commoditized. Everything that can be certainly marketed is going to appeal all the money and attention, bypassing other modes of being that are hard to market, like social relations, but usually more crucial. The challenge we face nowadays, as the confines of market fundamentalism are manifested daily by some indexes like economic collapse, is discovering the valuable aspects on extension of the society by use of markets and money, yet devising new institutional modes of regulating their abuse. How will this work out owing that it is the same money that has taken us these challenges? This is the context for the reflections on commoditization, reflections that emphasizing that money has proved invaluable to me (Holmes 45). In summation, I hope to explore more deeply how the mechanical system of money and commodities came to be dominant over the organic system of barter and gifts. In looking to past history, I will be better able to describe how money is different than other goods and services. At this point, combining what I have learned in class with my own economic observations and experiences, I believe that much of the answer lies in the fact that money has no inherent value. It is to an extent unnatural to seek out something with no inherent utility – after all, in terms of real material, money is nothing more than a scrap of cotton. At the same time, this is nothing new. As we learned, mercantilists saw the accumulation of gold as the key to national strength. In taking a historical perspective on this issue, it is easy to see how paper money arose from valuable metals, as both serve as a placeholder or credit with no obvious utility. Works Cited Holmes, Andrew. Commoditization and the Strategic Response. New York: Gower Publishing, Ltd, 2008. Read More