Georg Simmel provided a unique perspective on our relationships with the world around us. His insights and opinions led to comparisons with thinkers at all ends of the spectrum like Marx and Weber. Ultimately his insights and the interpretation of those insights were unique and interesting enough to stand out as his own. Most interesting is his examination of our relationship with money and what general negative and positive affects using money has on society will remain relevant to understanding our society until money is no longer used. Simmel’s insights are most explained in his piece titled, “The Philosophy of Money”; however, an understanding of his explanation of the tragedy of culture and his use of cultural geometric explanations is needed to truly understand the depth and meaning of his insights.
The most basic insight is that people in our society create things or perform actions that are valued and we all need things that are valued. For example a farmer creates crops, apples for example and consumers need food, apples for example. These things that the farmer creates and the consumer wants may be easy to create and easy to obtain or they may be hard to create and hard to obtain. It could be said, geometrically speaking, that the harder something is to attain (or create) the further away that person is from the object. In other words it is distant and that distance needs to be covered if one were to attain it. The distance has value. Just like the generally understood value in traveling to support your team at an away match, or driving across country to visit a loved one, closing any distance gap has value. Simmel’s insight comes from using this lens to examine the use of money. In previous societies, the distance gap was valued in terms of equidistant exchanges or barters for things that were of equal value. This led to a limited scope of things that could be created and attained and led to social norms that encouraged rich interaction amongst peers (a lack of rich interaction would diminish trading partners and thus the ability to attain anything of value that could not be created independently). With the use of money, the ability to expand trading partners to people without qualitative personal relationships arises and the quantitative judgment of situations emerges as the primary mode of interaction when value is concerned.
This led to a wide variety of positive and negative effects on society. Anyone who has been through a corporate review process or has otherwise been graded on a curve can understand what is meant by quantitative measurements. The reduction of consideration of human qualities and the increase in consideration of value, as measured by the money exchangeable for that value, means that the people in society have an opportunity to interact in new ways. It means that money allows people to choose to interact with one another on a personal basis or on a somewhat anonymous basis. This choice of interaction allows concepts such as capitalism, mass production, and individuality to emerge. This choice of interaction also allows people to replace the value of relationships with the value of production or money. The former choices create an environment where new personal freedoms can be attained, while the latter choices create an environment where exploitation is easy. This double edged sword of using money is a fine line that is difficult to balance and has been blamed for bad and promoted for its good. Simmel’s analysis is that underneath the tool, money, the people in our culture and society choose how to interact with one another. Money amplifies those choices that relate to decisions of trading value regardless of whether the choice is good or bad.
Certainly money can be used for good and bad, as we’ve seen with the latest financial crisis the desire to extract more money or value out of society drove to a large number of bad decisions by a lot of people. The masking quality of money surely played a role in masking the dangers of those decisions, just as it masks the face of an artist when a decision to purchase a painting is made. Simmel found money both influences how we interact with society around us and amplifies those things that we would naturally do regardless of money, in this way his insights are unique and relevant for us while we continue to use money.
Filed under: Banking, career, Entrepreneurship, Investing, Profit, Startups, stocks · Tags: Behavioral Finance, Behavioral Intelligence, Capitalism, Entrepreneurship, Marx, Money, Profit, Simmel, Weber