Edited by L. Randall Wray and Mathew Forstater
Chapter 5: Understanding the Implications of Money Being a Social Convention
Thomas A. Swanke INTRODUCTION It is well known that many different objects have functioned as money. Money also fulﬁlls many roles in the economy, and society. Yet, the attempts to deﬁne money seem to ﬂounder on these observations, rather than reveling in explaining the reasons that these observations seem to be true. In fact, money is many different things to different people. Some see money as a means of transactions; others see it as an object of study. Money has many levels, they can be practical, emotional, theoretical or the subject of inner or overt desires. One way to explain all these different aspects of money, and what it means, is considering money as a socially created social convention. The view that money is a socially constructed social convention explains many of the characteristics of money listed above. There are four reasons to believe that money is a socially created social convention. Along the way we will brieﬂy examine the ways that customs, norms, social contracts, social conventions and the social creation of reality impact on the functioning of money. Lastly, we turn to the reasons that the neo-Chartalist view of money, by itself, does not explain why money works. MONEY AS A SOCIAL CONVENTION Money is a social convention for several reasons. There are many similar deﬁnitions of social conventions. Lewis (1969, p. 78) argues that: a regularity in behavior of members of a population when they are agents in a recurrent situation is a...
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