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I am reading a book about how money works that contains a brief summary of Georg Simmel’s Philosophy of Money:

“Published in 1900, German sociologist Georg Simmel's book The Philosophy of Money looked at the meaning of value in relation to money. Simmel observed that in premodern societies, people made objects, but the value they attached to each of them was difficult to fix as it was assessed by incompatible systems (based on honor, time, and labor). Money made it easier to assign consistent values to objects, which Simmel believed made interactions between people more rational, as it freed them from personal ties, and provided greater freedom of choice.”

This is very difficult for me to conceptualize and wrap my brain around. I have the following questions:

what is meant by “the value they attached to each of them was difficult to fix as it was assessed by incompatible systems (based on honor, time, and labor)”? how exactly did money make interactions between people more rational, free them from personal ties, and provide greater freedom of choice?

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  • I've gotten good at estimating reasonable costs for everything from a dozen eggs to major car repairs, in current dollars. But if I had to directly decide how many eggs to give the auto mechanic, I might be stuck. It is a lot harder to 'bank' your work output to 'spend' later than it is to put money away. How could you ever retire or even take a long vacation if you had to store up eggs, or hours repairing cars, to do it? That said, essential things should not be withheld for financial reasons.
    – Scott Rowe
    Commented Sep 10, 2022 at 2:50

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I'd say it's premised on the idea that before money there was barter, where every trade required negotiating relative values. Then with money, each type of good has it's own market, which evaluates against something transferable, money.

It's a bit like having a standardised scale to refer to, instead of say only being able to directly compare two things.

This perspective on money as arising from barter, generally arguing that currency arose from bartering metals, turns out not to be supported by the anthropology and archeology. David Graeber showed convincingly that currency started with trading debt obligations, and metal currency was about paying soldiers with tokens that citizens were required to pay taxes with - ie it was a tactic of empire building.

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  • I've always found the idea of purchasing debt completely incomprehensible. It's like making a restaurant that sells hunger and thirst, or a hospital that makes people sick.
    – Scott Rowe
    Commented Sep 10, 2022 at 2:45
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    @ScottRowe: Graeber describes it as an extension of the 'gift economy', as a record of who helped who out that helps build & support trust - the real bedrock, as every bank-run or hyperinflation shows. Joint stock companies ended feudal era, by chipping in together for hazardous voyages, sharing rewards+liabilities -not so different from that. Trading stakes, meant people could participate even without reserves to cover any personal eventualities. All money is imaginary, so it's about imagining systems that serve us. As such don't let anyone say those that don't serve us, can't be changed
    – CriglCragl
    Commented Sep 10, 2022 at 11:29
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    Thanks for the explanation. Gosh, people are incredibly clever! Realistically, anything that amplifies trust is worthwhile, I think. You changed my mind today.
    – Scott Rowe
    Commented Sep 10, 2022 at 13:06
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Disclaimer: Not an expert on Simmel's philosophy.

the value they attached to each of them was difficult to fix as it was assessed by incompatible systems (based on honor, time, and labor)”?

I mean just picture a society that has no money. How would they get and receive goods from each other?

Well they would exchange them directly with each other. Now let's say you are a blacksmith, a person coming to you wants a tools but doesn't have money and nothing that you deem interesting would they be able to get the tool? Well, no, or they would need to give you lots of the stuff you don't really need, but where you think it's enough that there's something useful in it.

Meaning it becomes more expensive if your products aren't of direct interest to the person with whom you're exchanging goods.

Or say you're making a deal in terms of working off the cost. Now another trained blacksmith, who's interested in something new, would have no problem following the routine with little training, would do the hours required, and get something in return that is likely proportional to the hours invested (as in he could spend these hours himself to produce it).

While if you're not a trained blacksmith (but idk, a scribe), doing the same kind of labor would be a lot harder. You're not trained, you're not strong, your overall performance is worse, and it is physically harder on you, and probably takes you longer to produce something.

Meaning despite it being the same exchange work for good, it's actual value (how hard that work is) would vary significantly from person to person.

Or let's say you want to buy something from me and I simply don't like you. So no matter how much you offer, unless it gets in the realm of the ridiculously overpriced I'm not even considering doing business with you.

So you either have to go out of your way to please me, rob me, or find a middle man whom you could bribe to trade with me in your place, which adds a fee for the middleman to whatever I'd charge him for the goods.

Same for other social standings, like often enough rich people get things cheaper than poor people or even for free, because the merchants see it as getting a foot in the door for future and more lucrative deals. Like if the person that everyone tries to imitate is wearing your cloth then people will flock to you to buy stuff, while if a poor person does that, people might try to avoid looking like that. Status by association and similarity.

Or let's say you're already looking starved and are approaching a person selling food and they see that you're not in a position to decline an offer, so they might make you a worse offer than other people who could simply go away and look for other places to get their food.

So what a good or service is worth isn't the same for everyone and it's price can vary significantly based on status, time, labor and whatnot.

And while many of these things still apply to societies that use money, the use of money probably reduced the necessity for immediate trade relations. Like you wouldn't need to trade yourself working at the blacksmith's workshop for your tool, you could instead do scribe's work, which comes easier to you. So you're technically still exchanging "work time" (10 hours of blacksmith's work) vs worktime, but now it's no longer "however long it takes you to do what a blacksmith does it 10 hours", but just "10 hours of scribes work", because the blacksmith is also ideally able to exchange that for 10 hours of work that he actually wants (Like idk, hiring a capable apprentice rather than you or whatnot).

So as long as prices are relatively stable, known to people and thus applied to all customers the same. This makes planning your income and expenses a lot easier. It would still be largely based around time and labor, but now you have some comparison in terms of work time and workload.

That being said, status dependent prices are still a thing, sympathy dependent prices reduced a little at least for the goods for services you might still get inferior service or higher prices, out of your comfort zone working is still more tedious than working in your profession and scalping and using supply and demand against you to get more for less are also a thing.

So it might reduced some of that discrepancy between the value of the same thing for different people, but there's also still a lot of that left. Also, it kind of matters how money is distributed in society, because if money is largely unequally distributed you might still have a system where prices are depending on status. Like being physically nearer to where the money is often makes it more likely to get a share than if you're further away from surplus and closer to starvation where people count on every cent.

So one could also argue that in some regards it makes things even more irrational, like status symbols. Why would pressed carbon and shiny metal be so valuable to people if it serves literally no practical purpose at all? It's completely irrational and can probably be linked to money and excess due to money.

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    Good explanation! It reminds me of recent case of a cakemaker not wanting to sell a wedding cake to a gay couple. And, Burger King doesn't charge more if you're hungry.
    – Scott Rowe
    Commented Sep 9, 2022 at 22:39

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