Article Uskali Mäki* Reflections on the Ontology of Money https://doi.org/10.1515/jso-2020-0063 Published online February 17, 2021 Abstract: The suggestions outlined here include the following. Money is a bundle of institutionally sustained causal powers. Money is an institutional universal instantiated in generic currencies and particular money tokens. John Searle’s ac- count of institutional facts is not helpful for understanding the nature of money as an institution (while it may help to illuminate aspects of the nature of currencies and money particulars). The money universal is not a social convention in David Lewis’s sense (while currencies and money particulars are characterized by high degrees of conventionality). The existence of the money universal is dependent on a larger institutional structure and cannot be understood in terms of collective belief or acceptance or agreement separately focusing on money. These claims have important implications for realism about money.
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Reflections on the Ontology of Money
Keywords:
money, currency, causal powers, institutions, institutional fact, convention, realism, existence, social ontology, SearleAbstract
The suggestions outlined here include the following. Money is a bundle of institutionally sustained causal powers. Money is an institutional universal instantiated in generic currencies and particular money tokens. John Searle’s account of institutional facts is not helpful for understanding the nature of money as an institution (while it may help to illuminate aspects of the nature of currencies and money particulars). The money universal is not a social convention in David Lewis’s sense (while currencies and money particulars are characterized by high degrees of conventionality). The existence of the money universal is dependent on a larger institutional structure and cannot be understood in terms of collective belief or acceptance or agreement separately focusing on money. These claims have important implications for realism about money.
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Article
Uskali Mäki*
Reflections on the Ontology of Money
https://doi.org/10.1515/jso-2020-0063
Published online February 17, 2021
Abstract: The suggestions outlined here include the following. Money is a bundle
of institutionally sustained causal powers. Money is an institutional universal
instantiated in generic currencies and particular money tokens. John Searle’s ac-
count of institutional facts is not helpful for understanding the nature of money as
an institution (while it may help to illuminate aspects of the nature of currencies
and money particulars). The money universal is not a social convention in David
Lewis’s sense (while currencies and money particulars are characterized by high
degrees of conventionality). The existence of the money universal is dependent on
a larger institutional structure and cannot be understood in terms of collective
belief or acceptance or agreement separately focusing on money. These claims
have important implications for realism about money.
Keywords: money, currency, causal powers, institution, institutional fact,
convention, realism, existence, social ontology, Searle
This paper has a long past. It is a moderate update and modification of earlier (2004 and 2009)
versions that have not been published but are occasionally cited in the literature (e.g. Guala 2010,
2016). The 2009 version is archived for possible reference (as Mäki 2009, “Reflections on the
ontology of money”). The original 2004 version was presented at the Vancouver workshop on the
History and Philosophy of Money, 13–14 November 2004; at EIPE, Rotterdam, September 2005; at
the ISNIE Conference in Barcelona, 22–24 September 2005. The 2009 version has been presented
at TINT, Helsinki, June 2009; and at the workshop on the Ontology of Money in Groningen,
November 2019. Thanks go to the audiences of these events and in particular to two anonymous
reviewers for this journal, and to Amin Ebrahimi-Afrouzi, Cristian Frasser, Francesco Guala, Frank
Hindriks, Pekka Mäkelä, Giorgios Papadopoulos, Margaret Schabas, and Petri Ylikoski for very
useful written comments.
*Corresponding author: Uskali Mäki, University of Helsinki, Helsinki, Finland; and Nankai
University, Tianjin, China, E-mail: uskali.maki@helsinki.fi
Journal of Social Ontology 2020; 6(2): 245–263
Open Access. © 2020 Uskali Mäki, published by De Gruyter. This work is licensed under the
Creative Commons Attribution 4.0 International License. 1 Introduction
What is money? What does money consist of? Does money have an essence? What
larger worldviews are revealed by different conceptions of money? How does money
originate, and how does it persist? Is money an institution or a convention? What is
the precise relationship between the material and the social in money? How do
particular items of money relate to money as an institution? Why are certain things
that are easily mistaken for money, not money? How does money exist? Is money
real, and if so, in what sense? Does money exist just in virtue of people believing that
it does, or is more involved? These are questions about the ontology of money.
Naturally, asking and answering these questions is a multi-disciplinary chal-
lenge. Contributions come, or should come, not just from economics, but from
sociology and anthropology, history and archaeology, political science and psy-
chology, and now also neuroscience. Such disciplines are built upon various
ontological presuppositions, but their practitioners seldom make them explicit and
systematically examine them (about economics, see Mäki 2001). In their accounts of
money, however, economists have been forced to address ontological issues
directly: money seems to be a sufficiently mysterious entity to trigger this mode of
scrutiny. Yet systematic ontological forays into the deep secrets of money have not
been encouraged by the disciplinary conventions of economics, and no unified
consensus conceptions have emerged. The reflections to follow in the present essay
seek to go further by inserting additional philosophical detail to the endeavour
of disclosing money’s secrets. These selective notes seek to provide some novel
illumination on some of the questions above without, however, aspiring to offer
anything close to a full systematic account of the ontology of money.
Another body of literature that has discussed money as a paradigmatic
component of institutional reality is social ontology done by philosophers. The
reflections of the present paper seek to contribute to this literature. By pointing out
some gaps and shortcomings in the philosophers’ discussion, I propose some
directions in which social ontology should be further elaborated in its dealings
with money. Given that money is part of institutional reality – and a very signifi-
cant part for that matter – the observations to be made may also highlight some
aspects in the ontology of the institutional world more generally (but such im-
plications will not be pursued here).1
1 Unfortunately, philosophical social ontology has done too little to promote interactions and
collaborations with substantive disciplines such as economics, sociology, anthropology, political
science, psychology, and others. This also applies to the reverse relationship: these other disci-
plines have not properly set out to learn from philosophical social ontology. In an ideal world,
there would be interactive mutual learning.
246 U. Mäki The claims and suggestions to be made and defended in this essay include the
following. Money is a bundle of causal powers sustained by an institutional
structure. Money is an institutional universal instantiated in specific currencies and
particular money tokens. Taken separately, John Searle’s (1995, 2005) account of
institutional facts is not very helpful for understanding the nature of money as an
institution (while it may help to illuminate some aspects of the nature of currencies
and money particulars). The money universal is not a social convention in David
Lewis’s (1969) sense (while currencies and money particulars are indeed charac-
terized by high degrees of conventionality). The existence of the money universal is
dependent on a larger institutional structure and cannot be understood in terms of
collective belief or acceptance or agreement separately focusing on money.
2 Money as a Bundle of Causal Properties
What is X? One way of making the question more specific is to ask, What is the
identity or nature or essence of X? Indeed, in examining the nature of money,
economists have been inclined to adopt unashamedly essentialist ways of talking:
they take questions of this form to be legitimate questions about money. Expressions
such as “essence”, “identity”, and “nature” are regularly used in accounts of money.
Essentialism of this sort seems to be a rather widely shared philosophy in action of
monetary theorists. It may be that it is in this part of economics that economists
subscribe to an apparently essentialist outlook more explicitly than elsewhere.
In line with a long intellectual tradition, economists make claims about the
essence of money by listing its “essential” or “intrinsic” properties. These prop-
erties are the essential “functions” of money. They include the functions of money
as a medium of exchange, as a means of payment, as a store of value, and as a
standard of value or unit of account. To this we may add a few more observations.
First, these functions are identity-constituting properties in that they determine
what it is to be money, thereby distinguishing money from other things such as
consumer goods and physical objects. This list of properties makes money what it is:
money.Theyconstitute the realessenceofmoney (thiswillbequalifiedin amoment).2
Second, natural necessity is involved here: money and its identity-constituting
properties are related to one another by real-world necessity (necessity de re).
Nothing can be money without having those properties, and nothing having those
properties can fail to be money. This is natural necessity in the sense that is based
2 Note that I here suggest to locate the essence of money somewhat differently from the analysis of
Menger’s (1892) account of money offered in Mäki (1990). Yet the basic idea developed in the
present paper was introduced in that earlier paper.
Ontology of Money 247 on the nature of things, in this case the nature of money. De re necessity is a
modality that characterizes the relationship between essential properties and a
natural kind that obtains by virtue of the structure of the world (not by virtue of
how we decide to use words, which would give us de dicto necessity).3
Third, the list of properties is to be invoked in defining the concept of money.
Any such definition of the concept of money is therefore also a definition of money.
This means that such a definition is a real definition: a claim about the nature of
the thing defined, not just about a concept used to talk about it. Considered as
a definition of the concept of money, the list of properties determines its intension
(or intensional meaning). The intension of the term ‘money’ in turn determines its
extension (or extensional meaning), namely the class of objects to which the term
‘money’ correctly applies, that is the class of all items that are money, that have the
identity-constituting properties of money. Note that the “definitions of money”
that economists employ when distinguishing between what they denote as M1, M2,
etc. are definitions of the extensions or extensional meanings of the term “money”.
Fourth, economists and other social scientists hold rival views of the nature of
money. They have different conceptions about which of money’s functions are
indeed the essential or intrinsic functions, and how the functions relate to one
another, such as some of them being primary and others being derivative. This
means economists entertain different real definitions of money. The exchange
function is often thought to be the essential property of money, determining its
identity. “The essential function, the performance of which enables us to identify
money, is very simple: it is that of acting as a medium of exchange.” (Newlyn 1962, 1)
Others believe that it is the functions of money as a standard of value and as a
means of payment that are “intrinsic” to it, while the capacity of money to serve as
a store of value is “no distinguishing property of money as such” (Hicks 1989, 42).
Of the two distinguishing functions of money (as standard of value and means of
payment), these economists take the standard of value to be primary: it is pre-
supposed by the function of money as a medium of payment (ibid., 43). Even
though the reflections to follow in the sections below cite these functions as il-
lustrations, no stance will be taken as to how exactly they are supposed to be
related to one another.4
Fifth, I submit that what economists call the essential functions of money are
its causal properties. As suggested earlier (in Mäki 1990), they are a special species
3 Note that if any given account of the origin of money (such as money being an outcome of an
invisible-hand process, or of collective intentional action by a regulatory agency) is presented only
as a possible scenario, then such an account does not qualify as a description of an essential
property of money.
4 Most of the literature in social ontology dealing with money as part of institutional reality
restricts its attention narrowly to the function of money as a means of exchange.
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