Part [part not set] of 4 in series "Finance and the Common Good"

This is the start of the introduction, written by editors Kees Buitendijk and Cor van Beuningen,  to the book Finance and the Common Good (2019, Amsterdam University Press).

In his visionary cultural study, The Philosophy of Money (1900), philosopher and sociologist Georg Simmel states: ‘Life teaches us all about money; money teaches us all about life’. Simmel’s thesis is that anyone seeking to understand modern society should study the phenomenon of money, and vice versa. As we, in this book, try to understand life in relation to money, or, more specific, to understand what happened to and through finance in modern society, Simmel gives us a proper first stepping stone; a discourse for understanding the deep cultural embeddedness of our money – and the financial sector. Before we introduce both the aims of this publication and our fellow contributors, we will first use Simmel’s thesis to elucidate the thematic background of our writings.

Simmel argues that money is ‘function without substance’; it is a mere instrumental expression of the relationship between subject (the human being) and object (his/her environment). As an instrument, however, money allows subjects to invest ‘objects’ (products, services and relationships) with abstract value, regardless of their particular, individual qualities. Objects can then be quantitatively exchanged, and hence be made uniform. This is how money, as a transparent and universally intelligible medium, emancipates the subject, as it liberates from natural or social restraints. And in this way, the abstract instrument of money can provide societies with a vigorous energy.

Subjective valuations and objective values

Simmel nevertheless also observed – already at the beginning of the twentieth century – that money was increasingly becoming a ‘great disruptor’. Although money is ‘simply’ a quantitative expression of individual qualitative relationships, there is no indispensable connection between the two, and the instrumental, extrinsic function therefore has the tendency to detach from exactly the intrinsic qualities it expresses. Money in itself inherently tends towards becoming more essence (function) and less substance. This is already exemplified by the changing appearance of money: from seashells and cattle, via coins and bills, to scriptural money and bitcoins. Simmel argues that in this way, the greatest blessing bestowed on us by modern money – the possibility of exchanging ‘things’ – also poses the greatest danger to our culture and society. Money only expresses completely interchangeable, anonymous, and functional characteristics, as these are its own functions. But by doing so, it hides the concrete reality of ‘value’, or the valuable relationship between subject and object. Money itself obscures the relationship between man and the world.

Paradoxically, next to obscuring our disposition of value, money also symbolizes it. Or, as Simmel states it: ‘money is the adequate expression of the relationship of man to the world’. For the more abstract money becomes – and with it, the relationship it expresses between subjective valuations and objective values – the harder it becomes to concretize value. In modern times, abstract money allows us to value any object by price, but the price of an object will no longer necessarily tell us something about its value. It is therefore the triumph of the amorphous availability of everything through function over the individual significance of anything by substance, as explicated by our money, that we, modern people, will have to struggle with, according to Simmel.

When considering modern times, it is evident that culture and society have changed drastically over the last forty-odd years. Radical shifts in domains such as technology, economics, (geo)politics, and (social) media have turned the world into a global village. One exponent of these shifts has been the immense growth of the global financial sector. On the one hand, this process of financial globalisation has gone hand in hand with a considerable worldwide net growth of wealth; on the other hand, as the financial crisis of 2007/8 has shown, there are serious and harmful downsides to this global financial interconnectedness. In the wake of the crisis it has become painfully clear how ‘real’ financial products can turn out to be, (again) proving their ‘value’. Anyone who all of a sudden is unable to pay the mortgage instalments will find that finance is not all that abstract.

The light of money

For obvious reasons, the adverse sides of the globalized financial sector have been the main focus of political action, media coverage and public debate in recent years. Public resentment with the sector was and still is quite large and, at least since 2008, it has been under close scrutiny by the polity. And not without results: things have changed since the crisis. Stricter regulation, more substantive external monitoring and higher capital requirements, as well as increased attention for CSR, ethics and culture, to name a few issues. And yet, in the past months and years, there is one question that returns again and again: has anything really changed? Have technical, legal, and functional measures done the job? Or are the underlying social dynamics, the culture, and the ethics of the financial sector virtually the same as they were before the crisis? Even more fundamentally, what was the real problem in the financial sector to begin with? Was it a ‘technical’ problem? Institutional? Individual? Cultural? Or ethical? And did it only affect the financial sector, or was it more widespread – affecting other commercial industries, the government, and society itself?

Paul Dembinski, director of the Swiss Observatoire de la Finance, connects Simmel’s theory of money to the dynamics in society as exemplified by the rise and fall of the financial sector in the past few decades. He proposes the term ‘financialisation’: the increased dominance of financial (functional) motives in the domains of economy and society. Or, in his own words: ‘the almost total triumph of transactions over relationships’. Following Dembinski’s interpretation of Simmel, it is clear how the idea of functional money connects to the process of financialisation. Money as mere function becomes ever more abstract, shapeless – fluid. This abstract money brings us comfort and ease, as it is safer and easier to handle (re digital banking), and it affords new financial instruments. But following this same ‘functional (financial) logic’, abstract money penetrates easily and deeply, and almost irreversibly, into the organization of our societies. Accompanied, and strengthened by, the many other technological, cultural and geopolitical developments of the last decades, money has been able to abstract ever more qualitative values, extending to domains where money was not present hitherto. That which is fluid flows wherever it can; a financial logic has seeped into all capillaries of our society. We now see ‘our world’ through a financial perspective; all has come to stand in the light of money.

Although it is clear that the dynamics in the financial sector are the offspring of a broad societal evolution, it is safe to say that it now also functions as a catalyst, if only for the sector being a prime example of a domain where functionality overrules relationships and the value of concrete social interdependencies has become obscured by an abstract shroud of complexity, as was clearly displayed in the aftermath of the mortgage crisis. Furthermore, the financial sector itself has proved to have (had) a tendency to develop financial instruments that justify and consolidate unbalanced relationships, thereby further stimulating the cultural financialisation.

Re-actualise the Rhineland model

‘What has been seen cannot be unseen’ the saying goes. Thus, it is impossible to simply unsee our financialized perspective. We can however strive to elaborate new perspectives. That is why this book pursues Finance for the Common Good. We, the editors of this volume, believe that no single discours can account for the co-evolution of finance, economy and society in the last decades, inextricably intertwined as it has been with technical, political, legal, psychological, social and cultural developments. Hence, it makes no sense to demand change only from the financial sector, as some have falsely done. We do, however, believe that the term ‘financialisation’ gives adequate expression to the direction taken by modern societies in the past four or five decades, and that this is evidently made visible in and around the financial sector. We – society – have made money and with it, the financial sector, too much of a mere ‘function’. The result has been a ‘finance’ that only benefited the ‘financial good’.

Fortunately, further financialisation is not inevitable; our degrees of freedom are not (yet) exhausted. As editors, we are convinced that this is especially true for the countries that have strong roots in the rich tradition of the Rhineland model, that of the ‘Gemeinschaft’, the ‘Commons’, or the ‘Polder’. This is a geographic- and cultural area where relational finance could still be a viable organisational principle. In this volume, we therefore wish to explore the possibilities for a healthy Rhinelandic arrangement vis-à-vis an all-too financialised global village. Our main question in this is: how can the financial sector once again help achieve sustainable relationships and social ties? And under which circumstances, in what kind of environment, can such a change take place? Can we re-actualise the Rhineland model to enter a new social era, one in which the government, the financial sector, businesses, and society can complement one another and enable human flourishing, a vital society, and a healthy planet?

The initiative for this book was taken by the Socires (Society & Responsibility) foundation, an independent Dutch think tank engaged with questions at the interface of culture and society. The book reflects the findings of our Ethics and Finance programme, which took place between 2015 and 2018. This programme is now continued under the title Finance and the Common Good. The various authors who have contributed to this book were all involved in the programme at some stage. They were all invited to share their thoughts in a written contribution on the topic. We are very thankful for their contributions, at our events as well as in this particular volume.

Modesty with regard to the impact of Finance and the Common Good is in order. We do not pretend to come up with any kind of solution to the financial sector. There are plenty of solutions already, offered by just as many commentators. We believe that at the moment, there is a need to develop an appreciation for the complexity of the issues at hand. Furthermore, we believe it is necessary to foster willingness in all interested parties to enter into dialogue on these issues. We must come to appreciate that everyone must change in some way or another, to ensure that nothing stays the same. This book is meant as a means to clear some of the way on the journey towards finance for the common good.

Cor van Beuningen is senior advisor at Socires, where he co-coordinates different programmes. He holds Master’s degrees in both Geography and Public Administration. In the past, he worked for the Dutch Ministry of Foreign Affairs, and had assignments in Colombia, Mauritania and Yemen. From 2000-2017 he was Director of Socires. He is known for his publications in different media, books and journals.

Kees Buitendijk is the programme coordinator for the Finance and the Common Good project at Socires. He teaches at the Vrije Universiteit in Amsterdam, where he also carries out research on the philosophy of finance. He holds Master’s degrees in both Philosophy and Public Administration.