Money talk II: Language and the financial system

In Money Talk I, Is money language?, I explored how money and language are interconnected, and asked whether it is possible for money to exist without language. Here I cover the role that money talk plays in the financial system as a whole, and some recent work on the Utopian possibilities of money.

In recent years, several scholars have followed Marx in writing about how our erroneous views of money permeate our entire financial system. Keith Hart, in his book The Memory Bank, discusses the roles of language and money in making a more human economy. He notes that language and money are “the two great memory banks”, the major means of communication in modern society.

Hart points out that we communicate with each other globally through both language and through economic exchange. But whereas language “tends to divide us more than it brings us together,” money's potential for universal communication is less ambiguous: “Money and markets are intrinsic to our human potential, not anti-human as they are often depicted.” (Hart 2015, p.27) 

Language, money, and power

Not everyone is so optimistic. (Including Keith Hart, by the way.) Many other studies point to the co-optation of money and power (usually both together) through language. In Liquidated: An Ethnography of Wall Street, Karen Ho (2005) touches on the question of language and power in the global economy. She draws a startling comparison between the views that Wall Street bankers and many social scientists hold about globalisation.

Ho notes that both groups tend to discuss globalisation as though it is an unstoppable force that is fundamentally transforming societies in all corners of the world, and that they do so because they have a strategic interest in promulgating this framework. For bankers, representing Wall Street as omnipotent is a kind of marketing exercise. As one banker explains to her, 

Basically, nothing gets done these days on a large-scale basis without Wall Street approving it. You can’t build a plant in China. You can’t build a highway in China. You can’t build a highway in Brazil. (Investment banker, cited in Ho 2005:71) 

Furthermore, he goes on to state: 

There is no government that is above Wall Street now. If the Wall Street community does not like the actions of a particular government, they basically lose their confidence and pull capital away and things cannot get done. (Investment banker, cited in Ho 2005:72) 

This banker’s comments imply that Wall Street pulls all the strings because of its financial clout. However, this is clearly an exaggeration. Nevertheless, Ho argues that the bankers are using a particular kind of language to persuade others that their control over money does, in fact, give them such a high level of global power. Moreover, she says, it is a myth that many believe is true, and this endorsement bestows Wall Street (a misnomer in itself, since most large financial institutions in New York City are not located there) a kind of a brand power.

In contrast to Keith Hart's hope in the democratizing potential of money and language, Ho's example suggests that money is tied up with the enactment and subsequent realization of power relations regarding the economy, something that Pierre Bourdieu noted in Language and Symbolic Power. In other words, rather than 

money → power → more money → more power

or even

power → money → more power → more money

we get

power → money talk → power → money

with "money talk," or status talk, occupying a central role in the value chain between power and money. 

Central banking and language

It's not just investment bankers who use language to control money. Douglas Holmes, in his book Economy of Words: Communicative Imperatives in Central Banks, describes how central banks use language as a monetary policy tool. Douglas Holmes writes how central banks use language not just to communicate policy (i.e. changes in the discount rate), but as a monetary policy tool to influence the demand for money.

Holmes explains how monetary policy committees sometimes have to make decisions quickly, such as to avert a financial crisis. Lags in quantitative data collection means that they cannot entirely depend upon it to guide their decisions. Instead, they consult with a spectrum of people in the economy, including shop owners and merchants. They use this anecdotal evidence to judge what direction the economy is moving in and make decisions based upon it. So, contrary to popular representations of how macroeconomics operates, words are indeed influential. 

Interestingly, says Holmes, there is a second way that central banks use language as a tool of monetary policy, and that is by using it to shape public beliefs and expectations about the economy. We are all probably used to the idea that governments and policy makers might use language to calm people down to avoid a run on a bank, or the fast sale of stocks. The press release and other forms of communication by central banks have become a central tool for shifting public economic behaviour and affecting currency demand. As such it is an indirect tool for creating money itself. Of course, the question still remains of just how much central banks can actually control the money supply. Nevertheless, language has indeed become pivotal in their attempts to do so.  

Economic anthropologist Ursula Dalinghaus comments in a review of Holmes's book that “One might think of the organization and effect of the book as itself a simulation of the practices and assumptions that are the object of investigation.” She suggests that, in writing about how central banks use language to affect the money supply, Holmes himself is joining in the game. (I have long had similar thoughts about Bourdieu's Language and Symbolic Power - the writing is so convoluted that the book itself seems to demonstrate the point it was trying to make. I can almost hear Bourdieu laughing at us.)  

Is this money-language game impossible to escape?

Bottom-up and top-down processes

Language emerges from the bottom up. It changes constantly as people use it in their everyday lives. For centuries, institutions such as governments, churches, standardizing bodies, and commercial dictionaries have been battling with each other and the general public to win the right to define language, to be the canonical source. They never win. To the contrary, institutions have had to acknowledge that language is a living thing that is shaped by the people who use it. Every year, dictionaries include hundreds, if not thousands, of new words within their hallowed pages.

Money used to be similar. For thousands of years, there were many competing sources of money, and they were not at all centrally controlled. It has only been in the past two or three centuries that governments gained control over money and issued fiat currencies. Money went from being bottom-up to being top-down due to the consolidation of power in the hands of the state, backed by military power. 

Cryptocurrencies are trying to revert the process and make money bottom-up again. So far they are losing the fight. Cryptocurrencies were supposed to decentralize money control so that anyone could make it and there were no intermediaries (e.g., you did not have to rely on banks, governments, or any other institution to obtain your money, store it, and make transactions with other parties). Instead, three things have happened that are completely opposed to the original, utopian ideas behind cryptocurrencies.

First, most cryptocurrency transactions today do not occur between two independent parties; instead, a whole host of intermediaries, including exchanges, crypto wallets, and so on, have come into existence. People use them because it is far more convenient than managing their cryptocurrencies themselves. 

Second, cryptocurrency is being used for financial speculation far more than for ordinary transactions to buy and sell goods. The price of currencies such as Bitcoin and Ethereum have gone through the roof, making it unsuitable for most ordinary transactions. Cryptocurrencies are being consolidated into the hands of fewer and fewer people. Moreover, powerful institutions and companies are starting to talk about making their own cryptocurrencies, with Kodak announcing it is developing the Kodakoin and Japan's largest bank announcing it will launch a cryptocurrency stock exchange. Any bottom-up element of cryptocurrency (which some may argue was always an ideal, never a reality) is fast disappearing. 

Third, the language people use to discuss cryptocurrency is just as filled with metaphors and myths as any other conversation about money. It seems we simply cannot escape our tendency to mix our money metaphors. We talk about life in terms of money when we do not mean to refer to money at all, thus falsely introducing quantitative elements into our discussion of qualitative things. But we also make the same mistake in reverse: we talk about money in qualitative (and often mythical) terms, even when we mean to talk about it quantitatively. 

Why do we do this? It is clearly not a rational way to try to communicate with each other about the world. But herein lies a clue as to why language and money are so closely linked. As researchers like Kahneman and Tversky (Thinking Fast and Slow) and Nassim Nicholas Taleb (The Black Swan, Fooled by Randomness) have pointed out, humans are actually terrible at separating out our “rational” and “emotional” brains: in fact, we are deluded to think we can actually achieve this, since our emotional brains are a critical part of our decision-making processes (Taleb points to evidence that we can’t make decisions without emotions being involved). 

Money, a human invention, will never be the objective, rational, discrete thing that we envisage. 

What happens, then, if we stop seeing money as quantitative and objective, and instead view it for what it is, a part of culture and, more specifically, as a part of language? We open up the possibility to be more critical of how we think and talk about money ourselves, and how we assess the claims of other individuals and institutions, whether they be Wall Street, a central bank, or cryptocurrency evangelists. Given that we are likely to see more forms of money emerging in years to come, with their own ideologies, learning to think better about money will only become more critical. 

Further reading

Dalinghaus, Ursula M. 2015. Modeling the economy with words. Current Anthropology 56(2): 293-294.

Hart, Keith. 2000. The Memory Bank: Money in an Unequal World. London: Profile.

Hart, Keith. 2015. Money in the making of world society. In MoneyLab Reader: An Intervention in Digital Economy, edited by Geert Lovink, Nathaniel Tkacz and Patricia de Vries, pp.20-31. Amsterdam: Institute of Network Cultures.

Irvine, Judith T. 1989. When talk isn't cheap: Language and political economy. American Ethnologist 16(2): 248-267.

Kindleberger, Charles Poor. 1967. The Politics of International Money and World Language. International Finance Section, Department of Economics, Princeton University.