G E O R G S I M M E L
Towards a sociology of money
Georg Simmel
1858 – 1918
• A German sociologist, philosopher, and critic.
• Simmel was one of the first generation of German sociologists: his neo-Kantian
approach laid the foundations for sociological antipositivism, asking what is society?
• He represented pioneering analyses of social individuality and fragmentation. For
Simmel, culture referred to "the cultivation of individuals through the agency of
external forms which have been objectified in the course of history.
• Simmel discussed social and cultural phenomena in terms of "forms" and "contents"
with a transient relationship, wherein form becomes content, and vice versa
dependent on context.
• An acquaintance of Max Weber, Simmel wrote on the topic of personal character in a
manner reminiscent of the sociological 'ideal type‘.
• Simmel's most famous works today are The Problems of the Philosophy of History
(1892), The Philosophy of Money (1900), The Metropolis and Mental Life (1903), and
Fundamental Questions of Sociology (1917), as well as Soziologie (1908).
Introduction
• Money is everywhere. For some it is everything. For all it is necessary. Yet, money as such
is nothing in and of itself. Even the coins are all but devoid of precious metals and the
paper stuff is nothing more than paper with encrypted print. Yet, it would be hard to name a
thing more central than money to modern life; hence, the mystery as to why money is so
little understood inversely to its enormous importance in our daily lives.
• Anyone who uses money and wants better to appreciate the changes brought about by it
and constraints it imposes on day-to-day Philosophy of Money is a must-read book.
• Simmel is discussing the value of money as an objective reality apart from our subjective
appreciation of it. He treats money gently as the mysterious thing it is – at once real and
true, while also in some strange way quite beyond what we experience as real or true.
The Philosophy of
Money
• The Philosophy of Money (1900) is a book on
economic sociology by German sociologist and
social philosopher Georg Simmel. Considered to
be the theorist's greatest work, Simmel's book
views money as a structuring agent that helps
people understand the totality of life.
The Classic Book
• When it appeared in 1900 it was greeted with wide acclaim. Some saw
it as ‗a philosophy of the times. Others saw it as ‗the keystone of his
social psychological investigations. This is a document of the relativistic
interpretation of existence which one can characterize as Simmel‘s
world view‘.
• His contemporaries saw it as an important work in social theory that
could not be confined to a single discipline—be it economics, the
philosophy of economic life, psychology or sociology. Max Weber
praised the analysis of the spirit of capitalism it contained as ‗simply
brilliant‘. George Herbert Mead praised it as containing ‗an enormous
wealth of psychological illustrations‘ and as a work which
‗demonstrates the value of approaching economic science from the
philosophic standpoint.
The Philosophy of Money
• Simmel believed people created value by making objects, then separating themselves
from those objects and then trying to overcome that distance. He found that objects
that were too close were not considered valuable and objects that were too far away
for people to obtain were also not considered valuable. What was also considered in
determining value was the scarcity, time, sacrifice, and difficulties involved in getting
objects. In the pre-modern era, beginning with bartering, different systems of
exchange for goods and services allowed for the existence of incomparable systems
of value (land, food, honor, love, etc.). With the advent of a universal currency as an
intermediary, these systems became reconcilable, as everything tended to become
expressible in a single quantifiable metric: its monetary cost.
The Philosophy of Money
• In this book, Simmel is concerned with money as a symbol, and what some of the effects of this
are for people and society. In modern society, money becomes an impersonal or objectified
measure of value. This implies impersonal, rational ties among people that are institutionalized
in the money form. For example, the use of money distances individuals from objects and also
provides the means of overcoming this distance. Simmel thus suggests that the spread of the
money form gives individuals a freedom of sorts by permitting them to exercise the kind
of individualized control over "impression management" that was not possible in traditional
societies.
• A fundamental point of The Philosophy of Money is that money brings about personal freedom.
The effect of freedom can be appreciated by considering the evolution of economic obligations.
Although the monetary system enhances individual freedom, it can also lead to consequences
that are questionable.
Introduction
• Simmel combines ideas from all of the three major classical writers and was influenced by Hegel and
Kant. When Simmel discusses social structures, the city, money, and modern society, his analysis has
some similarities to the analyses of Durkheim (problem of individual and society), Weber (effects of
rationalization), and Marx (alienation).
• Simmel considered society to be an association of free individuals and said that it could not be studied
in the same way as the physical world, i.e., sociology is more than the discovery of natural laws that
govern human interaction. "For Simmel, society is made up of the interactions between and among
individuals, and the sociologist should study the patterns and forms of these associations, rather than
quest after social laws.―
• This emphasis on social interaction at the individual and small group level and viewing the study of
these interactions as the primary task of sociology makes Simmel's approach different from that of the
classical writers, especially Marx and Durkheim. It is Simmel's attempt to integrate analysis of
individual action with the structural approach that make his writings of contemporary interest.
Method
• The first part of his study relates money to the conditions that determine its essence and
the meaning of its existence. The first three chapters of the book is devoted to outlining the
preconditions for the emergence of a money economy—a precondition in non-economic
concepts and facts. Whereas the last three chapters of the book is where ‗the historical
phenomenon of money is studied, its effects upon the inner world upon the vitality of
individuals, upon the linking of their fates, upon culture in general‘. In other words, the
second part has analyzed the actual historical nature of social relations transformed by
money or ‗its consequences for non-economic values and relationships‘.
Method
• Simmel did not merely choose to study money a historical empirical entity. For Simmel it has a
deeper significance as ‗the symbol of the essential forms of movement within this world‘.
Money, like other phenomena, can never be grasped from a single science. Simmel asserts that
not a single line of these investigations is meant to be a statement about economics. Those
economic phenomena ‗which economics views from one standpoint can be viewed from
another.
• Simmel put forward a largely subjectivist theory of value and a conception of the economy as a
system of exchange. This is the context within which Simmel emphasizes the importance of
exchange relations in society and the implicit rudiments of a sociology of money. Simmel‘s
economic presuppositions are therefore significant for our understanding of his social theory of
the money economy.
Exchange as a crucial instance of
interaction and sociation
• Simmel‘s aim in the first part of The Philosophy of Money is to ‗present the
preconditions that, situated in the mental states, in social relations and in the logical
structure of reality and values, give money its meaning and its practical position‘. And
just as his study is not meant to be an economic one or even solely a philosophical
one so too this aim is not historical either.
• Simmel starts out from a subjectivist theory of value by stating that economy is
grounded in exchange not production. On reiterating importance on the social nature
of production, Simmel declares that ‗exchange is just as productive and value creating
as is production itself or that ‗exchange, i.e., the economy, is the source of economic
values.
Exchange as a crucial instance of
interaction and sociation
• Economy is ‗a special case of the general form of exchange‘. But it is not merely the
economy that is grounded ultimately in exchange. Exchange is also a crucial instance
of human sociation. Not only is exchange ‗a sociological phenomenon sui generis‘,
but it is also ‗the purest and most developed kind of interaction which shapes human
life‘.
• Indeed, social interaction is itself an exchange insofar as ‗every interaction has to be
regarded as an exchange‘. It is worth noting in passing that this conception of social
interaction is already to be found in Simmel‘s earlier study of social differentiation
where interaction is viewed as the reciprocal exchange of energies.
Exchange as a crucial instance of
interaction and sociation
• The process of exchange in fact enables Simmel to clarify and deepen his conception
of society. Society is a structure that transcends the individual, but that is not abstract.
Society is the universal which, at the same time, is concretely alive.
• The interaction between individuals is the starting point of all social formations but the
exchange of possessions is obviously one of the most primitive forms of human
sociation; not in the sense that ―society‖ already existed and then brought about acts
of exchange but, on the contrary, that exchange is one of the functions that
creates an inner bond between human beings—a society in place of a mere
collection of individuals. In this respect, ‗society is only the synthesis for the
totality of specific interactions. It is composed of these interactions. If all
interaction ceases there is no longer any society.
Exchange as a crucial instance of
interaction and sociation
• Amongst the crucial forms of interaction, exchange is not merely ‗a form of sociation‘; it is
also ‗the purest sociological occurrence, the most complete form of interaction‘.
• This sociological occurrence, the important relationship manifest in a remarkable entity,
called money. This is because money ‗represents pure interaction in its purest form; it is an
individual thing whose essential significance is beyond individualities. It is ‗the pure form of
exchangeability‘.
• The function of exchange, as a direct interaction between individuals, becomes crystallized
in the form of money as an independent structure. It belongs to the category of ‗reified
social functions’ that seem to exist over and above the individual.
Exchange as a crucial instance of
interaction and sociation
• Money is the reification of exchange among people, the embodiment of a pure
function. This pure form of the exchange relationship is only possible on the
basis—trust. Without the general trust that people have in each other, society
itself would disintegrate. Relationships itself becomes the precondition for the
constitution and continuation of society.
• The social relationships that constitute society not only exist in space as a web,
labyrinth or network.; they exist in time as fleeting relationships, as permanent
relationships, and sometimes these relationships are in flux.
Exchange as a crucial instance of
interaction and sociation
• Hence, the attraction that a sociologist concerned to demonstrate that society rests
upon social interaction and forms of sociation, money offers a perfect choice to
Simmel that offers and understanding that social reality is in ‗constant motion‘.
• Money embodies the permanency of relationships, in its content it is the most stable,
since it stands at the point of indifference and balance between all other phenomena
in the world‘. It is the spider that spins society‘s web.
• By taking up the phenomenon of the exchange relationship and its embodiment in
money, Simmel provided discussion of the intersecting and interlocking nature of
social relationships but also to pull together a wide variety of diverse relationships
within a totality. Simmel came closest to capturing the totality of modern life.
Exchange as a crucial instance of
interaction and sociation
• Simmel examines a far-reaching feature of money in an economy— one that comes to the
fore in much Marxist discussion of money— namely, the transformation of the quality of
money into its quantity. This arises out of the fact that ‘since money is nothing but the
indifferent means for concrete and infinitely varied purposes, its quantity is its only
important determinant as far as we are concerned’. Since money has no regard for
personal and other qualitative differences, it ‘moves from one personality to the other
without any internal resistance, so that the relations and situations that pertain to it can
easily and adequately adjust to any change’.
Exchange as a crucial instance of
interaction and sociation
• But if money is indifferent to personal qualities and differentiation, what role does it play
in the development of individual freedom? Simmel examines this issue in terms of the
historical development of individual worker’s duties and freedoms, from a slave economy
in which the person is totally obligated, through feudalism in which the person is obliged
to provide labour services or a part of what they produce, to a capitalist economy where
the person receives money payment in exchange for the use of labour power. What
particularly interests Simmel in the early transformation of feudalism is the commutation
of labour services or payment in kind into money payments thereby creating a greater
degree of personal freedom.
Individual and Society
• For Simmel, there is a dynamic or dialectical tension between the individual and society. individuals are free and creative
spirits yet are part of the socialization process.
• Simmel was troubled by this relationship, viewing modern society as freeing the individual from historical and traditional bonds
and creating much greater individual freedom, but with individuals also experiencing a great sense of alienation within the
culture of urban life.
• Simmel notes the deepest problems of modern life derive from the claim of the individual to preserve the autonomy and
individuality of his existence in the face of overwhelming social forces, of external culture, and of the technique of life.
• Simmel makes three assumptions about the individual and society. These are:
• • Individuals are both within and outside society.
• • Individuals are both objects and subjects within networks of communicative interaction.
• Individuals have the impulse to be self-fulfilling and self-completing, that is, they seek an integrated self-concept. Society also
tries to integrate itself (like Durkheim noted), although the effect of this may be in opposition to individual integrity.
Individual and Society
• In the social world, the various forms and styles of interaction are brought into existence by people and the above
assumptions are realized as individuals interact with one another. People are conscious and creative individuals, and the
mind plays a crucial role in this mutual orientation and social interaction.
• This creativity allows for flexibility and freedom on the part of the individual, but at the same time it helps to create the
structures of objective culture that may constrain and stifle this freedom. That is, social interaction becomes regularized and
has patterns to it, and these become forms of association.
• These patterns and forms, regardless of their content, is what sociologists should study. This means that society is not a
separate reality of its own, but "society merely is the name for a number of individuals, connected by interaction. Society
certainly is not a 'substance,' nothing concrete, but an event: it is the function of receiving and affecting the fate and
development of one individual by the other."
• For Simmel, society is nothing but lived experience, and social forces are not external to, nor necessarily constraining for the
individual, rather it is individuals who reproduce society every living moment through their actions and interactions. Ritzer
notes that Simmel disagreed with Durkheim that "society is a real, material entity" and did not view society as merely a
collection of individuals. Rather, he adopted the position of "society as a set of interactions."
