Last month I wrote about what caused the banking collapses of 2008. This month I would like to look behind the events to think a little about what money itself actually is. The dictionary definitions still tend to focus on coins and banknotes but we all know that most of the money in the world, indeed most of our own money, does not exist in this form. The “money” that we “have” is mostly a record in a computer owner by our bank. When we deposit money (often by means of an electronic transfer) our account balance is updates by no coins or banknotes are involved.
What this record (our account balance) amounts to is an IOU from our bank. It is a note that we are owed money, rather than anything more solid and substantial. If we want some “actual” money, some cash, coins or banknotes, our bank checks its records to see if it either owes us the money (our account is in credit) or is willing to lend us the money (our overdraft limit) and if so we can make our withdrawal.
And what are the coins and banknotes themselves? The metal or paper in them is not “worth” anything like the value that they represent. Their face value is set not by anything inherent in them but by the word of the Bank of England. The law says that people have to accept them and so they do. Someone being given such a note is confident that they will be able to pass it on to somebody else (for example a bank) and so they are happy to sell whatever it is they are selling in return for one. Ultimately the value of money rests on this willingness rather than anything inherent in the money itself, and this willingness rests on the confidence people have in the UK government.
In short money exists because people believe in it and for as long as people believe in it and this belief relies on their view of the country’s government. Money, in its current form, exists mostly in computers and in people’s heads.
At the same time this belief is possible because of the long history of the existence of money and on our personal experience of getting and spending it throughout our lives. It is not something just made up, a thing of the imagination. Societies have been using various forms of money for a very long time, as I was reminded when looking at bronze axe heads in the museum at Quimper in Brittany this summer. They had a large number of bronze “axe heads” which had been discovered in hoards. It is generally accepted that by about 1000 BC objects like these, which would not have functioned as actual axes, were used as money across Europe.
From those early days, 3000 years ago, money has developed and evolved but all societies have used it. It is a deeply settled part of our social life. Human beings have grown up with money. Particular forms of money, like our paper (soon to be plastic) notes and our electronic records can be made real through our belief because they are at the end of a long process by which we’ve got used to “money” having less and less easily touched and weighed forms, from bronze axe heads to gold and silver coins. From coins to pieces of paper that represented piles of coin. From these notes to notes that represent nothing except the word of a central bank and finally to computer records with no physical form at all.
For those of us who proclaim our belief in God this might give us cause to stop and think. Money itself is definitely a real and well proven social reality. Many societies have had money in a range of forms and without it economic life would be impossible. In each of these societies the reality of their money has depended on the belief in it of the members of that society, which in turn depended on their belief in something else, whether that was the value of metal, the trustworthiness of their fellows, the solidity of banks or the power of their government. What they thought they believed in was always less important than their belief. And behind it all stood the great social fact of money itself, about which they may never have thought.
I think God might be a little like this. The God we believe in is certain to be less, less good, less powerful, less loving, less complicated, than God himself. But that shouldn’t worry us too much. We don’t understand God, we don’t even understand money. That doesn’t stop him (or it) being real, even if what we believe in is less real than God himself is. We can spend money even though its existence might become doubtful to us if we really thought about it. Our lives and our fate dependson God and we can pray to and worship him, even if the God we think we believe in (who is less than the God that exists) might seem doubtful to us.