Money is a shared fiction. Our mechanism for storing and exchanging agreed-upon units of value, a tool so powerful that wars are fought over it, springs entirely from our collective imagination.
Some might find that unnerving. The age-old desire to attach a currency’s value to something earthly, precious and finite is partly founded on a false hope that these tokens, in which we place such faith, have intrinsic value. It’s an understandable instinct, and there’s a strong gold standard argument for curtailing the sovereign’s power to debase people’s savings. But the sense of innate value is just a belief. As with people’s beliefs in other ephemeral concepts – in religion, for example, or in the concept of a nation – the ones most difficult to challenge are those fundamental to society. Indeed, one could argue that if everyone were to acknowledge that money is a fiction, it would cease to function.
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The imaginary nature of money is not a weakness, however; it’s a strength. As Israeli historian Yuval Harari, author of the seminal “Sapiens: A Brief History of Humankind,” explains, our capacity to conceive of and commonly believe in stories is the primary reason why we humans rule the earth, instead of, say, the chimpanzees. It’s what enabled us to organize into communities and, ultimately, to build civilization. The modern world is a direct outcome of our capacity, not just to imagine, but to imagine together.
Now, as a terrifying pandemic forces a retreat from globalization and challenges the foundations of the international capitalist order, society could be in for one of its periodic narrative shifts, a sweeping reimagining of its core tenets. Our idea of money, which…