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This blog will discuss the ideas presented by Dr. Bernd Villhauer in his presentation ‘Money and Moral’ for AEMS Summer School 2021 and will also include the thoughts of us as students regarding the relation between money and its nature and moral considerations.
Money is an institution that has accompanied our civilization for millennia. Be it in the form of tokens used in barter, as metal money in Mesopotamia or as paper money in China, it has facilitated transactions and made trade possible. It has emerged as a medium of exchange and it can be seen as an expression of the importance that a commodity has for the satisfaction of subjective needs. In addition to being a tool for mutual settlement, money shapes the behavior and commitment of people. Such a fundamental institution, deeply intertwined with concepts like values, labor and freedom has an obvious link to morals because those concepts have it as well. As a society, we assign value to money, we exchange labor for it and we even gain certain freedoms by having it.
That’s why other social institutions - like religions - have also expressed prohibitions on certain practices. Islamic finance, for example, does not allow for institutions or individuals to earn interests on loans, so trading of goods and services is practiced instead. There are similar restrictions to usury in Judaism and Christianity. In the last decades, many movements advocating for ethical investments have emerged. This can be seen as a result of concerns about human rights violations and negative environmental impacts, just to mention two.
Prof. Villhauer reflected upon the impact of money on the political sovereignty of the state. After all, some economic problems are often hidden under the guise of political confrontations, the cause of which is money and power struggles in general.
Prof. Villhauer states that “money questions are always ethical questions”. They shape the conduct of people, because money as an institution based on trust and confers power upon the person/organization that has it. It was also stressed during the lecture that economics must be understood from a variety of disciplines like psychology, history, sociology and ethics to solve the most important questions on the basic global problems or study areas of the discipline, namely: debt, interest, accumulation, misallocation and injustices.
Proposed solutions to those problems were also stated during the lecture. Reorganization of capital flows, policy changes in finance, and other measures are key to foster sustainability, justice and peace. Initiatives like social responsibility, shared economies and ethical funds have good chances of helping to build a better society for all.
Financial market growth rates are astounding, with global capital flows having grown 30 times between 1975 and 2000, while world trade roughly quadrupled and gross domestic product (GDP) only doubled. This means that capital flows must grow along with social responsibility and that financial markets should be again coupled to the real economy. Large corporations (from Coca-Cola to GM) must be held accountable for how cash flows are used to maintain the global balance.
Future society might find a way out with a solution to problems similar to those that appeared with the development of cryptocurrencies. New economic booms will hopefully not be accompanied by increased energy consumption. Hopefully, society will find a way to decrease its energy consumption and thus avoid harming the environment.
Most industries pollute nature. If we want to live in a cleaner world, we need to find alternatives to current production processes and implement other solutions. This can be accomplished by taxes on harmful emissions from large industries and transport, stopping deforestation, recycling and reuse of resources. Taxes on harmful emissions should be directed to the restoration of nature and eco-friendly companies should be supported.
Written by: Andrés Angel and Margarita Slesareva
Based on the lecture "Money and moral" by Bernd Villhauer during the AEMS summer school 2021.