Money (8 page)

An early attempt at simplification and standardisation: a French cartoon of 1795 explaining the merits of the new “metric” system.

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illustration credit 2.1
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Of course, metrology is not static: as the uses to which they are put evolve, so do units of measurement and their standards. What is more, there is feedback in both directions: if practices and techniques give rise to units of measurement, the invention of broader metrological
concepts and the implementation of more consistent standards allow new forms of technological and economic co-operation to flourish. Myriad inconsistent systems of measurement and standards that varied village by village might have been sufficient for an economy of isolated agricultural smallholdings; but the industrial age—the age of machines and of mass production—demanded standardisation, and the burgeoning of international trade and industry demanded common units in the name of efficiency. Today, the need for universal units calibrated to common standards is more acute than ever. In August 2011
The Economist
magazine analysed the origin of the 178 components that make up the Apple iPhone 4: a quarter were from South Korea, a fifth from Taiwan, a tenth from the United States, and other fractions from Japan, China, and a host of European countries.
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Global industrial supply chains—to say nothing of international collaboration in medicine, science, and commerce—would be inconceivable without globally understood units of measurement. None of it could exist if the process crowned by the creation of the SI had not taken place.

So the gradual invention of general-purpose units of measurement was not a mere cosmetic development at all. At any given time, the units of measurement in existence reflect the concepts then available. When fathoms, furlongs, leagues, and hands were originally devised, for example, there simply was no universal concept of linear extension. The fact that dropping a weight to sound the depth of the sea measured fundamentally the same thing as pacing out the distance to the next village did not cross anyone’s mind. In the absence of a universal concept of linear extension, there could hardly be a unit of its measurement. The creation of the SI was therefore the visible and material manifestation of a profound but invisible change in the evolution of human ideas. The process took centuries—probably even millennia. The century of work by the International Bureau of Weights and Measures only put the finishing touches to it. But the 14 October 1960 decision of the General Conference to codify the six basic units of the SI was more than just a practical watershed for any activity that requires co-operation across national borders and the quantification of the physical world. It reflected the success of
an incremental abstraction over the course of history not only from the separate notions of the height of horses and the height of their riders, for example, to the idea of height in general, but from the general ideas of height and length and depth to the universal concept of linear extension. It marked nothing less than a fundamental transition in the concepts that the majority of humanity uses to quantify the physical world. All in all, not a bad day’s work for a faceless international bureaucracy.

The invention of a universally applicable unit of measurement; its central role in knitting together the modern, globalised economy; and its dramatic impact on the development of human thought. Where else is this revolutionary triumvirate to be found? Where else, but in the case of money?

What actually is a dollar? What is a pound or a euro or a yen? Not a dollar or yen bill, that is, or a pound or euro coin—but a dollar, pound, euro or yen, itself? It is tempting to think that these names refer to something physical. It may even be natural to think this when they are inscribed on something physical like a coin—particularly one made of precious metal. The urge may be almost irresistible if there is legislation in place—as there was throughout much of the world in the nineteenth and early twentieth centuries—requiring banks to redeem on demand their dollar, pound, or other notes for specified quantities of gold of a given fineness. Appearances then seemed powerfully to suggest that it was this—a certain weight of precious metal—that “was” a dollar. These appearances were misleading, however. A dollar, whether under a Gold Standard or not, is something that would be intimately familiar to the faceless bureaucrats of the International Bureau of Weights and Measures: it is a unit of measurement—an arbitrary increment on an abstract scale. So like a metre or a kilogram, a dollar itself doesn’t refer to any physical thing at all—even if the length or mass or value of some particular physical thing has been agreed on as its standard. As the great monetary scholar Alfred Mitchell Innes lyrically put it, “[t]he eye has
never seen, nor the hand touched a dollar.”
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Just as the eye has never seen, nor the hand touched, a metre or a kilogram either; even if they have gazed on or gripped a wooden metre ruler or a cast-iron kilo weight.

If the dollar is a unit of measurement, what does it measure? The answer, on the face of it, is simple: value—or, more precisely, economic value. But if that is so, then the story of the evolution of physical units of measurement and the concepts they reflected begs a couple of further questions. If the SI metre is now the single, universal unit of measurement of linear extension, how universal is this concept of economic value—and what is its standard? If, in other words, the mandate of the General Conference on Weights and Measures were to be extended to the social world as well, what would the bureaucrats in Paris find?

They would no doubt expect to discover it in the same state of dreadful backwardness that for centuries obtained in physical metrology. And initially, they would not be disappointed. They would find a great variety of notions of value contending for our attention in our decision-making. We preserve monuments because of their historic value; we admire paintings for their aesthetic value; we don’t cheat or steal because of our moral values; we spurn alcohol and pray five times a day because of our religious values; we treasure our grandmother’s costume jewellery because of its sentimental value. All these are limited-purpose concepts of value—each lord of its own sphere, none sovereign outside it. Like the old physical concepts of the height of a horse, the depth of the sea, and the width of a net, sentimental, aesthetic, and religious value are specific concepts invented in the context of specific activities. And as for the question of standardisation—that would seem to be even less advanced than it was for those antique physical units of measurement. Who, after all, ever heard of an international standard of sentimental value? When it comes to the social reality, it is more or less everyone, let alone every village, for himself. As the saying goes,
de gustibus non est disputandum
—there is no accounting for taste.

Yet just as they were admiring this vast new territory for their endeavours, the bureaucrats would get a nasty shock. For in the midst of this unruly rabble of limited-purpose concepts they would suddenly confront the concept of economic value; and when it comes to generality, the concept of economic value would inspire not only admiration but jealousy amongst the officials. For economic value can be applied not just to things that have a particular physical property—temperature, length, or mass, for example—but, at least in principle, to absolutely anything at all. Goods have economic value; but so do services. The three physical dimensions are no constraint: time is money, after all. Abstract notions are no strangers to monetary evaluation: what price success? Even a solely spiritual existence was no obstacle in the days when people cared about such things: the wages of sin could be readily offset by clerical indulgences whose value was measured, and paid for, in pounds, shillings, and pence. In fact, there seems to be no intrinsic limit to the parts that the concept of economic value can reach. Even human life itself is regularly assigned an economic value by government economists in the cost–benefit analyses that they use to weigh up new laws. In 2010, the U.S. Transportation Department raised its estimate of the value of a human life from $3.5 million to $6.1 million, for example, and thereby tipped the scales in favour of requiring truckers to double the roof strength of their cabins in order to prevent 135 deaths a year.
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The Owner-Operator Independent Drivers Association was outraged. But they were indignant because a lower valuation would have justified less onerous regulation: they were not complaining that you can’t put a price on life. Economic value has attained the last word in universality—without any input from the bureaucrats whatsoever.

Still, even if the bureaucrats found themselves redundant when it came to simplification, surely standardisation would still represent a respectable agenda? After all, the concept of economic value might be uniquely universal, but its standards are still clearly national: the pound in the U.K., the yen in Japan, the euro in the Eurozone. Only the U.S. dollar has serious aspirations to the international applicability
beloved of the General Conference, and even then somewhat patchily. Here, therefore, would be something for the officials to get their teeth into: building agreement on a single, international standard—ideally defined in terms of universal constants found in nature. But here too the bureaucrats would quickly encounter an obstacle. The problem is that there is a fundamental difference between the concept of economic value and the concepts measured by the SI. Economic value is a property of the social world; whereas linear extension, mass, temperature, and so on are properties of physical world. The choice of standard for the measurement of physical concepts is a question of technical efficiency. But the uses to which measurement of the social property of economic value are put are qualitatively quite different; and so the choice of its standard is quite different as well. The choice of standard for the measurement of economic value—the choice of the standard for the monetary unit, in other words—affects not how easy it is to build bridges, but how wealth and income are distributed and who bears economic risks. It is, therefore, not just a technical, but also an ethical question; and the criterion for choosing it is not only which standard unit is efficient, but which is fair. Of course, the determination of what is fair is nothing but politics. And since politics is, in today’s world, essentially a national competence, the standards used for the measurement of economic value—monetary units—are essentially national. If the bureaucrats wished to make an international standard, they would first need to forge an international polity—a task beyond even the International Bureau of Weights and Measures.

Deflated by the fact that economic value is already a universal concept and defeated by the fact that its standards are unresolvably political and national, there would, however, be one contribution that the International Bureau, with their experience of the assembly of the SI, could make: they could tell the history of its evolution. The mighty monetary unit—the degree of economic value—may already have in the social realm the universality that the six units of the SI enjoy in the physical world. But did it not, like they, undergo a transformation over time? If even the now familiar concept of linear
extension once did not exist, can economic value really be any different? Was there a time and a place when there was no concept of universal economic value—when actions were motivated and society organised by traditional, incommensurable, and limited-purpose notions of worth alone?

There was. We have already been there. It was the world before money: Dark Age Greece and ancient Mesopotamia. It is the invention of the concept of universal economic value that was the missing link in the invention of money. It is time to return to the archaic Aegean to find out how that invention occurred.

Technological and cultural sophistication have never been any guarantee of progress. History is full of examples of ancient and advanced civilisations whose reluctance or inability to absorb new ideas has left the field open for more backward nations, less burdened by the weight of existing achievements, to outstrip them. The situation was no different in the ancient world. Mesopotamia had great cities and complex economies, administered by the most advanced and innovative social system of the day—bureaucracy—which optimised efficiency and performance using the cutting-edge social technologies of literacy, numeracy, and accounting. It was hardly likely that these pinnacles of human civilisation had anything to learn from tribes of uncultivated yahoos to the west who clustered together in tiny groups and still organised society on the basis of uncouth tribal institutions dispensed with in Mesopotamia literally millennia previously.

The other way round was a different matter, of course. It was only too clear to the Greeks what enormous practical benefits the adoption of literacy and numeracy could bring. It is therefore no surprise how thoroughly these new technologies were adopted throughout the Greek world once contact with the East was properly re-established. The initial medium of transmission was almost certainly the Phoenicians of the Levant—prodigious sailors and traders with whom the Greeks had extensive contact from the late
Dark Ages. The earliest archaeological evidence for Greek writing is a famous drinking cup inscribed with three simple verses discovered at Ischia in 1954 and dated to between 750 and 700
BC.
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Within a matter of decades, both literacy and numeracy had succeeded in pervading the Greek world, from its easternmost reaches on the Black Sea to the colonies of Sicily and southern Italy in the west.