WEBVTT NOTE Money and Philosophy 1 00:00:00.000 --> 00:00:07.840 My topic is money and philosophy. What I thought I'd do is talk about six philosophers and 2 00:00:07.840 --> 00:00:13.960 what they've had to say on money. The first one was one of the greatest of all philosophers, 3 00:00:13.960 --> 00:00:20.720 Aristotle. Aristotle is interesting. Unlike some of the other ancient Greeks, we know something 4 00:00:20.720 --> 00:00:29.800 about his life. On a lot of the ancient Greeks, we don't. For example, on Homer, we know nothing 5 00:00:29.800 --> 00:00:36.480 about Homer's Life, which led Stephen Leacock to say that the Iliad wasn't written by Homer 6 00:00:36.480 --> 00:00:49.480 but by another Greek poet of the same name. When I once told that story to late Robert 7 00:00:49.480 --> 00:00:59.080 Nozick, his immediate comment was, Leacock didn't say that. 8 00:00:59.080 --> 00:01:04.640 Aristotle discusses money in book one of the politics. 9 00:01:04.640 --> 00:01:11.320 What he says, he asks the question, why do we have money? 10 00:01:11.320 --> 00:01:14.160 What's the purpose of money? 11 00:01:14.160 --> 00:01:21.940 What he says is that in order for an exchange to take place, for an exchange to be just, 12 00:01:21.940 --> 00:01:29.400 there has to be an equality between the two items exchanged, and money enables us to measure 13 00:01:29.400 --> 00:01:36.060 this equality so we can say that each person is getting what he should, each person is 14 00:01:36.060 --> 00:01:40.100 getting the same measure as the other person. 15 00:01:40.100 --> 00:01:50.100 Now, we can see right away there is a big problem. This is actually completely false ideas we learn in Austrian economics. 16 00:01:50.100 --> 00:01:58.100 If you imagine an exchange taking place, suppose I'm exchanging, say, my apple for your orange, 17 00:01:58.100 --> 00:02:06.100 we wouldn't make the exchange unless each of us valued what he was getting more than he was giving up. 18 00:02:06.100 --> 00:02:12.900 So, in an exchange, there isn't an equality, but there's a double inequality. 19 00:02:12.900 --> 00:02:22.600 In this statement that Aristotle made, that in an exchange, there's a measure, there's an equality that must take place. 20 00:02:22.600 --> 00:02:27.900 This is a fallacy that really bedeviled much of economics. 21 00:02:27.900 --> 00:02:35.200 This is the basis of Karl Marx's famous labor theory of value, that there has to be... 22 00:02:35.200 --> 00:02:39.600 Mark says since there has to be an equality in the exchange, he's trying to figure out 23 00:02:39.600 --> 00:02:44.680 what does the equality, what does this identity consist of, and he says it's measured by labor 24 00:02:44.680 --> 00:02:45.680 hours. 25 00:02:45.680 --> 00:02:54.600 So Aristotle really got the study of money off onto the wrong foot by making this statement 26 00:02:54.600 --> 00:02:59.760 that the exchange involves an equality that it's measuring. 27 00:02:59.760 --> 00:03:09.760 Originally, this wasn't the only problem in the short treatment that Aerosol gives to money in book one of the politics. 28 00:03:09.760 --> 00:03:20.760 He also says, he asked, well, what is the purpose of money? It's to enable exchanges to take place. 29 00:03:20.760 --> 00:03:22.760 That seems reasonable enough. 30 00:03:22.760 --> 00:03:30.600 And he says, well, if that's right, then we shouldn't have buy and sell money, because 31 00:03:30.600 --> 00:03:38.520 money is what's used to buy and sell commodities, so money itself can't be treated as a commodity. 32 00:03:38.520 --> 00:03:44.400 I guess he took seriously the joke that people sometimes say, money isn't everything, it's 33 00:03:44.400 --> 00:03:47.200 what you use to buy everything else. 34 00:03:47.200 --> 00:03:53.600 He thought that was, since money is used to buy, is what you use to buy other things, 35 00:03:53.600 --> 00:03:57.640 it itself shouldn't be exchanged. 36 00:03:57.640 --> 00:04:07.840 He thought also that when you accumulate money in a household so you can buy various goods, 37 00:04:07.840 --> 00:04:16.320 you don't have to just make your purchase immediately. 38 00:04:16.320 --> 00:04:23.000 You can accumulate a little bit of money in a household to get more goods, but you shouldn't 39 00:04:23.000 --> 00:04:28.520 accumulate a whole lot of money because, again, this would be going against the purpose of 40 00:04:28.520 --> 00:04:29.520 money. 41 00:04:29.520 --> 00:04:37.920 If you just amassed an enormous amount of money, this would be to no purpose. 42 00:04:37.920 --> 00:04:40.240 You would just be guilty of greed. 43 00:04:40.240 --> 00:04:52.240 This is called pleonexia, you're greedy, you're not really doing what the function of money should be. 44 00:04:52.240 --> 00:05:02.240 By doing that, what you should do is just get enough goods for what you need for your immediate household. 45 00:05:02.240 --> 00:05:12.240 Now, Aristotle, although he was the tutor of Alexander the Great, he tended in his treatment of politics to look back on the past. 46 00:05:12.240 --> 00:05:29.240 He was interested in the small city-states. Even though his pupil became the head of a great empire, he wasn't too interested in larger types of government than the small city-states. 47 00:05:29.240 --> 00:05:37.240 So he thought that just what you need for small amounts of consumption and production is really enough. 48 00:05:37.240 --> 00:05:40.240 You shouldn't have money for more than that. 49 00:05:40.240 --> 00:05:45.240 So he has, again, he has a kind of a very limited view of money's function. 50 00:05:45.240 --> 00:05:52.240 He says it's only we need money to do the measure of equality and you shouldn't accumulate too much of it. 51 00:05:52.240 --> 00:05:57.240 And also you shouldn't buy it and sell it as if it were a commodity 52 00:05:57.240 --> 00:06:18.240 The next philosopher I want to discuss is Thomas Aquinas, who accepted a good deal of what Aristotle thought. 53 00:06:18.240 --> 00:06:22.240 Aquinas was probably the greatest philosopher of the Middle Ages. 54 00:06:22.240 --> 00:06:26.240 He has one other distinction among great philosophers. 55 00:06:26.240 --> 00:06:31.800 He was the heaviest of all the great philosophers. 56 00:06:31.800 --> 00:06:38.960 In fact, the story is that when he celebrated mass, they had to have part of the altar cut 57 00:06:38.960 --> 00:06:43.920 out so that he would be able to kneel down. 58 00:06:43.920 --> 00:06:49.480 I think his only rival in heavy philosophy was David Hume, but he wasn't in Aquinas's 59 00:06:49.480 --> 00:06:53.040 class. 60 00:06:53.040 --> 00:07:23.040 Aquinas discusses interest, as you know in the Catholic Church at that time prohibited interest or usury as they called it, now usury sometimes today when we talk about usury we mean excessive rates of interest, like suppose I sometimes say I borrow $500 from you and you make me pay back 61 00:07:23.040 --> 00:07:30.680 $5,000, this would be considered usury today. But as it was used in the Middle Ages, the 62 00:07:30.680 --> 00:07:39.360 term just meant any rate of interest on money. It would be alright to have a rate of return 63 00:07:39.360 --> 00:07:44.840 for a productive investment if you thought you were going to get some kind of, you were 64 00:07:44.840 --> 00:07:50.240 taking some kind of risk on the investment. That would be alright. But if you just lent 65 00:07:50.240 --> 00:07:57.040 Money for just for consumption, this wouldn't be acceptable. This would be considered usury 66 00:07:57.040 --> 00:08:03.380 if you wanted a rate of interest. Now there were ways of getting around that, like one 67 00:08:03.380 --> 00:08:09.020 that I thought is kind of a very tricky way was called a mohatric contract. This would 68 00:08:09.020 --> 00:08:19.020 be something like this. Supposing you wanted to ask me for a loan of a thousand dollars 69 00:08:19.020 --> 00:08:28.380 and I want you to pay 20% interest, so I want $1,200 at the end of the year, so I can't 70 00:08:28.380 --> 00:08:35.860 do that because that would be usury, that's interest, but how could I get around that? 71 00:08:35.860 --> 00:08:47.260 Well, one way, suppose I say something like this, I'll sell you this pen I have for $1,200, 72 00:08:47.260 --> 00:09:02.260 But you don't have to pay me right away. You can pay me the $1,200 a year from now. Now, I'll also buy the pen back from you right away for $1,000. 73 00:09:02.260 --> 00:09:13.260 So this is one way people sometimes had of getting around the Prohibition on Interest, but that was also condemned by the Church, that kind of contract. 74 00:09:13.260 --> 00:09:20.460 And what Aquinas is very much in favor of this prohibition of usury, and what he says 75 00:09:20.460 --> 00:09:29.940 is he has an interesting argument in the Summa Theologica for this, he said in some goods 76 00:09:29.940 --> 00:09:38.220 it doesn't make sense to distinguish between the good itself and the use of the good. 77 00:09:38.220 --> 00:09:47.260 For example, supposing you borrow a bottle of wine from someone, it wouldn't make sense 78 00:09:47.260 --> 00:09:57.620 to say that the person has to return the same bottle of wine to you and also pay a fee for 79 00:09:57.620 --> 00:10:03.420 using the wine because there's no distinction between the wine and the consumption of the 80 00:10:03.420 --> 00:10:05.020 wine. 81 00:10:05.020 --> 00:10:11.300 In some goods there is, for example, I could rent a house from you and the house would 82 00:10:11.300 --> 00:10:17.880 still be there after I used it unless I was a rather bad tenant. 83 00:10:17.880 --> 00:10:24.700 So it would make sense there to distinguish between the use and the actual item. 84 00:10:24.700 --> 00:10:30.740 But Aquinas said it doesn't make sense to distinguish between the use of money and the 85 00:10:30.740 --> 00:10:34.620 money itself because money is being spent. 86 00:10:34.620 --> 00:10:45.060 There's no distinction there, so if you charge a fee both for using the money, the person 87 00:10:45.060 --> 00:10:50.820 who's hiring the money is using the money, and then insist on getting not only that, 88 00:10:50.820 --> 00:10:57.620 but the money itself, you're charging double, isn't this obviously unfair, you're charging 89 00:10:57.620 --> 00:11:05.340 And not only for the use of the money for the person spending the money, but you want 90 00:11:05.340 --> 00:11:12.420 the whole money back also. 91 00:11:12.420 --> 00:11:20.080 What is the basic problem with this argument is that Aquinas is assuming that, supposing 92 00:11:20.080 --> 00:11:24.620 you just said, no, I'm not charging for the use of the money separately, I'm just 93 00:11:24.620 --> 00:11:38.340 Charging a fee. I just want a fee for the money itself. It isn't a double charge. It's just I want more money back than what I got when I lent the money in the first place. 94 00:11:38.340 --> 00:11:49.300 Aquinas is thinking that since I'm getting back the same amount of money as I lent out, that's all I could ask for. 95 00:11:49.300 --> 00:11:56.180 If there weren't this kind of double counting, then I would just be getting back the same amount of money. 96 00:11:56.180 --> 00:12:04.780 But he hasn't taken account of the fact that money now and money a year from now are two different goods. 97 00:12:04.780 --> 00:12:16.740 He's neglected the fact of time preference that we prefer to have any good now to the same good in the future. 98 00:12:16.740 --> 00:12:24.060 This is, as Mises points out, this is a basic category of human action, time preference. 99 00:12:24.060 --> 00:12:29.420 If we didn't prefer goods now to the future, it would be hard to explain why there's any 100 00:12:29.420 --> 00:12:31.180 consumption at all. 101 00:12:31.180 --> 00:12:37.780 So what Aquinas has done is to really neglect this. 102 00:12:37.780 --> 00:12:39.980 He hasn't taken account of time preference. 103 00:12:39.980 --> 00:12:47.700 He's just thought, well, because the goods are physically the same good, it's the same 104 00:12:47.700 --> 00:12:54.420 money that I've loaned out that I'm getting in return, then if there's any additional 105 00:12:54.420 --> 00:12:57.780 charge it must be for something else. 106 00:12:57.780 --> 00:13:00.080 It must be for the use of the good. 107 00:13:00.080 --> 00:13:05.420 So he's thinking, well, then this means there's this distinction between, we're assuming there's 108 00:13:05.420 --> 00:13:09.780 a distinction between use of the good and the good itself, but he says there isn't such 109 00:13:09.780 --> 00:13:15.780 Such a distinction, therefore, interest isn't all right. As you would expect from Aquinas, 110 00:13:15.780 --> 00:13:23.780 it's a very complex, very well-reasoned argument, but it's based on a false factual premise, 111 00:13:23.780 --> 00:13:32.180 namely that money now is the same good as money in the future. Now, the two philosophers 112 00:13:32.180 --> 00:13:42.740 As I mentioned, first, the Aristotle and Quinus are ones, I think, who had fundamentally mistaken views about money. 113 00:13:42.740 --> 00:13:50.980 But the next philosopher, again, we're skipping now to the 17th century, was somewhat better. 114 00:13:50.980 --> 00:14:00.940 This is John Locke, and I want to discuss some things about the, he said, about money in the Second Treatise on Government. 115 00:14:00.940 --> 00:14:07.840 I'm sorry, Walter Block told me I should tell a joke every few minutes, but I don't have 116 00:14:07.840 --> 00:14:18.840 any good John Locke jokes. I'm sorry. I suppose there are funny incidents in his life, I suppose. 117 00:14:18.840 --> 00:14:24.820 Isaac Newton got very angry with Locke once. He thought that Locke was trying to get him 118 00:14:24.820 --> 00:14:31.340 I'm involved with women and he broke off with Locke for several years because of that, but 119 00:14:31.340 --> 00:14:35.780 that's the best I can come up with on him. 120 00:14:35.780 --> 00:14:41.460 Now, the second treatise, incidentally, sometimes it was published in 1690. 121 00:14:41.460 --> 00:14:47.760 Some people thought, it used to be thought that Locke wrote this as a justification for 122 00:14:47.760 --> 00:14:52.420 the English Glorious Revolution of 1688, but that isn't right. 123 00:14:52.420 --> 00:15:02.920 He actually wrote the book earlier in the 1680s. It was published in 1690, but it had been written years before. 124 00:15:02.920 --> 00:15:11.920 Now what Locke does in the Second Treatise, he goes against something that Aristotle had said. 125 00:15:11.920 --> 00:15:17.920 You remember, I mentioned Aristotle said that we shouldn't accumulate a lot of money. 126 00:15:17.920 --> 00:15:28.360 It's alright to have a little bit of money around if we needed it, but we should basically 127 00:15:28.360 --> 00:15:39.240 just use money to purchase household goods. 128 00:15:39.240 --> 00:15:40.880 Locke disagrees with this. 129 00:15:40.880 --> 00:15:49.120 Locke, remember his theory of property, he said we can acquire property by mixing our 130 00:15:49.120 --> 00:15:58.520 labor with unowned land, provided we leave as much good for others, this is the famous 131 00:15:58.520 --> 00:16:08.440 Lockean provisal, and he said we can't accumulate, we can't accumulate property and then just 132 00:16:08.440 --> 00:16:17.480 let it spoil. But he says once money has been introduced, once we have a money economy, 133 00:16:17.480 --> 00:16:26.680 then the so-called proviso lapses because money enables us to be much more prosperous 134 00:16:26.680 --> 00:16:33.280 than we would be without it. So people are automatically much better off in a money economy 135 00:16:33.280 --> 00:16:37.960 than they would be without it. So we don't have to worry about whether there's as much 136 00:16:37.960 --> 00:16:46.400 is good left over for others because once we have money then everybody is better off so 137 00:16:46.400 --> 00:16:53.240 we don't have to worry about, we can accumulate as much property as we want without worrying 138 00:16:53.240 --> 00:17:01.880 about spoiling property or others not getting enough because money enables us to be prosperous. 139 00:17:01.880 --> 00:17:08.700 This is an insight that most people would think pretty obvious today, that we can be much 140 00:17:08.700 --> 00:17:15.780 more prosperous with money than without money, and a large economy couldn't function without 141 00:17:15.780 --> 00:17:16.780 money. 142 00:17:16.780 --> 00:17:23.200 But before Locke, this hadn't been seen by very many people, at least not by very many 143 00:17:23.200 --> 00:17:24.200 philosophers. 144 00:17:24.200 --> 00:17:30.080 Locke was one of the first ones who had this insight, and he's going against Aristotle 145 00:17:30.080 --> 00:17:37.800 and really the whole medieval tradition which said that we should be very strictly limited in accumulating money. 146 00:17:37.800 --> 00:17:45.840 Locke said, no, it's all right to accumulate and even desirable to accumulate as much money as we can 147 00:17:45.840 --> 00:17:54.480 because this is what is enabling us to do well, to prosper as a society. 148 00:17:54.480 --> 00:18:02.080 Unfortunately, not everything in Locke was that insightful. 149 00:18:02.080 --> 00:18:06.000 He had the view that how does money arise? 150 00:18:06.000 --> 00:18:11.840 He thought that money arises just by people agreeing on money. 151 00:18:11.840 --> 00:18:13.360 He thought this was a convention. 152 00:18:13.360 --> 00:18:19.160 You remember in his political theory, he thought that government arises by everyone getting 153 00:18:19.160 --> 00:18:21.620 into an original agreement. 154 00:18:21.620 --> 00:18:36.820 in a Society First has a unanimous agreement to get together and then the majority of that all those people, the people who unanimously agree, will then agree to set up a government. 155 00:18:36.820 --> 00:18:50.820 It doesn't have to be a democracy, as he points out, I think it's section 132 of the Second Treaty, so they could establish a different kind of government, a monarchy and an oligarchy if they want, but it's by majority rule. 156 00:18:50.820 --> 00:19:04.820 So similarly, his view of money is that people just get together by a convention and they'll just agree to accept a certain commodity as money, and so that's all there is to it. 157 00:19:04.820 --> 00:19:21.820 This is a view that goes against Austrian economics in which Carl Menger and Ludwig von Mises show that money has to originate as a commodity. 158 00:19:21.820 --> 00:19:28.820 It can't have money originate by convention. 159 00:19:28.820 --> 00:19:54.820 Now, I now want to skip a few more centuries—this is a very fast clip through history of philosophy—to a German philosopher, Georg Simmel, S-I-M-M-E-L, who wrote an important book, The Philosophy of Money, that came out in 1900. 160 00:19:54.820 --> 00:19:59.380 This is a very significant book. 161 00:19:59.380 --> 00:20:05.620 Mises in Theory of Money and Credit cites this book, I think, on three occasions. 162 00:20:05.620 --> 00:20:10.020 Unfortunately, it's been translated into English, but unfortunately, 163 00:20:10.020 --> 00:20:16.660 Zimmel wrote in an extremely complicated style that's very hard to read. 164 00:20:16.660 --> 00:20:21.380 When I read the book, when I looked at the book, it reminded me of 165 00:20:21.380 --> 00:20:28.180 Wolcott Gibbs' comment on Time Magazine, when Time Magazine originated in the thirties. 166 00:20:28.180 --> 00:20:33.180 This isn't true today, but when Time Magazine got started, there was a very, it had a very 167 00:20:33.180 --> 00:20:36.860 distinctive style, there was a Time Magazine style. 168 00:20:36.860 --> 00:20:46.180 Wolcott Gibbs said of this, he said, backwards ran sentences until reeled the mind. 169 00:20:46.180 --> 00:20:51.500 I thought of that when I was reading Zimmel. He's really very hard to understand. He was 170 00:20:51.500 --> 00:20:57.300 also, besides being a philosopher, he was one of the pioneers in sociology. Now what 171 00:20:57.300 --> 00:21:05.420 he really, in a sense, developed one of Locke's insights. Remember I said that Locke said 172 00:21:05.420 --> 00:21:16.020 that by having money we were much more prosperous than we would be without it. What Zimmel 173 00:21:16.020 --> 00:21:23.020 He also asked, why is this true? What is the big advantage of money? 174 00:21:23.020 --> 00:21:31.020 He says that it enables rational calculation to take place. 175 00:21:31.020 --> 00:21:40.020 For example, we have in an economy, there are various means of production that can be used in different uses. 176 00:21:40.020 --> 00:21:50.020 We can use steel to build all sorts of things, or how do we know what's the best way to use the steel? 177 00:21:50.020 --> 00:21:57.020 Well, Simmel says that if we have money, we can then just calculate profit and loss, 178 00:21:57.020 --> 00:22:06.020 and we can determine what's the most profitable use to put anything, any type of production, any means of production into. 179 00:22:06.020 --> 00:22:10.020 The Profit and Loss Statement 180 00:22:36.020 --> 00:22:43.900 The basic points in Mises' calculation argument refuting the possibility of socialism, Mises 181 00:22:43.900 --> 00:22:50.860 said it's only with a free market that we can have economic calculation. 182 00:22:50.860 --> 00:22:57.200 We need this calculation as a basic, the economy couldn't function without that. 183 00:22:57.200 --> 00:23:04.820 We wouldn't know how to put the resources into different, the most productive use without 184 00:23:04.820 --> 00:23:10.340 a Means of Calculation, and that only the free market can do this. 185 00:23:10.340 --> 00:23:16.220 Now, Zimmel didn't apply this argument to socialism in the way that Mises did, but he 186 00:23:16.220 --> 00:23:24.740 had the fundamental insight that it's money that makes rational calculation possible. 187 00:23:24.740 --> 00:23:26.540 Without money, we couldn't function. 188 00:23:26.540 --> 00:23:39.740 Now, he also had other points. He said that, again, like Menger, he said that money has to originate as a commodity. 189 00:23:39.740 --> 00:23:45.140 He didn't go into a great deal of detail on this, but he said that money has to originate as a commodity. 190 00:23:45.140 --> 00:23:51.140 But, and this is a point that Mises quotes him favorably in The Theory of Money and Credit, 191 00:23:51.140 --> 00:24:03.140 that the money can't be explained just by the basis of its use as a commodity for non-monetary purposes. 192 00:24:03.140 --> 00:24:09.140 You have to come up with, you have to add some kind of explanation for its monetary use also, 193 00:24:09.140 --> 00:24:15.140 because otherwise it would just be, say, explaining that it's just another commodity. 194 00:24:15.140 --> 00:24:19.140 You have to explain what's different about money from other commodities, 195 00:24:19.140 --> 00:24:25.140 And this is just the basic problem of explaining the value of money. 196 00:24:25.140 --> 00:24:32.140 Now, I want to turn to two more contemporary philosophers. 197 00:24:32.140 --> 00:24:42.140 One of these is Elizabeth Anscombe, who was a professor, taught at Oxford, and then was a professor at Cambridge. 198 00:24:42.140 --> 00:24:50.140 She was a very formidable philosopher. She was Wittgenstein's student and literary executor. 199 00:24:50.140 --> 00:25:01.140 She was extremely tough in argument. I remember when I heard her lecture, once someone asked her a question, a critical question. 200 00:25:01.140 --> 00:25:08.140 She just stared at the person and said, but why did you say that? Why? She just looked right at them. 201 00:25:08.140 --> 00:25:14.140 I thought to myself, well, I'm glad I wasn't asking that question. 202 00:25:14.140 --> 00:25:19.140 She was, as I say, an extremely formidable debater. 203 00:25:19.140 --> 00:25:28.140 There's a famous story that she defeated C.S. Lewis at a famous debate in Oxford in 1948. 204 00:25:28.140 --> 00:25:34.140 He had to revise one of his main arguments because she had been so critical. 205 00:25:34.140 --> 00:26:03.140 Now, what she did, she was very familiar with Aquinas' argument against interest, and she thought this argument was correct, but she was familiar with the counter-argument that I mentioned, namely that Aquinas neglected the notion of time preference, and she tried very briefly to reply to that. 206 00:26:03.140 --> 00:26:09.860 Remember, the argument is that, going against Aquinas, is that money now isn't the same 207 00:26:09.860 --> 00:26:12.420 good as money in the future. 208 00:26:12.420 --> 00:26:20.340 So it makes sense to say, why is there a different price for money now, rather than money in 209 00:26:20.340 --> 00:26:21.340 the future? 210 00:26:21.340 --> 00:26:23.560 They don't have to be the same price. 211 00:26:23.560 --> 00:26:30.940 You don't have an argument that there's some difficulty if someone wants more for 212 00:26:30.940 --> 00:26:35.740 lending money now, and he would want more in the future. 213 00:26:35.740 --> 00:26:42.540 So she said, well, isn't it always true when we buy something, we're getting it now? 214 00:26:42.540 --> 00:26:46.740 Say if I go down to the grocery and buy a loaf of bread, I'm getting it now. 215 00:26:46.740 --> 00:26:51.900 She doesn't think this is, she says, isn't it, this is always true. 216 00:26:51.900 --> 00:26:57.640 What is supposed to be so, supposed to be so special about lending money? 217 00:26:57.640 --> 00:26:59.580 But then she seems to withdraw this point. 218 00:26:59.580 --> 00:27:29.580 She said, well, I suppose, she says, it would make sense if someone wants a discount for giving something now and just getting it back in the future, so she seems to have withdrawn what she said in the first place, which is a bit confusing, but then she said the problem with the argument is that the notion of wanting a positive return for something isn't something 219 00:27:29.580 --> 00:27:34.580 It's just something that's a necessary category of action. 220 00:27:34.580 --> 00:27:41.580 It's just something that exists only because there's a market in the first place. 221 00:27:41.580 --> 00:27:47.580 She thinks it would be perfectly rational, say, depending on the custom of the society, 222 00:27:47.580 --> 00:27:52.580 for people to spend money in certain kinds of things like buying a house, 223 00:27:52.580 --> 00:27:57.580 even though they knew that they'd be losing money by doing this. 224 00:27:57.580 --> 00:28:06.080 She thinks that it might just be the custom in a particular society to invest in certain things that would lose money. 225 00:28:06.080 --> 00:28:16.280 So she says there's nothing special, there isn't any general category of rationality where you should always get a return. 226 00:28:16.280 --> 00:28:19.580 It could be the custom that you should lose money. 227 00:28:19.580 --> 00:28:38.580 So it's only because of the market that we have the notion of getting positive return for things, but I think she's neglected the point that Mises makes that we really couldn't explain how we can consume it all without time preference. 228 00:28:38.580 --> 00:28:47.580 It isn't just a historically determined phenomenon that's just found in market societies and not others. It's a universal phenomenon. 229 00:28:47.580 --> 00:29:05.580 And the last philosopher I want to mention is, unlike the other five who are still living, is John Searle, who's a specialist in philosophy of mind, he's teaching at Berkeley, I think he's near retirement. 230 00:29:05.580 --> 00:29:17.580 He's famous. He'll come up very often with simple arguments that go against nearly what all the other philosophers in his area are saying. 231 00:29:17.580 --> 00:29:24.580 Nozick once said, well, don't pay too much attention to Searle because he's always wrong. 232 00:29:24.580 --> 00:29:27.580 But I don't think that's true. He's quite good in certain areas. 233 00:29:27.580 --> 00:29:33.580 But what he says about money, he addresses this in a book called The Construction of Social Reality. 234 00:29:33.580 --> 00:29:41.940 and he's very impressed by one unusual, seemingly unusual fact. How is it that, 235 00:29:41.940 --> 00:29:48.160 supposing I want to buy something, say, I wanted to buy a car, how is it the person 236 00:29:48.160 --> 00:29:54.040 will give me the car just if I give him a piece of paper, doesn't it? Have you 237 00:29:54.040 --> 00:29:59.220 supposed I just took out a piece of paper, wrote 50,000 on it? Why would the 238 00:29:59.220 --> 00:30:01.220 The Theory of Money and Credit 239 00:30:29.220 --> 00:30:37.220 and the theme of mutual intentions. Everyone knows that everyone else knows that he will accept this money. 240 00:30:37.220 --> 00:30:43.220 He's very interested in this intention. That's one of his main topics. 241 00:30:43.220 --> 00:30:50.220 But unfortunately, he gets from this the conclusion that money is purely conventional. 242 00:30:50.220 --> 00:30:58.220 In doing that, he's neglected the basic point made by the Austrians that money could only originate as a commodity 243 00:30:58.220 --> 00:31:12.220 Because otherwise we couldn't explain why the prices of goods would be what they are if money were purely conventional and we wouldn't know what the prices of the various goods would be. 244 00:31:12.220 --> 00:31:27.220 So I've given what six philosophers have said about money and if you concluded from this that you don't need what most philosophers have said about money is wrong, 245 00:31:27.220 --> 00:31:30.220 I think you would have gotten the point of this lecture. 246 00:31:30.220 --> 00:31:32.220 Thanks very much.