How Does Money Work?

Money works not only as a medium of exchange, but also significantly influences our social lives. Earmarking money to different household expense groups, e.g., draws focus on our social ties and lets us make sense of money and spending. We differentiate money by each sum having different meanings and tasks to perform for us.

The sections which follow explain it in more detail.

This compartmentalization of money in our minds allows us to perceive specific sums differently. It also lets us form different relationships with these individual sums.

Money earmarked for the daughter’s school fees, e.g., has very different meanings for the chief earner of the household than that allocated to pay the rent.

Earmarking focuses on social ties that shape how people make sense of money and spending. It also puts us in a web of meaningful relationships. Various sums of money serve to strengthen some relationships while they may also threaten others.

Money differentiation doesn’t exist only in households but also in the corporate sphere. An employer gives compensation to employees categorized as wages, annual salaries, and bonuses.

Clearly, daily wages show an employer-employee relationship different from the annual salary shows. Daily wages may work to keep the employee, while the salary is a badge that displays his market worth.

Money as a neutral entity is fungible but loses its fungibility in peculiar circumstances. When you earmark it for different purposes, it has varied emotional value. Another instance is when you have lots of resources and spend leisurely, it has little value.

Money also has symbolic value. The Earned Income Tax Credit (EITC) refund has special meanings for people. The money refunded to low-income individuals is a way to fulfilling their middle-class aspirations.

Money doesn’t work the same way for everyone as a fungible token showing title transfer. Its meanings change when it changes hands.

Money fuels greed and corrupts humans from a moral standpoint. It also motivates many to involve in philanthropic activities, saving precious lives. We fear its role in creating a soulless market that may dissolve social solidarity and violate ethical principles.

Money is undoubtedly a legal instrument that states create. But it goes beyond that. Many forms of money are not the state’s creation. These include

The creation of modern money is not the result of economic expansion but rather the intermingling of cultural, political, and legal forces and institutions. Sufficient evidence is the issuance of a Euro coin in Belgium with marks of Waterloo on it. France objected to it, and it sparked a huge controversy.

Money can be an instrument that sparks debates, conflicts, and cultural, political, and social strife alongside its role as a medium of exchange.

When we differentiate between monies, we learn that there are sums of money that corrupt. And others build upon social ties and morality.

Some monies create social justice and some inequalities. We often see markets as obliterating morality. In actual practice, markets largely reinforce moral practices through economic transactions. They allow opportunities to make a living for scores of people.

Money’s damaging effects show in nonmarket contexts such as households and other relations. Practices like the valuation of human life, trade of body parts, and babies taint its role. Such transactions should barely be valued in money but in an emotional detachment that little monetary gains cause.

Money works as an expression of care. Young immigrants from developing countries to advanced countries for work or study, e.g., send money or gifts to their parents. The resourceful parents, in turn, send money to their children abroad for their education, and housing. The value of money in all such transactions isn’t measured in quantity but as an expression of care.

Money is no more coins and currency notes. Now we pay and receive money in varied forms.

As time passes, money creation is moving away from the realm of the state to private institutions.

Virtual currencies, new payment platforms, and robotic advisors are innovations that will depersonalize money. Put simply, new technology will take away emotions from money decisions and base them on hard trends and facts.

Money isn’t only a method of exchange of value, but it is a lot more. And it works in varied ways. It is fungible, but its fungibility is not constant and depends on the context in which we use it.

When we divide the money into different uses by written or mental budgeting, we differentiate one sum from the other. We then assign different values to each lot in our minds.

Money strengthens relations, but at times it also weakens them. In the marketplace, it works to provide opportunities for people to make a living. It also motivates people to indulge in immoral acts.

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