Economic and monetary ethics with Bernd Villhauer

Aug 8, 2017 by

by Sander Vanherle and Thi Hoang

Why are questions about money intrinsically ethical?

The current economic system is driven primarily according to neoliberal principles, which means that profit is seen as the highest form of validation of success: “If profits are high, you’re clearly doing something right”. But this depends on what you call right of course. The lecture today addressed this issue of what the role of ethics in the current economic and monetary system is, or rather what role it should play.

To address this question, the concept of ethics was first defined. Ethics is the study of principles relating to right and wrong conduct (behaviour): Ethics deals with what we believe (and what we should believe) to be good or bad. It also deals with the moral obligations that those beliefs imply. Ethics therefore involves rules for deciding what is right or wrong and the code of conduct. But why are questions regarding money even related to ethics in the first place? First of all, money shapes our conduct. The concept of money is a social construct,  built on the premise that money is based on trust. You have to trust the other person to value money in the same way as you do. Furthermore, money, to some extent, represents  power and is a key element of all economic activities. Money is therefore a way of controlling resources, the labour force, and even to a certain extent legislation.

Are our monetary systems based on the “freedom” principles?

In the sphere of ethics, a central aspect relates to the possibility of making your own choices – or in other words, having certain “freedoms”. In monetary terms, this would mean the ability to choose your own (or at least in a community or certain group of people) monetary currency/system. According to Villhauer, there are two types of freedom related to money: quantitative freedom and qualitative freedom. The former refers to having “more opportunities and independence from limits and restraints”, e.g. you have more freedom if you’re able to choose out of 100 similar cars than out of 10 similar cars, whereas the latter talks about having “better opportunities and empowerment for changes and life models”, e.g. you’re better off if you can afford to choose from a variety of different lifestyles, career paths or hobbies (Villhauer). In the current monetary system, “freedom” is rather conditional: money only brings “freedom” to those doing well on the labour/ trade market (within the market) – those who have high purchasing power, yet constraining those who’re failing or outside of it. Thus arose an interesting question:  “Doesn’t money actually inhibit our freedom, both the quantitative and qualitative ones?” – which could be seen as the following: we are “conditionally free” within the market system but not free from it.

Money projects for social responsibility

There are several money projects which have emerged recently, such as “regional money” (a regional currency, based on a certain, commonly agreed understanding of freedom),  “private money” (this idea was particularly supported by the Austrian-British economist F. A. Hayek, arguing that because money was created by the markets, not by the governments or the state, we should give people the opportunity to create their own money), “money for the common good”, as well as “virtual money/ cryptocurrencies” (e.g. bitcoin). Given that issues about money are inherently ethical as discussed above, all of the aforementioned money projects’ respective rationales, implications and decisions are philosophical in principle. Finally, adding to the philosophical discourse/ view on money, another worth-contemplating question arose “do we need a global currency that is free from national jurisdictions or states’ control?”. The question is left unanswered and you’re free to choose your own answer(s) and perspective(s) on this. After all, it is a philosophical and an ethical matter.