To Redeem Metal with Paper: David Hume's Philosophy of Money

Abstract

David Hume's writings on political economy, and on money in particular, constitute only a small portion of his encyclopedic work.1 His stature in histories of economic thought appears correspondingly modest. In particular, Hume is credited by economic historians with having articulated an early version of the self-regulating mechanism of classical trade theory, and its relation to the quantity theory of money.2 This essay challenges the accepted view that money is a minor aspect of Hume's work. Instead, this essay argues that, by interpolating Hume's limited treatment of money into his wider philosophical concerns, money takes on a much wider significance for Hume's social thought than has been heretofore appreciated. Hume's analyses of the understanding and the passions do point to a central role for money in a Humean society. While such a role is only hinted at in Hume's actual discussion of money, his larger epistemological and moral doctrines imply that money transactions are the ideal units of social life. Money must become the mediator of social relations because a society actuated on Humean psychological principles would otherwise be an entropie one. This entropy is derivable both from Hume's doctrine of sensationalism and his formulation of utilitarian self-interest and sympathy in sensationalist terms. In short, implicit in Hume's thought is something like a Humean philosophy of money. This argument not only reintroduces money into Hume's other concerns, but highlights a triplet of reversals that are immanent in Humean social