Towards the break‐up of money: when reality – driven by information technology – overtakes Simmel’s vision

Abstract

Georg Simmel reached the conclusion that evolution drives money towards an ever‐higher level of functionality while, at the same time reducing its importance as a substance. This article confronts Simmel’s one hundred‐year‐old hypothesis with the changes money has undergone since the publication of his book, The Philosophy of Money, since the 1970s. We begin by presenting the main conclusions of Simmel’s inquiry into the essence of money. We focus on his findings concerning the unstable relationship between the substance and functions of money and on the notion of money as a social institution. The second part of the article relates Simmel’s analysis to various aspects of contemporary thinking on money, and presents the “double anchor” hypothesis on the monetary order. Then, this hypothesis is used to analyse how technology‐driven processes are causing specific monetary functions to become increasingly autonomous. What this implies, in turn, is the de facto break‐up of money. For the time being, this situation has not actually arisen, but the stage‐by‐stage break‐up of money is well under way, at various speeds, and taking advantage of any available technical opportunities, especially in the field of information technology. The expected total break‐up of money poses compelling problems that call for new conceptual, technical and institutional solutions.