Requirements of a Philosophy of Money and Finance John Smithin York University

Interdisciplinary Approaches to the Economy, Business, Money, Finan ce (1) Social Ontology - The “ontology “or nature of social institutions/social facts – from the financial of point of view, these include business firms, money, banks, other financial institutions, governments, etc., – as opposed to the physical facts, the “brute facts”, studied in natural science. (2) Economic Sociology - Study of the specific institutions in a given socio-economic system. For example, Weber’s study of the “method of enterprise” (capitalism). (3) Monetary Macroeconomics - The most important “technical” field of economics – note the emphasis on “monetary” here – macroeconomics is monetary economics. (4) Political Economy - Deals with questions of policy and governance – also comparative economic systems, questions of “equity”, income and wealth distribution, etc..

The Branches of Philosophy (I) Ontology The study of what exists, what there is. A central concept of “metaphysics”. (II) Epistemology How do we know what we think we know? Are our methods of gaining knowledge defensible? etc. (III) Ethics Provides a code of values to guide human choices and actions. (IV) Politics Studies the nature of the political system and defines the “proper functions” of government.

Correspondences (I) ontology (1) social ontology (II) epistemology (2) economic sociology (III) ethics (3) monetary macro (IV) politics (4) political economy

Simmel on the Philosophy of Money (1907) “Every area of research has two boundaries at which the process of reflection ceases to be exact and takes on a philosophical character … If the start of the philosophical domain marks, as it were, the lower boundary of the exact domain, then its upper boundary is where the ever fragmentary contents of positive knowledge seek to be augmented by definitive concepts into a world picture and be related to the totality of life.” But, the scheme suggested above really has no such boundaries. There is a “philosophical character” throughout. There can be precision, but not the sort of “exactness” (presumably) found in natural science. The subject matter is different.

What Type of “Knowledge”? Episteme A Greek word, often translated as “scientific knowledge” - however, this is misleading in a financial context – it would be better to say something like “deep” knowledge (understanding the principles of things) Technical Knowledge In context, this would be the type of material learned in “functional courses” in business school, accounting, finance, marketing, etc.) Practical Knowledge “Hands on” knowledge - by definition, something not found in college. Must “do it yourself”. (E.g., physically turn on a computer and buy and sell stocks) (We are mainly interested here in “episteme”. There is not much use in “playing the market”, for example, or knowing how some complicated financial derivative works – even in having a “Ph.D” in finance - without some idea of the basic principles of money and credit.)

What has Happened to Neoclassical “Microeconomics”? Does not appear explicitly? This is OK, as soon as it is realized that “economic sociology” already includes the study of markets. However it does puts the “market” in its place (so to speak), in the broader social order, rather than being the only thing discussed.

An “Iterative Sequence” as Applied to Economic Sociology The “method of enterprise” implies (in this order): (a) a political settlement of some kind (b) money (unit of account, means of payment, debt/credit) (c) private “property” (in the legal sense) (d) markets (e) entrepreneurial business {As for “iteration” see Searle (2010)}

“Business Ethics” It is important to note where “ethics” and “politics” come in, in this scheme. Actually, it is not possible to discuss either until after the ontological and epistemological issues have been decided. There may well exist an “objective science of ethics” (the argument is not relativism or pragmatism) – but the ethics must be coherent in some sense - must be consistent with the way the world “works”.