“Money isn’t a material reality – it is a psychological construct. It works by converting matter into mind. But why does it succeed? Why should anyone be willing to exchange a fertile rice paddy for a handful of useless cowry shells? Why are you willing to flip hamburgers, sell health insurance or babysit three obnoxious brats when all you get for your exertions is a few pieces of coloured paper?” – Yuval Noah Harari, Sapiens: A Brief History of Humankind
What is a Social Construct?
Social construct essentially means a concept of perception of something based on the collective views developed and maintained in a society, as opposed to existing inherently or naturally.
A social construct is something that exists not in objective reality but as a result of human interaction, which is to say that it exists because humans agree it exists.
Humans create social constructs in order to make sense of the objective world. The best example to give of social constructs is countries. If we ever think about how countries came into existence, our mind usually comes up blank because it is something that has always been there. But we all know that it hasn’t. There are no physical boundaries marking the area of countries. They exist as a result of human interaction. Continents have been divided into numerous countries by humans.
Over the years, slowly and steadily, the meaning of various social constructs is changing. Attitudes towards those of different skin colours have changed over the last 100 years and they continue to change. The construct of race still exists but what the construct means has changed. However, just because something is a social construct, reconstructing its meaning entirely may be theoretically possible but might not be realistically probable.
Social constructs have an effect on us as we do on social constructs. Little girls dream about being a blushing bride even before they are allowed to date. After reaching a certain age, not being married may make you feel insecure. Family members, friends and society as a whole may pass judgments on someone who is not married, happily married or has been married seven times. Our decisions about fidelity and relationships are often influenced by the social construct of marriage and what it means in society to be married.
If a person wants to ‘break free’ from social constructs, they may be considered as a rebel or an outsider. This shows just how much social constructs influence individuals and how society influences the creation and direction of social constructs.
Money as a Social Construct
If the doctor performs an operation that takes an hour to finish, how many breads must the baker produce to deliver a corresponding amount of value? Money is a tool that allows for measurement of different values for the sake of uniformity.
Money is the most universal and most efficient system of mutual trust ever devised. Everyone understands that the thing we call money has its original basis in a promise, or rather a social relationship, that is, credit. The word credit is based on the Latin word credo which means ‘I believe’. On elaboration, it comes to mean ‘I believe you will pay, or repay me for any goods and services, now or at some point in the future.’
As long as human societies exist, the idea of reciprocity will form a fundamental basis around which social relations are built. Money and credit function well in societies because they give a tangible form to human interactional exchange ideas.
People cannot deny accepting/paying money in exchange for goods and services because it is a legal tender declared by governments (which is yet another social construct) in order to maintain stability in the society and economy.
On some basic level, we all know that money is purely symbolic. It only works because everyone collectively agrees to participate in the fantasy that a dollar bill is worth a dollar, whatever that is.
If there were no rules regarding the recognition of monetary value, there would be no money. This brings us to one of the most important powers of language – the power or creating a social reality by declaring that it exists.
The concept of debt was a moral notion before it became an economic notion. The concept of obligation, which owes it origins to this concept of debt, is intrinsic to human behaviour. This is precisely why credit functions can sustain in this society.
Barter system or an economy based on exchange of some metal could work when we live in small tribes and share communally however such systems are generally inferior to fiat currency if we are looking to live in a nation of 200+ people.
Humans were living in money less societies close to 100,000 years back. Humans were living without electricity. Humans were living without Internet. Is it possible to go live like that? Yes. Is it probable that we could go back to living like that? Very, very unlikely, if you don’t like a straight answer as “No”.