On Words: ‘Money and Morality’

Editor’s note: Welcome to this installment of “On Words,” an occasional series in which University of Virginia faculty members write about evocative words and phrases. Simone Polillo, a professor of sociology, teaches a course on money and morality and dives into that topic in this essay for UVA Today.

In late 1912, banker J.P. Morgan, at the height of his power, spoke at a U.S. Senate committee hearing investigating the “Money Trust,” the tightly knit network of bankers and industrialists who controlled much of the nation’s capital. This was a time in U.S. history with many parallels to today: Inequality was rising, corporations had stifled market competition and public discontent with the banks was growing.

Having been asked how banks grant loans, Morgan provocatively asserted, “A man [sic] I do not trust could not get credit from me on all the bonds of Christendom.”

Morgan was responding head-on to the accusation that personal relationships in the credit system only served the connected at the expense of outsiders and did little to improve public welfare. Instead of denying that social relationships were at the heart of banking, he gave a rationale as to why they should be: collateral (“all the bonds in Christendom”) was but a narrow indicator of the individual’s ability to pay back his or her debt. Through personal relationships, however, creditors could gain a better sense of the borrower’s creditworthiness. The potential for cheating would decrease – “character is everything,” Morgan was fond of saying.

In today’s world, Morgan’s perspective may seem outdated. For most of us, access to credit is regulated by algorithms that produce quantitative indicators of creditworthiness. Personal connections do not seem to be as central to everyday citizens’ access to banking services as they used to be – though the proverbial handshake may still seal a deal when the parties to the transaction belong to a rarified and small social elite, raising important questions about how inequality operates in the world of credit. The larger point that still rings true, however, is that creditworthiness, no matter how quantified and automated, is a type of moral judgment: getting credit – whether a personal loan, funding for college, or a mortgage – requires us to undergo a process of evaluation with an eye to understanding whether we are the “sort of person” who can pay the creditor back. It’s not just about how much money we make: it’s also about our credit history, and specifically what kinds of “mistakes” we have made in our past that would raise a flag to potential creditors.

We have come to accept that morality – a rather strict, even punitive kind of morality at that – is a way of governing credit – limiting or expanding access to it, regulating how it is used, and so on. And yet, when it comes to money – and it is money that passes hands in a credit transaction, after all – the idea that money and morality are just as intimately connected strikes us as dubious. We stand on the shoulders of giants when we take this position: Thinkers as different as Adam Smith, Karl Marx and Georg Simmel all made some version of the argument that whenever money is involved, that’s when morality stops. As Marx famously put it, with money, “all that is solid melts into air,” as money knows no boundaries; in fact, it transforms all relationships and experiences we consider to have intrinsic value into a quantitative metric, dissolving their distinctiveness and making them comparable. As sociologist Viviana Zelizer suggests, such views on money produce two perspectives on the relationship between the economy and our social world: first, a view whereby money “corrupts” anything it touches, lending credence to claims that money should be kept at bay from aspects of our lives we understand to have intrinsic or incommensurable value. Second, a view whereby money is “nothing but” money – once monetary evaluation takes root in a previously untouched sphere, its cold, rational logic will relentlessly take over.

Credit is not the same thing as money, and perhaps it is legitimate to accept that credit has moral dimensions that money does not have. There are, to be sure, important differences between the two: credit is granted upon a promise of future repayment, whereas money, once exchanged, completes the transaction (e.g. as a payment). By the same token, credit entails a bet (however informed) about the future, with all the uncertainty it might bring; and so, it binds creditor and debtor into something of a personal relationship, at least for the duration of the loan. Money, by contrast, once exchanged, terminates the transaction. And, especially in the case of cash, a monetary transaction can preserve the anonymity of the parties to the exchange.

Yet, these differences are more superficial than they appear to be. Money is often exchanged in the context of pre-existing, meaningful social relationships, as when you send a friend a gift card for their favorite store. Money, in a case like this, does not “corrupt” the relationship: it would be awkward, of course, if you were gifting your friend an actual stash of cash, but charging the amount to a gift card helps you avoid this sort of faux pas. Or consider the arcane, intricate and often-contested practices that constitute tipping culture in the United States – how much, when and who to tip are questions that can be rarely settled through simple quantitative calculations of the kinds Marx was so worried about. As my Department of Media Studies colleague Lana Swartz argues in her 2020 book about new forms of payment (“New Money: How Payment Became Social Media,” Yale University Press), exchanging money always entails exchanging information, and, in the process, creating a community she calls “transactional,” with its own idiosyncrasies, inside jokes, and yes, even its distinctive sense of the right way of using money.

There is another, important connection between credit and money that infuses money not only with morality, but with politics. Political economists and sociologists have long argued that cash is a special form of credit: It is general credit backed by the authority and power of the national government (the state). The deeper point is not only that governments issue money: It is rather that political communities can decide, collectively, how much and what kind of money they should issue to finance projects the community really cares about. Money, that is, is a democratic tool. When J.P. Morgan emphasized the link between reputation and credit, he forgot to add that credit has social sources, and so it can be directed toward uses that are not reducible to what individuals would plan for their own benefit or self-interest. The morality of money, then, is another way of understanding the morality of politics. And while conventional views about politics can be as cynical about its morality as they are about the morality of money, understanding money in terms of political choices can also alert us to the ways money can empower us.