In this blog post, we explore whether ‘money’—something we take for granted—is truly a real entity or just a fictional concept invented by humans.
In modern society, money has established itself as a very important entity. Money constantly torments modern people. From those who grieve over lack of money to those who find happiness in the very act of earning it, money’s influence is truly immense. Therefore, people easily assume money is real and its value undeniably exists. Regarding this, Yuval Noah Harari, author of ‘Homo Deus’, argues that money is a fictional entity. Harari explains that money is a tool used by powerful human organizations to instill a fictitious belief in the powerless, compelling them to actually obey. I agree with this, and in this essay, I aim to clarify why the existence of money, as introduced in the book, is not real.
First, we need to consider what it means for something to ‘exist’. Based on Martin Heidegger’s ontology, a truly real being is one that recognizes its own finitude and makes choices autonomously within that finitude. While I cannot fully agree with this view, it is undeniable that being real means, at the very least, that its basis does not derive from external grounds but solely from itself. Therefore, the definition of reality can be stated as follows. A truly existing being must have its reason for being—that is, its value—grounded in itself and must possess finitude. It cannot be infinite. If either of these conditions is not met, it is a fictitious existence that cannot be called truly existing.
Let us examine the reality of money based on this definition. Money possesses characteristics that deviate from the meaning of reality. First, the value of money does not originate from itself. Money is always derived from human labor. To assign value to the act of humans producing necessary goods through labor, governments established the system of currency. Money is merely a numerical representation within an illusory system of the value that can be attributed to human labor. So why do people believe money has value? It is precisely because of the commodity fetishism inherent in capitalist society. Fetishism refers to the phenomenon where social relationships between people are manifested as relationships with the material objects they possess.
To elaborate further on the system established by the government: the government created the tool of money to facilitate smooth agreements when members of society exchange labor, and built a system ensuring this tool became deeply embedded in human life. This system is capitalism. It is a system that allows currency of a certain value issued by the government to be exchanged for goods. Therefore, all transactional relationships existing in a capitalist society are not actually trading the value of money; they are merely the relationship of exchanging labor between humans appearing as a relationship between material and material. It is not the value of money that is being exchanged. A prime example revealing the fictitious nature of money in this regard is securities. The securities market is where various commodities like stocks and bonds are traded. The value of securities fluctuates based on stock price movements driven by trading volume or transaction value. However, this reflects an assessment of the value of the company whose bonds or stocks are listed on the market—that is, how outstanding the combined labor of its members is—not that the numbers themselves represent that value. In other words, what is evaluated in the market is not the value expressed in numbers, but the value of the company. Yet, it is precisely money that causes humans to cling to numbers, leading them to mistake money for a tangible entity.
Secondly, money deviates from the meaning of reality because it is never finite. As mentioned earlier, money is merely a number appearing within a fictional system. This number can freely change its magnitude within the vast fictional system called the market. An example illustrating this fictitious nature from this perspective is the Money Multiplier effect. The Money Multiplier effect demonstrates that under certain conditions, when the government injects a specific amount of money into the market, the actual amount of money circulating in the market becomes larger than that initial amount. The necessary condition for calculating the money multiplier is that banks retain only the required reserve ratio of the money injected by the government and lend out the entire remaining capital. The condition is that individuals deposit all their capital in banks. Here, the reserve ratio refers to the proportion of total deposits that banks must hold as reserves. If the amount of money released by the government is M and the reserve ratio is x (i.e., 100x%), the actual amount of money released into the market is calculated as M/(1-x). That is, the amount of money supplied to the market becomes larger than the amount released by the government. Although defined as a fixed formula, in real society, most bank funds beyond the reserve requirement are used for lending. Individuals save most of their capital. Therefore, it is a clear fact that when the government issues a certain amount of currency, a larger amount actually appears in the market. This example demonstrates that the value of money is not fixed and can infinitely increase or decrease. This characteristic of money, which violates one of the fundamental premises of reality, is another piece of evidence revealing that money is a fictional construct.
Based on this point, the argument raised by Yuval Noah Harari in his book can be considered correct. Money can never be real; its emergence is merely a government ploy to make society’s members cling to a fictional construct, enabling the state to operate smoothly. In modern society, money wields such immense influence that many believe it is real and that its value constitutes the most crucial aspect of life. To them, I would say this: Think about it. Is what truly holds value the paper in your wallet and the numbers printed on your bank statement? Or is it the ability to acquire them?
