The Treatise: A Brief Outline of a Theory of Money?
However, A Treatise of Human Nature (Hume 1739-40 [1983]: 520) contains an approach that seems to fundamentally deny the thesis of neutrality (see Diatkine 1992, 2012; Wennerlind 2001).
In fact, barter is not only costly, it is quite simply unthinkable. As Hume writes (1739-40 [1983]: 520): “The transference of property, which is the proper remedy for this inconvenience [the fixity of property], cannot remedy it entirely; because it can only take place with regard to such objects as are present and individual, but not to such as are absent or general.”First, barter (the “transference of property”) is costly because it must be immediate; as the exchanged objects must be present. This simultaneity of the transfers is costly, says Hume, because it prohibits inter-temporal trade (1739-40 [1983]: 520). This requires the institution “of the obligation of promises” which is crucial for any theory of justice.
Secondly, because it only concerns individual objects (that is, objects that are identifiable by means of their owners’ identity), barter prohibits the anonymity that is necessary for the generality of trade. The prices of commodities must not depend on the identity of buyers or sellers. Evidently, this is not the case for promises. It is possible to conclude that for Hume, the substitution of a general promise (money) for individual promises is logically necessary for trade. Unfortunately, Hume does not go any further, for his purpose here is to understand the origin of the sentiment of (political) obligation at the heart of his theory of justice, and not to elaborate a theory of money.
Nevertheless, money is therefore an essential element of the economic structure. It is neither the “oil of the wheels of trade” nor the blood of the social body; it is an essential ingredient for social links, and society is neither a mechanism nor an organism.
Daniel Diatkine
See also:
Balance of payment and exchange rates (III); Scottish Enlightenment (II).