Paul H. Dembinski

Towards the break‐up of money: when reality – driven by information technology – overtakes Simmel’s vision

Georg Simmel reached the conclusion that evolution drives money towards an ever‐higher level of functionality while, at the same time reducing its importance as a substance. This article confronts Simmel’s one hundred‐year‐old hypothesis with the changes money has undergone since the publication of his book, The Philosophy of Money, since the 1970s. We begin by presenting the main conclusions of Simmel’s inquiry into the essence of money. We focus on his findings concerning the unstable relationship between the substance and functions of money and on the notion of money as a social institution. The second part of the article relates Simmel’s analysis to various aspects of contemporary thinking on money, and presents the “double anchor” hypothesis on the monetary order. Then, this hypothesis is used to analyse how technology‐driven processes are causing specific monetary functions to become increasingly autonomous. What this implies, in turn, is the de facto break‐up of money. For the time being, this situation has not actually arisen, but the stage‐by‐stage break‐up of money is well under way, at various speeds, and taking advantage of any available technical opportunities, especially in the field of information technology. The expected total break‐up of money poses compelling problems that call for new conceptual, technical and institutional solutions.

Enron: Visiting the Immersed Part of the Iceberg

According to the thousands of pages of official reports, enquiries and studies that have already been devoted to Enron, its collapse can be attributed to a coincidence of a number of dysfunctions and malfunctions within the firm, but also in its immediate environment. Each of these ‘local problems’ has been scrutinized, analysed and, in some most visible cases, addressed at a regulatory level. Despite all these efforts, however, a more fundamental question remains on the internal composition of the multi-causal knot that led to Enron’s collapse. Was the collapse exceptional, resulting from an accidental combination of unrelated, independent and unique incidents, or was it the spillover of a chain of linked, correlated, interdependent or even mutually reinforcing routine events? In the latter case, Enron’s collapse would have been much more than an accident. It would be symptomatic of deep systemic dysfunctions, the suspicion of which may, in the last analysis, put trust in the financial system in doubt, and thereby put the system’s very survival at risk. This systemic concern may grow deeper once it is acknowledged on one side the cementing role trust plays in any financial relation, and on the other the everyday longer list of corporate malpractices or wrongdoings on which Enron will remain a milestone for a long time.