Theology of Money by Philip Goodchild
My rating: 4 of 5 stars

Much More Than Mammon

The 2nd century apologist for Christianity, Tertullian, asked ‘What has Athens to do with Jerusalem?’ His point was that it really wasn’t possible to get from Greek thinking to Christian (or for that matter Jewish) faith. In a time when scholarship, or even critical thought, is considered substantially less virtuous than wealth, the question today might more appropriately be ‘What does Wall Street have to do with Trinity Place?’ The two streets don’t intersect in the financial district of Manhattan. Yet they have had a connecting passageway through the venerable Trinity Church for the last 300 years, a sort of corpus collosum between the two halves of the modern cultural brain. Goodchild’s The Theology of Money provides just such an intellectual connection between the mammon of money, wealth and financial power and the maid of religion, faith, and spiritual being.

Goodchild considers theology to be “the most fundamental and radical form of inquiry.” By this he means not the derivation of economic truths from scriptural sources or ancient church authorities, but rather the investigation of our most central, and often most hidden, beliefs. Among these beliefs is that of the nature of “true wealth.” Since “The quest for wealth is the one practical activity that unites the diverse people of the contemporary globalized world” the issue is general and constantly pressing on all.

Although Goodchild’s argument is ‘non-sectarian’ as it were, his motivation is Christian. He perceives that “Jesus’s announcements raise the most fundamental of theological problems: What is the value of values.” Since this formulation is a bit elliptical, he also states the issue in operational terms: “Do our scales of evaluation express true value?” This is a crucial insight which immediately demonstrates the potential of theological analysis.

The issue is not one of accurately measuring value on any particular scale - market price, GDP, the Gini coefficient of income inequality, or an individual utility function - but of choosing which of these metrics, among an infinity of other possibilities, is the right one. The truth of whatever choice is made is “not itself objective [but] a subjective presupposition.” There is no such thing as a scientific, neutral, or disinterested metric of value, regardless of how standardized or widespread the use of the metric. The standardization of metrics itself may appear as a disciplinary advance; but it is in reality a way of removing such metrics from political debate about what constitutes value.*

Money, Goodchild recognises, is only one possible metric of value. But because it is so pervasively thought of, and taught, as the ultimate value that can acquire all other things of value, “money veils the source of the value of values.” He goes on go make the theological connection explicit: “Being transcendent to material and social reality, yet also being the pivot around which material and social value is continually reconstructed, financial value is essentially religious.” This may have the same import as the traditional idea ‘Mammon as God’, but it is at a considerably greater level of precision and operational significance that the traditional shibboleth.

Goodchild also takes takes into account (!) the social institutions that support and maintain the dominance of money as universal standard of value. Chief among these is accounting: “The paradox of accounting is that it directs attention to that which is counted rather than to that which matters.” He then makes the somewhat incongruous claim that “that which is truly valuable always escapes representation and counting.” This claim suggests a prejudice not a conclusion.

I think the prejudice regarding quantitative measurement arises, at least in part, because Goodchild doesn’t recognise the fundamental difference between financial accounting** and management accounting. In the later, that is within the corporate environment, the metric of money is routinely distorted - through transfer pricing, cost allocations, and physical production targets, for example - in order to encourage or deter economic behaviour. And such distortions may be altered more of less continually depending upon circumstances, particularly what corporate employees learn about value itself. That no one considers such distortion as anything but sensible and necessary suggests that we all retain some intuitive awareness of the inadequacy of the metric of money.

Democracy is another institution which contributes to the deification of the metric of money. ‘One man, one vote’ is mirrored in economics by the idea of ‘One man (or woman), one utility function,’ which ideologically has as much sovereignty as the electoral franchise. If this is accepted in social convention, and it generally is, then the only metric of social welfare possible is money. The fact that money then has the potential to undermine democracy itself through the purchase of influence is seen as an incidental by-product of an ideology rather than an inevitable consequence of the metric. As Goodchild summarises the situation: “the inevitable outcome of liberal democracy, lacking a determination of higher goals, is subjection to consumer desire.”

Goodchild therefore articulates what He calls “a crisis of representation” about value. The deification of the metric of money does not occur because it is singled out and worshipped as the supreme good. Although I’m sure there are such people, I certainly know no one who has the goal of accumulating as much money as they can for its own sake. Almost everyone, I think, would agree this would be psychotic.

The deification takes place by not even noticing the metric of money at all, particularly its source. The metric of money, like all metrics of value, is a social convention that has been incrementally defined over centuries. It is an abstraction that has taken on the character of the hyper-real, as something over which no one has any control or influence. In short, the metric of money is transcendent, omnipotent, and omnipresent, that is to say,.... God. Such a perception is neither scientifically irrational nor religiously delusional. It merely describes our reality.

The crisis for Goodchild is not that we are getting things wrong about money. Like all metaphysical concepts, the metric of money may not be correct, but it cannot be proven wrong. Philosophically speaking, value is its own representation. That is to say, one cannot compare one metric of value with another in order to determine if one ‘represents value better’. ‘Better’ would be the comparative for what? Some other metric perhaps, but then the problem simply escalates. It can’t be resolved by any rational means.

But there is a chance to resolve the representation of value politically. Goodchild notes that “money does not exist outside of accounts” Accounts, the records of mutual obligations, is not just the register of money, it is money tout court. As has been shown by the rise and bitcoin and other crypto-currencies, there is nothing beyond, underlying, or defining the metric of money other than these ledgers. This is why he is correct in saying that “accounting is an exercise in collective imagination” and simultaneously “the measure of that which is taken for granted” - a fundamental paradox of modern existence.

Therefore it is correct to say that “A revaluation of all values may begin with the practices of accounting.” But Goodchild bemoans the absence of any social or governmental institution that could initiate or sustain such a revaluation. In this he is being myopic, for this is precisely the role of the modern corporation in the 21st century. The corporation is an institution, regardless of its many unfortunate flaws, which has by law and organizational power, removed itself from the constraints of ‘the market’ and the market’s principle metric of value, money.

As indicated above, the corporate organization, because it has substituted agreement for contractual obligation within itself, has the power and the experience to displace the dominance of the metric of money. And through its ability to influence the behaviour of its customers, it also has substantial power to establish new metrics in society generally. ‘But DAZ because it makes clothes whiter’ and ‘Show how innovative you can be with Apple’ are not empty slogans. They are concerted attempts to establish the metrics of whiteness and innovativeness as the criteria that are used by consumers, with the recognition that superior value must be delivered on that very specific metric.

The corporate organization has the motivation necessary to undermine the metric of money. Having established a metric in the market, it can only deliver on that metric if its internal metrics are aligned with it - from the mailroom to the boardroom. And it can only facilitate this alignment if it understands and reconciles the various metrics that are already ‘in play’ by its experienced employees in Sales, Operations, IT, and especially in Finance and Accounting where metrics are hatched, authorized, and disseminated throughout the organization. Employees almost always have a far more precise idea about what constitutes value than any corporate CEO.

The fact that Goodchild has missed an important, perhaps the only real, possibility for realizing his aims of increasing awareness of metrics of value, as well as of creating an institutional mechanism for formulating and promulgating them, does not degrade his theory. His argument about the priority of scales or metrics over the acts necessary to establish a measurement on a metric are exactly right. His realization that metrics of value are both transcendent and political is a crucial insight. His understanding of the subtle institutional pressures that prevent the displacement of the metric of money is perceptive and correct.

My suggestion therefore is that Goodchild appreciate what is actually at hand to do exactly what he suggests doing.

*I find it instructive that in 2008, the year after the publication of The Theology of Money, Niall Ferguson published his Ascent of Money which traces the same patterns of thought. In his book Ferguson catalogues the various types of error in measurement that economists worry about. These include:
* Availability bias
* Hindsight bias
* The problem of induction
* The problem of the fallacy of composition
* The fallacy of conjunction
* Confirmation bias
* Contamination effects
* The problem of affect heuristics
* Scope effect
* Calibration overconfidence
* Bystander apathy
I’m sure there are many more potential sources of error in economic metrics that are studied intensely and worked on to mitigate or eliminate. However nowhere in economics is there even a term for the problem of having the wrong metric to begin with. A strange science indeed.

**The metaphysical issues of financial accounting - as in the distinction between investment and expense, the valuation of consolidated vs. unconsolidated assets, and the nature of accounting profit and book capital - are so standardized and fixed by the accounting profession that there seems little hope of ever achieving the kind of progress Goodchild is hoping for in this area.

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