Money: An analysis of Smith and Hume from the metaphor as a cognitive Instrument

Abstract

 The role of money in the economy remains a phenomenon lacking a clear position within economic theory (Cartelier 2018). After extensive theoretical discussion, this enigma has led to a discouraging result in terms of economic policy: “money is what money does.” That is, money lacks a conceptual explanation, and since it exists and cannot be ignored, it is assumed to be important due to the functions it fulfills. This merely indicates a lack of understanding of its fundamental properties. This document proposes that, through metaphorical analysis, we can advance cognitively in understanding money (Richards, 1936; Black, 1982; Mary Hesse, 1966; Boyd, 1993; and Lakoff & Johnson, 1980). According to Fiori (2022), metaphor fulfills two key functions: 1. It directs research, and 2. It facilitates the identification of causal relationships in complex phenomena. Authors such as Smith and Hume seem to have perceived these two functions, respectively proposing the metaphors of money “as the great wheel of circulation” and “as the lubricant of the economy.” This document analyzes, based on the functions indicated by Fiori, the role of these two metaphors. On the first topic, it concludes that for Smith, the directional metaphor of money provides a perspective of endogenous money, while in the case of Hume, it offers a perspective of money provided exogenously. On the second topic, Smith’s response is that money has no value, so it does not generate inflationary pressures. In contrast, for Hume, money does have value, generating short-term benefits and long-term inflationary pressures.>