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Published online by Cambridge University Press: 07 January 2021
This essay examines Hume’s treatment of money in light of his view of the imagination. It begins with his claim that money is distinct from wealth, the latter arising, according to vulgar reasoning, from the power of acquisition that it represents, or, understood philosophically, from the labor that produces it. The salient features that Hume identifies with the imagination are then put forth, namely its power to combine ideas creatively and the principle of easy transition that characterizes its movement among them. Two issues that these features explain are then discussed: first, why people take value to lie in the material of which money is made, and, second, why they assign value to what they take money to represent, namely, wealth. In both cases, the imagination creates a new relation, an illusion or fiction, that cannot be traced directly to experience. In the case of money, the faculty conjoins what is intangible (the power of acquisition) with the physical qualities of specie; in the case of property it produces a causal relation that connects persons with objects to constitute stable possession that constitutes ownership. Hume also appeals to the imagination to explain the rules of property that subsequently develop (present possession, occupation, prescription, and transference). The essay concludes by emphasizing that being based on the imagination is not in itself indicative of any instability in either money or property and the practices they enshrine, a feature they share with other phenomena (such as the self and continued existence) that Hume also traces to the same faculty.
I am grateful to Christopher Berry, Maria Paganelli, Margaret Schabas, and an anonymous reviewer for the journal, all of whom provided comments on an earlier draft. Their combined advice and recommendations contributed greatly to the quality of the final product, though I, of course, remain responsible for any and all errors that remain.
1 See “Introduction” to David Hume: Writings on Economics, edited and introduced by Eugene Rotwein (Madison: University of Wisconsin Press, 1955), xxxii and xxiv, respectively. The third “level” Rotwein identifies in Hume’s approach is “economic philosophy,” namely, a normative enterprise that focuses on luxury to “frame a comprehensive appraisal of a commercial society” (xci). The widespread and routine characterization of Hume’s essays as “economic” is reported and reflected in Skinner, Andrew S., “David Hume: Principles of Political Economy,” in The Cambridge Companion to Hume, 2nd edition, ed. Norton, David Fate and Taylor, Jacqueline (Cambridge: Cambridge University Press, 2008 [1993]), 381–413CrossRefGoogle Scholar. For a useful synoptic overview of Hume’s contribution to the fields, see Schabas, Margaret and Wennerlind, Carl, “Retrospectives: Hume on Money, Commerce, and the Science of Economics,” Journal of Economic Perspectives 25, no. 3 (2011): 217–30CrossRefGoogle Scholar.
2 For these respective emphases, see, for example, Rotwein, “Introduction” and Skinner “David Hume,” esp. 229–39; Sakamoto, Tatsuya, “Hume’s Political Economy as a System of Manners,” in The Rise of Political Economy in the Scottish Enlightenment, ed. Sakamoto, Tatsuya and Tanaka, Hideo (London: Routledge, 2003), 86–103Google Scholar; Margaret Schabas, “Hume’s Political Economy,” chap. 4 of her The Natural Origins of Economics (Chicago: University of Chicago Press, 2005); Edward Soule, “Hume on Economic Policy and Human Nature,” Hume Studies 26, no. 1 (2000): 143–57; and Nakano, Takeshi, “‘Let Your Science Be Human’: Hume’s Economic Methodology,” Cambridge Journal of Economics 30, no. 5 (2006): 687–700CrossRefGoogle Scholar. The alternative view—that Hume’s economic writings (or his view of money at least) can be treated separately and without reference to other parts of his system—is expressed forcefully (and against Rotwein explicitly) by Douglas Vickers in his Studies in the Theory of Money 1690–1776 (Philadelphia: Chilton, 1959), 217–218 n. 2. For extended defense of the thesis that Hume’s political writings more broadly form a unity with his philosophical work, see Miller, David, Philosophy and Ideology in Hume’s Political Thought (Oxford: Oxford University Press, 1981Google Scholar) and Whelan, Frederick G., Order and Artifice in Hume’s Political Philosophy (Princeton, NJ: Princeton University Press, 1985)CrossRefGoogle Scholar. For connections between politics and his brand of skepticism more specifically, see Susato, Ryu, Hume’s Sceptical Enlightenment (Edinburgh: Edinburgh University Press, 2015)CrossRefGoogle Scholar and McCormick, Miriam Schleifer, “Hume’s Skeptical Politics,” Hume Studies 39, no. 1 (2013): 77–102CrossRefGoogle Scholar.
3 For an extended defense of the general thesis, see Costelloe, Timothy M., The Imagination in Hume’s Philosophy: The Canvas of the Mind (Edinburgh: Edinburgh University Press, 2018)Google Scholar.
4 References to Hume’s works are given as follows: A Treatise of Human Nature, ed. David Fate Norton and Mary Norton (Oxford: Oxford University Press, 2001) (T) with citations according to book, part, section, and paragraph, followed by page numbers to A Treatise of Human Nature. Analytic Index by L. A. Selby-Bigge. Text revised and notes by P. H. Nidditch (Oxford: Clarendon Press, 1978 [1888] (SBN); Enquiry Concerning Human Understanding, ed. Tom L. Beauchamp (Oxford: Oxford University Press, 1999) (EHU) and Enquiry Concerning the Principles of Morals, ed. Tom Beauchamp (Oxford: Oxford University Press, 1998) (EPM) with citations given according to section and paragraph, followed by page numbers to Enquiries Concerning Human Understanding and Concerning the Principles of Morals, Reprinted from the 1777 edition with Introduction and Analytical Index by L. A. Selby-Bigge (Oxford: Clarendon Press, 1974 [1888] (SBN); “A Dissertation on the Passions,” in A Dissertation on the Passions/The Natural History of Religion, ed. Tom L. Beauchamp (Oxford: Oxford University Press, 2007) (DP) with citations given according to section and paragraph; and The Letters of David Hume, Volume I, 1727–1765 and Volume II, 1766-1776, ed. J. Y. T. Greig (Oxford: Oxford University Press, 1932) (L1 and 2), followed by page number. All references to Hume’s essays are to the pagination in Essays: Moral, Political, and Literary, ed. Eugene F. Miller (Indianapolis, IN: Liberty Fund, 1985) with specific essays abbreviated to: “Of Commerce” (C), “Of Refinement in the Arts” (RA), “Of Money” (M), “Of Interest” (I), “Of the Balance of Trade” (BT), “Of the Balance of Power” (BP), “Of Public Credit” (PC), and “Of the Populousness of Ancient Nations” (PAN).
5 See Costelloe, The Imagination in Hume’s Philosophy, chap. 1, which attempts a classification of Hume’s view of imagination, its powers, and the classes of fictions he appears to have in mind. For a more schematic attempt of the same and application of the result to Hume’s view of money, see C. Caffentzis, George, “Fiction or Counterfeit? David Hume’s Interpretation of Paper and Metallic Money,” in David Hume’s Political Economy, ed. Wennerlind, Carl and Schabas, Margaret (London: Routledge, 2008), 146–67Google Scholar. I only became aware of this paper after publishing the book.
6 The first of these—that the government of Sparta might “appear a mere philosophical whim or fiction” were “testimony of history less positive and circumstantial” (OC 259)—is reminiscent of the “philosophical fiction of the state of nature” and corresponding “poetical fiction of the golden age” that Hume discusses in the Treatise (T 3.2.2.14-15/SBN 493-4) and second Enquiry (EPM 3.15/SBN 189).
7 Gatch, Loren, “To Redeem Metal with Paper: David Hume’s Philosophy of Money,” Hume Studies 22, no. 1 (1996): 169–91CrossRefGoogle Scholar, reads Hume correctly on this point (see 177), but it is apparently overlooked by Caffentzis, “Fiction or Counterfeit?” 149 passim, who infers erroneously from the passage that Hume calls “metallic money ‘fictitious’”; he subsequently equates this proposed fiction with convention, even though, and the original misreading notwithstanding, they are not the same thing (something can be conventional without being fictional). One might also note that money is not a virtue either, a suggestion made by Carl Wennerlind, “An Artificial Virtue and the Oil of Commerce: A Synthetic View of Hume’s Theory of Money,” in David Hume’s Political Economy, 105–26. Hume says that a virtue is a “quality of mind agreeable to or approved by everyone, who considers or contemplates it” (EPM 8.n50/SBN 261n1), a definition that hardly extends to a currency of metal or paper. Money can be used, presumably, in more or less virtuous or vicious ways and in that sense is one element in the formation of moral character. The locus classicus of such a view is Aristotle who takes “wastefulness [asotia] and ungenerosity [aneleutheria] [to be] . . . an excess and a deficiency about wealth” where we call “wealth anything whose worth is measured by money.” See Aristotle, Nicomachean Ethics, trans. Terence Irwin (Indianapolis, IN: Hackett, 1985), IV.i, 1119b25-30, and n. 11 below.
8 Hume is generally read as a forerunner of economic liberalism and of thus being critical of the mercantilist tradition. For challenges to the assessment, see Thornton, Mark, “Cantillon, Hume, and the Rise of Antimercantilism,” History of Political Economy 39, no. 3 (2007): 453-80CrossRefGoogle Scholar, and Schabas, Margaret, “Let Your Science Be Human”: David Hume and the Honorable Merchant,” European Journal of Economic Thought 21, no. 6 (2014): 977-90CrossRefGoogle Scholar, and “Bees and Silkworms: Mandeville, Hume, and the Framing of Political Economy,” Journal of the History of Economic Thought 37, no. 1 (2015): 1-15. Whether and in what sense Hume is a “mercantilist” (or anti-mercantilist) often turns on what meaning the term is assigned, and that itself is not a settled matter. For a recent consideration of this and related issues, see Lars Magnusson, The Political Economy of Mercantilism (London: Routledge, 2015), esp. chap. 2, an expanded and reworked version of material contained in his earlier Mercantilism: The Shaping of an Economic Language (London: Routledge, 1994).
9 Hume writes in the Treatise that “Paper [securities and deeds] will, on many occasions, be consider’d as riches, and that is because it may convey the power of acquiring money” (T 2.1.10.3/SBN 311, emphasis added), a point he echoes later in the Discourses when he says that “Public securities are with us become a kind of money, and pass as readily at the current price as gold or silver” (PC 353) and speaks of how the “institutions of banks, funds, and paper-credit” effectively “render paper equivalent to money” (BT 316). The meaning of “counterfeit” as imitation is evident from Hume’s use of the term elsewhere as, for example, in his discussion of memory and imagination: “an idea of imagination may acquire such a force and vivacity, as to pass for an idea of the memory, and counterfeit its effects on the belief and judgment” (T 1.3.5.6/SBN 86). Cf. Paganelli, Maria Pia, “David Hume on Banking and Hoarding,” Southern Economic Journal 80, no. 4 (2014): 968-80CrossRefGoogle Scholar, esp. 973-74, who (apparently overlooking Hume’s use of the term elsewhere), argues that he regards paper money as “counterfeit” because it is not “universally accepted,” the sine qua non she urges for something qualifying as a “means of exchange” and a criterion that only “real” money made of “precious metal” can satisfy: “This is why Hume claims that paper money is counterfeit money. It is not real money. It is something that may work as money only in limited places, but is not universally accepted” (973). Cf. Arie Arnon, Monetary Theory and Policy from Hume and Smith to Wicksell (Cambridge: Cambridge University Press, 2011), who seems to appreciate the fact the Hume connects counterfeit money with paper credit (14), though he later endorses Paganelli’s equation of the same term with being “accepted internally and internationally” (23). A similar distinction between “‘fictitious’ metallic money” and “‘counterfeit’ paper money” is made by Caffentzis, “Fiction or Counterfeit,” 156-60, even though they are not disjunctively analogous in the way he assumes: metallic money is not a fiction of any sort and “counterfeit” simply means passing for or imitating the value attached to precious metal.
10 Vickers, Studies in the Theory of Money, 222 and 223, and Wennerlind, “An Artificial Virtue and the Oil of Commerce,” 109, emphasis added. Hume clearly prefers metal over paper money, even to the point (as he puts it in the letter to Morellet), that “money must always be made of some materials, which have intrinsic value, otherwise it would be multiplied without end, and would sink to nothing” (L2 204, emphasis added). His reasons for preferring metal, however—principally inflation and the contingencies of political and economic upheaval—are independent of his claim that value cannot be reduced to its material qualities; it is thus only partially correct and certainly misleading to say that Hume is a “metallist.” For consideration of what sometimes appears to be an ambiguity in Hume’s attitude towards paper money, see Caffentzis, C. George, “Hume, Money, and Civilization; Or, Why Was Hume a Metallist?” Hume Studies 27, no. 2 (2001): 301-35Google Scholar, and Margaret Schabas, “Temporal Dimensions in Hume’s Monetary Theory” and Robert W. Dimand, “David Hume on Canadian Paper Money,” both in David Hume’s Political Economy, ed. Schabas and Wennerlind, 127-45 and 168-80, respectively. A somewhat different interpretation is found in both Paganelli, “David Hume on Banking and Hoarding,” and Gatch, “To Redeem Metal with Paper.”
11 See Paganelli, Maria Pia, “David Hume on Monetary Policy: A Retrospective Approach,” Journal of Scottish Philosophy 7, no. 1 (2009): 65-85CrossRefGoogle Scholar, esp. 66-68. A similar emphasis on Hume’s appeal to convention in his view of money is found inter alia in Caffentzis, “Fiction or Counterfeit,” 147-49, and Wennerlind, “An Artificial Virtue and the Oil of Commerce,” 106-8. Paganelli refers the reader to Nicomachean Ethics, V.i, 1133a20-1134a25. Unlike Hume, who traces the value of money to the stock of labor, however, Aristotle traces the same to “need” or “what people require” (dein), which reduces all things to the same common measure. Thus “currency has become a sort of pledge of need, by convention” (1133b30). In his apparatus criticus Irwin notes (423-24) that “need” is preferable to “demand” (as dein is sometimes rendered) because one can have needs that are not expressed as demands.
12 This phrase appears in all eight editions of the essays between 1752–68 but is omitted from those of 1770 and 1777 (the latter being posthumous but corrected by Hume before his death). See Miller’s variant readings, Essays, 632.
13 For an extended treatment of Hume’s appeal to customs and manners in his political economy, see Berry, Christopher J., “Hume and the Customary Causes of Industry, Knowledge and Humanity,” History of Political Economy 38, no. 2 (2006): 291-317Google Scholar, reprinted as chap. 11 of his Essays on Hume, Smith and the Scottish Enlightenment (Edinburgh: Edinburgh University Press, 2018), 184-207.
14 See Wennerlind, Carl, “The Link between David Hume’s A Treatise of Human Nature and His Fiduciary Theory of Money,” History of Political Economy 33, no. 1 (2001): 139-60CrossRefGoogle Scholar, who, presumably with this observation in mind, connects the “money symbol” with the “authenticity and solemnity of the promise” (141). Wennerlind thus links “Of the Obligation of Promises” (T 3.2.5) with “Of Money,” though it is surely a link rather than (as his title has it) the link between these parts of Hume’s thought. See also Carl Wennerlind, “David Hume’s Political Philosophy: A Theory of Commercial Modernization,” Hume Studies 28, no. 2 (2002): 247-70, esp. 248-53.
15 Hume appeals to the same idea in explaining why luxury actually promotes the public good, it being a “kind of storehouse of labor” (RA 272; see also C 263). For Hume’s place in the extant tradition of seeing money as representation, See Paganelli, “David Hume on Monetary Policy,” 68-69, and for some general background on the idea, Marc Shell, Art and Money (Chicago: University of Chicago Press, 1995), chap. 3. Cf. Wennerlind, Carl, “Money Talks, But What Is It Saying? Semiotics of Money and Social Control,” Journal of Economic Issues 35, no. 3 (2001): 557-74CrossRefGoogle Scholar, esp. 560-62, who might be exaggerating a touch when he identifies Hume as an “unacknowledged semiotician of money” who anticipated the work of Georg Simmel and Hans-Georg Gadamer.
16 Hume’s metaphor has generated a good deal of discussion and interpretive disagreement. For a recent consideration of the issue and some of the literature, see Costelloe, Hume’s Imagination, chap. 7. Whether or not Hume himself distinguishes in his own work between the descriptive work of the anatomist and the normative work of the painter (as his metaphor implies) has been and remains a subject of much debate, as does the extent to which his essays (or other parts of his philosophy for that matter) are intended to persuade an audience and influence policy rather than simply illuminate the errors of current practice, in which case “Of the Balance of Trade,” for example, might be read as a call for Britain to change its policies on trade and banking. In the present context I mark the distinction to indicate (non-controversially I assume) how the different levels of explanation are reflected in Hume’s account of money. My thanks to an anonymous reviewer for bringing this issue to my attention.
17 See Christopher J. Berry, “Out of the Coffee House or How Political Economy Pretended To Be a Science from Monchrétien to Steuart,” in the current volume, which also sounds, albeit in a different key, Hume’s distinction between everyday practice and philosophical (or scientific) inquiry.
18 I follow in the spirit of David Owen, Hume’s Reason (Oxford: Oxford University Press, 1999), chaps. 1-2, who argues that Hume’s use of “faculty terms” is largely for “ease of exposition,” and that in the final analysis they simply refer to “ideas and impressions that can be classified in various ways” (76).
19 See, for example, Locke, John, An Essay Concerning Human Understanding, ed. Nidditch, P. H. (Oxford: Oxford University Press, 1975 [1690]), 2.11.13, p.161 and 2.12.1, pp. 163-64Google Scholar.
20 Strictly speaking, then, a “fiction” is not the same as an “illusion,” which has a different origin, in illusionem (mocking, jesting, or ironic) from illudere (to mock at or play with). Hume tends to employ both terms without marking any relevant difference, and commentators have tended to follow him, a practice I adopt in the present context.
21 I owe this observation to Christopher Berry. For the importance of power in Hume’s discussion generally, see Berry, Christopher J., “Property and Possession; two Replies to Locke—Hume and Hegel,” in Property, ed. Pennock, J. Roland and Chapman, John W. (New York: New York University Press, 1980), 89-100Google Scholar, esp. 92-93.
22 Hume also attributes this judgment to be “from an illusion of the fancy” that gives us “our false sensation of liberty” (T 2.1.10.9/SBN 314-15).
23 It is an open question whether Hume might have considered a signature on an IOU—that is to say, on paper credit as opposed to paper money—to carry the same weight and serve the same function. That he considered such a signature not to be equivalent to the marks or signs on paper money might speak (at least in part) to his suspicions about the wisdom of credit. I have Christopher Berry to thank for this observation.
24 See Harris, James, Hume: An Intellectual Biography (Cambridge: Cambridge University Press, 2015CrossRefGoogle Scholar), who documents this lesser-known aspect of Hume’s life and character, including his two-decade pursuit of £75 from his ill-fated sojourn as tutor to the Marquess of Annandale in 1745; petitioning for the half-pay he was owed for his position as Secretary to General James St. Clair in 1746–47; and in the 1760s staying on in London for an extra eighteen months after his time as Under Secretary of State for Northern Department had expired for no other apparent reason than to “make sure of the pension” (422). Harris reports that by the early 1760s, already well-off, Hume had become extremely wealthy: not counting income from pensions, investments, and rents, the History of England alone netted him the equivalent of $500,000. Neither philosophical insight nor pecuniary need can account for Hume’s actions and one can only assume that he too was seduced by the power of acquisition that wealth promises.
25 For some consideration of this issue, though without necessarily reference to the role of imagination, see Berry, Christopher J., The Idea of Luxury: A Conceptual and Historical Investigation (Cambridge: Cambridge University Press, 1994), 142-52CrossRefGoogle Scholar, and his more recent “Hume and Superfluous Value (or the Problem with Epictetus’ Slippers),” in David Hume’s Political Economy, ed. Wennerlind and Schabas, 49-64, republished as chap. 13 of Essays on Hume, Smith and the Scottish Enlightenment, 226-46. Relevant discussions are also found in Skinner, “David Hume,” 225-30, and Hundert, E. J., “The Achievement Motive in Hume’s Political Philosophy,” Journal of the History of Ideas 35, no. 1 (1974): 139-43CrossRefGoogle Scholar.
26 The aspect of Hume’s discussion of property has generally been passed over in the literature, with the most extensive treatment being in Miller, Philosophy and Ideology, 68-72 and Costelloe, Hume’s Imagination, chap. 3, which informs the current discussion. See also Berry, “Property and Possession,” 91-95, and Moore, James, “Hume’s Theory of Justice and Property,” Political Studies 24, no. 2 (1976): 103-119CrossRefGoogle Scholar, esp. 113-16, who emphasizes the “fanciful” (113) character of property and the rules that govern it. Berry and Moore also provide some historical context for Hume’s view (his studies at Edinburgh University and as a reaction to Locke and the labor value theory of property).
27 This might appear too narrow a definition since it places weight on the idea of sole proprietorship. There is no reason, however, why Hume’s explanation could not be extended to apply to joint or common ownership: the same relation of cause and effect would obtain, but “sole” would refer to a collectivity rather than an individual.
28 See Britton, Karl, “Hume on Some Non-Natural Distinctions,” in David Hume: Bicentenary Papers, ed. Morice, G. P. (Austin: University of Texas Press, 1977), 205-9Google Scholar. The quotation is from 205.
29 See Miller, Philosophy and Ideology, 69, who points out that cause and effect sometimes combines with the other principles of association to explain our rules of decisions about property.
30 See T 2.3.1-2 and EHU 8 and for the place of moral evidence in Hume’s political economy more generally, Schabas, “Hume’s Political Economy,” 60-65. See Berry, “Property and Possession,” 93-94, who emphasizes the fact that property (like causality in general) is fundamentally an “internal” relation and that the “elements involved” (people and the things they own) are “separable”; and Moore, “Hume’s Theory of Justice and Property,” 114 n. 3, who comments that for Hume “property provides the best illustration of the idea of causation” (emphasis added). Moore draws some evidence for this claim from the fact that Hume added a footnote to the 1760 version of “A Dissertation on the Passions” (originally published in 1757) reiterating the importance he placed on property being a species of causation: “Property is therefore a species of causation,” Hume writes in the closing sentences. “It enables the person to produce alterations on the object, and it supposes that his condition is improved and altered by it. It is indeed the relation the most interesting of any, and occurs the most frequently to the mind” (DP 2.9n3). For the comparison between this note (in its entirety) and T 2.1.10.1/SBN 310 to which is bears a strong resemblance, see Beauchamp, “Introduction,” in A Dissertation on the Passions/The Natural History of Religion, lxxxi-ii and cxvii.