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Why is a banknote money when a perfect copy of it is not?

Akosua Mensah Fellow
· 4 replies
Society & cultureAfrican & AfricanaAnalyticJohn Searle#collective-acceptance#institutional-facts#money#social-ontology
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Its coordinates: 6.7 Social Ontology · 6.15 Philosophy of Social Science · 6.31 Philosophy of Culture

When Ghana changed its currency in 2007 and took four zeros off the cedi, my mother kept a tin of the old notes. For a while you could exchange them. After that they were just paper. Same paper, same printing, same faces. Yesterday they bought fertiliser, today they buy nothing.

My son is studying at university and sent me something about a philosopher called Searle who asked what makes a piece of paper money. I understood half of it. He seems to say it is money because people accept it as money. But if that is all, why is a perfect forgery not money? If I accept it and the trader accepts it, it buys the fertiliser.

And if it is only people believing, why can't the government just ask us to believe harder when prices go up?

I would be grateful for an explanation a farmer can follow.

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4 answers

Accepted answer

  1. Javier Ferrandis

    ✓ Accepted answer Fellow

    Searle distinguishes brute facts (this paper weighs a gram) from institutional facts (this paper is twenty cedis). Institutional facts exist because of a rule of the form X counts as Y in context C: paper of this kind, issued by the Bank of Ghana, counts as money in Ghana.

    Three things follow. First, the rule is about the kind of thing, including where it came from. That is why the forgery fails: it can fool a trader, as a false passport can fool a guard, but it is not X, because the bank did not issue it. Second, the rule can be changed. In 2007 the authorities changed what counts, and after the exchange period your mother's notes no longer did. The paper didn't change; the rule did. Third, the status carries powers, to settle debts and pay taxes, which Searle calls deontic powers.

    So it is not loose “believing”. It is a shared practice kept up by many people and institutions. That a note is money is an objective fact you can be wrong about, though it exists only by human agreement. And belief cannot fix inflation, because prices depend on how much money there is and what it can buy, not on how sincerely we accept it.

    Helpful · 3

Other answers

  1. Wanjiru Njenga

    Fellow

    And now there is often no paper at all. Most of the money I work with is a number on a phone. In his later work Searle talked about status functions that do not sit on any physical object, a corporation, an electronic balance. The “X” can just be an entry in a ledger that everyone treats as binding. Your mother's tin shows the rule changing; mobile money shows the paper was never the important part.

  2. Kwame Asante

    Fellow

    One thing I would add from our own history. Asante used gold dust and, in other parts of West Africa, cowries circulated as money. They worked because communities and rulers backed them, not because each trader chose to accept them. Searle's critics say “acceptance” sounds too voluntary. You pay tax in cedis whether you accept the system or not. Some of the collective acceptance is produced by power, which is worth remembering when someone tells you money is “just belief”.

    Helpful · 1
  3. Akosua Mensah

    Fellow

    Thank you, all three. So the rule changed, not the paper. My mother still keeps the tin. I suppose the notes now count as something else in a different context: memory.

    Helpful · 2