The Relativity of Money


This paper will examine the changing nature of money in society. Money comes in various and ever-expanding forms. Money can be studied as a social artifact. Money reflects the core values of the society. Money is relative.  The nature of how much money is needed to live a "normal" life has changed over the past century; changing patterns of consumption and ideas about an "acceptable standard of living" have driven these changes.  Evaluating money and the notion of ideal class in terms of their variance provides us with an analytic framework that increases our understandings of the core institutions in society and how they interact.


This paper will advance some preliminary ideas and analyses in an attempt to provide additional sociological insight into the relativity of money and its effect on society.


Carmine Calabro

Department of Sociology

State University of New York at Stony Brook

© 1985 Revised 2001  Revised 2008  Appended 2009

All Rights Reserved



Let's begin with the most elementary question. What is Money?


The answer seems apparent. Money is typically perceived in terms of dollars and cents. This is logical, given that the currency and coinage of a society are most familiar, hence usually top of mind to most people. Credit is also a familiar form of money whether in the form of a credit or charge card or the mortgage on the family home. E-money is now part and parcel of the digital wallets of cybercitizens.


In fact, all kinds of "things" have been used as money at different times in different places throughout the continuum of modern history. And most nation states mint their own currencies that are considered "fiat money." These currencies float from market to market at variable exchange rates. Money is thus socially constructed and differs from society to society. (See: Berger and Luckman, 1966). We note, that from a sociological perspective, it is impossible to define "money" in terms of its mere physical form or pure properties since these are truly diverse. Even economists apply different meanings to "money."


The Sociology of a Money Economy


The concept of exchange is critical to formulating an elementary understanding of the social and political aspects that form the framework of the "money economy." In a macro model, social cohesion and unity are maintained as the result of "partial interactions" between "institutions" of the society. The exchange of money between individuals and institutions reinforces the concept of the relative autonomy of the political institutions and reinforces the notion of individual "freedom" by manifesting "choice" in the subjective exchange of monies. Individual citizens of the money economy exchange their labor for money, which in turn, exchanges for goods and services. The acquisition of goods in the form of a consumption function is essentially an expression of freedom within the institutionalized channels. What are the laws that govern choice?


Simmel's treatment of money as an object of "pure exchange" is central to the underlying theme of this paper. Herein, money, in and of itself, does not have any intrinsic value; however, it expresses the character of everything else. Veblen's conception of the function of money: "…the process of economic life as a whole and taking it in its rationalized bearing as a collective endeavor to purvey goods and services for the needs of collective humanity, the office of the money unit—money transactions, exchange, credit, and all the rest that make up the phenomena of business—is perhaps justly rated as something subsidiary, serving to facilitate the distribution of consumable goods to the consumers, the consumption of goods being the objective point of all this traffic," is equally important with respect to the fundamental propositions we are advancing herein.


Although economics tends to be all about the statistics of dollars and cents, production and consumption are dependent upon people. Labor is the engine that propels both production and consumption. Work involves the exchange of an individual's labor power for "wage money." Spending in the form of consumption for material goods (necessities and luxuries) and saving or investing for the "future" are the manifest gains from the exchange of labor for money. Marx believed "that human thought is founded in human activity 'labor,' (in the broadest communal sense of the word) and in the social relations brought about by this activity" (See: Berger & Luckman, 1966:6). Therefore, to treat the economy of a society in terms of dollars and cents alone is to overlook its foundation, human interaction.


Few economists now ponder about how we consume, what we consume, and why we consume and whether it reproduces class inequality, alienation, or power. However, this has not been the case with respect to sociologists, social critics, and market researchers.


In the mainstream economic and psychological models, the consumer is considered to be rational with respect to their decisions. We note that in traditional economic business models, consumers tend to act in a pattern that will maximize their own well-being. Modern business theory rests upon a series of assumptions about consumers themselves and the relationship between consumers and the markets in which they operate. In these models, consumers are both rational and well informed with respect to the decisions they make. Moreover, these models show that consumer preferences are consistent and that each consumer's preferences are independent of other consumers' preferences.


The history of any society provides us with a plethora of "hard facts" about that society. Time provides us with the baseline to examine "historical data" in a consistent manner. Year 2000 marked the dawn of the new millennium. The second thousand years of human evolution rang with global and electric celebration. If only for its chronological value in the space, place, and time continuum, year 2000 is particularly salient with respect to establishing a "baseline" to map the various "observations" about the prevailing culture in the United States at this benchmark. There are many observations that one can draw from the "economic dataset" that can be used to paint a portrait of the millennial mindsets and behaviors of the American consumer.


Getting back to the idea that labor is the engine that maintains and reproduces the social form. It is our willingness to exchange our labor power for economic well being relative to an acceptable "standard of living." The notion of an acceptable standard of living is part and parcel of the dynamics of social class, work, and money in our society.


With respect to working and getting "ahead," we now find that "work" requires longer hours, jobs are less secure, and pressures to spend are more intense than for our parents' generation. The average American now finds it harder to achieve a satisfying standard of living than 25 years ago (1975). We would also find that the standard of living, at least what is "popularized" as being the norm, has become more elusive in that it now represents the lifestyles of the upper-middle class. As such, the gap between the aspirations and the abilities of households to attain what is expected and respectable has widened.   This gap has become more salient as consumers are paying more for essentials such as fuel and food.  The weakening dollar has also contributed to the strain that “average” Americans (2008) are experiencing, further compounding the economics of a country at work.


This observation leads to several questions. Has the gap widened, or has the "norm" and standard of what is acceptable increased at a greater rate than income? We know that the upper-middle-class is roughly considered to comprise the top 20 percent of U.S. households. This segment excludes the top few percent of America's Wealth. In 1994, the lower-income cutoff for this group was about $72,000 a year and its midpoint $91,000. At last count, the median household income is $40,816 (US Census - 1999). This measure has grown only slightly over the past decade ($38,168 - 1990 in 1999 Constant Dollars).


In terms of households, income, and population, the normal curve roughly approximates the distribution of income by households, however the conceptual pyramid structure advanced by Pareto (See: Circulation of Elites) reflects the power base that results from the accumulation of wealth and capital. Getting to the top of the pyramid, or at least near it, becomes part and parcel to the raison d'etre of individuals and households in the middle and lower middle classes. The notions of social striving and aspirational behavior are central to understanding the fundamental aspects of mobility in the money economies. What happens when the "standard" shifts to higher levels and outpaces the capabilities of households to sustain ever-increasing consumption? This problem fits well into the problematic notions of manifest and latent effects in the postulate advanced by Robert Merton that addressed this specific and salient situation. It is convenient to discuss the notion of "anomie" in terms of goal attainment, e.g., when the individual's means are not sufficient to attain the goals aspired to by the mainstream. It is didactically convenient to present Merton's logic as one that assumes conflict as a basis of social progress. Progress is not a linear process; it is more accurately represented as the result of dynamic interactions between social institutions that compete for scarce resources. In this model, it is logical that outcomes of any given situation at some point in time would not be equal for all, despite the larger social or "pluralistic" gains made by and for the nation state in terms of sustaining the prevailing culture.


The same situation holds validity at the household level. For many, making a living is starting to take a back seat to having a life. Many households have struggled with quality-of-life issues. Within the middle class—and even the upper middle class—many families experience aggressive strain to keep up, both for themselves and their children.


Although money empowers individual consumers, this is not to say that all consumers care about is consumption of goods and services, many struggle with ongoing conflicts between material acquisitions and an alternative set of values stressing family, religion, community, social commitment, equity, and personal meaning. However the system is structured such that an adequate income is an elusive goal. That is because adequacy is defined by reference to the incomes of others. As social interaction moved from backyards and porches to the workplace, the referential locus for income comparisons also shifted. The social context of consumption, as it relates to the individual and households, is one where our sense of social standing and belonging comes, to a large degree, from "what" we consume. But can what we consume actually change our social class?


The economic history of the U.S. is well documented. Economic data are readily accessible and relatively straightforward to interpret in a linear model. These are important historical data to capture and analyze.


The impact of moving the "ideal" standard of living from "middle class" to "upper middle class" has created greater pressures on households aspiring to reach and then maintain this more affluent "lifestyle."


Over the course of 200 years the U.S. has emerged as the dominant political and economic power in the world. The culture for which it stands has emerged, in and of itself, as the prevailing model for the world at large. As such, the American consumer has become the role model of success for a growing global audience.


The lifestyles of the "middle-class American" were once considered the standard of normative attainment in terms of status and civility. Today, an upper-middle-class milieu represents the normative standard of living for the nation and for the world at large. In shifting the target from "mass" to "class," the costs for maintaining a household at relatively social parity with this new and improved standard of living have increased.


Changing Notions of Income and Middle Class Over the Past Century


In order to fully understand the impact of these observations, we must step back into the economic and political history books and take snapshots of the 1900s. The turn of the century was marked by an increase in specialization and bureaucratization. Americans now worked for large corporations where their roles involved performing tasks that were often fragmented and impersonal. The assembly-line technique employed by Ford to mass-produce automobiles became the model of efficiency for all productive institutions. Working also came to involve being pressured and squeezed by middle management, who in turn were being squeezed by superiors and stockholders to increase the marginal profits of the corporation.


In order to evaluate how the idea of a normal "life" and an acceptable standard of living has changed over the years, we examine changing notions of money and income over the past 100 years of American society.


The world began to change dramatically after World War I. The culture of America in the 1920s was profoundly changed in many ways. More and more people had entered the middle classes and began to enjoy substantial discretionary spending. The advent of mass production in the 1920s facilitated the production of consumer goods that were "nearly identical" and that most everyone wanted. The average household was able to purchase mass-produced goods due to declining prices, and the "average Joe" was earning a higher income during this boom cycle of economic and financial prosperity. This era marked the rise of Wall Street and the New York Stock Exchange. Symbols of status and success became readily accessible to the American consumer as did the popular practice of displaying one's acquisitions.


Although the U.S. doctrine rested on the political and social principles of equality and opportunity, class distinctions were rapidly forming. Consumers' acquisition goals and purchasing patterns were meant to echo their status within the social hierarchy. Wealth and power were seen in the material goods and lifestyles of the moneyed class.


In an era marked by increasing social stratification, social striving became excessively oriented towards attaining the trappings that marked them as members of the elite and mobile class. Within less than a decade, the economic boom of the Roaring '20s had come to a screeching, somber, and silent halt. The economic depression of the 1930s was a seminal event for America and its economic allies. Although much of the gains in economic prosperity, especially among the middle class, were eradicated within several years, the country struggled to sustain social cohesion through political means. Deficit spending became a key component of government during this decade. Major public works programs, social safety nets, and other "progressive" legislation allowed America to work at rebuilding its infrastructure.


Europe also felt the ravages of economic collapse, paving the way, in part, for the rise of Fascistic movements in Germany and Italy. Germany's attempt at progressive reforms embodied in the polity of the "Weimar" administration buckled under the weight of economic depression. Germany began to arm itself for war, with its objective of colonizing all of Continental Europe and Russia. Germany, Italy, and Japan, the Axis powers, clashed with the Allied forces of Britain and France (with Russia and the U.S. joining the effort later) in heated battles throughout Europe and Eastern Europe.


American workers in the 1940s were busy at mass-producing military armament for World War II. Factories pumped out tanks, guns, bullets, planes, ships, and submarines to supply the war effort. The U.S. entry into the war itself further escalated the production, giving birth to a mighty American military industrial complex, where atomics and electronics came to drive the course of American productive capabilities. The result of the war further solidified the dominance of the American culture and way of life.


By the 1950s, prosperity and stability were once again part and parcel of the American Culture. New American communities began to take root in geographical clusters surrounding the nation's largest cities. Suburban developments were carved out of large tracts of land, and millions of American families flocked to these bedroom communities.


In the shadow of the cold war between capitalist and communist societies, Americans once again began to resume their penchant for "acquisition" of material possessions. People looked across their yards to their neighbors' homes for cues about consumption. As a result, neighbors grew increasingly alike in what they owned and displayed in the form of their material well-being and lifestyles. This was a new era, and Madison Avenue advertising had become a new force in branding consumer products. A fully automatic Norge washing machine, wall-to-wall Karastan carpeting, a Kirby vacuum cleaner, a shiny Chrysler in the driveway were symbols of suburban success. We note that the branding process, in and of itself, is meant to "reify" some thing by affecting a "halo" or image to a product or service.


The 1960s were a decade of dissidence and dissonance. Civil rights and the war in Vietnam occupied the front pages of America's newspapers. Age was a factor in creating a schism in the larger cultural milieu. America's youth were disavowing the tenets of the mainstream culture in large numbers. However, mainstream prosperity continued to dominate the landscape of American values, and the consumption of material goods continued to escalate as a result.


During these decades, much in the way of social critique was leveled at the prevailing culture of the money society. Although the foundation of the American culture is rooted in the notion of a classless society, our nation maintains distinct lines of stratification that separate one group from another based on "material wealth" and the power that emanates from that wealth. In 1959, the social critic Vance Packard wrote: "We compete for the same symbols of bigness and success. We are careful to conform to the kinds of behavior approved by our peers. We are wary of others who don't look like our kind of people. We tend to judge people by their labels. And all too often we judge people on the basis of the status symbols they display." Sociologists associated with the "New Left" influenced by the Frankfurt School (e.g., Walter Benjamin, Thomas Adorno, and other proponents of Lukac's "History and Class Consciousness" and other disciples of the Columbia and Harvard schools) argued that Americans had been manipulated into participating in an artificial consumer culture (kitsch) that could not yield true human satisfaction. Marcuse published an extensive work using Hegelian dialectics—One-Dimensional Man (1964)—contending that modern society and especially those typified as liberal and free are, in fact, most repressive. The work of Thorstein Veblen is also important with respect to understanding the link between consumption and the image of the self in terms of a reflexivity of sorts.


Most economic and business models show that America's super-rich households generate average yearly incomes of a quarter-million per year. They consume most of the world's ultra luxury goods and services. There is an extensive network of business that caters to the appetites of the super-rich.


The standard of living, however, for most folks in the year 2000 more often personifies the lifestyles associated with an upper-middle-class social status. In pure economic terms, the upper-middle class typically earn in excess of $90,000 per year. This group defines material success, luxury, comfort, fashion, and civility for nearly every class below it.


Corporations use the persuasive arts to transmogrify personal and social hungers and cravings into desires for commodities. Commercialism foments a culture devoted primarily to the stimulation of wants rather than the satisfaction of them. The endless stimulation of wants creates an ever-enlarging sense of what constitutes consumer "essentials" and boundless growth in households' demand for goods. Individual discretionary spending increased 30 percent between 1979 and 1995, while expenditures on recreation have more than doubled. Competitive spending intensified in the 1980s and 1990s; a large proportion of middle-class Americans were acquiring at a greater rate than any previous generation of the middle class. And their buying was more upscale. By the end of the 1990s, the familiar elements of the American dream (a little suburban house with a white picket fence, two cars, and an annual vacation) expanded on many dimensions.


The size of houses doubled in less than fifty years, more households owned second homes, and households owned or leased two or more types of transportation (automobiles, van, station wagon, sport utility, trucks, etc.). Middle-income Americans were also consuming more leisure and pleasure activities, and more families were enjoying yearly vacation travel. Over time new items have entered the middle-class lifestyle: personal computers, beepers and cell phones, education for the children at a private college, private school(s), designer clothes, a microwave, restaurant and take-out meals, home air conditioning, summer vacations, private lessons, and multiple forms of personal enrichment.


During the past several decades, we have witnessed the dawn of the digital age. Technology is rapidly changing the way in which folks live and work. We now live in a world that is rapidly expanding into a true global community through e-access and interaction. There is another clearly definitive schism emerging as a result of the technological progress we've made in the past thirty years in the form of a "digital divide."


In this new technologically enhanced society, advanced education and technological prowess are emerging as the key drivers that will determine which individuals advance economically. This has blurred, to some extent, the effect of gender on mobility. The struggle for women's liberation is rapidly bearing fruit. Women are rapidly advancing in areas of work that were once dominated by men. There are now more women in graduate schools, law schools, and medical schools than ever before. Women with advanced educations are increasing their incomes faster than their male counterparts.


Changing Notions of Consumption


Consumption practices both reflect and perpetuate structures of inequality and power. This is particularly true in this era with its emphasis on luxury, expensiveness, exclusivity, rarity, uniqueness, and distinction of things. These are the values that consumer markets are selling to the middle and lower-middle class.


Despite the overall economic well-being of the nation, and in part, due to the display of richness and wealth during the 1990s, it has been reported that many households felt cynical, deprived, or trapped, apparently more concerned with what they could not manage to pay for than with what they already had. Definitions of the "good life" and even of "the necessities of life" continued to expand in material terms, even as people worried about how they could pay for them. The upshot of this trend was to upwardly shift aspirations while concomitantly increasing the sphere of reference groups. Even though we own more than our parent's generation, the percentage of Americans describing themselves as "very happy" peaked in 1957. Since then the trend in self-reported happiness has remained fairly stable or declined. This trend towards "unhappiness" prevails despite the fact that American's consume twice as much as they did in the 1950s, when the average size of a house was about the same as many two-car garages today. The moral implications of want creation notwithstanding; there is increasing evidence that the notion that material goods bring happiness is simply false on its own terms. A series of studies by psychology professors Richard Ryan and Tim Kasser suggest that lasting happiness does not come from money or material goods.


"[T]he more we seek satisfaction in material goods," says Dr. Ryan, "the less we find them there. The satisfaction has a short half-life; it's very fleeting." From research in 13 countries, Dr. Kasser concludes that the pursuit of wealth is at best neutral and frequently psychologically harmful. This "comes through very strongly in every culture I've looked at," he says.


In their study, "A Dark Side of the American Dream," Professors Ryan and Kasser found that measures of well-being and mental health are inversely related to the importance a person places on money and material values. This finding holds true for both college students and the general public. The implication is that the advertising industry's relentless want creation and promotion of visions of splendor may spur widespread unhappiness, even as it promises the opposite.

All social realities contain ideas of social relationships, of social occasions, of social roles, and of community (typological classifications of the ideal or normative). In these respects, all interaction results in participation in the creation of a shared ideological culture (superstructure) that is necessary for the social condition to be maintained. This is part and parcel to the process of socialization or acculturation. Society and the artifacts of the society are best considered as products of the society, as such they are socially constructed, thereby sustaining and maintaining the social form. Consumption is perhaps the clearest example of an individual behavior that our society takes to be almost wholly personal, completely outside the purview of social concern and political policy.


The Future of Income and the Middle Class


What's new in the 2nd Millennium is a redefinition of reference groups: Today's comparisons are less likely to take place between or among households of similar means. Instead, the lifestyles of the upper middle class and the rich have become a more salient point of reference for people throughout the income distribution. Luxury, rather than mere comfort, is a widespread aspiration.


The costs to maintain a higher standard of living are both economic and social. In a simple economic model, household income is allocated towards consumption or savings. Keep in mind that much of the household savings of Americans is invested in 401k, equities, bonds' and funds. Wealth building, for the better part of the decade, has been a "given" attribute of the upwardly mobile households of the '90s. This trend in asset growth buoyed the attitudes of the American consumers, eager to acquire the latest toy or trapping required for the moment. The rapid escalation of desire and need, relative to income, explains in part the precipitous decline in the savings rate—from roughly 8 percent in 1980, to 4 percent in the early 1990s, to the current level of zero.


We note that the stock market boom induced many households not to save their discretionary funds; but financial assets are still highly concentrated, with half of all households at net worth's of $10,000 or less, including the value of their homes. The most recent research indicates that about two-thirds of American households do not save in a typical year. The paper wealth of many households was reduced by significant proportions during the first and second quarters of 2001.   


We are seeing a repeat of this cycle that started in the 3rd quarter of 2006 through the first and second quarters of 2008.  Coupled with the collapse of housing values, tighter credit, sagging dollar, reduced real estate equity and increased foreclosures, tied into rising oil prices, gasoline prices, food prices and energy costs are further reducing the discretionary income spending that has traditionally been the impetus for economic resurgence in our country.  As of 2009 prevailing trends are continuing to defy the laws of gravity, despite the massive amounts of "money" being injected into the global capital markets by G7 and G20 members.  More information about current trends and conditions can be found here: News, Analyses and Commentary.htm




The future of money and ideas of money will not remain static, as the past 100 years have shown. The concept of money and how much money is needed to live a "normal" or "acceptable" life will continue to change with consumption patterns. The relativity of money will continue to change with increasing technology and expanding markets. Whether or not society will ever see a universal system of "money" will be worth watching for as globalization continues and ideas of consumption spread across the globe. Would a universal form of money lead to universal ideas of income and class? Probably not, but globalization and the spread of capitalism will add to a more systemized belief system about what is "needed" to live the "good" or "normal" life across the globe. In all of this, we can more easily understand what Veblen advanced in his sociological studies; that is, "This suggests that the standard of expenditure which commonly guides our efforts is not the average, ordinary expenditure already achieved; it is an ideal of consumption that lies just beyond our reach, or to reach which requires some strain. The motive is emulation -- the stimulus of an invidious comparison, which prompts us to outdo those with whom we are in the habit of classing ourselves. Substantially the same proposition is expressed in the commonplace remark that each class envies and emulates the class next above it in the social scale, while it rarely compares itself with those below or with those who are considerably in advance."