From Smith to Simmel, the Metamorphoses of ‘Purchasing Power’


Purchasing power as dominance over others

The term “purchasing power” appears in the XVIIIe century from the pen of Adam Smith. In his view, purchasing power has to do with dominance: the more you own, the more you dominate in society. To defend this idea, he relies on Hobbes: wealth, cis power”, admits Smith in the Wealth of countries. The quote isn’t exactly from Hobbes, but it builds on the Hobbesian idea that there is a positive relationship between wealth and power: the richer you are, the more power you have. For Smith, however, the problem is not political, economic, or military—unlike Hobbes. If there is power, it is of the order of domination over others.

To understand him, we have to go back to his theory of ‘work value’. First to try to find the value of a commodity other than by its exchange value (the price in a market), Adam Smith argues that every commodity is the result of a certain amount of work. So what one pays with the currency is only the compensation for a certain number of hours spent on manufacturing a product. In transitivity, to buy a good means to appropriate the work of others. This is where there is “power” in buying:

wealth, cis power, said Hobbes; but he who acquires a great fortune or who…inherited nthereby necessarily acquires no political power, neither civil nor military. […] The kind of power that this possession grants him immediately and directly, cis the power ofto buy vsis a right of command over all the work ofotheror on any product of this work then in existence on the market.

Thus, from the origin of the expression “purchasing power” has a link with the idea of ​​domination and freedom.

Purchasing power as personal satisfaction

The sociologist George Simmel worked at the beginning of the XXe century a philosophy of money where the power to buy has a paradoxical character. On the one hand, Simmel believes that money liberates from the compulsion of barter by enabling greater availability of tradable goods and services. This is why money, by purchasing a larger number of products, means more freedom. In that it is a form of power. † The possibility toexpress and reimburse the services through:money has always been proven as a means and guarantee of personal freedom”, he says in his short text “Money and Food” (1915).

On the basis of Roman law, he even says that money buys freedom:

USAis that classical Roman law prescribed that whoever was assigned a certain task could refuse to do sopay it in kind and settle it with its cash equivalent, even with theagainst the will of the beneficiary. We acquired there the guarantee to meet all personal obligations ofto applyis for this reason thatthis clause is called magna card of personal freedom in the field of private law.

But it also happens that the power of money turns against individuals. A kind of new religion, money becomes an end in itself:

The super addition [ce que l’on ajoute] wealth nis nothingother thana special manifestation of this metaphysical essence that themoney, it will be said, by virtue of which it goes beyond any of its singular applications and, as absolute means, imposes the possibility of all values ​​as the value of all possibilitiesmoney philosophy,1900).

Purchasing power is thus a source of personal satisfaction, as long as he doesn’t become a fetishized totem in society.

Purchasing power as social justice

Today purchasing power is claimed as a political and social necessity. The phenomenon is not new, and it would be wrong to make it an obsession specific to the 2000s: at the beginning of the 20th century there were already riots in Europe to denounce the high cost of living , as evidenced by “the Housewives’ Crusade”, in 1911. The question of human dignity through purchasing power became essential in post-war social justice developments.

Indian economist and philosopher Amartya Sen, “Nobel Prize” in Economics in 1998, is one of those who recognize this social demand as legitimate. According to him, purchasing power purchasing power ”) is necessary for human dignity. It is inspired by the political liberalism of John Rawls and in particular the idea that public power should give citizens access to ‘primary goods’. In Rawls, access to these goods refers to important general principles that Amartya Sen finds too abstract. one must “to focus on the resources ofexist for sinterest in the real possibilities of life”The idea of ​​justice2009† According to him, individuals should “possibilities”, that is, having more than just rights. However, this cannot be done without a minimum of purchasing power that allows individuals to achieve their goals. Therefore, a situation will be just according to: ” the possibilitiesthe chance thatover thereiindividually to achieve their goals or from “choosing between possible ways of living” Power must, here, sunderstood as a concrete ability to act.

A big but still current problem

Faced with these three concepts of “purchasing power”, we understand better why this notion has (again) become a major concern of the French. It is not just an economic and material issue. He is not just a chestnut tree in presidential campaigns (as early as 2007 Sarkozy wanted to fight for “purchasing power”, while Royal fought against “high cost of living”). Behind this term lie the foundations of human dignity and of righteous living.

But perhaps this expression is also obsolete, or at least contradict other concerns of our time. Indeed, isn’t buying the social practice the most contributing to destroying the planet and fueling global warming? Other expressions, such as “power to live” or “happy sobriety,” have been on the rise for a few years now so as not to make purchasing power the sole driver for a society’s development.

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