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The story of how money was first developed could only be guesswork. We can infer that the concept of money started in ancient times when barter was the medium of exchange. Because the ancient origins of economic systems precede written history. So it is impossible to trace the true origin of the invention of money. And, the transition from “barter systems” to the “monetary systems”.

Apparently, theories of what money is can influence the interpretation of historical and archeological evidence of early monetary systems. For example, “the commodity theory of money” (money of exchange) is preferred by those who wish to view money as a natural outgrowth of market activity. Others view “the credit theory of money” (money of account) as more plausible and may posit a key role for the state in establishing money. Overall, economists’ different theories of money largely focus on money’s functions, use, and management.

In this article, however, I am more interested in the psychological aspects of money. Particularly to understand why money drives people mad and how it leads to chaos in our society.

Georg Simmel‘s book (The Philosophy of Money) views money as the structuring agent that helps people understand the totality of life. One of the fundamental points of this book highlighted that money brings personal freedom. The experience of independence and self-sufficiency, capacity to monetize obligations and flexibilities are effects of such freedom.

Money as an empowering value

As a matter of fact, money is an enslaving agent. Evident in most societies today, those with access to funds tend to ride on others who are unfortunate and less privileged. That is because the funds in their possession make them feel they’re masters over the poor. That is to say, money positions its owner in the place of power over others – making them masters and lords.

Indeed, when in possession of a high source of wealth, you get respected, honored, and dignified irrespective of your looks or personality. That is because money builds wealth and fame – this elevates you above others in any society. It creates signals to others that you should be liked and admired.

Also, if you want to empower people, give them a source of wealth. Likewise, if you want to test someone’s true character, give them fame or put them in the place of power.

Reminds me of a story about a poor farmer who was marginalized in his community. When he goes to the market to sell some of his produce, people treat him with contempt and sometimes even pushed him aside. As far as the community was concerned, he had no place among them as even the poor called him poor. As the end of the story would have it, he stumbled upon a hidden treasure on his farm. This made him so rich and was appointed the chief head of the community. He became the talk of the community – like a hero of war.

Such is the effect of wealth – bringing out the ‘nobility’ in ordinary people. For this is probably one of the strong reasons people want to become wealthy by any means. Everyone wants to be seen, reverenced, and highly esteemed – and being wealthy is the way to go.

Understanding the psychology of money; Why people behave the way they do with money

How people behave with money is essentially dependent on their perception of what it is. If you ask people, probably as a survey, what they think about money, their responses would shock or surprise you. Let’s consider the instances of these three characters; Josh, Brian, and Clare.

They work in different departments in the same organization, earn the same salary under similar economic situations. Josh explicitly took the job because he wants to clear all his bills and avoid debts. As far as he’s concerned, all his bills are off his neck each time he earns his salary. That was enough for him.

Brian considers himself an investor. So he uses his job as a form of security to get loans which he uses to invest in real estate and the financial market. He is constantly on secured debts which he channels over half of his salary into. His view of his earning is primarily to appreciate its value by securely investing though, with risks of being in debt.

Clare, on the other hand, saves about 60% of her salary. She’s able to minimize her expenses in unusual ways. She lives in a cheap one-bedroom house and doesn’t drive a car. Clare lives a very humble and quiet life with no children or dependants. By all means, she avoids spending her money. Her savings is huge for fear of an emergency in the future.

You are likely to fit in any of the distinct personalities above. Not to be judgemental here as there’s no right or wrong about these perspectives.

Why do you want more and more?

The love of money is the root of all evil… and good, too.

Financial obligations breed financial interests. In this case, the more financial responsibilities you’re burdened with, the more funds you want to get. Of course, that includes your appetite for extravagant spendings which attracts a quest for more and more money. An insatiable search for some fulfillment or pleasures which, sadly, getting more cannot fully satisfy.

Generally, we all seem to have a vacuum in us. Some sort of emptiness, constantly looking for something to be filled with. For some reason, we think getting more wealth, fame, or higher positions would help us reach a point of contentment. Unfortunately, such a point of contentment by getting more is unattainable. Because contentment is not a state of having acquired enough. It is a point of decision making – that you’ve had all you need to fulfill a life that you want.

Jim Carrey made a remarkable statement which says, “I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.” He particularly became famous and wealthy just to prove to everyone that it is not the true path to fulfillment. Because we can never be enough by what we possess in terms of wealth and fame.

Why so much greed and corruption?

In a money economy, individuals will tend to put their financial interests above the goals of society. Most decisions by political and business leaders are stimulated by the desire to get more money, usually, at the expense of the people under them. This is a result of their gross insensitivity to the needs and feelings of others.

Corruption is often linked to how money is gotten and used. Though corruption wears so many faces and that includes bribery, embezzlement, fraud, money laundering, extortion, cronyism, lobbying, and so on. Important to realize that corruption is the outcome of greed and selfishness.

People become greedy probably as a result of their bitter experience from lack. This leaves them in a state of depravity and fixates on the things they lack with an obsession to fill the void.

Also, it is possible that greed is programmed into our genes as everyone is vulnerable and has the tendency to be greedy for something. When you live a life that’s constantly encrusted with excessive needs or covetousness, there is a likelihood that you’d end up being corrupt.

And when such a person gets to a place of authority or leadership, they compulsively acquire and hoard public funds and even prevent others from getting the funds. This eventually robs off from the top and spread to the bottom like a virus. Unfortunately, this is the case in many societies.

In conclusion

As can be seen, the primary cause of chaos in every society is exposed when you follow the streams of money. As money is undoubtedly the common denominator of all ills in our society. When you think of a huge sum of money, what comes to your mind?

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