Posted by: Doug Henwood | June 18, 2012

From the vault: money and the mind, a psychoanalysis

[Related topics came up earlier today on the Facebook, so I thought I’d post this excerpt from my book Wall Street (Verso, 1996/1997). You can download the whole book for free here. For a more “economic” analysis of money and gold, see From the vault: the gold fetish.]

Money, mind, and matter: a psychocultural digression

 Money is a kind of poetry.

— Wallace Stevens (1971, p. 165)

Who drinks on credit gets twice as drunk.

— Turkish proverb

One virtue of Keynes’s attention to psychology and sentiment is that it forces us to think about economics in a way that most economists find squishy and unscientific. This narrowness of vision has harmed the dismal science immeasurably.

Credit is money of the mind, as James Grant (1992) put it in a book title, though of course every now and then mental money faces an unpleasant coming to terms with matter. Still, in these days of multibillion dollar bailouts, it seems that mind can sustain fantastic valuations for far longer than ever seemed imaginable in the past.

We might date the modern credit culture’s beginning to the severance of paper currencies from gold in the early 1970s. It waxed during the 1983–89 binge, waned during the 1989–92 slump, and waxed again starting in 1993. At its root, it’s based on the assumption that a munificent river of liquidity will flow for all time. Someone will always be willing to take an overvalued asset off your hands tomorrow at a price comfortably higher than today’s. Two famous axioms from apostles of credit illustrate this faith. In the late 1970s, Citibank chair Walter Wriston, a promoter of Third World lending, rebutted skeptics with the argument that “Countries don’t go bankrupt” (quoted in Kuczynski 1988, p. 5). Last decade’s chief debtmonger, the junk bond supremo Michael Milken, used to argue in the days before his incarceration that capital isn’t a scarce resource, capital is abundant — it’s vision that’s scarce (quoted in Bruck 1988, p. 272).

This credit culture is a long way from that described by a 19th century Scottish banker, G.M. Bell, who thought his colleagues to be finer moralists than clerics:

Banking establishments are moral and religious institutions. How often has the fear of being seen by the watchful and reproving eye of his banker deterred the young tradesman from joining the company of riotous and extravagant friends…? Has he not trembled to be supposed guilty of deceit or the slightest misstatement, lest it should give rise to suspicion, and his accommodation be in consequence restricted or discontinued [by his banker]?… And has not that friendly advice been of more value to him than that of priest? (quoted in Marx 1981, p. 679).

‘The cult of money,” wrote Marx (1973, p. 232), “has its asceticism, its self-denial, its self-sacrifice — economy and frugality, contempt for the mundane, temporal, and fleeting pleasures…. Hence the connection between English Puritanism or also Dutch Protestantism, and money-making.” In a phrase Keynes also used, it is auri sacra fames — the sacred hunger for gold.

This austerity strikes moderns, supersaturated with commodities, as quaint — though there’s nothing passé about sadomonetarist adjustment programs. But there’s another sense in which money and religion travel together — especially when money takes the form of a promise rather than a hard form of settlement, that is, when money becomes credit (from Latin, “I believe”). A credit agreement is a profession of faith by both parties: short of a swindle, both parties believe the debtor will be able to repay the loan with interest. It is a bet on the future. This theological subtlety is lost on the information asymmetry theorists, who, even as they concede the possibility of deception, don’t allow departures from rational self-interest.

For most of history, credit’s dreamier excesses were limited by gold, a metal at once seen as both “natural money” and pure enough to touch the body of Christ. Marx (ibid., p. 727):

The monetary system [i.e., gold-based] is essentially Catholic, the credit system essentially Protestant…. [T]he monetary existence of commodities has a purely social existence. It is faith that brings salvation. Faith in money value as the immanent spirit of commodities, faith in the mode of production and its predestined disposition, faith in the individual agents of production as mere personifications of self-valorizing capital. But the credit system is no more emancipated from the monetary system as its basis than Protestantism is from the foundations of Catholicism.

Money conflates the sacred and profane; it’s no accident that American currency states that “In God We Trust.”

This conflation of high and low, of matter and spirit, is enough to send a student of money to Freud. By the lights of classical psychoanalysis, money is gold, and gold is transformed shit, and exchange relations, sublimated rituals of the anus. Though this is by now a commonplace, readers found this a rather shocking thesis almost 90 years ago. Freud’s (1908) essay on the anal character began by noting the coexistence of a trio of features in such cases: orderliness, obstinacy, and thrift. Freud speculated that this unholy trinity  — hallmarks of the Victorian bourgeois — spring from an infantile interest in the anus and its products. Orderliness, said Freud, gives “the impression of a reaction-formation against an interest in what is unclean and disturbing and should not be part of the body.” Obstinacy represents the baby’s lingering reluctance to part with his or her stool on command.

And the infantile roots of thrift are perhaps the most interesting of all. Freud noted the rich associations between money and dirt found in folklore and everyday language. In English, there are expressions like “stinking rich” and “filthy lucre.” In legends, “the gold which the devil gives his paramours turns into excrement after his departure…. We also know about the superstition which connects the finding of treasure with defaecation, and everyone is familiar with the figure of the ‘shitter of ducats’ [a German idiom for a wealthy spendthrift; we have our goose with its golden eggs, more fertile than fecal, but emerging from a neighboring bodily region]. Indeed, even according to ancient Babylonian doctrine gold is ‘the faeces of hell.’” Finally, Freud suggested that “it is possible that the contrast between the most precious substance known to men and the most worthless…has led to th[e] specific identification of gold with faeces.”

Freud’s early followers — notably Abraham, Ferenczi, and  Jones — trod the anal path blazed by the master. The accumulation of money is a sublimated urge to retain feces for the very pleasure of it, and the production of commodities is the psychic derivative of the expulsion of feces. Money, in Ferenczi’s (1976) marvelous phrase, is “nothing other than odourless, dehydrated filth that has been made to shine.”[1]

The psychological equivalence of dirt and money is suggested by the low social status of bankers in pre-modern times. Using decidedly non-fecal reasoning, philosopher of money Georg Simmel (1978, p. 221) speculated that “the importance of money as a means, independent of all specific ends, results in the fact that money becomes the center of interest and the proper domain of individuals and classes who, because of their social position, are excluded from many kinds of personal and specific goals.” Among Simmel’s examples are the emancipated Roman and Athenian slaves who became became bankers, as did Armenians in Turkey; Moors in Spain; and Huguenots, Quakers, and Jews across Europe. Reading Simmel eighty years later, one thinks how the social prestige of banking increased along with the development of credit, that is, with its evolving liberation from gold.

Norman O. Brown, not the most fashionable of writers these days, found this psychoanalytic orthodoxy wanting. Brown returned the sacred to the analysis of money and demeaned both equally. For Brown (1985, p. 297), money and the sacred were both sublimated products of a revulsion from the body. And such sublimation, whether aimed at god or mammon, is “the denial of life and the body…. The more the life of the body passes into things, the less life there is in the body, and at the same time the increasing accumulation of things represents an ever fuller articulation of the lost life of the body.”

To Brown, the exchange relation is imbued with guilt, and the debtor–creditor relation with sadomasochism. In this, Brown followed Nietzsche, for whom all religions are “systems of cruelties” and for whom all creditors enjoy “a warrant for and a title to cruelty” (Nietzsche 1967, Second Essay, sections 3 and 5). (Modern usage confirms the link of debt with both sadomasochism and the sacred: “bonds” impose conditions known as “covenants” on debtors.) Creditors in the ancient world “could inflict every kind of indignity and torture upon the body of the debtor; for example, cut from it as much as seemed commensurate with the size of the debt.” Creditors can take pleasure in “being allowed to vent [their] power on one who is powerless, the volutptuous pleasure ‘de faire le mal pour le plaisir de la faire,’ the enjoyment of violation.”

For Brown, debt is a sickly tribute paid by the present to the past. (Of course, we postmoderns often see — consciously or not — credit as a way to steal from the future.) But for a partisan of the body, Brown was nonetheless guilty of the ancient psychoanalytic habit of dematerializing its needs. As the early analyst Paul Schilder (1976) — who rightly lamented the absence of a psychoanalysis of work — noted, “When one looks over large parts of the psychoanalytic literature one would not conceive the idea that one eats because one is hungry and wants food for sustaining one’s life but one would rather suppose that eating is a sly way of satisfying oral libido…. Silberer once said…[that] according to psychoanalytic conceptions…the Danube…is merely a projection of urine and birthwater.”

Similarly, Brown’s gold is more a fetishized projection of intrapsychic drama than an alienated embodiment of real social power. His moneyed subjects lack class, race, nationality, and gender. For Marx, what made gold valuable was that it embodied human labor and served as the universal exchange equivalent for all other commodities, whose value arises from the labor that made them. But the nature of market relations — anonymous, mathematical — is to hide the social nature of production and exchange behind the veil of money. As psychoanalysis lacks a theory of work, so does orthodox Marxism lack an understanding of the passions that sustain the disguise. With credit comes a set of passions entirely different from those of gold.

Money, Brown said, is but part of the “commitment to mathematize the world, intrinsic to modern science.” But modern science has now almost completely mathematized money. Aside from doomsayers, survivalists, and other goldbugs, the monetary functions of dehydrated filth are all but forgotten. Even paper money is getting scarce — only about 10% of the broadly defined money supply (M2). Most money now lives a ghostly electronic life.

With this dematerialization of money has come at least a partial banishment of the guilty sadomasochism of the anus. That banishment was seen at its fullest during the 1980s, when fantasy ruled the financial scene; in the early 1990s, the repressed made a partial return, and the exuberance of the Roaring Eighties seemed a distant memory. But the psychological dethronment, however complete or incomplete, of anality and guilt, has an interesting analogue in the cultural and social transformations that so trouble American reactionaries. Capitalism, having undermined the authoritarian–patriarchal family, now produces fewer guilt-ridden obsessives and more hungry narcissists than it did in the days when gold and daddy reigned as the harsh taskmasters from whom there was no appeal. Like the narcissist, today’s consumer seems less interested in the accumulation of possessions than in the (novelty-rich, credit-financed) act of purchase itself.[2] Rather than the guilty obstinacy of the anus — or the Puritan character identified by Max Weber as the spirit of capitalism — one detects a more primitive, fickle, and eternally dissatisfied orality. In contrast with the dry, tight, fixed, “masculine” aura of gold, modern credit money seems protean, liquid, and “feminine.”[3]

Unlike the classic neurotic, whose conflicts centered around anxiety and guilt over what were seen as dangerous or forbidden desires, the modern narcissist complains most about a sense of emptiness, of disconnectedness, of a free-floating rage and anxiety attached to nothing in particular. Under a superficially well-functioning veneer, the upscale narcissist, in Joel Kovel’s (1980) words, “is unable to affirm a unity of project or purpose, a common goal, with other people in a way that goes beyond immediacy or instrumentality.”

According to Kovel, the transformations of domestic life that have occurred since the capitalist industrial revolution first gave us the authoritarian–patriarchal–obsessive personality type, only to be succeeded by the modern, or postmodern, narcissistic type. The breakup of traditional social arrangements that came with the development of the capitalist labor market meant that the scale of social life simultaneously expanded — transportation and communication making people far more mobile and informed about life beyond their locality — and shrank, as the nuclear family became the central focus of all non-work life. “Childhood” in the sense of a protected, privileged phase of life was invented sometime in the 19th century.

This child-centered, father-dominated life became increasingly penetrated, Kovel argued, by the state, the media, and the increasing power of the commodity form. The family, in Kovel’s coinage, became de-sociated. People’s lives became increasingly determined by institutions far beyond their immediate sphere of experience. Decisions about lives in New Jersey are often made by executives in Tokyo; about lives in Brazil made in Grosse Pointe and Milan. The family has effectively ceased to be a barrier against outside events, a haven in a heartless world.

A right-wing version of this analysis calls for a return to the patriarchal family, which is both impossible and undesirable. But leaving aside the issues of the politics of the household, we have to wonder how capitalism can survive this new personality type? On one hand, the system, especially its American variant, depends on credit-financed consumption to keep the wheels spinning, but on the other, the financial system can’t live indefinitely with its consequences. Central bankers and partisans of fiscal austerity can impose sadomonetarism (to steal Dennis Healey’s fine coinage), but it’s not clear that the system can bear it either economically or psycho-politically over the long term. The attempt to evade the sadomonetarist logic produces only a bizzarria of hollow prosperity, speculative bubbles, and an atmosphere of generalized irresponsibility. The attempt to conform to it provokes economic stagnation and corrosive popular resentment. This is another way of looking at the Minsky paradox.

[1]Anyone who has observed modern goldbugs knows that behind their faith often lies a deep snobbery, a contempt for “common,” debased forms of money like paper, which lack the aristocratic status of the sacred metal. Economically, they love the austere, punishing regime of a gold standard, which makes mass prosperity difficult, and hate loose money, which threatens to make prosperity more widespread than it should be. Though there is an economic point to this, the psychosocial truth is another matter entirely; while gold is certainly rarer than feces, both are undifferentiated substances; an ingot is as characterless as a turd. But, as Fenichel (1945, p. 281) wrote, the anal characters who love money love the kind that appears to be “not deindividualized; they love gold and shining coins.”

[2] Or as The Slits put it in their 1979 song “Spend, Spend, Spend”: “I need something new/Something trivial will do/I need to satisfy this empty feeling.”

[3]Needless to say, the gender contrast alludes to convention, not to timeless sexual essences.



  1. This is crucial.

    “In contrast with the dry, tight, fixed, “masculine” aura of gold, modern credit money seems protean, liquid, and “feminine.”

    So much of the right today is a reflection upon loss of male control.

  2. Thanks Doug. Great analysis.

  3. I read this some time ago. Thanks for pulling it out of the vault! But you’re too hard on turds! Under a microscope, they are “a bloomin’ buzzin’ confusion”! In other words, alive. Very unlike shiny metal. Gold can’t make your garden grow.

  4. Thanks Doug. I’ve read and reread the book but forgot about this timely discussion.

    From elsewhere on the Internets:

    “According to Freud, who no one cares about anymore, we underestimate how much sadism and masochism underlies the average personality (because it is taboo in a ‘civilization’ and because it is a fundamentally infantile dichotomy of desire). I’m not crazy about Freud, but I think something like the popularity of ’50 Shades of Grey’, which gets pretty explicit in its descriptions of S&M sex, amongst the most normative demographic (Soccer Moms) is arguing for the possibility that Freud was right.)”

  5. I remember reading this years ago when I first read Wall Street. After finishing “Against Thrift” by James Livingston, the Freudian analysis of ‘holding on to money purely for the sake of accumulation’ being a psychological dysfunction makes even more sense now than it did then.

    Also, the 13 year old boy in me can’t read this line without laughing loudly – “Freud’s early followers — notably Abraham, Ferenczi, and Jones — trod the anal path blazed by the master.”

    Peter K: The fantasy depicted in 50 Shades of Grey is actually a really common one, there are many stories like it in a very similar vein, (Susie Bright has actually written about this on her blog) Story of O being one example. It kind of annoys me that there is so little knowledge of the history of erotica, so much so that one can basically plagiarize and get away with it in a puritanical culture.

  6. Richard, thanks! I’ll look up Susie Bright’s blog.

    50 Shades of Grey is really, really popular though and it seems to be a new phenomenon. Combine that with the housing bubble/recession austerity and puritanical hardworking anal Germans infliciting austerity and sadomonetarims on the Greeks and periphery and Doug’s post is timely indeed.

  7. Have you seen the International Chamber of Commerce position paper for the G-20? Verry interesting in light of what came down in Cabo.

  8. The dirt-and-gold contrast is the only part of this I don’t get. Freud’s analogies seem to me like the imaginative creations of someone who doesn’t have to actually produce commodities and isn’t hurting for cash to pay for his needs.

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