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Which came first: the Chicken or the Egg?

Yesterday I joined the excellent Digital Money Forum run by FSClub speaker and friend Dave Birch, and enjoyed discussions about social currencies, transit systems, contactless developments, the strange world of Japanese payments, the trends in biometrics and more.

Throughout the meeting, various folks were tweeting.

Specifically, Daniel Gusev of VTB24 in Russia.

Halfway through yesterday’s meeting, Daniel asked the question: "Does currency shape societies or do societies shape currencies?"

I’m sure he’ll pen some words around this theme, but it got me thinking about the rich world of money that I’ve spent so many years considering.

It made me realise that this is a classic chicken and egg question.

Which came first: the chicken or the egg?

Which shapes which: money or society?

Society is obviously geared towards its monetary system.

That’s something I’ve blogged about often, and is proven from the origins of money to the diversity of modern Islamic versus non-Islamic cultures and their attitudes towards finance.

Money is the controlling mechanism of society.

It is how governments manage society through taxes, and it is what makes us work to live.

It is the engine that allows us to eat, live and have shelter, and for governments to generate income through taxation and fiscal policies.

Money – or currency in Daniel’s parlance – is what shapes society.

And banks, as they manage the monetary system, are therefore the controllers and guardians of societal order.

This is why banks are so critical to governance, and how inter-twined governmental policies are with banking.

If governments lose control of banks, they lose control of society.

Anarchy and disorder will follow, as we’ve seen recently in the post-bank crisis meltdown since 2008 and even more recently in the Middle East.

For example, what’s the first thing the world did to try to manage the issues in Libya?

Go after Gadaffi’s money.

Having said that, society shapes the currency to suit the way they want to live.

If the government is out of control then society will get rid of that government through a vote, or through civil unrest and war.

The new government will then create the society that it wants, and will create a monetary, fiscal and tax system to suit the new agenda.

The new government will create a regime where money shapes the society they want.

So the chicken and egg of currency is that society creates governments who create currencies that create societies that reflect the way they want that society to work.

Like the chicken and the egg, the circle is a circle of life where one cannot exist without the other.

Currency shapes society but society shapes the currency through the governmental controllers they allow to enforce it.

Oh, and just in case you were wondering, the chicken came first.


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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