Delivered on Wednesday 27 July 2011 in St George's Chapel

It was on 26 April 1711 that David Hume was born. By general agreement Hume was the most important philosopher ever to write in the English language. To mark the three-hundredth-anniversary year of his birth I offer a couple of sermons. Last week I took a brief look at one of Hume's best-known themes - his argument against miracles. This morning I want us to take a look at a less popular side of Hume, namely Hume the economist. I am going to follow Hume into the beginnings of economic theory so that I can ask a single question: what is money? Those will be some people listening who will think this a strange topic for a sermon: what, they will be wondering, has money to do with the price of fish? And they may be right. I just get a sense that money has become the measure of all things, and not least the measure of how we think of ourselves and others. We seem infatuated and beguiled by money. For that, and other reasons, it seems not inappropriate to ask: what is money?

A classic undergraduate textbook, written by Richard Lipsey, teaches us that, for our purposes, money has three functions. It is a medium of exchange, a store of value, and a measure of accounting. I think the third follows from, and is implicit in, the first two. That money is a medium of exchange, however, seems good and efficient. There was a time when, in order to buy a sack of corn, you would have needed to find somebody who both had corn and was also willing to receive some of your surplus sheep in exchange. The barter system worked but money - something that could be a medium of exchange - meant that trade was easier, quicker, less bothersome. In fact coinage was invented by the kings of Lydia more than seven hundred years before the birth of our Lord - so coinage has a history of more than two and half millennia.

Then there is the notion that money is a store of value. The idea here is that you can put money under the mattress and take it out, some time later, when you want to buy something. You can do that because money stores value. In days gone by coins were made of precious metals, gold and silver, and so had a value inherent in themselves. Now coins and indeed paper notes have no intrinsic value, they are themselves worthless; so where does their value come from? If you look at a sterling note you will the words printed: 'I promise to pay the bearer on demand the sum of ten pounds'. Money is therefore about a promise. In truth, it is that and more, it is down to faith: faith in the person who is paying us, belief in the institution responsible for the transfer. It is trust inscribed. There have been times - sixteenth century Spain, twentieth century Germany, late twentieth century Argentina - when that trust has evaporated and money has become worthless, absolutely not a store of value. At times like this other things take the place of money: gold, animal skins, cigarettes. As Hume has pointed out 'Money has only a fictitious value, arising from the agreement and convention of men'. But right now, even though we are still going through a deep and worldwide financial crisis, we do have faith in money. Indeed we have such faith that we are willing to spend and receive money that we don't even see. We use cards and press computer buttons to transfer money. It has been calculated that only 11% of money used in the United States is actual hard cash, the rest is virtual. We have taken trust and promise to yet another level. We believe in money unseen.

That willingness to believe in material things unseen has come about because in modern history we have given money more credibility than Lipsey, the author of our textbook, has explained. Long ago, Aristotle claimed that money was sterile or barren. Cows, he said, beget cows; sheep beget sheep; even corn begets corn; money is sterile. In other words money by itself does not produce more money. His thinking became part and parcel of all major world religions. The effect was a ban on usury, a ban on the charging of interest. Money could not beget money and so interest could not charged. In the middle ages Christian Popes and Abbots wrote often about the evils of usury, how it concentrated the money of a community into the hands of the few. Up until Elizabethan England, the same mistrust of usury was upheld which is precisely why the story of The Merchant of Venice is such an interesting social and historical commentary - as well as being a very good play. So it is no surprise then that David Hume argues strongly that money is, as he puts it, 'not one of the wheels of trade: it is the oil which renders the motion of the wheels more smooth and easy'. As far as Hume is concerned there is no inherent value in money. He is a child of Aristotelian thought; he is a man of his times.

That is not to say that usury had not developed in eighteenth century Scotland, where Hume plied his philosophical craft. Usury actually began in the late medieval period and is generally credited to the Medici family. Christians were forbidden from charging interest on money. The Jewish people according to Deuteronomy were also forbidden, forbidden that is, to charge interest to their own people; they were free to do what they liked in relation to thef Christians. So it was that Giovanni Medici traded in currency exchange and lending, and made a fortune. It wasn't long before the Medici wealth was paying for Renaissance Art and becoming a model for modern banks, leading to the establishment of the Bank of England in 1694, just a few years before Hume's birth.

The relatively recent acceptance of usury has taken on a new and previously unimagined life of its own. For if money really can beget money it can also beget so-called instruments of money: loans, bonds, equities, derivatives. None of this is simple. We might have thought we could have understood loans, but the recent crisis shows us that the sub-prime market is much more complicated than any high street shopper might imagine. And derivatives take us into stratospheric levels of deriving their value from something other than themselves. In allowing money to beget money we have created a fictional world - an immense and complex world of fiction - that we have collaboratively and implicitly agreed to regard as fact. We have moved miles away from Hume's idea that money is only the oil of the economy, towards an inherent belief that money is the master of our economy and therefore our national life.

And let us not be coy about the pervasiveness of this belief. It is as true of the Church itself as it of the Government, companies, or individuals. Why is that the Church of England has invested millions of pounds in News International - is it because it believed in vision and purpose of the News of the World Newspaper. Of course not, it invested because it the Church like any other institution believes that money really does properly beget money. I know that we will never go backwards and it would be impossible to run pension funds etc without understanding the potential that money to beget money, but are there more imaginative ways of tackling the problem? Could we explore the microfinance models created in the subcontinent to develop our own deprived inner city areas? If anything these models have been embarrassingly successful on the financial front as well as on social. If money is to beget money, let it do so in the cause of something useful to society, appreciating, as Adam Smith - Hume's friend - did, that there is yet another different measure of value, human labour.

Be that as it may we cannot turn the clock back. We can understand the wisdom of the ancients and their concern that money should not beget money; but it is now impossible to retrace our steps, even if wanted to; our economic world is simply too complex, too interwoven. And yet I think we really ought to take Hume seriously when he argues that money is not one of the wheels of trade but only the oil. In other words we need to get perspective back into our notion of money. It is not true that money is the measure of all things. It is the measure of only some things and really ought not to be considered a measure of itself. Of course we must take money seriously - it is a necessary element of trade and modern life - but we need to be serious about life in its wider form. We should value people, for example, because of their goodness and not only their wealth. Perhaps we should learn to value trust, for after all, if money has any value, it is as trust. But when we speak of trust, there is ultimately only one source of absolute trust, God, which is precisely why the collect bids us love God above all things.

The collect expands the powerful short New Testament reading w had this morning. It is a text perhaps more applicable today than it was in ancient Palestine, for I contend that contemporary society really has enslaved itself to money. We have lost proper perspective. And that loss puts whole national and personal economic stabilities at risk. Recapturing a more realistic perspective is a task well suited to religious communities, for we have long known that you cannot serve God and Money.