The Nature of Money - do we need it?

[Ned]

The basic issue is very simple.

What is a country? It is a group of people residing on a well-defined territory, using division of labor to produce necessities (and luxuries) and sharing what is produced.

Production is science and technology, organization and labour. We need farms and factories and energy and transportation and communication. We need the same things under communism, capitalism, anarchy, monarchy or fascist dictatorship. Ideology makes no difference: if we do not produce, we die. We can do it better or worse, more or less efficiently, more or less messily, but we all have to produce food, build houses, weave fabric, run trains, maintain phonelines.

Production is not the issue. Distribution is.

We tend to think in terms of money. But money is only the hat a magician pulls rabbits out of. We do not eat it, wear it, or heat our houses by shoveling paper bills into the furnace. If we want to understand what happens in the world, we must try to explain what is REALLY happening, leaving money out of it.

Take the economic output of the planet in a one-year period. Concentrate only on food, housing, clothing, furniture, means of transportation, communication, health-care and education. These are the essential products that we need for healthy survival. So much is produced during one year. Most of it is distributed. It gets into individual hands; it is owned and consumed by individual people. That is what matters.

If I have a billion dollars in the bank (or under the mattress) and never use it, I am poor. What makes me rich is not a figure on a sheet of paper or in a computer’s memory chips. What makes me rich is my share of the communally-produced cache of goods. The house I live in, the car I drive, the quantity and quality of food I eat, the clothes I wear, the neighborhood I can afford to live in, the school I send my kids to, the vacations I take. That is what makes me rich or poor, not the money I own.

Money is a fiction, not part of the reality we were born into. It is not necessary for survival. Money is a human invention for simplifying and facilitating trade. It would have been completely superfluous had we decided to share equally. Then only production and distribution would be required. It is unknown in primitive societies that share.

But we nation-states decided not to share equally, because this would not be fair. We don’t want to feed the lazy and incompetent (or his children) and we don’t want to deprive the more diligent and talented. We created money to make sure that we don’t distribute products equally. Well, we got our wish. Just look at the world.

Now, instead of producing and consuming and living healthy, happy lives, we have wars, famines, pollution, poverty and despair.

Money serves as the greatest con of all time.

Replacing the simple issue of surviving well on a lonely planet in a vast Universe, money created an insane-asylum of banks, interest rates, currency supply, tax-cuts, subsidies, grants, off-shore accounts, inflation, recession, deficit-financing, leveraged buyouts, derivatives, toxic assets, credit-rating, hostile takeovers, stocks, bonds, investment portfolios and CEO compensation packages.

We wanted to make sure that no person could cheat others. So we invented money. Now money is the primary medium of cheating each other out of our share. Just look at the number of rich, unproductive parasites living in obscene luxury and the number of hard-working, productive people who have difficulty feeding their children and keeping a roof over their heads.

The only way to create a utopia is by resolving the age-old problem of distribution. If humanity abandoned the concept of money and started to share equally, we would gain by eliminating an enormous waste of resources on the mechanisms required to maintain the financial system (most of government, all of finance, most of enforcing, insurance, welfare, much of the judicial system; etc., etc.)

My feeling is that - even if 10-20 percent of people would decide not to contribute to production, we would still be better off. The percentage of non-contributing people is a lot higher now,(children, students, elderly, incapacitated, incarcerated, homeless) even before we count those who are employed in the activities that would be eliminated.

We humans are creatures of habit. At birth we inherit a world with its millions of facts and billions of connections, and never really think to ask fundamental questions about the principles by which humanity is organized. We only want to tinker with the surface, not touching the foundations. The few who dare to question basic assumptions, we recoil from, we call them crackpots, immature or insane, but we never dare to wonder whether they may be right.

[bobevenson]

Money serves as the greatest con of all time.

You're talking to somebody who understands that the biggest scams on Earth are education, religion and patriotism. Money is not one of them, my friend, so I please stay clear of economics.

[Ned]

I wasn't in economics.

I was thinking outside your box!

[bobevenson]

I wasn't in economics. I was thinking outside your box!

When you're talking money, my friend, you're talking economics. If you took away money, I think you'd have a pretty tough time exchanging whatever you do for whatever you want. For instance, how would a person who helps assemble new cars exchange that production for a cup of soup?

[phyllo]

When you're talking money, my friend, you're talking economics. If you took away money, I think you'd have a pretty tough time exchanging whatever you do for whatever you want. For instance, how would a person who helps assemble new cars exchange that production for a cup of soup?

You misunderstand his premise. There would be no exchange. The guy would just walk into a restaurant and get a soup for free. He would keep assembling cars because he wants to contribute to society and he gets satisfaction from working.

[thedoc]

When you're talking money, my friend, you're talking economics. If you took away money, I think you'd have a pretty tough time exchanging whatever you do for whatever you want. For instance, how would a person who helps assemble new cars exchange that production for a cup of soup?

You misunderstand his premise. There would be no exchange. The guy would just walk into a restaurant and get a soup for free. He would keep assembling cars because he wants to contribute to society and he gets satisfaction from working.

Eventually someone would want to know that they were getting their fair share and the other guy wasn't getting more than he deserved, and you will be right back to some kind of money system.

[phyllo]

You sense it and I sense it but Ned doesn't.

That guy in the factory could be the most honest hard working stiff imaginable. But after a while of putting in 8 hours, he'll do 7 hours and take care of some errands. Then he'll do 6 hours and go fishing.
He's not immoral or unethical. He's just human.

[bobevenson]

When you're talking money, my friend, you're talking economics. If you took away money, I think you'd have a pretty tough time exchanging whatever you do for whatever you want. For instance, how would a person who helps assemble new cars exchange that production for a cup of soup?

You misunderstand his premise. There would be no exchange. The guy would just walk into a restaurant and get a soup for free. He would keep assembling cars because he wants to contribute to society and he gets satisfaction from working.

Oh, yes, the "Alice in Wonderland" theory of economics.

[Ansiktsburk]

Well, I guess that kind of Utopia will never come to being. A pity, though, hope you all agree on that.
However, in Sweden, and I guess in the whole western world, things have been somewhat going in that direction during the 20th century. My grandfather was the son of a blacksmith, best in class, brilliant, but ended up as a blacksmith himself. The family only had money to let the oldest son study. And the living standard was terrible. He wrote his reminiscences, and the way rich people lived in Sweden around 1910 was unbelivable, and I don't think the US or UK ruling 100.000 were doing much less good.

So things have happened. For bad, I guess that some here might feel resentment about that, that the socialists have had their way with what glamour there was. No, just kidding.

Actually, I think we had a situation towards the end of the 20th century when there really was some kind of analogy between how much, or good, you worked and what you got. That's not the utopia you sketched, I know, but anyhow something in that line.

Now, especially in the last years, there is another situation, when other parts of the world have been rising, China and India, and qualified work can be done at a very low cost. Now people are getting rich again, the gap between people who have money, and people who do work, even higly qualified tasks are getting larger. The guy who owns the supermarket is doing better and better compared to the medical doctor. In the western countries. But ok, thats maybe all for the best, of course the striving people in China and India should have a chance to make a good living. And the salaries in China is rising fast. So there will hopefully be some kind of balance towards the middle of the century.

Things are what they are, more now than ever when the role of national states is diminishing (something that Popper might have seen as a danger), maybe there will be global solutions towards a world that is reasonably fair, we'll see.

[spike]

I'm imaging that I was told I had to answer this post. I don't want to. But the rules are that I have to or I can't leave the room.

Well, the first thing that comes to my mine is that this entry is out of the mouth of babes and a fantasy. This entry is what I call philosophy fiction, not science fiction but philosophy fiction.

[bobevenson]

My grandfather was the son of a blacksmith, best in class, brilliant, but ended up as a blacksmith himself.

Is there something wrong with being a blacksmith?