The Nature of Money
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26-08-2011, 04:01 PM
The Nature of Money
This thread is closely tied to the other I started: "Proposal for a new social contract". Without understanding the real nature of our money-based civilization, it is hard to realize how much wasted effort could be eliminated by removing money from the absolutely necessary survival-related Production and Distribution.

Please comment!

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, 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.
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26-08-2011, 11:16 PM
RE: The Nature of Money
Your argument is very much my own firstly i will state I fully agree with this post.

I've never been able to understand the concept of money. I understand how it is used, but for me there is a mental disconnect in being able to see any worth in it. The whole system to me is just so illogical that I can't work within it.

Plenty of groups work in a communal setting. Look at the Amish for a monetary focused group that went into a community focused society. Unfortunately when the western world introduces money to new groups it generally succeeds in killing/maiming their entire community. Those without a concept of money quickly fall to it's vices.

It is true that non monetary groups are not as innovative as monetary groups, but that innovation only spreads disaster. Sure a small tribe doesn't have much in the way of medicine, but at the same time it has a sustainable group. At this point in the monetary sectors everything would collapse if anything cut off. People focused on money are way too individualistic and will hoard most during a crisis. If a middle class family suffers from a member having a heart defect this defect can be fixed, but they will stop being middle class. The world of money punishes people most for having needs.

Really just random musings on the illogical factors of money, it's not even really something I can discuss well, unfortunately since those in power like the power money gives the best answer to change things is a rebellion. People within monetary systems have always been perfectly willing to sit in the role they were placed in, so it's uncommon to get many revolts in the right direction.

I'm not a non believer, I believe in the possibility of anything. I just don't let the actuality of something be determined by a 3rd party.
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26-08-2011, 11:20 PM
RE: The Nature of Money
You misunderstand the value of money and the origins of the banking problems you outline here.

Money is more of a philosophical concept than a solid basis for an economy, you're right in that respect, but you seem to believe it holds no value. This is not true. Money has value because we imbue it with value as a whole, just because you don't value money doesn't mean you can walk into your convenience store and buy milk with chicken eggs and bottle caps. It's a social construct upon which we have built our modern society, and money has never been about making sure people don't get cheated or hard work gets paid for adequately, all throughout human history the rich have had it easy with little to no troubles (a few peasant revolts aside) and the hard-workers are exploited.

The only way for money to become worthless is for society as a whole to disregard it, and that won't happen. Money isn't unnatural or strange, it's just based on the value of certain objects. In a way the barter system we used to operate under thousands of years ago was essentially a currency, a goat for three rugs, a jar, and some eggs, most traders would offer deals of similar value, the goat's value was decided upon by society. Consider the Yoruba tribes of southern Nigeria, for example. They used cowries (seashells) as a form of currency, especially dowries, as well as trading to obtain goods, while Europeans used metals.

Trade is an important facility of human society and just because objects have been replaced with numbered currency doesn't mean that money is evil. The difference comes about when you consider that the way human labour has changed we don't reap what we sow, so to speak. You don't raise goats for a living, I assume, so what are you to trade with? I work the loading bay at a store, if they don't pay me then what do I get to bring home so I can eat? It's not like I'm managing my own farm, I can't trade any excess food I grow, I need something to replace that trading system so that I can eat.

The evil of money is entirely human, and it isn't exclusive to money. Consider that at any point in history a man may have killed another just to take his goods, because he wanted them. Maybe he had better tools or a fatter cow, the point is obsession over possession isn't exclusive to money, and equal distribution, while ideal, is just not going to happen. And, even if it did, there would still be people willing to kill or steal in order to have more. It's just human nature, to use a horribly flawed ideal.

As for the banking thing, that's relatively modern. I don't entirely understand it but I know it's not inherent to the system and that it's far more complex than you're giving it credit. It's very stupid, I agree, but the free-market wizards from the Chicago School of economics and Milton Friedman's economic shock-therapy are to thank for it and unfortunately their ideology continues to spread and ruin the system.

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27-08-2011, 12:51 AM
RE: The Nature of Money
(26-08-2011 11:20 PM)Green Wrote:  You misunderstand the value of money and the origins of the banking problems you outline here.

If money is used only as a medium facilitating trade then, of course, it is very convenient indeed.

However, money has another, more important role: regulating distribution -- and that is where the problems come in, as I explained in the OP.
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27-08-2011, 10:37 AM
RE: The Nature of Money
Certainly it has become a means by which to control distribution but if it wasn't money it'd be something else, the man with the most goats to carry on my analogy. Being rich is a human construct that doesn't rely entirely on your dollar figure, as you mentioned possessions have value as well and without money a mansion is no less valuable in human society, it's just be worth hundreds of goats in trade.

My point is, with or without money, we will have these same problems.

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27-08-2011, 10:46 AM
RE: The Nature of Money
(27-08-2011 10:37 AM)Green Wrote:  My point is, with or without money, we will have these same problems.

Yes, you are right, but consider this: it is a lot easier to transfer millions of dollars electronically, invisibly (and untraceably) from one account to another, than to transfer a thousand goats from one farm to another. Plus, it is also difficult to hide a sudden increase of goat population on your farm -- passerbys may become suspicious.

Money makes it a lot easier to acquire wealth by non-productive means like theft, multi-million-dollar bonuses, golden parachutes, etc., etc.
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27-08-2011, 10:52 AM
RE: The Nature of Money
Yeah, there is no arguing this, but this is less to do with money itself. Since we have actual, physical money, such as dollar bills, there is an actual tangible object, something that could be very difficult to transport in large numbers.

So it seems more like you're arguing against the idea of digital money, using debit and credit cards, where we use the term money in reference to an amount of imaginary dollars that we have (or owe) in a bank, but have no physical, tangible, representation of that wealth.

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27-08-2011, 11:18 AM
RE: The Nature of Money
(27-08-2011 10:52 AM)Green Wrote:  So it seems more like you're arguing against the idea of digital money, using debit and credit cards, where we use the term money in reference to an amount of imaginary dollars that we have (or owe) in a bank, but have no physical, tangible, representation of that wealth.

Let me put it this way:

There are two possible options for humanity: use money (paper, metal, rocks, electronic, goats, whatever) or not use money.

My contention is this: so much energy and resources is wasted on producing, counting, protecting, reporting on, transferring, insuring, and fighting over money that could be used productively to improve our lives.

Of course, if we did not have money (of one kind or another), then we would not be able to trade other than with limited barter on an individual basis.

So what could we do without trading?

Imagine the following scenario:

If a group of us were shipwrecked on a desert island, would we starve to death because we had no money to facilitate trade? Of course not. We would get busy building huts and planting crops to make our lives as comfortable as we could.

Now, at the beginning of the 21st century, we have the technology and the tools to provide plenty for our real survival needs (most of us don’t have adequately covered).

If we eliminated money and all the waste that it implies, we would have to share based on our real needs, and I suggest, that all of us would be better off (even the rich ones) because, in my opinion, 90% of all our resources are spent on fighting over and administering money and distribution (wars, military, most of police, most of government, court system, insurance companies, banks, accountants, most lawyers, stock brokers, investment houses, most of prisons, taxation system, HMO-s, social assistance administrators, cashiers, clerks in purchasing, etc., etc., etc.)

Why not choose a system that would make us individually better off in the absolute sense, even though we may not be able to one-up each other in the relative sense. We could one-up each other with our accomplishments in our favourite occupations. Our status would be based on real values not on results of bribery, robbery, theft or fraud.
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27-08-2011, 12:32 PM
RE: The Nature of Money
Reading this made me for some reason I can't explain want to head for my bookshelf and read "Atlas shrugged" all over again. (a book that really scared me the first time I read it, just to point that out). I have nothing really to contribute with in this thread, but I read interestedly and am pleased to notice the width of topics on this forum.

"Never underestimate how narrow-minded, petty and stupid people can be". Mark Fulton, forum member
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27-08-2011, 12:36 PM
RE: The Nature of Money
(27-08-2011 12:32 PM)Cubic Bubbles Wrote:  Reading this made me for some reason I can't explain want to head for my bookshelf and read "Atlas shrugged" all over again.

Ayn Rand, in her big speech about money in Atlas Shrugged, said: “money or guns – make your choice”.

We did. Now we have both.
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