I was just thinking that the world goes crazy all the time … and … there seems to be no damned good reason for it … so ….
Reality 1 – Money is an agreement.
Reality 2 – Goods and Services like Wheat, Designing, Gold (because it’s conductive and not susceptible to corrosion,) Repairing, Potato Chips and Latex Paint are all objects that can do REAL things.
Reality 3 – People cannot produce Goods in any useful volume. This is semantics, bear with me. I produce hair and other more unsavory things. I do not “Produce” electronic products, I modify resistors and capacitors and solder and circuit boards that I bought from someone else with my hands to pass a stereo amplifier on to someone else.
Reality 4 – People can produce services. These are very important and include Knowledge and Labor. The production of Knowledge comes from experimentation and the production of Labor comes from working our fingers and backs to the bone.
For the most part, in the modern era, the Labor is “Educated Labor” in the form of properly timed button pushing, steering wheel turning or cow swatting. This is in opposition to “Fundamental Labor” such as lifting rocks, picking fruit or digging dirt with our hands. This is a Transformational Labor that makes something less useful (iron ore in the ground) into something more useful (iron ore in a train on the way to the smelter.) My own personal Fundamental Labor is typing and speaking whereas my Educated labor is the transformation of unorganized groups of people into organized groups of people … Yes, I’ve had the operation to remove chunks of brain … I’m a Manager. I had been an Electronics Engineer designing cool electronic widgets for the telephone system, professional audio and medical industries.
Caveat Lector: I very strongly believe that there is no service done by any person that can be called less important than any other. Cleaning toilets, picking peaches, sweeping streets are just as important – often more so – than designing rockets or sewing up wounds.
So What’s Money Good For?
Good question. Start with Barter! Could you store enough cheesecloth from the cheesecloth maker to pass on to a cheese maker when you needed to fix the cheesecloth maker’s toilet. Then will you find someone who makes diapers when you need them WHO WILL TAKE CHEESECLOTH AS PAYMENT?!?! No, I didn’t think so.
There are two very important terms in our world … Currency and Make-a-Market:
Way back in the day (1200 ace. back in the day) people didn’t trust anyone but themselves. To trade their furs and get food meant that they first found someone who wanted furs BEFORE they went to someone who had some nice bread. That fur trapper (this is the days BEFORE fur traders) needed to take something from the person who needed the fur that he was damned certain he would be able to take, at his leisure, to the bread person. He had to be sure that the bread person would take whatever this was.
The “whatever this was” has some important properties. Property 1 – It has to be immediately recognized as what it is. Property 2 – It has to be small despite its representation of the value of a large thing. Property 3 – It has to last a long time, so that it doesn’t disintegrate on your way from the fur-coat maker’s shop where you sold your furs to the baker. Property 4 – It can’t be faked – more easily manufactured as a token than the work of hunting, killing and skinning that beautiful little ermine weasel. Silver, copper and gold did all of this.
1. It’s easy to know that what you have is copper, silver or gold. They have a recognizable smell & taste (at least the copper and silver do,) their softness, texture, color and weight just aren’t found in any other objects. Fools’ gold got it’s name because it is so easily known not to be gold that only a fool could be … fooled.
2. Tiny bits of these metals wind up worth a lot of value (but for really neurotic reasons.) This was true like-for-like even when you melt them down and make a bowl or jewelry out of them. I say neurotic because they didn’t do anything but provide decoration outside of their role as coinage. Until electricity, conductivity was irrelevant. They are useless for weapons or tools (except for copper, which is only marginally useful.)
3. They are really inert compared to wood, bone or leather. Despite their relative softness compared to stone or steel, they don’t wear down in decades of time.
4. Related to the ease of identification, it turns out that there is nothing readily available that can mimic these three elements. Just the luck of physics, this one.
Make a Market
A salesperson makes a market. This is someone who does this work either from the comfort of home, or in a nice big building with a recognizable logo on it. From home, this person just knows people. People who buy things and people who sell things. Either way – the quasi-anonymous shop with a shingle or the more personal Trader with a capital T – the salesperson is a hub of transfer rather than a manufacturer. If there is great need for fur clothing, then there had better be large numbers of fur trappers and large number of fur article manufacturers. If you could limit the number of people you have to go to as a trapper or as a manufacturer, then you can do your work rather than hunt down people to by from or sell to. So there are fewer traders than buyers (usually) though there can be more traders than providers without loss of efficiency.
Without either currency or salespeople, we wouldn’t have quality of life with penicillin, golf clubs, ska, light bulbs and everything.
So what’s the Crazy Come From
Remember how I said that the value of the metal flakes was neurotic (might also be pronounced “wildly inflated”?) Well, the crazy comes from not knowing what’s important about the currency coupled with believing that looking good is more important than being good.
Property 1 – Easily recognizable. This can come from a spoken word as easily as from a metallic sheen. The stamp we put onto paper money. The handshake we do when we say “it’s a deal.” Nobody gets this one wrong, so it’s not the culprit today. BUT … its the fundamental reason why its value gets inflated … it’s pretty and rare and unique despite its uselessness.
Property 2 – Representation of value in a compact form. Notice that I didn’t say “Intrinsic value in a compact form?” THIS IS THE BIGGEST PROBLEM IN PEOPLES’ MINDS.
Property 3 – Value is constant. This isn’t inflation/deflation, but rather that one dollar stays … one single dollar no matter what else happens. It doesn’t magically become 1/2 dollar because it got rubbed down. The coinage suffers this, though the weight loss over a century of pocket rubbing is single-digit percentage weight loss. It was a great crime (once we stopped weighing gold flakes for trade) to scratch the edges off of coins to make gold or silver for ourselves. That’s why valuable coins have ridges and other patterns on their edges.
Property 4 – Difficult to fake. One way to do this is by agreement! If nobody every made counterfeit money, the world would be a better place. So, we have to make some huge investment in plastic, laser etching, secret threads, fancy ink or whatever else to make it difficult for North Korea to build the same machinery.
The crazy comes from believing that when we run out of money that we can’t do good things like make wheat or cars or toys or whatever else.
Peoples’ talents didn’t go away, just the money. We have come to believe in the money more than in our talents, drive, inspiration, spirit, integrity, accuracy, honesty, diligence … !