This is an affliction that most people in the world suffer under. Anyone who says the phrase my money as if money is personal property. Anyone who thinks that working is how you earn money. Anyone who thinks that money has value beyond what it can buy at the moment you need to purchase something. Those people all live under the delusion of money. Anarcho-capitalists, libertarians and fiscal conservatives all suffer under this delusion. Their ideals of what money is precludes them from ever understanding what will solve the recurring economic crises we’ve suffered throughout history. Until we understand what money is, we cannot hope to fix the problem of the boom/bust cycle.
Money: The True Story of a Made-Up Thing by Jacob Goldstein
When I take the time to listen to conservatives and libertarians these days, to read their arguments, I’ve started posing this counter question. What is Libertarian Socialism? They generally short circuit like a drone android calling for Norman. You know, Libertarian Socialism, the political movement that dismisses notions of taxes as anything other than the monetary recapturing tool that taxes are, sees Guaranteed Minimum Income as a necessary function of living in large groups? If my antagonist of the moment can manage a reply, then it is generally a denial that Libertarian Socialism is a real thing. But Libertarian Socialism is real, and it is just one more movement afoot to bring economic freedom to the problem of worldwide poverty. A real solution to a real problem, not hidebound ideology and wishful thinking.
The process of discovering what money is and what its functions in human society are has lifted a veil from my eyes. The punishment of poverty that is meted out most vengefully by the middle class, egged on by the wealthy who know just how much of a delusion the middle class labors under, is unwarranted. People are not poor because of some failing of theirs. People are poor because the system forces them into poverty.
I have struggled with how to present the ideas that seem so clear to me, present them in a way that will be understood by others. Understood by others who have not dropped their preconceived notions about money. How to have the ideas understood by them, and not simply have the argument rejected out of hand.
Year after year, when I was a libertarian, I promoted the World’s Smallest Political Quiz (WSPQ) as the way to illustrate, concretely, just how libertarians were different from liberals or conservatives. I wish I had spent that time studying economics rather than promoting fringe ideology now. The WSPQ is a variation on the Nolan chart, a political spectrum diagram created by American libertarian activist David Nolan. The WSPQ slims down the questions asked by Nolan to ten yes/maybe/no questions, and then places people in their political quadrants based on their answers. I never understood the pushback offered by people who suggested that financial freedom wasn’t what the diagram described while I was out stumping for it. Now I can see the problem more clearly.
The Nolan chart and all it’s minor variations don’t deal with the reality of economics; and consequently, these attempts to measure political beliefs do not measure economic freedom as they claim to do. This fact makes all libertarian ideas that deal with economics flawed at the precept level, shattering the entire structure of libertarian philosophy. The flaw shatters not just libertarianism, but any philosophy that includes the ideals of money as an individual possession. You cannot define libertarianism as different than the same flawed left/right and/or liberal/conservative political lines without a measuring stick that is separate from social freedom, and economic freedom enables social freedom more than any other kind of freedom one can imagine. The two go hand in hand (Four Freedoms) Understanding what money is, conceptually, is the first step to understanding how the systems we live in can be improved.
Money is not a thing; or rather, money isn’t just one thing. Money is not a possession, although physical representations of money can be possessed. Money is not a commodity even though it is currently traded like a commodity. If I had the last glass of water, you could have all the money in the world and you couldn’t buy that last glass of water from me. That is the difference between a commodity and a currency. Money isn’t even a set value as my previous writing on the subject of money skims over. So what is money?
I’ve been bashing my head against this wall and several others for the last decade and more. It’s part of the overall arc of EPHN, my languishing work on Emergent Principles of Human Nature. The work languishes because I lack the depth of knowledge to deal with the questions posed by writing the work, not by my ability to express the ideas contained within it. The accumulation of information takes time, and so the work languishes, in a general sense. At the same time, my understanding grows about certain subjects that interest me, and one of those subjects is the delusion of money.
Money = Lubricant
Any mechanical part that moves in relation to another part of a mechanical construct, like a motor or an engine, has to be protected from the friction present when any two parts come in contact. This protection can take several forms, and even several forms at the same time. Motor oil. Hydraulic fluid. Ball bearings. Grease. Money is like these things in many ways. It reduces the friction between one side of the economy, supply, and the other side of the economy, consumption.
If you provide sufficient funds to each household to allow them to meet needs you will see how much of each product needs to be produced based on the value assigned to the product by the consumer. Thusly, money eases the acquisition of goods and services for the people who need them. Without money we are forced to barter one good for anther one, and that system has never functioned in a way that the average human found acceptable, which is why we invented money in the first place.
Then you, the money issuing authority, sit back and wait. You wait to see where the money goes. When you notice that money is pooling in areas and not being spent, you tax those pools that don’t enhance the economy, the economic backwaters that don’t serve the purpose of lubricating the system generally. You tax them because money hoarding is a corruption of the intent of the system. Money is for spending not for hoarding. Property is what you keep. If you want to hang on to wealth, invest it.
Money is a third-party contract that is carried along with every other financial contract that is agreed to. Money is the underlying agreement between the people who are giving over goods or services and the people receiving said goods or services, that the compensation will be in X currency at a particular value. Anyone who has read a financial contract should recognize this language. The value of money, that money will have value at all, is an agreement between every working and consuming person on the face of the planet. When that agreement breaks down, commerce breaks down. Goods rot in warehouses. Families starve.
Ten autumns ago came two watershed moments in the history of money. In September 2008, the bankruptcy of Lehman Brothers triggered a financial meltdown from which the world has yet to fully recover. The following month, someone using the name Satoshi Nakamoto introduced BitCoin, the first cryptocurrency. Before our eyes, the very architecture of money was evolving — potentially changing the world in the process. In this hour, On the Media looks at the story of money, from its uncertain origins to its digital reinvention in the form of cryptocurrency.
Money is a collective belief in the value of a thing, a story we tell ourselves about buying what we buy and what we buy it with. Bitcoin is the essence of this narrative. It only has value because calculating entries in the blockchain is currently rewarded with bitcoin, funding all of the Bitcoin mining centers all across the world. What happens when the last Bitcoin is minted? Where will the value in maintaining the blockchain ledgers come from then? No one who invests in Bitcoin wants to know what the answer to that question is. In the meantime the story of the value of Bitcoin continues. But any currency is only as valuable as the people who trade in it think it is. If you can’t buy anything with the currency, the value of the currency is zero.
How can you make money to spend if there is no debt to create money from? This was the problem that faced the world after the crash of 1929. There was insufficient money in circulation. No one had money, and the reasons for this defied explanation according to the rules of the time. Europe needed gold to create money. Europe did what the gold standard required of them and raised taxes on their poor citizenry to the brink of starvation in an attempt to create gold reserves, creating backing for government spending that they needed in order to dig out of the holes that World War One left them in. The hordes of gold that the US held in reserve profited the American people not one bit, even though the rules of the gold standard dictated that America should be swimming in cash. Why was there no cash? Because the rules of the gold standard did not accurately describe how economics works. (Lords of Finance) FDR had to create new, insane rules, by the standards of economists of the time, to justify creating money that did not already exist, so that he could hand it out to people who wanted to work but could not find work.
Making sure that everyone has money to spend simply shortcuts the requirement that incomes will start at zero. Work is not required to generate debt, to create money. Work is how you pay off debt, and government generates money to make these transactions possible. But money is more than that, too. It is more than a lubricant that makes nearly frictionless exchange of goods possible. More than a contractual obligation that we all agree to every day when we buy or sell anything. More than a story we tell ourselves and more than a debt obligation that we must dig out from under.
The disconnect over the subject of money really isn’t the fault of libertarians, they are nothing more than my target of opportunity because of their culpability in promoting the ideas that have come to dominate most thinking about money and economics in the US these days. Classical economics itself deals with the individual rational actor the homo economicus as he is occasionally referred to. Economics was set up at the outset to create the delusion of the supreme individual modifying the market with his rational demands. This has proven not to be the case, but most economists who come from the Chicago school are still caught up in the delusion. Capitalism, as classically taught, was at war with a socialism that eschewed profit. The Marxist utopia of communism. Like most utopias, Marxist communism is a dystopia that we would be better off not pursuing. However, in a general ideological sense, capitalism and socialism aren’t even in conflict. Authoritarianism and democracy are in conflict, and authoritarianism is in ascendency.
Authoritarianism has been in ascendancy since Vladimir Putin started trying to dismantle the democratic West, and China decided to help him. When there is one party, and you control that party, knowing who your enemies are makes controlling that government child’s play. Consequently these rising authoritarian regimes (including the United States under Trump) have a lot of political prisoners. Removing them into the slavery of the prison system is the best way to clear your path. This is one of those facts that should have been obvious to us in the US for a very long time. We’ve been growing the prison population since Nixon was in office, and we now have the largest prison population per capita. Most of those people are there because of crimes that were invented in order to criminalize Nixon’s political opposition, and it has proven prudent for each president since Nixon to leave those people there.
Capitalism and socialism are not in opposition. Capitalism and socialism can be present in the same mixed system because they deal with different parts of human interaction. Profit is not evil. Profit, when properly managed, is the reward for the entrepreneurial spirit. Profit, when held as an inviolable sacrement, leads to worship of the wealthy, what Objectivism has turned into over the last half-century. The Trump administration is laboring under this delusion of money. This holy profit-taking. Trump has started beating the drum of red baiting. He is promoting the same old schtick that Nixon and McCarthy did so well with two generations ago. I’ve said this from the moment that he announced his candidacy and he’s proven it daily since the broken system we live in delivered him into office. Trump believes in the zero-sum game and is right now rigging it to favor the wealthy who currently own our country.
Subscribing to the delusion of money as Trump and the average American thinks of it today is to go back in time to the days of the robber barons, when monopolies ran roughshod over Americans and the the world at large, when the simple fact that you had money meant that you had the right to rule. We don’t want to go back to those days. This is why Make America Great Again is the chant of mouth-breathing idiots. The America that they think was greater than it currently is was an America where they would have died young of a preventable disease, probably at the hands of someone like Don Jr.
To paraphrase what I said to Trump Jr: Never too earlier to teach her about conservative capitalism either.
Put her in an orphanage that sells her out to work in a coal mine. Kid that size can get into spaces an adult can’t, business can find all sorts of uses for them. You don’t have to pay them. They don’t need safety equipment. You hardly have to feed them. And if they die, fuck it, you can always get more.
Meanwhile, the Robber Baron she works for gets 99% of all the candy in the world and she and all the other kids get to split 1%.
Oh, and while you’re teaching lessons, Junior, make sure she knows her lady parts belong to you.Jim Wright, Stonekettle Station
The reason why those of us who live in the great post-WWII dollar hegemony can be so secure in our delusion of the value of our money is explained in this episode of Planet Money.
If you combine the dollar being the world currency with the results of moving off of the gold standard as detailed in Lords of Finance you can create a money background for yourself to muse about the current perilous status of the dollar against. Or you can be like the libertarian that I was trying to enlighten today who called out for Norman before locking up in the illogic of money being a social construct. Pick one.
If you need further examples of just how confused the problem of money is, here is another one. TED Radio Hour, The Money Paradox. I did get one response from a libertarian after writing this piece. He informed me that I wouldn’t be taken seriously on the subject of money unless I looked like a rich man. People who are wealthy don’t bother with trying to look wealthy. They don’t need to convince anyone of their wealth because they are reassured that they have wealth in simply living their lives.
Frugality is how you establish wealth. The richest woman in America ate cold porridge every morning because she was too cheap to heat it. Doing well with less is how you illustrate monetary wisdom. Not paying too much for clothing is bedrock for doing well with less. Fooling stupid people with nice clothing that you pay too much for is nothing more than a confidence game. Red ties are a dead giveaway for a schyster. Never take a man in a red tie seriously. Words to live by.
Star Trek was an attempt to say that humanity will reach maturity and wisdom on the day that it begins not just to tolerate, but take a special delight in differences in ideas and differences in life forms. […] If we cannot learn to actually enjoy those small differences, to take a positive delight in those small differences between our own kind, here on this planet, then we do not deserve to go out into space and meet the diversity that is almost certainly out there.Gene Roddenberry
This article was posted when it was because of a conversation that was evolving on a Facebook group I was part of. A conversation between people convinced that their personal beliefs are somehow manifested in a show they love, Star Trek in this instance, and then argue that their political beliefs somehow are justified in the show. Star Trek represents a post-scarcity economy, as several people went to great pains to explain during that evolving conversation. As expected, the notion that there could be a society where everyone gets enough to eat and has a place to sleep that protects them at night from predation, that notion is conceptually beyond the thought processes of your average Stormtrumper. This fact doesn’t change what the show’s creator set out to do.