Money

Last updated 2004-06-28 by Roedy Green ©2002-2004 Canadian Mind Products.
You are here : home : economics : Money.

History

Money is a relatively recent invention for the human species. How did they get along before that?

In a small tribe there were work roles for everyone. If someone slacked social pressure could bring them into line. There was a pecking order. Alpha males got the first crack at the kill.
Between groups there was barter.
Later, with the rise of civilisations there was a caste system. Depending on which caste you were born into, you received different privilege and access to goods.

Money As A Caste Tool

The poverty of our century is unlike that of any other. It is not, as poverty was before, the result of natural scarcity, but of a set of priorities imposed upon the rest of the world by the rich. Consequently, the modern poor are not pitied... but written off as trash. The twentieth-century consumer economy has produced the first culture for which a beggar is a reminder of nothing.
~ John Berger

I contend that money is a disguised caste tool. Consider:

Money neatly stratifies society. Those at the top get the best foods and cars. Those at the bottom are forced to eat pesticide-laden and artificial foods with low nutritive value. Those at the top get acres of living space per person. Those at the bottom are crammed 12 to a room. There are restaurants and entertainment places where only the very wealthy are allowed to enter. All the entertainments are graded by which strata are permitted to enjoy them.
In England your caste is determined by your accent. However, this does not help peg a foreigner. Money lets others know your proper status, even when they have never heard of you or your family before.
Money ensures your descendants will enjoy your same privileged caste status. You can transfer it to them. If you give them enough, even if they do absolutely nothing to earn more, they can become even wealthier than you just on the interest. Interest on the public debt is tribute the non-rich pay in perpetuity to the rich to reward them for having rich ancestors. The deadbeat bond holders are a much bigger drain on the government than the collective welfare moms. The difference is the law is so rigged that the government can reduce the money flow to the welfare mom, but not the rich interest leech.
Just as in a traditional caste system, there are bars to keep people from crossing caste lines. For example, you need an education to earn serious money, yet that education is so expensive only wealthy families can afford to educate their young. On the other hand, a wealthy person can get relatively easily get millions in loans to bail them out should they get into financial trouble.
There are welfare systems designed to counterbalance the gravity of money which tends to make the rich richer and the poor poorer, however the rich always ensure the poor remain uncomfortably poor. The easiest way for a high caste person to feel exalted is to make someone lower on the scale even more miserable.
People who will not turn a shovel full of dirt on the project (Muscle Shoals Dam) nor contribute a pound of material, will collect more money from the United States that will the People who supply all the material and do all the work.
~ Thomas Alva Edison
If Bill Gates or a movie star walked into a McDonald's restaurant, he does not need to pay like anyone else. This is a privilege of rank.

Money As Motivator

Money motivates people to do what they otherwise wouldn't want to do.
~ Philip Slater

In any society there are dirty jobs that have to be done, like unclogging toilets. In theory, money rewards those people willing to tackle the most dangerous or odious jobs. Strangely though, the people with the cushiest jobs, clipping bond coupons, for example, earn the most money.

If unpaid household labour performed by both men and women in the United States were given minimum remuneration, it would equal the entire amount paid out in wages and salaries by all the corporations in the United States. So much for money as the great motivator.
~ Philip Slater

Money As Favour-Tracking Mechanism

What is money for? In theory, it ensures the people who do the most work get the lion's share of the community product. It's job is to encourage people to work harder to produce what others want produced.

You could look on money as a formal way of keeping track of who owes whom a favour. The favours are transferable. We neurotically keep track of favours as small as a penny.

Unfortunately, there are thousands of ways to cheat and fool the money system into thinking it owes you a favour even when you have not done anything for anyone else, e.g. speculating in currency, counterfeiting, selling shoddy goods, monopolistic price gouging, lending money at usurious rates ...

Further there are many favours you do for others that the monetary system ignores, such as a providing a website of useful information, volunteering or donating your time to charities.

Money as Ritual

Imagine watching a movie where, with special effects, money were made invisible. You would see people going into stores and collecting goods. The clerk and customer would pat each other's hands.

In the bank, the most impressive building in the city, there would be people muttering to themselves like nuns counting rosaries as they toted up the invisible piles of bills. You would see some stock brokers sitting at computers all day apparently staring at a blank screen, but typing furiously.

People who play with money for a living produce nothing. They are a bit like priests of yore, who handled the sacraments.

At the theatre, people come to petition a woman behind a booth to see if they will be allowed into the theatre. If you she okays them, she gives them a ticket. She okays nearly everyone but the young and the scruffy.

Money As Parlour Trick

Money is a sort of magician's trick to distract people from noticing their pockets are being picked. It is easiest to understand on a global level. The United States has about 4.7% of the world's population and consumes about 30% of the world's natural resources. Money is the illusion that makes people accept this inequality as natural.

Allegory Of the Five Gluttons

This global inequity is roughly analogous to a banquet with 100 guests. All the guests labour and bring food. However, five guests run about scarfing down the food off 30 other guest's plates leaving them with almost none. These five actually laboured less than the rest. The five gluttonous guests explain their behaviour by saying, "We deserve the generous extra share of the pie because we are richer. Those 30 other guests had no money so they deserved nothing." Note the three don't dispute that all contributed labour and food to the banquet. They hypnotize their marks by claiming privilege based on wealth. What is so strange, is nearly everyone buys this con, both rich and poor.

Using economic power, the wealthy nations force the poor ones to labour for them at slave wages, and the slaves are supposed to feel grateful for the work. The poor nations were much better off in pre-colonial days when they consumed the fruits of their own labours.

Republicans tax the poor and give tax breaks and loopholes to the wealthy. The poor then feel ashamed of not having money. They believe they don't deserve any of the resource pie. The poor see the lack of money not as evidence of a rip-off, but of being undeserving.

Money Vs Wealth

Real wealth increases when somebody labours and produces something, and decreases when that product decays or is destroyed.

Oddly money follows a quite different birth and death plan. Governments can print it (and spend it) or burn it any time they choose. Printing it has much the same effect as counterfeiting, decreasing the value of existing money causing inflation. Only a tiny fraction of the money in circulation is in the form of bills. Most of it the banks manufacture by a sort of slight of hand. When you deposit $100, they can lend it out. The people who borrow the money keep that same money in the bank. Therefore that same money can be lent out over and over again. Each time the banks collect interest. This is how the banks can make fabulous sums of money even when the difference between interest paid and charged is tiny. On average, every dollar you deposit is relent out 12 times. Even if the borrower spends the money, chances are the money ends back up in some bank in another account, where it can be lent out yet again. The whole thing depends on not everyone withdrawing their money at once -- a bank run, since they have nowhere near enough reserves in the vaults to cover all the deposits.

Then there is the stock market which is chimera of wealth and money. Speculators bid up the price of a stock, then sell it in exchange for cash from some other speculator. Usually the price collapses, leaving the second speculator holding the bag, the victim of a semi-legal confidence game. However, sometimes the company behind the stock actually starts paying dividends, and the price stays high, reflecting the true wealth of the corporation.

Summary

We laugh at the caste system in India even when we have one of our own which has even finer gradations from most lavish to deliberate degradation. We pretend it is not a caste system. I see it as just primate pecking order status on a grand scale. We forget it is just another social game. We tend to treat money as if it had independent power from the society that plays it.

Links

capitalism.
The End Of Work: an essay about what happens to economics as computers make human workers obsolete.
The Mandrake Illusion

home	Canadian Mind Products
	mindprod.com IP:[24.87.56.253]
	Your IP:[80.134.30.163]
	You are visitor number 3783.
	Please send errors, omissions and suggestions
	to improve this page to Roedy Green.
	You can get a fresh copy of this page from:	or possibly from your local J: drive mirror:
	http://mindprod.com/money.html	J:\mindprod\money.html