Nature of Money

The nature of money is something i spend way too much time contemplating.

It is the basis of capitalism: liquid, imaginary capital that eases the process of trading goods and services. Western civilization is not the only culture to have developed the concept of money either. I remember learning about a culture in a class in Anthropology that I took at Brown. The culture used certain types of rocks as money. Some were small enough to be handled, but there were also boulders that were in circulation. The larger the stone, the more it was worth. Needless to say, they would not move a several ton boulder when it was used in trade. Everyone just REMEMBERED who owned it at any given time. No one could steal it, because it wasn't just a giant rock, it was an cultural meme and a consensus on whose it was. You cannot steal something when in reality it is just a consensus among a group of people. Money is such a weird concept.

In my mind I have defined it in many different ways... it can be a representation of labor, a representation of power, a kind of score in a weird competitive game, a cultural status marker, a representation of a good, and even a representation of consent. But, it is always just a symbol, something people think is important. When that consensus falters, so does the economic system that is built upon the it. It is ironic that the entire capitalist system, which happens to be very secular (if not in name than de facto), relies on faith. Faith that money does represent something more than a number on a screen or a piece of cotton paper that has no functional use. The only reason money has value is because we believe it does, the same reason that boulder was the proverbial pot of gold. The consent and faith of a large group of people gives things value. If people stopped believing that those boulders had value, or consented that one person "owned" them, then they would be as worthless as any other boulder.

Right now, I work because I need to increase an electronic number, that I can check over the internet. I distribute a quantity of this number to others to get various things like food, housing, and electricity. This signifies both my faith that increasing my number is worth spending 50 hours a week at work, and the belief of others that they want a quantity of my number enough to give me things I need to live. This just strikes me as weird arrangement. It reminds me of the story of the a guy who sold his most of his stuff to buy a virtual space station in an online computer game for $20,000. He is now a millionaire because he turned the space station into an imaginary shopping mall where people buy virtual goods for real money. It is just decreasing your number to buy an idea, and that idea ends up increasing your number because lots of other people like to interact with the idea. Then you can use that increased number to buy real things.

I was reading some money the other day and every bill has this phrase on it: "This note is legal tender for all debts public and private." This statement is meant to reinforce the belief that money has value. And it is an authoritative message, coming from the organization that has the consent of the general population. (Non-sequitor: This also signifies the value we put in printed documents and writing. If something is written down, it is generally considered to be more powerful. Ex: Written vs verbal contracts, religions of the book vs other non-text based religions, use of documents to prove stuff like your identity.. etc.). The point is that institutions have put effort into maintaining and reinforcing people's confidence in money, it is not natural or inherent in humans, it is a cultural meme that has been maticulously constructed and maintained in the minds of the general population.

To sum up...
Money is a multi-faceted symbol of faith, it symbolizes the fact that billions of people put their faith in the idea that money is something real. Belief has made it real and a power in our current culture. Money has value because we all agree it has value. That is the power of consent, the power of belief. It can make a useless boulder or a worthless piece of cotton paper into valuable items that people seek to possess. If anyone doubts the malleability of human culture, they should take a long deep look at the idea of money. When people claim a social system will not work because of X, Y and Z, they are really just writing a self-fulfilling prophecy. Of course it will not work if we think it will fail. In truth, we can have any kind of society we want, we just have to believe in it.