The Meaning of Life and Other Vegetables

Hello everyone.

Here are some thoughts to consider, about… you guessed it: money, trade and abundance. But how do the ants fit in, you might ask?… I’ll get to that in the end; it will be easier to explain when I’ll get there. This was originally intended as a single article, but since it contains a lot I’ll break it down into 3 parts. Today’s part is about Money and Trade.

To get the discussion going, let’s consider a possible extreme left-wing stance:
“Money is the source of all evil”
“We have to eliminate money altogether and straight away if we want to save humanity”

Now, let me please argue back: Not necessarily true. Money is just a standardised vehicle that allows flexibility and efficiency in mobilizing resources.

It’s the abuse of money, and the uninhibited application of money (and power) that is the problem.

Let’s see where money comes from.

All living creatures have basic physical needs that have to be fulfilled, on an ongoing basis, in order to survive (and later, thrive).

Primary producers (plantlife, fungi etc.) fulfill their needs directly from the environment. All other organisms are parasites – one way or another, directly or indirectly – on those primary producers.

Initially, humans fulfilled their basic physical needs either directly from the environment (for example, using an existing cave for shelter) or by being parasites onto other organisms (for example, hunting and gathering). Theoretically, each individual human had to fend for themselves (meaning, obtain enough water, food and protection), or perish. This was not the most efficient and sustainable solution, so humans evolved to be social creatures – living in packs / families / tribes and so on. Regardless, the balance had to be maintained – the reference group had to be able to obtain / keep enough resources to maintain all group members. When that didn’t happen, members of the group started to perish, and in extreme situations the entire group perished. Through evolutionary pressure, humans evolved such that some groups were able to last, maintaining the balance (and maybe even a modest surplus at times).

At this point, people were only as well off as the sum of their exerted efforts and accumulated skills (including the skills of cooperation and coordination with other group members, and by extension, with other groups). Sounds quite fair, right? At least from a Darwinian perspective it is.

As the human population grew the benefits of trade became evident. Initially it was barter, which is cumbersome, inefficient and limited in more than one way. This is where the concept of a standardised currency arose. It could be seashells or gold, for example; the point was detaching the symbolic worth from the utility of the object / currency (salt and spices only went halfway abstract, because they also had real utility, beyond the monetary convention). This development did not change the essence of trade, only made it more streamlined (as well as made the question of valuating the various goods explicit; such valuation was implicit in barter trade as well). It also didn’t change the fact that people were as wealthy (either in primary resources or their equivalents – gold etc.) as the sum of their exerted efforts and accumulated skills. So, is the base concept of money really “evil”, unfair or “opposed to the natural order of things”?…

Separate question: How does work come into all this?

There are only two base commodities humans have. One is whatever objects or substances they can find or obtain directly from their immediate environment; for example, a wild fruit they picked or a mineral they mined or laid claim to and were able to defend (the concept of land ownership is an abstract and more complex one, and only arrived later). The other is the work – initially physical, but now also mental – that they are able to do. In terms of trade, they are not that different. Work essentially provides the opportunity to obtain or produce all other commodities (for example, by gathering or agriculture). So, once a standardised “value vehicle” (for example, money) is available, work can be traded with others – for money; or for other goods / work (barter). In a way, gathering can be seen as a trade with the environment – work (searching and collecting) is given, and the gathered items (for example, fruit) is received in return. The only difference between work and the other commodities is that it’s not tangible upfront – you can’t “see the work” until it takes place. However, it can be thought of as being “stored” in a reserve, by the individual, for future use (much like cash in a wallet).

And so, various types of work (as well as different levels of work quality) can be valuated and traded for a specific monetary value, just like any other commodity humans trade.

Back to the “evil” money… As long as gold (or the likes) was used as the standard currency there was nothing really wrong with the system. New gold can’t be created out of thin air at a whim, and mining additional gold requires a lot of other resources (for example, work and equipment); so adding more gold to the system represents an addition of real-world value – look at it as a trade between the gold miner and the environment (as described above). Hence, the use of gold prevents inflation (the addition of money not proportionally backed by goods or effort). This is even truer today, when all the “easy gold” has already been found and collected, so adding more gold to the system requires significant resources.

The problem started with the introduction of issued money (either plain-metal coins, or paper). Originally, one could deposit the gold they owned with someone powerful (and thus trustworthy in safekeeping it) – for instance, the King – and receive in return a security note stating the exchange, and entitling the depositor to obtain their gold back in the future, for surrendering the security note. These were actually the first money notes, because such a note (and the gold entitlement it granted its bearer) was transferrable and equivalent to its stated gold value.

So far so good, because all the issued currency was backed by gold that slumbered somewhere under the protection (and guarantee) of someone as powerful as a King. Essentially, it doesn’t matter if you trade actual goods, nuggets of gold, minted coins or notes of paper, as long as the latter are related 1:1 with actual goods (or work spent in obtaining / producing value). The problem originated when the King (or the government) realized that it’s very easy to print out money notes that seem completely wholesome but represent no real-world value, and require relatively small resources to generate (much smaller that the value they pertain to represent) – essentially created “out of nothing”; thus allowing the King / the government to generate a lot of apparent wealth at a fraction of the resources otherwise necessary. From here on, the path was open to creating all sorts of “value papers” under all sorts of schemes (or scams), culminating in the dodgy financial instruments that brought down the global economy during the GFC.

Why did trade emerge in the first place? Simple. Someone was short of something, but had an abundance of something else (or at least could spare some). At the same time someone else was in a similar situation; only their shortage / surplus was in some other things [Note that “shortage” and “surplus” are relative to the individual’s needs / preferences; the two parties might have objectively had the exact same amounts of those goods, but in terms of their needs and wants their situation, or feeling, was different.] So, trade didn’t emerge as a means to accumulate wealth; it emerged as a means to achieve a more satisfactory distribution of the goods, a better overall match between needs and access to goods (“better” in the eyes of the voluntary participants, of course).

In short: Trade gave birth to money, which later detached itself from real-world value and became a source of immense power and inequality, facilitating massive hoarding and endless greed.

To be continued…

Peace to all.