Thursday, December 3, 2009

The Tyranny of Money

It is said that money makes the world go round. A quick empirical observation would make this seem so incredibly obvious that it doesn’t bear thinking about. I’ve been thinking about it anyway. Money makes the world go round now, but did it always? Historically, that answer is no, although you have to go back a ways to find a time when it didn’t. That isn’t the point though. The point is that there was a time where humans existed without money, and someone had to invent it.

If there was a time when there was no such thing as money, and humans were capable existing without it, could there then be a future time when humans – either through choice, circumstance, or necessity – exist without money again? Conceivably, this answer is yes. The real question isn’t whether or not it’s possible, but whether or not it’s desirable. It’s not a matter of ‘could?’ but ‘should?’

To answer the question of ‘should?’ we first have to ask ourselves what to we get out of each side of the deal. This is a complicated question, and volumes have been written to explain what money is, how it works, how to use it, and what it does for us. Even if you’ve read these volumes, the matter isn’t solved – there’s still the matter of faith – what you believe money is and does. There are several schools of thought, and devotees of all of them, some of whom hold to their ideas with an almost religious fervor. I don’t want to get into that discussion, at least not at this point, so I’m going to give a working, as agnostic as possible, definition and use that for the purposes of this discussion: Money is a tool used to facilitate the transfer of wealth.

I happen to be an adherent of E.F. Schumacher’s as modified by John Michael Greer when it comes to what wealth is. In a nutshell, there are three categories of wealth:

Category One – raw resources, renewable or otherwise, derived or extracted from the earth. This category includes ores, minerals, water, plants, animals, etc.

Category Two – finished goods. This category consists of those things of category one to which human labor is applied as well as those things made up of one or more category two goods. Money, as a commodity is part of this category.

Category Three – This category is a meta-category, and consists only of money that is produced through the manipulation of money. Banking and finance are in this category.

Most ordinary people live the bulk of their lives in the first two categories and only occasionally brush against the third when we take a mortgage on a house, get student loans, or buy a car. We live our lives as a cog in the wheel of some production or service machine, for which we receive money and use that money to buy the real things that are necessary for life. We might save a little and shop around for interest or yield, maybe even a little bit, but for the most part, the third category is apparently invisible.

At least it used to be. In the last couple years, this third economy has come to dominate the news and have a real impact on the lives of many ordinary people as they lose their jobs, homes, and savings. Misbehavior on the part of investment bankers and no small amount of just plain criminality have thrown a bucket of cold water in our collective faces and shown us that the third economy is a major presence in all of our lives and quite possibly the single greatest threat to our well-being.

Money as a commodity is a useful technology. This is the best possible argument that the gold-bugs have going for them. It provides a standard measure by which the relative value of goods can be measured, making it easier to trade disparate goods and services, convert perishable or ephemeral goods to something that can be saved for a rainy day, and deal with issues of surplus, but make no mistake – Money is a form of technology, and like every technology is only as good as it’s benefits to us as individuals and groups are.

That answers the question of the benefits of money, but what about the bad side? What are the detractions from this technology? Like any other technology, it has the tendency to ‘run away’ from the sound limits that necessitated its invention and develop a logic of its own with the net effect of becoming a crutch (I’ll be discussing more of these technological crutches in future posts) to the point that societies become dependent and the ability to survive without it is impaired.

I can’t state this plainly enough. Life is possible without money. Humans need air, water, food, warmth, shelter, and other humans. Everything else is a want or a fiction. It is societies, institutions, and to some extent cultures that need the abstractions of money and so forth, not the humans who are the component parts. To be sure though, collapsing societies are usually detrimental to individual health.

The most insidious evil of industrialization is that it has increasingly moved people away from the first and second economies where humans naturally occur and placed them in the third economy. This may seem to a counter-intuitive statement at first, since the obvious aim of industry seems to be to produce second economy goods, but when you think about it for a while it begins to make sense. Moving people to the third economy makes them dependent on money, which in turn makes them dependent on the financial industry.

Why does this create dependence? In simplest terms, it did so because money got between the common man and the production of wealth. Originally, the common man produced some or all of his own subsistence directly and traded the surplus for money. Increasingly, and exponentially with the coming of industrialization, the primary activity of the common man became the trading of labor for money, then in turn trading money for subsistence in the form of first economy goods. Gradually this has evolved into what we have in the present day where the common man trades labor for money and then trades that money for mostly second economy goods. We’re told this is progress.

In this world, first economy goods are seen as near worthless. Give your modern American a live pig and a bushel of raw wheat and tell them to make supper and they can neither produce pork chops or a loaf of bread. Most wouldn’t even know where to start. Increasingly, if you gave them a raw pork chop and a bag of flour, they still wouldn’t know where to start. We, as modern humans can no longer feed ourselves without the intervention of technology, which we must have money to acquire, and this is how money and those who control it have become tyrants.

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