Category: Economics, Finance, and Political Economy

A WORLD WITHOUT MONEY? —“What would happen if there were no money on earth?”– (Repost) Answered May 1, 2013 Believe it or not, this subject has been given quite a bit of treatment in the literature – mostly during the early part of the last century in response to the communist, socialist and fascist movements. REALITY: Almost everyone, on the planet, except for perhaps ~500M subsistence farmers would die in the first 30-90 days. Yes. Really. Seriously. MONEY Money makes planning of complex things possible. Humans literally cannot ‘think’ as we understand the term, without numbers, money, property, contracts, credit and interest. Just as drawings and written words help us remember things, numbers help us remember things we could not remember, think about, or compare without them. Money makes numbers possible to apply to things that are DIFFERENT. Whereas numbers without money can only be used for things that are the SAME. As such, we say that money makes it possible to compare objects that are otherwise incommensurable. Money renders the world commensurable: open to planning and the use of mathematics (measurement and forecasting). In practical terms, money and prices form an information system that tells us all what to do in real time in response to what others want and need. It is how we tell each other how to cooperate. It is the human social system. And the use of that social system, plus the capture of fossile fuel, has taken us out of ignorance and poverty. CONVERSELY What money and credit have also done is make it possible to breed again up to new malthusian levels. While Malthus was only half right, he was half right. Group selection accomplishes what malthus did not account for. THe general belief of ‘progressives’ is that technology will ‘save us again’ just like agrarianism, and then pastoralism saved us in the past. But the truth is we just breed up to these levels again, and reduce ourselves back to poverty. The problem then is that we must control our breeding. And that has been, except for a brief period in china, or the middle ages in England under Manorialism impossible to achieve. Partly because it is so profitable to sell things to people who bear children, and those children as they too mature. EXAMPLES THe US economy is primarily driven by housing, and the high rate of return on lending for housing, and the large supply of labor jobs for the production of housing. From this perspective, the exceptional nature of the american economy is not the product of ‘democracy’ or innovation, but the product of selling off a continent to waves of immigrants and their offspring, and using the profits from the sale of the (conquered) continent to invest in increasingly complex technologies. THe Chinese for example have figured this out and are doing the same thing but moving people from the ‘poor’ village farm to cities where they *hope* the population will be more productive than they were at subsistence farming. China can do this bcause it adopted consumer capitalism (money, prices and interest) and abandoned communism (no money, no prices, and no interest). The problem other countries face (India and say, Ukraine) is india is so pervasively corrupt that it’s not possible to create infrastructure without privatization of the investment through corruption, and the population is still expanding unsustainably in a dirty and hot environment. THe problem Ukraine faces, is that it cannot play ‘china’ because the lower levels of government are so corrupt and the country sees no demand for its currency, so the government cannot issue credit, and therefore the people remain poor. IN CLOSING When you say ‘money went away’ what you must also understand is that with money and prices will go the ability to communicate, and think. Literally. Humans would not be able to cooperate, communicate, plan and think without money. Worse, they would have no incentive to do so, because to have an incentive one must be able to think of something to do. And you couldn’t think of anything to do that you couldn’t do with your own two hands. THere is about 4 days worth of energy, and 14 days worth of food in the pipeline. If you made money vanish, you would need to make 6B people vanish along with it. You may find a more thorough, or a more simplistic answer elsewhere. But this is the answer, and there isn’t any alternative.

A WORLD WITHOUT MONEY? —“What would happen if there were no money on earth?”– (Repost) Answered May 1, 2013 Believe it or not, this subject has been given quite a bit of treatment in the literature – mostly during the early part of the last century in response to the communist, socialist and fascist movements. REALITY: Almost everyone, on the planet, except for perhaps ~500M subsistence farmers would die in the first 30-90 days. Yes. Really. Seriously. MONEY Money makes planning of complex things possible. Humans literally cannot ‘think’ as we understand the term, without numbers, money, property, contracts, credit and interest. Just as drawings and written words help us remember things, numbers help us remember things we could not remember, think about, or compare without them. Money makes numbers possible to apply to things that are DIFFERENT. Whereas numbers without money can only be used for things that are the SAME. As such, we say that money makes it possible to compare objects that are otherwise incommensurable. Money renders the world commensurable: open to planning and the use of mathematics (measurement and forecasting). In practical terms, money and prices form an information system that tells us all what to do in real time in response to what others want and need. It is how we tell each other how to cooperate. It is the human social system. And the use of that social system, plus the capture of fossile fuel, has taken us out of ignorance and poverty. CONVERSELY What money and credit have also done is make it possible to breed again up to new malthusian levels. While Malthus was only half right, he was half right. Group selection accomplishes what malthus did not account for. THe general belief of ‘progressives’ is that technology will ‘save us again’ just like agrarianism, and then pastoralism saved us in the past. But the truth is we just breed up to these levels again, and reduce ourselves back to poverty. The problem then is that we must control our breeding. And that has been, except for a brief period in china, or the middle ages in England under Manorialism impossible to achieve. Partly because it is so profitable to sell things to people who bear children, and those children as they too mature. EXAMPLES THe US economy is primarily driven by housing, and the high rate of return on lending for housing, and the large supply of labor jobs for the production of housing. From this perspective, the exceptional nature of the american economy is not the product of ‘democracy’ or innovation, but the product of selling off a continent to waves of immigrants and their offspring, and using the profits from the sale of the (conquered) continent to invest in increasingly complex technologies. THe Chinese for example have figured this out and are doing the same thing but moving people from the ‘poor’ village farm to cities where they *hope* the population will be more productive than they were at subsistence farming. China can do this bcause it adopted consumer capitalism (money, prices and interest) and abandoned communism (no money, no prices, and no interest). The problem other countries face (India and say, Ukraine) is india is so pervasively corrupt that it’s not possible to create infrastructure without privatization of the investment through corruption, and the population is still expanding unsustainably in a dirty and hot environment. THe problem Ukraine faces, is that it cannot play ‘china’ because the lower levels of government are so corrupt and the country sees no demand for its currency, so the government cannot issue credit, and therefore the people remain poor. IN CLOSING When you say ‘money went away’ what you must also understand is that with money and prices will go the ability to communicate, and think. Literally. Humans would not be able to cooperate, communicate, plan and think without money. Worse, they would have no incentive to do so, because to have an incentive one must be able to think of something to do. And you couldn’t think of anything to do that you couldn’t do with your own two hands. THere is about 4 days worth of energy, and 14 days worth of food in the pipeline. If you made money vanish, you would need to make 6B people vanish along with it. You may find a more thorough, or a more simplistic answer elsewhere. But this is the answer, and there isn’t any alternative.