Wed Dec 29th, 2010 at 01:55:32 AM EST
Man invented money. It is not a process of nature like gravity or sunlight. Man conceived of this thing called money to make it easier for folks to trade stuff.
Money is not a physical thing; it is a mental concept, a social contract. It is nothing more than information, often disguised as a coin or a paper bill. And what is the information that it carries? It is that the bearer is entitled to exchange this money for various items or services.
Money has become so embedded in nearly all of human behavior that it has far surpassed its original primitive function as a substitute for physical things in trading.
And yet we think of money in much the same way its primitive inventors did.
Please follow me below the fold to consider the unfortunate implications of this disconnect.
Economists and financial leaders will not deny that money is intangible, that it is purely conceptual. And yet they treat it, probably unconsciously, as a physical thing that is in limited supply.
The presumed limits of the money supply have resulted in concepts and situations damaging to human society and to our world, such as national debt limits, spending caps, spending cuts, austerity, deficits, taxation, borrowing, hoarding, bankruptcy and more.
If one views money as possessing characteristics of physical things, the obvious conclusion is that the amount of money in the world is limited, as all physical things are. And since it is limited, all the money in the world is already owned by people and by other entities such as governments and corporations. And if all the money were spread around equally among the world's population, individuals would each own only a small amount. Therefore, for an individual to become wealthier, others must become poorer. And thus there is no cure for poverty because there will always be competition for the limited amount of existing money, and the smartest and most aggressive will gain the lion's share of wealth.
These seemingly logical ideas are pervasive in the world's population, but they are probably rarely adopted through rational analysis; rather, they are mostly unconscious beliefs derived from many centuries of following our primitive ancestors' views of money--beliefs practically embedded in our DNA.
But if economists agree that money is a concept rather than a physical thing, why do we have the world's leaders acting as if money were physical and limited? Concepts do not possess the same limitations as physical stuff like gold or oil. Concepts can be limited or unlimited depending upon our will to make them so. We cannot change the limits of physical stuff (unless we physically destroy it).
When our leaders refer to deficits, spending caps and austerity, they are assuming that there is a physical limit to a nation's or the world's money, and they know what the limit is. When corrupt leaders declare that citizens must survive with less government assistance, they are doing so not only because lobbyists for wealthy groups have paid them to do so, but also because both they and the lobbyists are afflicted with concretistic thinking about money, a holdover from "Stone Age" trading notions.
The world's economy needs to be humanized. If world leaders agreed that money should be based upon human needs rather than solely upon its relationship to commodities, goods and services, these beneficial results could follow:
1. Taxation would be unnecessary, since a government can produce as much money as its needs require.
2. A Basic Income Guarantee could be applied to all its citizens.
3. Needed government programs such as infrastructure building and health care could be funded at levels based upon need rather than upon arbitrary federal budget limits.
4. Poverty would be eliminated.
5. Recessions and depressions would be eliminated.
6. General prosperity would ensue.
7. Capitalism could continue as usual.
8. Governments might no longer be viewed as enemies of the people.
It should be obvious that the main function of money is to facilitate or make possible a vast array of human behaviors. Even life itself usually depends on the possession of money, as when parents decide whether or not they can afford to have children, or when people die because they cannot afford proper medical treatment. Over the ages, money has become involved in, even critical to, virtually every aspect of human existence. It has evolved a long way from its pre-historic role as a shiny metal to trade for food.
From my book
Governments can declare that all men are created equal and endowed with inalienable rights, but it can do little more to advance and preserve these rights, because they usually require money. A Basic Income Guarantee (BIG) would be beneficial in this respect.
After my recent book was published I discovered that there is an informal organization promoting BIG. Although discussions have been held for many years, no agreement as to the funding mechanism for a BIG has been reached. I believe that recognizing money as informational, carrying the information that the government certifies that the bearer can use it for any of the usual uses of money, would provide a funding means for BIG.
What I'm advocating is that governments print much more fiat money, provided that money is redefined as no longer exclusively based upon commodities, goods and services, but upon the needs of citizens.
Governments should exist to promote the welfare of their citizens. By redefining money in the way I propose, governments could eliminate taxation, provide basic income guarantees for all citizens, meet the infrastructure-building and social program needs of its citizens that could not be handled by private efforts, and contribute more to international problems such as climate-change mitigation.
I have provided much more detail in my book, which is described further at www.TableOfGold.com
I am not an economist; my field is psychology. Therefore you will find evidence of naivete about economic concepts, but hopefully not about the needs of people in my book.
A different version of this diary was posted earlier at DailyKos.
Update [2011-1-5 13:55:49 by psyched]:
I'm gratified to see all the comments on this diary. I'm pleased to see so much general agreement that money is not a thing.
It's fun and illuminating to follow the discussions that verge into physics, metaphysics, philosophy, etc., and perhaps they are useful, but they seem tangential to the main thrust of my arguments, which I would summarize as follows:
1. Money is not a physical thing, but a social contract.
2. Money was created by man and thus can be changed or eliminated by man.
3. Money and its rules of usage need changing to improve our dysfunctional economy.
4. The world must agree that government issuance of fiat money should be limited only by the limits of the people’s needs (including infrastructural and environmental requirements) to achieve and maintain life, liberty and the pursuit of happiness.
One of the main impediments to achieving these ends is the disparity of beliefs among the world’s people about what money really is. Most people regard money as a physical entity, and even world leaders who understand the non-physicality of money behave as if it is a scarce or limited physical thing. And perhaps, as stated or hinted at in some of the comments, financial leaders consciously or unconsciously control the masses by perpetuating the notion that money is limited.
The concept of greed enters often into economic discussions. In my book I said that to combat greed it is easier to change the rules of using money than it is to reform the psyches of greedy individuals. The latter approach would provide many jobs for psychotherapists, but its effectiveness would be questionable, especially when one is dealing with sociopaths, who are notoriously immune to therapy or even diagnosis.
On Sunday I saw the film “Inside Job”, a documentary of the 2008 international financial breakdown. Most interesting was seeing close up the interviews with various greedy and/or sociopathic types who appear to lack understanding of or concern with the gargantuan effects of their actions upon millions of suffering people. It’s unfortunate that we can’t weed sociopaths out of political or other positions where their behavior becomes so disruptive to society, the way we look at medical exams of candidates for office to gauge whether they are physically suitable for a leadership position. This ties in with comments here that good government is essential to carrying out the beneficial societal aims we promote. (I don’t mean to promote a discussion of psychotherapy for politicians; that was merely a side remark.)
Thank you again for your serious attention to this diary, and happy new year!