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136 comments on A World Without Money?
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136 comments on A World Without Money?
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Beyond their industrial demand, precious metals are fiat currencies just like anything else.
Who does not understand this, has not read his history of money. Gold bugs can argue what they want, their arguments are not based on history or reality.
As such, if the thought game calls for a breakdown of not just the first line of money (national fiat paper currencies), but all forms of money, then it's back to barter we go. You have fish, I have grains. Let's barter.
However, before we would get there even in an imaginary scenario like that, I do believe we'd go through some other form of currency first. Maybe precious metals, maybe something else.
But let's not make the mistake of saying that any 'money' has inherent value, when it's all based on a social 'fiat' contract.
But barter with this many people would HAVE to have a new currency. Otherwise it would be too cumbersome -so the question is - how would society be organized and what would the rules be for the new currency? An energy backed one like Hubbert and the Technocrats suggested? Or a basket of basic commodities? I agree however, that gold will not play a long term role. Yes it represents embodied materials, but so does a car, or a barbecue grill. I think future currency backing (on a full planet) will have stronger links to real resources (energy, food, water, etc.)
How it will be done - that I don't know. But I figure starting from scratch we could at least tease out what principles would be involved...
Some of the community-based and/or intentional community barter systems use a time system. You work or trade an hour for a set amount of value. A key point is that all work has equal value. An hour of lawyering is equal to an hour of babysitting. (This has implications for education, of course, but again, if all education is given equal value and/or is merit-based - say, highest achievers getting their choice of major - then it might not matter.)
The starting value would be arbitrarily set, I imagine, but from that point on, there wouldn't be much need to adjust it up or down. If some resource isn't available, then that resource is doled out at a fraction of the set value. Anything that there's plenty of, well, there's just plenty of it.
Just thinking by the seat of my pants again, so blast away, folks.
Cheers
Nate-
But I HAVE to have a Mercedes convertible by next week, so the money WILL be coming from your account, etc...
In the real (hypothetical!) world, barter with this many people will fail to have a new currency for some time (due to lack of confidence even after one is organised). And consequently people will be forced to try to cope with a hopelessly cumbersome barter system.
ccpo-
More like a year of lawyering is already becoming equal to jack shat. Ask the 40 lawyers already disposed of by the top firm in this city.
Whereas I think you'll regret those words a lot.
With a failure of money there would be such a breakdown of the life-support system that a great dependence on local personal relations would take over. It would be much more to do with work exchange than things exchange.
I think the cumbersomeness of barter gets overstated a lot. That's not to say that money wouldn't re-emerge, if only because we live in a society heavily adapted and accustomed to fiat currency, but I do think it is important to recognize that barter systems can be very complex and sophisticated, and that monetary exchanges don't always *replace* - that is, barter offers refinements over and above monetary systems in tight-knit communities, among people where money is short (ie, the poor who never have a lot of access to currency), and it operates, when frequently used, to enmesh people in relationships with one another - often permanent ties, since nothing ever comes out "even" in bartering.
We tend to view economic history as a one-way trip away from barter, and towards currency by preference, because currency is so preferrable to barter. And for some things it is - but for some things it isn't, and it might be more accurate to argue that part of the problem has been the prioritization of a way of life that made barter seem inferior, rather than the inherent limitations of barter.
Sharon
I don't think it's inherently an either/or. The sticking point seems to be in applying a value. It is interesting to note that in the 17 and 1800's inflation was incredibly slow and stable. I forget where I read it, but I'm sure it was from here at TOD, but there was something like an 80 year period in the 1800's or so with virtually no inflation...
So, if we can determine a value that has some inherent value and, by extension, generally perceived validity, AND set up the system so it simply can't be screwed with, then it doesn't matter if you use a note to represent the "real" good(s) or not.
Or, so it seems to this non-economist.
Cheers
I think talk of a barter system is idealistic nonsense. It sounds good but be careful of what you wish for.
Governments need fiat money and taxation to keep the peace, to enable elections, health services, education and public services like police, coast guard, border patrol and weather forecasting etc.
Maybe look to Somalia to gain an insight in a system without government.
When you come up with a fair barter system which can pay the sailors and airmen, police and teachers with bags of beans then you have success.
I don't discount that bartering could become a means of survival but if it becomes widespread, it will most probably mean we have anarchy, warlords and slavery and a whole damn lot more misery than necessary.
I agree with you that a barter system would work. Why couldn't someone trade a certain weight of gold for a certain amount of fish?
Money does have inherent value, otherwise its not money. Gold and silver have inherent value; just look at the tremendous amount of effort and risk that is undertaken to remove it from the earth. By the way, definition for fiat - An authoritative command or order to do something; an effectual decree. Surely you don't believe that gold and silver only have value because the government says so? Because if you think about it, they would much prefer that you think the opposite. Follow this logic, and Gold and Silver are really anti-fiat money.