Economics

Did Money Evolve? You Might (Not) Be Surprised

It’s all about social accounting

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By Steve Roth

You probably won’t be surprised to know that exchange, trade, reciprocity, tit for tat, and associated notions of “fairness” and “just deserts” have deep roots in humans’ evolutionary origins. We see expressions of these traits in capuchin monkeys and chimps (researchers created a “cash economy” where chimps were trained to exchange inedible tokens for food, then their trading behaviors were studied), in human children as young as two, in domestic dogs, and even in corvids — ravens and crows.

But humans are unique in this as in many other things. We use a socially-constructed mechanism to effect and mediate that trade — a thing we call “money.” What is this thing? What does it mean to say that it’s “socially constructed”? What are the specifics of that social construct? How does it work?

Money has lots of different meanings when you hear it in the vernacular. A physical one- or five-dollar bill is “money,” for instance (“Hands up and gimme all your money!”). But so is a person’s net worth, or wealth (“How much money do you have?”), even though dead presidents on paper or even checking-account balances are often insignificant or ignored in tallies of net worth (think: stocks, bonds, real estate, etc.).

You might think you could turn to economists for an understanding of the term. Not so. They don’t have an agreed-upon definition of “money.” The closest they come is a tripartite “it’s used as” description that completely begs the question of what money is: It’s used as a medium of account, as a medium of exchange, and as a medium of storage. I and many others have pointed out the myriad problems with this tripartite non-definition. Start by asking yourself: what in the heck do they mean by “medium” in each of those three? You’ll often hear economists speak of (undefined) “monetary assets,” “monetary commodities,” and similar, attempting to communicate in absence of a definition.

When economists speak of the “money supply” (a stock measure, not a flow measure as suggested by “supply”), they are gesturing toward a body of financial securities that are somewhat currency-like. Primarily: they’re used in exchanges for real-world goods and services, and have fixed values relative to the unit of account — e.g. “the dollar” (think: “the inch”). They assemble various “monetary aggregates” of these currency-like things — MB (the “monetary base”), M0, M1, M2, M3, and MZM (“money of zero maturity”). Here’s a handy chart on Wikipedia.

This conflation of “money” with currency-like financial securities reveals a basic misunderstanding of money that pervades the economics profession. That misunderstanding is based on a fairly tale.

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In the golden days of yore, it is told, all exchange was barter. Think: Adam Smith’s imagined bucolic butcher and baker village. This worked fine, except that your milk wasn’t necessarily ready and to hand when my corn came ripe. And moving all those physical commodities around was arduous. This inserted large quantities of sand and mud into the gears and wheels of trade.

But then some innovator came up with a great invention — physical currency! Coins. “Money.” This invention launched humanity forward into its manifest destiny of friction-free exchange and the glories of market capitalism.

Except, that’s not how it happened. No known economy was ever based on barter. And coins were a very late arrival.

The best efforts at understanding the nature and origins of money have come from anthropologists, archaeologists, and historians who actually study early human commerce and trade, and from various associated (“heterodox”) fringes of economic thinking. David Graeber recounts much of this history (though unevenly) in Debt: The First 5,000 Years. Randall Wray, a leading proponent of the insurgent and increasingly influential Modern Monetary Theory (MMT) school of economics, has offered up some great explications. (Though even he is reduced, at times, to talking about “money things.”) If you’re after a gentle introduction, Planet Money has a great segment on money’s rather vexed history and odder incarnations.

The main finding from all this: the earliest uses of money in recorded civilization were not coins, or anything like them. They were tallies of credits and debits (gives and takes), assets and liabilities (rights and responsibilities, ownership and obligations), quantified in numbers. Accounting. (In technical terms: sign-value notation.) Tally sticks go back twenty-five or thirty thousand years. More sophisticated systems emerged six to seven thousand years ago (Sumerian clay tablets and their strings-of-beads predecessors). The first coins weren’t minted until circa 700 BCE — thousands or tens of thousands of years after the invention of “money.”

These tally systems give us our first clue to the nature of this elusive “social construct” called money: it’s an accounting construct. The earliest human recording systems we know of — proto-writing — were all used for accounting.* So the need for social accounting may even explain the invention of writing.

This “accounting” invention is a human manifestation of, and mechanism for, reciprocity instincts whose origins long predate humanity. It’s an invented technique to do the counting that is at least somewhat, at least implicitly, necessary to reciprocal, tit-for-tat social relationships. It’s even been suggested that the arduous work of social accounting — keeping track of all those social relationships with all those people — may have been the primary impetus for the rapid evolutionary expansion of the human brain. “Money” allowed humans to outsource some of that arduous mental recording onto tally sheets.

None of this is to suggest that explicit accounting is necessary for social relationships. That would be silly. Small tribal cultures are mostly dominated by “gift economies” based on unquantified exchanges. And even in modern societies, much or most of the “value” we exchange — among family, friends, and even business associates — is not accounted for explicitly or numerically. But money, by any useful definition, is so accounted for. Money simply doesn’t exist without accounting.

Coins and other pieces of physical currency are, in an important sense, an extra step removed from money itself. They’re conveniently exchangeable physical tokens of accounting relationships, allowing people to shift the tallies of rights and responsibilities without editing tally sheets. But the tally sheets, even if they are only implicit, are where the money resides.

This is of course contrary to everyday usage. A dollar bill is “money,” right? But that is often true of technical terms of art. This confusion of physical tokens and other currency-like things (viz, economists’ monetary aggregates, and Wray’s “money things”) with money itself make it difficult or impossible to discuss money coherently.

What may surprise you: all of this historical and anthropological information and understanding is esoteric, rare knowledge among economists. It’s pretty much absent from Econ 101 teaching, and beyond. Economists’ discomfort with the discipline’s status as a true “social science,” employing the methodologies and epistemological constructs of social science — their “physics envy” — ironically leaves them bereft of a definition for what is arguably the most fundamental construct in their discipline. Likewise for other crucial and constantly-employed economic terms: assets, capital, savings, wealth, and others.

Now to be fair: a definition of money will never be simple and straightforward. Physicists’ definition of “energy” certainly isn’t. But physicists don’t completely talk past each other when they use the word and its associated concepts. Economists do when they talk about money. Constantly.

Physicists’ definition of energy is useful because it’s part of a mutually coherent complex of other carefully defined terms and understandings — things like “work,” “force,” “inertia,” and “momentum.” Money, as a (necessarily “social”) accounting construct, requires a similar complex of carefully defined, associated accounting terms — all of which themselves are about social-accounting relationships.

At this point you’re probably drumming your fingers impatiently: “So give: what is money?” Here, a bloodless and technical term-of-art definition:

The value of assets, as designated in a unit of account.

Which raises the obvious questions: What do you mean by “assets” and “unit of account”? Those are the kind of associated definitions that are necessary to any useful definition of money. Hint: assets are pure accounting, balance-sheet entities, numeric representations of the value of goods (or of claims on goods, or claims on claims on…). That’s where I’ll go in my next post.

Sneak preview: we’ll start by thinking carefully about another (evolved?) human social construct without which assets don’t, can’t, exist — ownership.

* Some scholars believe repeated symbolic patterns going back much further, in cave paintings for instance, embodied early “writing,” but that is widely contested, and nobody knows what the symbols — if they are symbols — represented.

29 November 2015


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  • Intersting thoughts. Following the logic, if I do my buddy a favor (e.g. give him a ride to the airport), he may feel he “owes me one.” Would that fall under your definition on “money?”

    • No, by this def it would have to be numerically specified in a unit of account to be money.

      • And clearly the use of numeric specification of units of account began when the number of “owes me one” started to get too large to be reliably remembered. Probably with the advent of agriculture, large surpluses, and larger groups that formed in towns and early cities.

        Seems probable that there is a clear evolutionary link there in the emergence of money as a concept from “owes me one” – which is common in many social species (even vampire bats).

        • Dr. Mohinder Kumar

          I found Marx missing from the scene. His concept of money as “most general equivalent” among all commodities may be pertinent. It’s important to re-emphasize notion of “subjectivity” as Steve has discussed it in sense of “social construct” and precursor to human “language”. Hitherto in mainstream economics money appears as object in an objectified world devoid of humans/ subjects/ subjectivity and hence sociality/ socialization. I think it may be useful to understand when/ why/ how “money” got to be posited as “store (house of value” or warehouse of value? This aspect of capitalism is humanly dangerous in man’s history.

          • Marx was somewhat further down the line of evolutionary development of money.
            A lot of people in history, including most economists, seem to have gotten very confused looking for some sort of definition of money and the value in it.

            Money started out simply being commodities that were common enough for general usage yet rare enough to be useful in trade – many metals served the purpose, most commonly copper, silver and gold. In some societies they used rare shells, some used rare feathers. All that really mattered was agreement about value.

            The thing that most people don’t get is that all value is subjective and context sensitive. Money is, in this sense, a useful myth. It has value because we all agree to give it value. That is all.

            It is useful as a means of exchange.
            It has served many complex coordination roles in human society (all of which can now be done far more effectively by modern digital systems).
            It has served as a tool of control and domination (which needs to stop if any of us to experience the sort of security that will allow potentially very long lived individuals to actually live a very long time).

            For the last few thousand years it has served many useful purposes, in helping build societies from hunter gatherer systems to complex societies with complex technical and cultural constructs.

            And we are approaching the end of money.

            Automation allows us to produce any product or service that can be fully automated in universal abundance (and anything universally abundant has zero exchange value).
            Automation is on a double exponential – currently doubling about every year.

            And all of this is beyond the scope of the original topic as to how did money evolve, and is more about what is likely to be the next evolutionary paradigm of human values, coordination and interaction.

          • Dr. Mohinder Kumar

            “Value” is again another concept that is not properly understood by the mainstream economists, right from classicals and neo-classicals. And misused also. It’s so ambiguous and ambivalent that every person has his/her own meaning, sense and definition. To a sociologist, it’s “human value”; to a narrow economist it’s “money value”; and to a philosopher it’s about locating plain “importance” or “meaning” in something. I think Marx’s notion of value as “common something” and as a product of abstract labor power is the most convincing notion and most pertinent here as far as further evolution of money is concerned, particularly it’s long back in the early development of capitalism. There is very close interaction b/w “value” and “money” as social relations in the process of capitalist production. Both are social constructs.

            We may not approach “end of money” as long as social processes of production under advanced capitalism continue to produce “value” i.e. as long as capital-labor relations exist. Only form of money may change. Change from coin/paper money to digitized money doesn’t mark substantial change in existence of money. As long as wage labor is there to be employed by capital and “value begets value” to produce surplus value, such capitalistic “productive” labor processes may not allow demise of money and capital.

            In case human emancipation is to be realized, private property shall have to go. I am yet to read Steve Roth’s essay on property. Hopefully it’s as brilliant as money essay. Lenin attempted issuing of “labor chits” as embodiment of labor-hour put-in by workers. That’s a brilliant practical idea –because it replaces money as store of “value” of assets with money as store of “labor”. Proudhon previously proposed “abolishment” of money. However, external denominations abolished by preserving essential wage-labor type relations (even in USSR’s state capitalism under Stalin, to the dismay of Trotsky) may only promise retention of one or the other form of “value” store.

            And, as long as private property (even by national/state property) exists, no discourse of “end of money” in any form may facilitate realization of goal of human emancipation through “permanent” uninterrupted revolution. We’ll end up having same peraphernalia of trade, objective exchange, values, profits and the same.

            Though apparently beyond the scope of present paper (definition) by Steve, the question of evolution of money into “store (house) of value” may not be wished away. In fact, a priori definition may not work. I wish to make a point that somewhere in this process of evolution of this thing/ relation called “money” it got to be used by capitalists as “store” house –may be for the purpose of accumulation. Some form of “denomination” that was readily acceptable socially, was required and “money” as a unit was available and it became “handy” to use it as “store” for vested interest of private property owners/ asset owners. Otherwise, in physical sciences, there is not a single “unit” of measurement or weighing (kg/ m/ km/ ounce/ mile, et al) which is also acts as “store” of same entity which it measures. “Joule” cannot store energy/ electricity/ power but money/dollar can!! This is the most vulgar invention and peculiar innovation of economists, which deserves questioning. How could a unit of measurement be a mechanism of “store” of something, say “value”? Just as electricity cannot be “stored” why should we attempt to “store” value? The path is to be opened for movement from positive economics to normative/human science.

          • Hi Mohinder

            OK, let’s forget Steve, and look at evolution and money – since that was purportedly the topic.

            And one cannot look at either evolution or money without examining the very idea of knowledge or understanding – which also has an evolutionary path.

            The Greeks had the idea that Truth existed, and could be known.
            That now seems highly improbable.
            What now seems likely is that all knowledge is heuristically based, and has evolved through differential survival at some level.
            It now seems clear that all any of us can experience is a subconsciously created model of reality that our brains produce. We have no direct access to reality – whatever that actually is.
            It seems that all we have is these levels of historically useful approximations to something.
            It seems that possibility space, algorithm space, the space of possible logical and mathematical systems, are all infinite, and we have explored a close approximation to none of them (and should we live for the rest of eternity, exploring, that will remain true). Such profound ignorance, profound uncertainty, is our reality – not any sort of Truth.
            It seems clear that the sort of Truth that most searched for was illusion.

            So, within that context, of useful approximations to reality:
            Marx looked to labour for a measure of value, which was a step in a useful direction, but he didn’t have the intellectual tools to understand evolution.

            Most people have a very distorted view of evolution.
            The popular understanding of evolution is about competition, nature red in tooth and claw, and all that stuff.
            That is certainly an aspect of what is possible in some contexts, and it is not what evolution is.

            Evolution is simple.
            It is differential survival of variants.
            If a context has insufficient resources to sustain a population, there will develop within group competition. That is a possible context for evolution. It is not necessarily a dominant context for evolution.
            If there are sufficient resources for all individuals within a group, then traits that lead to cooperation in surviving out group factors can be strongly selected for. Hence we see such things as predator signalling in most species – from blackbirds to baboons.
            Context is king.

            Humans seem to have spent most of their existence in a sort of stochastic “sweet spot” where external factors were the major limitation on survival rather than in-group competition. This allowed the evolution of many cooperative heuristics. And to be stable cooperation requires attendant strategies to prevent cheating strategies from dominating – we have an abundance of those. Hence we are the most cooperative species known.

            In the last few thousand years, a subset of individuals have exploited certain strategies to effectively dominate the majority of humanity.

            One way or another, that is going to end soon.

            I would like it to end peacefully, with everyone leading long and interesting lives. And other options are also possible and have roughly equivalent probabilities at present.

            Marx looked at labour for value.
            He failed to grasp the strategic role of survival, and the many levels of deeply embedded heuristics in the human psyche.

            I could never make a single microprocessor. The processor and memory in this machine is more complex than I could possible build in a lifetime, yet it is made possible by a series of processes that have evolved over many decades, and they are produced in vast numbers at a small unit cost.
            This difference, between what an unaided individual can produce, and what a productive process (with or without humans) can produce, is the value that is traded in markets. Can I get more value from an extra hour at work, rather than an hour tending my garden? In money terms, without doubt.

            A few days ago I was wondering about the distribution of numbers within Pi – was it random, so I spent a few hours and wrote some routines and searched the first billion digits of pi – and the distribution of spacing between digits does appear to be entirely random. Even 100 years ago, that task was impossible even for humanity as a whole. I did it in a few hours, with the aid of this laptop, and a set of tools I have spent 40 years developing, along with many others.

            Our potential for productivity is vast.
            Our potential for destruction is similarly vast.
            In the years I spent as a commercial fisherman I personally caught and delivered to market over 2 million fish.
            In the 30 years I have owned and operated a software company systems I have produced have saved thousands of man years of clerical time. Just yesterday I had one person tell me how she cried when a new system I delivered worked, as it meant 6.5 hours per week of her time she didn’t have to spend typing numbers.

            Most of our systems are hugely suboptimal.
            Most are work for works sake – soul destroying, humanity destroying.

            Capital is about slavery.
            Capital is about dominating the means of production, and survival relies on production.
            The so called bargain between capital and labour is highly asymmetric.
            Labourers need food to survive, many live an almost day to day, certainly week to week, existence.
            Capital can usually stand idle for much longer than labour, without any serious risk to the survival of the capitalist.

            The entire capitalist system is a form of slavery with a whole bunch of myths associated with it to make it acceptable.

            When most things were in fact genuinely scarce, the system did have a certain utility to it.

            Now that we have the technical capacity to fully automate production, the system is in crisis.
            Fully automated systems can deliver universal abundance, but anything universally abundant has zero value in a market, so no capitalist will ever allow such abundance – hence poverty as a necessary structural part of any current market based system.

            Marx correctly foresaw that we would reach a point where automation would mean that most people could not add sufficient value to justify their existence. Amongst modern economists Robin Hanson is one of the few with the intellectual honesty the take that paradigm to its logical limits. I completely disagree with Robin that it is an ethically acceptable outcome, but I don’t disagree with him that it is the natural outcome of any market based system.

            Money is a myth.
            It is something that works only because we believe it will work.
            In that sense, it is a useful myth, to the degree that it is.

            Reality is, that there exists in any instant a potential for the production of goods and services. Any such potential not used, no longer exists.

            Austerity is nothing less than the deliberate disabling of production, to intentionally deliver poverty.

            We are not short of energy.
            We have sufficient sunlight to meet the reasonable needs of everyone, with a wide margin to spare. But it is hard to make profit from a distributed power source like solar, so it is resisted at every level of capitalism.
            It is easy to make super normal profits from Saudi oil, when it is produced for under a dollar per barrel and retails at over $300 per barrel. Lots of snouts deeply into that trough.

            We need to stop using oil as an energy source, but all levels of the capitalist system are addicted to the profit it delivers.

            The problems are not technical, they are mythological.
            The myth of money.
            The myth of power.
            The illusion of security that both deliver.

            Once you can see past the myths, it is clear that real security, real power, lies in cooperative action at the highest levels, that delivers security and freedom to everyone.

            And that does have the necessary outcome of exponentially expanding diversity.

            Its going to be a close thing.
            Will we survive into a future of abundance and security, or will we fall foul to the great filter of out of control competition and short sighted narrow self interest leading to extinction for all.

            I am cautiously optimistic that cooperation and survival will win out, and it is by no means certain thing.
            It is going to take a lot of effort by a lot of people.

          • Dr. Mohinder Kumar

            Ted, very much impressive yet somewhat incoherent. So, let’s not forget Steve who stands in favor of coherence of thought . . . in economics, and everywhere. Let us not lose track of plot. That’s THE reality for our purpose. “Money” primarily/predominantly/originally evolving as mere “social accounting construct”, as a way of counting, as a way of enumerating items of human-use (not yet “asset”) becoming in this cooperative-dialectical process of evolution a leviathan “store (house) of value” of assets created by human labor-power employed by Goddess Capital throughout its journey of hundreds, if not thousands of years. Money makes the mere (employee) go! We need to dig into the grave, after doing surface level archeological work with aid of historians and social-enthropologists/ethnographic experts (keeping mainstream economists out) to trace this historical evolutionary process, document it and link it to the present in coherent way. “Value” (economic/ money) is the Achilles Heel of society. And you can’t abolish it also without abolishing private property. Yesterday I finished Steve’s second article on Property. I think we need to tals about various “forms” of property/ownership –that angle was missing in Steve’s article: Primitive-communist/tribal, Slave, feudal, capitalist forms of property, and we have property form under Asiatic Mode of Production (AMoP) in so-called oriental societies of Asia: Despot’s in such “hydraulic societies” controlling huge water/irrigation works and allocating agricultural lands to communities, which are far from capitalist commodity production, and still survive as traditional/ subsistence farming systems without commodification of production: No value. Yet governments advice them: Borrow from banks and produce for the market! And, for your “survival” kindly depend and ruthlessly over-depend on state’s public distribution system. State never wants that the question of subsistence/ livelihoods be ever solved! Recall Steve’s mentioning of “outsourcing of execution of violence or its monopoly to government” via rent-seeking institutions, including banks, MFIs, Non Bank Financial Companies. A corollary of Steve’s article on property could be that this system ruled by state on behalf of a financial class (as Michael Hudson elsewhere termed “The one percent”) always wants “financial asset” (dual) for every “real asset” (primal). If there is no finance/dependence, there won’t be any financial asset (not even implicitly). The need of the hour is to debunk finance. We need to act. I agree with Matt Holbert’s last line comment in Steve’s article: “We are now a society that is far more talk than action”. After we’ve finished with talking and writing, we’ll act also. But thinking, talking and writing is also a form of “action”. Isn’t it? We need to know and disseminate knowledge to our students who creates (value) and how it gets accumulated as “dead labor” into assets owned privately. Origin of private property is surely the process of “so-called primitive accumulation” by force, power et al (Marx) or “primary accumulation” *Adam Smith) in the early stages of development of capitalism. It’s historical truth across time (600 years or so in Europe) and space (even today in India, Africa, elsewhere). Initially, it was by violent force; today it’s through peaceful “social production process” of employment of wage laborers. Somewhere down these processes, bacteria of “value” gets originated, propagated, multiplied and becoming all-pervasive as ghostly/spectral demonic force to devour entire commotiditified / commercialized/ capitalized mankind. The purpose of “value”, “finance”, “property” et al is precisely that only. I think Steve’s point is well taken. In these comments, I have also understood and brought Michael Hudson’s article on Finance as Parasite posted at Evonomics. Great articles –with promising/useful areas of further research . . . and concurrent action! Wishes!

          • Perceptions of coherence are very much a function of paradigms in use.

            I cannot create a coherent argument for people who still believe in Truth. For me it is like asking me to explain Santa Claus – a myth.

            Money is kind of like that.
            It is pure myth.
            It works because people believe in it.
            It worked in history because life with it was easier than life without it.

            In the transition period we are entering, we may still need to experience life with money, and some form of Universal Basic Income may be part of an effective suite of transition strategies to life beyond money.

            Most people only want a fair share (enough for their needs), and some people want all they can get – that about sums up wealth distributions.
            And I do get it is far more complex than that, and it is a good first order approximation.

            When we required labour to create things, the idea of dead labour made a certain sort of sense.

            But now we can mechanise and automate processes to the point that there is all most people need, for nothing.
            Yet we don’t do it.
            We don’t do it because most people are trapped inside the idea of money as a measure of value, and the need for profit that is derived from that.

            I guess Steve and I agree in a very real sense, that money is just numbers that people believe in.

            Most people simply get the numbers they need to survive, and sometimes do what they want, without taking it much deeper than that.

            We didn’t have video cameras back in the deep cultural past recording what actually happened, so everything about the history of the evolution of money is going to be conjecture.

            Even if we could somehow get images of what happened, that would explain the what, not the why.

            The paradigms that individuals use, moment by moment, to make sense of the model of reality that their brain is presenting to them as their experiential reality cannot yet be recorded, so even today we can only guess at what is going on in anyone’s head – ourselves included. Our conscious experience is only the tiny tip of a vast computational iceberg.

            My brain has all these concepts, from computing, biology, complexity theory, Wolfram’s NKS, Einstein, Heisenberg, Russell, Turing, Goedel, and thousands of others. In my head, they create a unique ecosystem, with many populations at many levels of complexity of concepts, ideas, abstractions, interpretations, conjectures, intuitions, analogies.

            How can I explain Kurt Goedel, when it took me nine months of nightly headaches to come to terms with everything in his logic? And I’m not slow, when active in Mensa I was invited to join the 4 sigma club, and I consciously chose a different path, followed my own intuitions.

            I know I have not the time or patience to connect all the dots for anyone else. My writing or talking speed is a tiny fraction of my thinking speed. I just leave pointers, as best I can, in case anyone else is interested in doing the work.

            And some things are quite straight forward (unfortunately evolution is not one of them – simple principle, recursively complex reality, with at least 20 levels of cooperative systems present in most human beings – and many instances of different systems at every level).

            I am not too interested in the past.

            I am very interested in the future we are creating.
            I would like to live in it for a very long time – the rest of eternity sounds about long enough.
            And I may have only a small chance of doing that, and so long as any chance remains, I’ll keep going.

          • Dr. Mohinder Kumar

            “Easiness” of life of men “without money” in the long distant past may similarly be termed as mere speculative personal “perception” and a “myth” so long as empirical findings do not establish this as a matter of fact rather than fiction. Truth is so-called and termed hitherto as “myth”. So, this world is also myth? Fishes are also “myth”. The genius in German Philosopher Hegel observed truth as a [dialectical] process that is slippery. When it’s slippery it must be difficult to grasp and hold. That is the core issue. We, the people of this world, get tired so soon in making effort. Truth is slippery –so we declare it as “myth”. But fishes we capture in millions in our commercialized processes to make money are also “myth” –the money thus made (earned) is also a “myth”? I see a humanity worn-out under the pressure of money. I can understand if you call money as “spectral” “ghostly” and “phantasmagorical” in unleashing a neurotic madness in society just like “capital” was termed by Marx 150 years ago. But to say that “money” and “truth” are myths –it becomes over-speculative idea torn apart by wear & tear of thinking process.

            Difficulty in understanding a phenomenon and efforts needed for that and difficulties of conceptualization et al are quite valid aspects. Even Marx had termed “value” in Capital-1 as “common something” (brilliant concept but apparently crude concept and very difficult to convey/ teach/ make someone understand who may find it difficult to understand like dialectics or quantum mechanics concepts) in all abstract labor of wage-laborers to put in their labor-power under capitalist production processes. But no one says, value thus defined/ conceptualized is “myth”. I think it’s too easy-going approach to say something is myth rather than doubting it scientifically and exploring the truth or forms of truths behind it. Einstein found this universe “mystical” (not mythical) and “real” –both at the same time. His approach needs to be grasped and understood if one is really fond of having excursions into the universe of imagination –rather than indulging in “myths”. I do understand, archaeologists, historians, anthropologists, social anthropologists, evolutionary economists et al working as a team on this proposed project (exploring the essence of money/value) may face difficulties to take Marx’s foundational task forward, but it’s I think a socially desired effort to make our humanity’s future better, more progressive and humane that is now sort of vitiated by “capitalized”, “financialized”, “monetized” processes active all around the globe –so much so that we want even tribal/ethnic communities also to forcibly join these processes. If they ask us why –shall we tell them don’t worry it’s “myth” and just enjoy bank’s loan and money-capital?

            In social sciences, it also becomes problematic to use the word “origin” , “initial point”, etc. If Physicists can set up LHC project and recreate original conditions of universe to locate “God’s Particle” –that building block particle of this universe then why not lot many researches can be launched by teams on systematic study of evolution of money/ “value” when we’ve aboriginies, ancient tribes and old ethnic groups around us? We find it so “easy” to do “financial inclusion” of these sturdy and fit people only to make them ruthlessly dependable creatures on global financial institutions (since profits are “real”, not “myth”) but doing exploratory/ empirical/ evolutionary research is found by us as an idea that is what you may call “myth” like Santa Clause. That way India has millions of “mythical” gods. And still scientific temper is alive along with Einstein’s clarion call for caring that we as humans remain interested and excited in spiritual (not dogmatic monetized religious) quests and imagination about aesthetic beauty and value (meaning) of this universe. Hitherto there is sort of fetishism of money or money-fetishism promoted as an overwhelming idea that we’ve got confounded and started treating it now reality and then “myth”.

          • Hi Mohinder

            This is getting really tricky.
            I can sort of agree with everything you wrote, and it mostly seems to stem from a misunderstanding of what I wrote, and that (I am afraid) is very much to be expected.

            Let me approach it this way.
            Some things we can get agreement on fairly easily.
            Some things are much more probable than other things.

            I called Truth with a capital “T” a myth, as in something that one could be absolutely certain about.
            I don’t have any such thing.
            I have many things I am very confident about, that I rely upon operationally, and don’t normally entertain any doubt, and if pushed, I have to admit the possibility of doubt, however small.

            A myth is a story, that at some stage for some people served a useful purpose, and within the paradigm in use is demonstrably untrue.

            Saying that money has value is such a myth, to me.
            That is not to deny the operational reality that I can get a variety of goods and services by giving people money – that is very true most of the time.
            The really interesting question is why?
            Is it something in the money, or something in the people.
            To me, it is clear, beyond any shadow of reasonable doubt, that money works because people believe it will, and for no other reason.

            It is the degree to which we all trust that it will work, that makes it work.
            Money works – that we agree upon.
            The idea that money itself has value, that to me is myth.
            What has value is the goods and services that people have, or want, and the trust that they have in an abstract token of value (money).

            As to evolution, that too is complex.
            If we reset the clock, wind the earth back to how it was 4 billion years ago, and try again, we might get life forms (and maybe not),
            If we did get life, there is very little chance that it would be like us.
            There is a lot of randomness in evolution.
            The general forms of the processes we understand well, but that does not make the process as a whole predictable.

            And sure, we could go back and look for clues about how money evolved, and some of us have, and it seems to be part of the whole thing about the invention of writing, about keeping accounts, keeping track of tribute and taxes in complex societies.

            And of far greater interest to me is the strategic bottleneck we currently face, where the strategic interests of the monetary system and the strategic interests of individual human beings are now coming into direct opposition, as the result of automation.

            Any fully automated process allows us to produce whatever goods or services it creates in universal abundance with no human labour required. That is great for people who want that good or service.
            But, anything universally abundant in a market place drops to zero value in that market. Zero value means no profit. Banks, financial institutions, governments, stock markets, all fear such loss of value, loss of profit. It is anathema to them.
            Hence the conflict.

            We already have the ability to fully automate the production of a large set of goods and services (mostly services at present) and that set is exponentially expanding.

            Right now, we have the technical ability to deliver a high standard of living to every individual on the planet, but doing so would break the money system. I have run a software company for 30+ years. I have some practical experience of such matters.

            I don’t want to force anyone to do anything.

            I do want everyone to have the real resources and freedom and security to do whatever they responsible choose – where such responsibility involves make conscious assessments of the risks of actions to others and to the environment we share, and minimising such risks as much as is reasonably possible, and cleaning up whatever messes our mistakes create.

            I find it odd that you seem passionate about the details of the history of money to about the same degree that I am passionate about creating systems that empower everyone. And it is odd to me, that I see clearly the need to disinvent the concept of money, or at least relegate it to a bit player in the larger ecosystem of human value judgements and the influence on the direction of societal systems development, because of the clear and present danger it presents.
            But then I’m a systems geek, have been fascinate by systems for over 50 years, biological, mechanical, human, ethical, computational, strategic, paradigmatic…..

          • Dr. Mohinder Kumar

            I was aware that Truth has capital letter ‘T’ and it must be in the league of idealism’s or particularly Hegel’s concepts of “Being”, “Idea”, “God” and “Truth” –all words with initial capital letter with their intended notions. In any case humanity has always strove to find these four in their individual quests, and declared these to be non-achievable, unknowable, myths and what not. Should we add “Money” also to this league of G-4? Then there will be no end. Everything gets unknowable, since each individual doesn’t agree with the other. Agreeing or not agreeing is not very important. The important thing is individual perspective versus social perspective. With individual perspectives (trust, faith, belief) we turn everything into unquestioned agreeable convenient myth –so that all are happy in agreeing. That way, Darwin may not have been able to pose his evolutionary theory to confront mythical-design-centric view of the Church that said “God” created this world with his exclusive unknowable design, and it has “worked”. Something “works” –that does not mean it shall “work” in future also, which is in a way your concern also –future-centric perspective. But can “future” be built over fragile sand of overlooking the past patterns, trends, facts, functions, features, etc.

            Why is Evolutionary Economics contesting the premises and assumptions of mainstream economics? More so when mainstream economics was “working” well thus far! But why it’s not working now? There was a time when heliocentric view of solar system was working since Church commanded that it’s “working” –so it was working well. When it no more continued to work? Why? Because a scientist/ astronomer (was it Galileo?) questioned it. Similarly, today we’ve to question and doubt money in all its respects (to disrespect it deliberately) and say, okay even if it’s working, it’s creating problems (also). In its various “avtars’ (reincarnations), e.g. finance it’s acting as , what Michael Hudson says, “parasite”, and Marx 150 years ago said money in credit form of bank’s capital as “fetish”. Why fetish? Because banks made our predecessors to be convinced that bank’s loanable-money/capital has miraculous/ godly powers to ameliorate all of your problems of existence. Money thus got strengthened in to a super myth though in its earlier forms it was already similarly regarded as a “myth” in which people had full faith and loyalty and belief. No one doubted as even today Mr.Ted refuses to accede to the need/fact that it’s time to question/doubt the “myth” of money. But here we refuse to launch even an exploratory inquiry since scientific fact finding is still detested. Why Marx said: “Doubt everything”? And at the same time he was aware that any scientific inquiry (taken passionately) was a “hell” lot of experience. It’s not easy. But we are now habitual of finding short-cuts and “workable” paths. At the same time, for our deserved consolation Marx also proposed to have “trust” in scientific inquiry and its results/ findings while you’ve to have “doubts” also in your mind. So, its complete dialectical package of doubt+trust that may lead us to see “money” evolving into store-house of “value”. See, my and our problem is with economic inequality and concentration/centralization of wealth/ capital/ incomes, and it’s aggravating –causing all sorts of national/ social/ political/ global problems of progress and existence. Money is the culprit. Value creation and appropriation is the culprit. Value begetting value (by automation) is the culprit. You’ve mentioned “automation” severally in your post. But think over this: Is “automation” / machinization/ technology/ way-of-doing things by workers meant for emancipation of workers from drudgery or to replace them from production/ creation process altogether in the name of “efficiency”/ profits? Why legendary Chomsky wrote “Profits over People”? His legend we’re bent upon detesting to keep money on highest pedestal but are not willing to forget the legendary “myths” of money working so beautifully in our past history! If something has worked in the past, that does not mean it should not be questioned/abolished. Do you want outright abolishment of money/ credit (as storehouse of value acting as command over others who do not own/have it)? Your post reveals certain reservation on this. Nevertheless even if you tend to say “Yes”, you’ll find Proudhon already proposed this but without proposing abolishing of private property. If our private vested interests are attached o private property/assets then even by abolition of money, we’ll conveniently devise any other “measure of value” / standrd of value/ mechanism of exchange etc. and cleverly from back door install in this “medium”/ “mechanism” “something” of value so that this “mechanism” henceforth becomes a new “store” house of value: A new warehouse, bigger warehouse, more sophisticated warehouse of . . . what? Of “something”! What “something”? Common something”? What “common something”? —dead/concealed labor-power of others/other humans employed by the system, still entrenched, as WAGE LABORERS. Let us be clear? Do we want a human commanded to work for another human (except by cooperation)? Do we want one’s labor power “stored” this way in “mythical” storehouse and later be used by us for private use?

            If such a system was working for the past at least 500-600 years then that does not mean it is cellular automata and it will “work” automatically. Let us not forget human design while we’re so obsessed with God’s design.

            Ted, you give so many anecdotes. Let me offer one. In my childhood days I used to visit local bazaar’s sweet-maker’s shop to buy sweets. I, and my friends, would more often tend a mutilated Rupee (Indian currency) note -sometimes surreptitiously and sometimes, when it became a custom, openly also, as there was huge rush of customers at his shop. That nice fellow (the shopkeeper) would invariably always accept that mutilated note (vernacular language “Khota Sikka” –a priori, non-working coin/note) though it worked! While on the one hand, we “believed” that that Rupee note was “not workable” (since mutilated so badly) at the same time practically it “worked” also –invariably always, as I said earlier. There were in “operation” two opposing sets of beliefs –working and not working. Nonetheless “operational relaity” as you used the term is more important. And it “worked”. Why it worked”? Because sweet-maker thought so. Why he had such thought? Because there was “something” hidden in it (Rupee note). It had “value” stored in it by virtue of which it could exercise command over things/ commodities/ persons.

            We, the humans (or wage- laborers) are so gullible and have been so for thousands (or at least hundreds) of years. We believe that a Rupee note is just a medium of exchange or mechanism of payment but somewhere down the line/process in history, it (money as accountancy/ counting unit) has acquired an autonomous role/ function/ force to store abstractly a sort of power that can be sourced by its owner at his/her will. Entire humanity has problem with this automatic/ liberal function of “money” which we devised in all good “faith” as mechanism/ measure/ unit/ medium/ means but somehow it turned into an independent/ autonomous existence of its own. It was “null & void” and somehow it got to be spacious/ massive/ substantive existence in its role/ function. If you (I, we also) do not unearth its past in its all aspects of existence and “working” you’ve no right to abolish it also or even question it to have a world without money.

            “Property” is nothing but form of “accumulation”. Landed property can only be a ground basis/store-house of concrete commodities but “money” is a storehouse of everything i.e. exchangeable. It is for no other reason that it was termed as “most general equivalent” by Marx. And it is for no other reason that Steve deemed it fit to discuss money, followed by property in his subsequent article. It’s the private “property”/ ownership and its idea of private accumulation that is to be smashed (as it provides the concrete ground on which “money works”). Otherwise you may not go into “future” by just ignoring the “myth of money” which according to you worked. Money worked because it was “real”. Its reality has to be smashed. If it was “myth” you’ll have another myth substituting it. Digitized money/ social money et al –they all have to be mere counting and accounting of . . . what LABOR put in by individuals, not their “assets”/ properties. We’ll have to start from zero property, and see to it that property continues to be “no more workable”. It’s labor/ work in cooperation, that should work, not money. That’s our future.

          • Hi Mohinder,
            Thank you. Thank you for the anecdote, and for everything else.

            Our world views are so different, I think I have a reasonable model of yours now, and it will only be a useful model in some circumstances, as all human beings are vastly more complex that any of our models of them (ourselves included) – this I know with great operational confidence. 😉

            To try and give you a model to help you understand me, and where I am coming from – consider that in 1974, as I completed my undergraduate studies in biochemistry, it became clear to me that the default mode for all cellular life is indefinite. Only the complex forms of life have developed the trick of giving some cell lines a limited lifespan.

            Once I saw that, it was obvious that indefinite life extension was possible. I did not know how to do it, and I did know, beyond any shadow of reasonable doubt, that it was technically achievable.

            Having confidence that the biological aspect of dying from complications directly related to aging could be cured, the question that immediately occurred to me was “What sort of social, political and technical institutions are required to allow potentially very long lived individuals to actually live a very long time, with both freedom and security.

            That question sent me down several different practical and theoretical explorations. I started joining and volunteering in many different aspects of society, to gain practical experience of how things actually work now, as well as looking at theoretical investigations.

            I read large numbers of works, by philosophers, mathematicians, physicists, chemists, logicians, historians, economists, computational theorists and many more. I am 42 years into that journey. In all those many works, only one did I find no significant errors – Kurt Godel’s incompleteness theorems. And I suspect that is so because he stuck strictly to the realm of logic and made no claims at all about reality.

            Proudhon had the beginnings of a philosophy, just as Marx made some interesting investigations into the consequences of particular trends in economic and social patterns. David Harvey even argues that Marx foresaw the elimination of labour by fully automated systems. I have looked at those passages, and I doubt that Marx actually made that connection.

            Marx viewed life as a class struggle.

            I view life in terms of evolving open complex systems.

            I see we are near the limits stability of exchange based systems.
            Exchange based values cannot survive fully automated systems.

            What I am about is empowerment of individual freedom, which comes with a responsibly to act reasonably within both social and ecological contexts.

            The only way everyone can have all the empowerment, is if we automate all the systems. That doesn’t mean that people to nothing. People can do whatever they responsibly choose, and if no one does any of the critical things that need to be done, then the automated systems can step in and do what must be done to ensure survival.

            In markets, asymmetries always magnify. There is no way of avoiding that.
            So markets are not stable as a dominant coordinating paradigm (as per Hayek).

            So for me, the answer is, to develop a set of machines that can use sunlight to make a copy of themselves and do all the important things that really need to be done. That is a huge task, but once done, if it takes two weeks to make a copy, then within 2 years there can be one for every person on the planet.
            That is a major game changer.
            We dont need money then.

            We use labour to make a system that then delivers all the labour anyone needs.
            No need for exchange or further labour.
            Every individual free to self actualise in whatever fashion they responsibly choose.
            Gifting becomes just as useful – perhaps even more so.

            And I really do get, that what I wrote can be almost impossible to get.
            And I am confident, beyond any shadow of reasonable doubt, that it is possible.
            Not nearly so confident that we will actually do it – about 50/50 at present.

          • Dr. Mohinder Kumar

            1. “Marx viewed life as a class struggle”. The statement needs correction. If read carefully, we’ll find his thesis was not for entire life as viewed in the past as also future. Marx divides and differentiates b/w modes of production and epochs though not in a linear way –he did see non-linearity and complexity of social living systems. For instance, Asiatic Mode of Production (AMoP) in his Ethnological Notes discovered by Lawrence Krader bring forth his observations of non-linear movement of history of society/people. Out of all these “modes” he saw “class struggle” predominantly under slavery, feudalism and capitalism –as these were dominantly divisive class-based structures. For him, not all social/economic systems were class-based and hence prone to “class struggle” –not even primitive-communist mode of production that preceded slavery in his scheme of things. So, please made this significant correction. Otherwise, for you Marx becomes a promoter of eternal ceaseless “struggle”, that is, not good for social world even in our normative view of future. Being a biologist, you may understand this thing better. No doubt, Marx appreciated Darwin’s theory and his innovative/ original findings on evolution but that has to be understood from his concern for due appreciation of “EVOLUTIONARY” approach that was developed by Darwin in contrast to the Church’s sheer deterministic perspective (read commandment) which forced a view of design/ purpose/ teleology of “God” behind our creation. Second, classical economics in his times was dominated by eternal categories/ concepts posed as if they were “natural”. Engel’s “Dialectics of Nature” came far later. Before him, Marx was gripped with this problem of eternal nature of economic concepts, including rent, profit, value, etc. To attack these eternities transcending epochs/ modes of production, Marx was drawn nearer to Darwin, particularly his “evolutionary” approach. Otherwise, our reading of Marx doesn’t suggest that he was votary of “struggle” between classes without qualifying it to be restricted to any formation of society that was based on class distinction. Rather, his praxiological model suggests action for class-less social formation i.e. socialism. If he inspired socialism throughout the world more emphatically than any other philosopher then he may not be termed in unqualified way as “Marx viewed life as class struggle”. Instead Marx viewed [future] life of men as associated/socialized devoid of class based or other “struggles” born out of alienation/ separation.

            2. “I view life in terms of evolving open complex systems”. Marx too visualized life in society as evolution and open system. His “socialism” is not a boundary. It’s open, free with sense of collective labor (responsibility). He never portrayed himself as “Marxist”. He wished posterity sees his theories with open/ critical mind. He offered no blueprints for future’s society. Everything depended (not in deterministic sense) upon people’s actions and past history. Recall his correspondence with Vera Zasulich on possible pathways for Russia even as traditional communal institution of “Mir” came into their picture as also the role to be played by whatever capitalist-proletarian development was achieved in Russia upto 1880. He kept things open. He (particularly older Marx) doesn’t impose linearity of slavery–>feudalism–>capitalism —>socialism onto AMoP.

            3. “I see we are near the limits [to] stability of exchange based system. Exchange based values cannot survive fully automated systems”

            If I’ve understood your posts in totality (though I doubt it), I think you mean to say the end of road for human exchanges when “fully automated” systems are in place. As a laborer, I desired automation for all workers so as to reduce drudgery and reasonable human convenience in operations. We are pleased to note that your invention of solar based copies of machines will make life of all workers/ individuals easier.

            There is a fundamental problem that needs to be addressed: Social Division of Labor. Future society, as Marx perceived, and I agree (there are millions who think on same lines) that future society shall not have social division of labor –a kind of hierarchical economic-social-caste system. If that persists, then those “automations” would still keep old trash of the hierarchical divisions intact. Minimum Basic Income kind of thing read elsewhere then is also of the same league as your automation and automatic devises for each individual. See, the fundamental problem of humanity that has NOT changed despite evolution of societies is man-man/human exchange based on labor. One person (propertied class) has always looked upon another person (slave/ serf/ tenant/ wage-labor class) as hired/ contracted/ wage-based laborer. Just as draught animals were used for work/drudgery (and still it happens) on farm gor the owner, so are individuals looked upon as paid workers (socially individualized laborers). This IS inhuman. Does your invention of automated machine address this fundamental issue –forget money –if you’ve not addressed this exchange-based problem of capital-labor exchange based Relation of Production (RoP). Try to understand this aspect while you are passionate about your scientific invention of automatism. Automated individuals shall be no better than Robinson Crusoes trapped on secluded islands within society. Though automation (technology) is always desired goal in any society, but you cannot simple wish away “exchanges” and herald their demise (stability) as it cannot survive your automation. Though you said this thing about “exchange based values” it equally applies to “exchanges” per se b/w humans. Without any discourse on human exchanges and their contours clarified in your post, any system of full automation is not going to be of any human use universally. Please think over it and then you may respond. Without addressing/ clarifying your position on such fundamental questions as PROPERTY/ OWNERSHIP/ SOCIAL DIVISION OF LABOR, etc. which impact humans directly/ immediately and in the long-run, “automation” appears simply as enthusiasm of a technologist/ bio-technologist/ bio-chemist to invent a machine/ automatic system –so it becomes mere application of science but that has nonetheless been happening over the past since modern science took shape. In any case, new cars, new mobile versions, new softwares, and what not are daily appearing on the global scene. I am not shedding this responsibility of social realm on your shoulders alone but since you’re proposing this invention then you must have in your team required people who better understand social systems. I value your reading of “thousands” of books on varied subjects and experts but that now needs to be arranged/ sorted/ classified and used in appropriate way. I find your passion/ obsession with mechanical Robotic automata not very innovative. We recall here one Russian mathematician (name forgotten) who first proposed Robotic devises for society. So, the idea has already been there. I suggest, with your vast reading of literature/ philosophy as also benefiting from your biological/natural science background, just introduce a more effective path of addressing social questions at least in your discourse (I’m not saying you become a Che Guevara or John Reed). Elsewhere I read in probably Michael Hudson’s article on “Finance as Parasite” that by 2020 we’ll achieve indefinite life expectancy or something like that (words are not exactly same).

            Ted, just stop here. Despite your immense reading of vast literature, you’re leaving out fundamental issues cited above plus the issue of finance also. You said in your younger/UG days in college you felt that certain specific kind of social/ economic/ political institutions could facilitate/ make it possible to extend survival/ life span indefinitely or something like that. Exactly, just go 40 years back. If you want to work effectively, then immerse yourself (also) in thinking about those very “institutions”. But your propose hereby (as pious wish); there will be no money, no exchange, no exchange-based values! Same mistake was done by Monsieur Proudhon for which he was rightly reprimanded by Marx and their friendship came to an end. Ted, without abolishing the idea and practice of private property (in any form including labor power), private ownership of “assets” (particularly financial form of assets –Steve’s concern), system of social division of labor (in India Caste also) et al you cannot kindly succeed in your avowed objectives in case you’re passionate about the question of human emancipation (including all classes). If class system persists, that means power persists, and your automatic copied machines shall be stolen/ grabbed/ expropriated even physically and violently –since your system does not allow exchanges! I can foresee in your model, elements that may push social systems back to the “so-called primitive accumulation” . . . of what? Of your “automatic” robots. If I, as a capitalist do not allow you to keep/own that machine, how can you even hold it? Have you noted, in your discourse on individualized automatic systems not a single word is there about “ownership”/ “property”/ “distribution”/ “allocation”/ “conferment” etc. Do you know why? Because you’ve demolished “exchange” and “exchange-based values” altogether with one stroke . . . of Idea! This is fetishism. Same fetishism about which global/ local FINANCE is so jubilant in today’s discourse on Empowerment vis-a-vis Finance: “Finance/ Microfinance has positive impact on empowerment”!

            4. “What I am about is empowerment of individual freedom, which comes with a responsibly to act reasonably within both social and ecological contexts. The only way everyone can have all the empowerment, is if we automate all the systems. That doesn’t mean that people to nothing. People can do whatever they responsibly choose, and if no one does any of the critical things that need to be done, then the automated systems can step in and do what must be done to ensure survival”

            Ted, though you do not ascribe “empowerment” to finance/ money sort of thing as contemporary literature throws at us (rather your stance is really human with passionate objective though devoid of fuller understanding of material ground situation as if working in social vacuum). You know Sartre similarly was passionate about “individual freedom”? Ultimately, he found salvation in Marx’s realm of social necessity after having written a social sarcasm out of anguish that “we are all condemned to be free”? I value and respect your idea of “freedom” but it’s freedom of individualized individuals –it loses sight of social relations of production/ society/ exchange/ association. Did I say socialism? No, let’s go there free, with a free mind BUT not without clarifying our stand on human exchange although goddess money must have departed as induced by your holy wish. I have also constructed your “model”, dear Ted. I see that you’re so passionate about your biological laboratory experiment/ innovation exercise but same thing appears missing from your exercises in social laboratory. Moral of the story is: You may work with your comrades in social sciences on the above fundamental social/ political questions that you yourself raised 40 years ago for betterment of mankind. Wishes!

          • Hi Mohinder,

            Again, thank you for taking the time and effort to offer the depth of critique you have, and to be as explicit as you have been. I have found it very helpful.

            Marx’s understanding/conception of human nature, of existence, was so different to my own, that it is hard to find paths of relationship, yet they must be there in history somewhere.

            In the time he lived, there was no understanding of nuclear fission, no explanatory framework for how either the earth or the sun could stay hot over deep time, so their conception of time was very much shorter than ours.

            There was no generalised understanding of topographical space, nor of algorithm space, logical space, infinitely dimensional conceptual space, or general computation or modelling in anything like the modern conception of virtual reality.

            The idea of atoms was not generally accepted, and the modern conception of the quantum mechanical processes that allow atoms to exist and behave as they do, as what seems most likely to be the sum over time of random events within probability functions, was not available.

            There was no mechanism generally understood for the hereditary that was required to power Darwin’s natural selection, Darwin himself went down a dead end on that particular subject.

            The fundamental role of cooperation in the emergence of complex life did not exist as a concept.

            The idea that life started as cooperation between a set of RNA molecules, then built out to stable assemblages of RNAs and proteins, then adding in lipids and sugars eventually delivering cells, and through many more levels to us, was not present.

            The idea that our individual experience of being is the result of some 20 levels of complex cooperative systems (each system with its attendant strategic systems to prevent invasion by “cheating” strategies), wasn’t available.

            The idea that every thing alive today is part of an unbroken chain of life some 4 billion years long wasn’t around.

            The idea that at the most basic level, life is a collection of heuristics (at many different levels) that survived in practice, wasn’t available to Marx. It seems most likely that only the variants that survived the test of existence in the particular contexts that they lived in at least long enough to leave some descendants, form part of our ancestry. From a cell’s eye perspective, every cell alive today has been alive for some 4 billion years (it may have gone through many millions of cycles of halving its number of chromosomes then receiving more from a another cell – and that is what sexual reproduction is from a cell’s perspective).

            So Marx came up with his ideas on human nature.
            From my perspective, occasionally useful approximations in some contexts, and wholly misleading overall.

            So, yes – I will agree that framing Marx as being based in class struggle can be seen as unfair, and that is what Marxism has developed into in practice- which is arguably not of his doing or choice.

            I grew up in relative poverty in New Zealand (which was still relative wealth by world standards, I was rarely hungry for more than a few hours) and discovered very early that I found little joy in working for others, so with very few exceptions, I have been self employed my entire adult life. I have spent a few times of a few months working for others, and have retained an interest in my own businesses through all but one of those.
            I like solving problems, finding easier and quicker ways of doing things, so I have at times made lots of money, and now put very little time into making money. In that respect (and many others I suspect), I am unusual.

            You used the phrase “Marx viewed [future] life of men as associated/socialized devoid of class based or other “struggles” born out of alienation/ separation.”

            I don’t see life in those terms either.
            What I see is many levels of systems surviving, and most of the key control systems with those systems having had their controlling heuristics selected by differential survival over deep time.
            At the highest levels of human abstraction something else is possible, and it is only possible because of all the levels of supporting systems below it.

            For me, the concept of “collective labor” is anathema to freedom.

            For me, real freedom can only exist when every individual has the real option of existing entirely without the labour of anyone else, which is not to say that anyone actually need take up that option, and it does need to be there as an option. In this sense, I see fully automated and fully distributed means of production as the only tool capable of delivering real freedom.

            If every person has such a tool, then perhaps markets can start to measure real human values, but so long as there is a survival asymmetry between capital and labour, labour needing employment to survive, then there can be no justice in a market based system.

            If I understand you correctly, then I do not believe that framing my thesis as “I think you mean to say the end of road for human exchanges when “fully automated” systems are in place” is accurate.

            I expect humans will do things for each other for as long as humans survive. Reciprocity is a fundamental part of the neural heuristics that make a human brain what it is, that much is very clear.

            My thesis is at a more abstract level, and has a lot to do with the fundamental nature of value.

            Marx tried to support the idea of a labour theory of value, and that does capture part of the picture, but nowhere near enough.

            I am clear that value is a personal thing.

            For most of us, most of the time, the amount of time we must devote to something to achieve an outcome is a reasonable proxy for value. Some things we just love doing, and will happily do them for long times, other things we have much shorter tolerances for. The amount of discipline required to perform tasks is part of our personal measures of value in most cases.

            And sometimes attachment to particular beliefs can change our balances of value (I tend to think of values as having their own ecosystem within any individual – with what gets expressed being very context dependent). Sometimes such beliefs come from our own choices, and sometimes they are instilled by culture or propaganda at some level.
            When one starts dealing with values implicit in multi-level abstractions it really does get complex – complex dispositional systems.

            I deeply challenge the claim that private property is anathema to freedom.
            Marx was wrong on this, not because his logic was faulty, but because his implicit assumptions were invalid.

            There is nothing wrong with private property as such, and there is a deep problem if all property is private.

            So I see no problem with every individual having an allocation of property – something like a half acre of land and whatever they and their automated systems can produce from it – which is a rather radical abundance even by millionaire standards today, using efficient molecular level manufacturing and recycling.

            And certainly, there needs to be large areas that are in commons, and large area where natural systems dominate.

            All are required.

            Monocultures (of anything, at any level) are dangerous in the single point of failure they pose (from a systems perspective).

            Security demands diversity, at all levels.

            Freedom, fully empowered by fully automated systems, will deliver diversity.

            My freedom does not lose sight of socialisation, it does nothing to impede it, nor does it do anything to enforce it.
            It is truly neutral.
            That can be really difficult to get if one comes from a strongly rule based background.

            Just consider, right now, what percentage of machines that could be productively employed meeting real human needs actually are?

            I don’t have a hard answer to that question, only a guess.
            My guess is that the productive capacity of existing machines exceeds the total of human demand by a substantial margin.

            In our current system, the problem is, most people with the real demand do not have enough numbers.
            Doesn’t the idea of an insufficiency of numbers strike you as just a little bit odd?

          • Dr. Mohinder Kumar

            Even after reading your post twice I do not claim full understanding of your view. Each and every point deserves critique (not declamatory rhetorical criticism) but it’s not possible somehow. I’ll take the most relevant. Everything else is bio-chemistry or quantum physics in which you’ve better clarity and command but your Achilles Heel is social aspect/ social science/ Marx/ property/ money et al. You need to read/work upon these and think more on these areas –else kindly enjoy bio chemistry. You’re fine there.

            “I see fully automated and fully distributed means of production as the only tool capable of delivering real freedom”

            But you do not elaborate or even mention the agency/ mechanism through which “full distribution” will happen. State will do it? Or charity? Or so-called “corporate social responsibility”? Or market? But asymmetries of market you’ve mentioned and Stigliz had elaborated them already. Please note this gap.

            If Marx could not understand complexities of “cooperation” in systems including society then he doesn’t deserve to be a socialist who inspired whatever brand of socialism on entire globe.

            Every thought is conditioned by contemporary conditions, ethos, culture (including technology) and environment and values then prevailing. So, it doesn’t matter if Marx had not witnessed DNA, RNAs and quantum mechanics etc. But it’s our task to take it further aided by current level of culture and technology. His view was not static. If you think a materialist dialectic thinker expected himself to offer a static view of society then we pity our own understanding of a genius.
            In a way, Marx also did not have exposure of PC, mobile, internet or even a zerox machine so that he could take copies of readable materials as he went on to sit continuously for hours to take manual notes throughout his life from the British Museum Library. Still he produced so valuable material. I am not here to defend a genius but I find it little chaotic on you part to “disagree” with almost everything he wrote when I am fully convinced that your reading of Marx is . . . what should I say? Not deep. On the other hand, you seem to be so commanding in the area of bio-sciences. So, the model of “eco-system” of diverse knowledge, information, understanding and wisdom in your “brain” derived from diverse sciences (hitherto truncated) is contradictory (which is not bad if you’re learning things to relate into a system/network) and full of confusions (again, not bad). For instance, the beauty with which you explain complexity in nature/bio-systems or even complex layers beneath “cooperation” seem impressive but when it comes to thinking on very same lines in social phenomenon, your weakness immediately comes to the fore. Similarly, on freedom, on automatism, etc. You are at you best in bio-sciences but diametrically opposite on social aspects though your scientific approach is same –this is a big paradox discerned in your views/ observations/ propositions. You may like to accept that you are weak in social aspects. That’s why you discard the core subject of money etc. and take shelter in methods and approaches of bio sciences. I do not blame you but I can see you as a brilliant achiever on our original issues of social science posed by Steve in his article. You are comfortable with counting results of researches in 4 billion years of human life on your finger tips but find research into history of money et al worthless! Did you note this paradox? It’s so dear Ted because you are definitely comfortable with bio science but not social science, which to me appears to be a great paradox if our approach is said to be “evolutionary” or guided by theory of complexity. I think this much sermonization is “sufficient” and you may think yourself whether you should delve into an area with apparent authority while essentially you are not even a very keen reader of Marx. You may like to spare the genius where you do not agree with him, but there are millions who agree with him and they do not know who is Ted and who is undersigned. On every single point please do not take out swords to confront Marx to say his understanding was “partial” and your understanding is “different”. You need not be tomato ketchup “different”. You take Darwin also to a task. Let us avoid that. Then your knowledge and wisdom shall appear more appealing. We’re not in any exhibition. We are concerned about certain things, that’s why we happen to be here together.

            Given a choice, if I have to choose philosopher/social scientist b/w Marx and Ted, I’ll choose Marx, but if I have to choose a bio-chemist I’ll certainly choose Ted. You need to work more in certain areas where you “differ” with Marx. He should not be your obsession. Your idea of freedom is still in the process of making, I find it chaotic. There are over 6 billion persons in this world. By your approach, biologists will find it impossible to classify their traits –no classification at all –particularly on social issues.

            By “collective labor”, Marx (not Stalin’s farm collectivization programme) it is meant to say that there is “network”, “relation”, “web”, “connection”, “mutuality” et al. Now see how your notion of “complexity” differs from this notion of collectivity?

            I need to be judgmental on your statements which fail to constitute a single whole of your ideas. They are chaotic and tend to go into all possible directions.

            I did not see any inkling of your understanding of difference b/w “private property” and your confusion of this entity with what Marx and others say “personal property”. Since you’re millionaire, I see a latent insecurity that all this shall be taken away from you if there is: “collective” labor/property; (ii) abolishment of private property; and (iii) lack of freedom (to accumulate). That’s why you wish, rather with your one word stroke annihilate “money” but not private property! You know society (rather state) shall devise another “medium of exchange” which shall be surreptitiously used as “store (house) of value” where “value” = numeric attached to an asset. That’s why your Freudian “unconscious” portion of mind longs for “sufficient” numbers even as “insufficient” numbers are found “odd” by you.

            I too learnt from your perspectives in the making in general.
            Thanx.

          • Hi Mohinder,

            Again, I thank you deeply for your engagement, and the integrity of your critique, it is deeply valuable to me.

            It helps me to understand my failures of communication.

            For me, exposing the basic levels of systemic influence makes clear the higher levels of diversity experienced.
            I see clearly from your critique of my writing that such linkages are not intuitively obvious to you, and if they are not obvious to you, how much more deeply opaque must they be for the average mind.

            I find out later today if enough of the citizens of our district thought me a suitable candidate for mayor. If not enough, then I may well focus my energies on making many of those links explicit in a book.

            It is not that I find the history of money et al worthless. It is very interesting from an academic perspective. For me, it is an example of a how a conceptual tool with practical utility that is founded on trust can evolve in a human population, and how that tool can be thoroughly exploited by “cheating strategies” at many different levels. For over a hundred years cheating strategies can be said to have held dominance, and for much of that time an argument could be made for their benefit, but no longer.

            I see human beings as deeply, fundamentally, cooperative, and that is context dependent. If people have a context of abundance, then cooperation will tend to dominate.
            And people are also habit machines.
            Our neural networks develop habitual patterns at all levels, so we tend to repeat patterns, unless some context pulls us out of the context triggering that pattern (recurs as deeply as you care to go).

            You are right in a sense.
            I am not a keen reader of Marx.
            I found his style pedantic and boring.
            He had some very interesting insights, but they were based on sets of assumptions clearly invalidated within the frameworks I use. So while they worked within the context of the example sets he chose, they tend to fail if pushed too far (much like Newton in science). Newton is famous, because he did some great work. He expanded a paradigm, and created some great mathematical tools (discovered is probably more accurate than created, and for me the words are almost synonymous in most contexts). The work done by Newton allowed others to take those ideas and apply them to other contexts, and to test them against reality, and discover that they didn’t always work as expected – something else was present. Many people were involved in those discussions, adding perspectives, designing and doing experiments, thinking about the results of those experiment, coming up with different interpretations that more elegantly connected the observations into a coherent pattern.

            The problem for me, with Marx, and with most social science, is the invalid sets of assumptions around the nature of human nature.

            I can read in those areas, and see a certain beauty, a certain creativity, in the conceptual development, and I can also see where there is a conceptual failure caused by an inadequate set of foundational assumptions.
            And in saying that, I am clear, that my understanding is not any sort of end point in understanding, it is simply where I am on my journey right now. I make no claim to perfection, merely to a utility appropriate to circumstance.
            As I have said many times, I don’t do Truth, I just do best approximation based upon current data sets.
            And quite often those data-sets clearly invalidate some sets of assumptions.

            I too am concerned with certain things and why they happen to be together.
            I am concerned with these large collections of molecules called human beings and why they believe in myths like money and gods.

            These things are deeply interesting to me.
            Those two are deeply connected in my understanding.

            And everything I have tried to point to is part of that understanding.

            Some assumptions are useful for certain purposes. The assumption that the earth is flat is perfectly adequate for building a house out of lumber, and fails completely if one is trying to navigate a yacht from Auckland New Zealand to Hawaii.
            That is why I critique Marx, critique Darwin, critique every philosopher and scientist I have read, from Plato to Wittgenstein, Newton to Dawkins.
            And all of them have made contributions to the process, that too I acknowledge.
            I acknowledge Marx as a great thinker, and I deeply challenge some of his fundamental assumptions, and those are critically important. And I am not a great expert on Marx or anyone else. I have read some of Marx – not all. I really struggled with Marx, found it hard work reading all the stuff he put in between the interesting concepts.

            Don’t avoid me “taking Darwin to task”. In my world, I don’t “take him to task”, I simply clarify where he made important errors of assumption and logic – based entirely on inadequate data-sets.
            I don’t think any less of Darwin or Marx for their errors, and nor do I pretend that those errors are anything other than errors.

            Darwin pointed in the direction of evolution. He had no idea how it actually worked, and he could see that something had to be at work. Of the possible explanatory frameworks available in his day, he sided with an approach that was fundamentally flawed, and logic could have told him that, but obviously he didn’t ask that question in a way that the answer was obvious to him.

            That isn’t a condemnation of Darwin, it is an observational data-point about the evolution of ideas in human minds.

            Agreement of people isn’t my purpose.
            Having a model of reality that is as close as possible to reality, and still with sufficient heuristic shortcuts to give useful outputs in useful time-frames is my objective.

            I do my best to make that model as available to others as possible, and I acknowledge that the model any individual uses is very much a matter of individual choice and individual style. It is clear to me that all models must contain simplifying heuristics if they are to work in anywhere near real time, and which heuristics are selected will vary with the demands of the specific context of the moment.

            Right now, you, me, and about 7 billion other people find ourselves in the intellectual, technological and cultural context that we do. It is a time of rapid exponential change, the most rapid in human history, possibly the most rapid in the history of this galaxy (of that we cannot be certain and it does seem possible).

            It seems clear to me that there are many levels of existential risk present.
            One of those levels of risk does appear to me to be very strongly increased by a set of invalid assumptions contained in Marx’s understanding, that has carried forward to our day.

            And it is part of something much wider, as you say, of “social science” more generally.

            Your comment ” You need to work more in certain areas where you “differ” with Marx.” is extremely helpful, as it shows a complete failure of the approach I took to make such things clear.

            And right now I feel something akin to “Terror” at the thought that I might need to write something akin to the style of Marx to achieve communication. For me, that would involve years of “soul destroying” effort, of the sort that makes what I did to beat terminal cancer seem like a romp in a playground. I wonder if I really have such strength of will?

            I don’t have an issue particularly with the classification of social issues.
            What I have an issue with is the systemic causes (in as much as the term cause can be said to have meaning) that have greatest explanatory utility in this context.

            I love your sentence “By “collective labor”, Marx (not Stalin’s farm collectivization programme) it is meant to say that there is “network”, “relation”, “web”, “connection”, “mutuality” et al.” I align with that perfectly as a statement about what is.
            As a statement about deeper causality or about desirable outcomes of human evolution it is more problematic and needs greater explanatory depth.

            For me, there are many aspects to the complexity of this concept, but if I just focus on two polarities, and leave the infinite spectrum between those for and others to enumerate as you choose, it goes something like this:
            Yes, we are all networked at many levels, that is accepted as both a given and a necessity.
            The issue I have is not the networking, but with dependency within those networks.
            Biology is a massive web of networks.
            Human culture replicates much of that complexity in the domains of ideas and behaviours.
            So yes, we must all act in reality, and that “labour” must all connect in many different ways.

            And Marx seems to me to have gotten the necessity of that network confused with meeting essential needs.
            If one looks at a human body, as an analogy for human society, and looks to individual cells within that body as an analogy for people, then it is clear that the survival needs of every cell in the body are met.
            Not every cell in the body plays a direct part in the meeting of those needs, in fact the vast majority do not.
            Marx seems to be saying that we need to maintain that web, that mutuality, to meet our survival needs.
            I don’t see that.
            And I see that it is possible to read Marx as saying something much closer to what I am saying, and I really wonder if that is what he intended.
            I am saying that we could develop the technology, via a one off set of labourings, that would automate all of the processes for meeting all of the survival needs of any human being (including the production and maintenance of that set of machines) – essential fulfilling the requirement of Lupinski’s famous 1978 quip to Milton Friedman that “socialism can only work if everyone has two servants, including the servants”.
            One pole of the spectrum seems to say that human society requires the dependency of labour to give it stability.
            The other pole says that every individual requires independence of the needs of survival.

            I say, that if the outcome is a system which enables potentially very long lived individuals (many thousands of years, perhaps even many billions of years) to actually have a reasonable probability of living a very long time, then that sort of security can only exist in a context where the highest values of the vast majority of individuals are individual life and individual liberty, and such a set of values will demand the sort of security provided by fully automated systems capable of meeting the reasonable needs of everyone.

            I have been quite explicit that such was indeed the question that started me on the quest that has occupied most of my attention over the last 42 years.

            So I am all in favour of networks and I am also in favour of freedom.
            And the only way in which individuals can in fact have complete freedom about which networks they choose to come and go from is if their survival needs are completely independent of any specific set of network connections.

            Marx does not seem to make that explicitly clear, though he does quite explicitly see an end to capitalism – it’s just not the sort of end that seems to have the qualities of long term stability I am looking for, and it is entirely possible that I have misunderstood him in this. As I have often said, I did not find him an easy read. His writing style was like that of Thomas Hardy to me. I never did get past the first chapter of any of Hardy’s works, and it was hard to read even one page of his without falling to sleep. Contrast that to Goedel, where sometimes I could spend hours rereading the same paragraph confident that there was something there that I was not getting, and staying with it until I was confident I understood what was said, and had verified all of the dependencies. And I did actually make it all the way through Capital, and partially through other works of Marx.

            You class my ideas as “They are chaotic and tend to go into all possible directions”, yet for me they are coherent, and it is my attempts at expressing concepts that involve up to 12 levels of abstraction, about systems that involve about twenty levels of complexity, that make it difficult to say anything in a way that another can get with confidence.

            I get, that your reality is that my ideas are chaotic.
            My reality is that my ideas are coherent.

            Our shared reality is one of a failure of linguistic tools available to achieve a shared comprehension between two independent minds.

            Just to correct a misinterpretation.
            I am not a millionaire.
            By NZ standards I am middle income.
            It is almost 20 years since I put any significant effort into making money. I do still run a small software company, but it only takes me a few hours per week, and it brings in minimal income.
            I do have about $10,000 in cash reserves, and I do own my own home debt free, and a small block of land growing trees.
            But I am certainly not a millionaire, though I have made several million dollars in my younger says, I spent most of it doing things – flying aircraft, etc.
            For the last decade in particular I have lived a very much simpler lifestyle, with minimal personal expenses, and quite low income by the standards of my society.

            I have been involved in many collectives, at many different levels. I chair one charitable trust, I am treasurer for another, I am active in the Lions club here in Kaikoura, to mention just a few.
            I loan out tools to many people, and very few of them look after them as well as I do.
            My systems knowledge of incentive structures matches my observations of behaviours in practice.

            What I see is that every person needs to be able to ensure their own survival.
            With any particular set of technologies, that will have a certain requirement for energy and space, that will translate into a certain area of land (and the technology housed in that land). Those are the necessary conditions for survival, given the current reality of solar power and our biological needs.
            That physical reality is what it is, at any time and set of technologies.

            That is my definition of a minimum set of personal property that no amount of social agreement can remove.
            That is also my working definition of private property.
            In any social system that would have the characteristic of stability, no person would be able to trade their particular set of property for one less than the minimum for survival and a reasonable freedom to self express as they see fit – that would be the minimum. Within that, people can do whatever they choose.

            If all survival needs are met, people don’t need to exchange anything.
            People can choose to create any network for any purpose.
            Exchange does not need to be part of the interaction, only alignment of purpose, for whatever reason.
            If all survival needs a met, then the journey can be its own reward, exchange is not required.
            Certainly networks.
            Certainly mutuality, connection, webs, relationships, these are a fundamental aspect of existence for complex entities, and are not necessarily related to the idea of exchange as that concept is used in markets.

            Certainly in information terms, networks exist due to exchange of information – that is the definition of a network in information theory. In that sense of exchange, in the bidirectional flow of information between nodes, then certainly – exchange is required.
            But in the economic senses, of a flow of a scarcity based value measure through a market – no, that is not required, it is possible, and it is not required.
            Abundance based systems do not require exchange in this sense of exchange.

            And I do understand how difficult it can be to even conceive of such abundance when one is in the midst of scarcity, and one is bombarded constantly with scarcity based media and advertising.

            I spend the vast bulk of my time free of media and advertising.

            When the needs of survival are met, value does not exist for me in any material object, value exists in the journey, in being, in choice, in awareness, in possibility, in the exploration and creation of context.

    • Derek R

      It’s an evolutionary precursor to money. There’s definitely debt involved but the debt’s magnitude is only roughly specified. So a favour is a gift rather than money. But a gift with a repayment obligation attached.

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  • Brian Gladish

    So, were cigarettes money in POW camps? Chocolate? Doesn’t their use support Menger’s evolutionary account of money? Weren’t they the most liquid commodities in those circumstances?

    • Cigarettes were certainly used as physical currency in POW camps (they were simultaneously a consumption good; that itself is what imbued them with consensus exchange value). See the para above beginning “Coins and other…”

      Ask yourself this: if you, a thousand years before coins were invented, have 1,000 obols or whatever (choose your unit of account) in credit recorded on the tally sheets of the village cooperative — an asset — do you have “money”? If money is physical currency, obviously not. But that’s the whole definitional issue that’s at issue.

  • Wim Nusselder

    I’d say that money is hybrid: both a social (accounting) construct and token-based.
    See Perry Mehrling’s Why is money difficult?
    Also see my Licensed to print money, expecially some of the Bank of England hyperlinks in it.

    If money is a social construct, created by performative language, as long as most people understand and talk about money as being primarily token-based money (i.e. concrete things), than money IS … primarily token-based even though >95% of monetary transactions is done in ledger-based money (moving around bank account balances).

    • Thanks, Wim!

      Perry’s work is great. Also love your piece, and the BOE has been delivering some of the best writing and thinking on the subject over recent years. (Also BIS.) I love this piece in particular, by BOE and IMF economists:

      http://www.voxeu.org/article/banks-are-not-loanable-funds-intermediaries-macroeconomic-implications

      Addressing the core, ubiquitous economic confusion between money and real resources/goods. (cf the oxymoron, “financial capital.”)

      But I’ll say: both your and Perry’s pieces are crippled, IMO, by the fundamental definitional problem, conflating two different conceptual constructions of “money”: 1. currency-like financial securities, and 2. (my definition here) the unit-of-account-designated value of balance-sheet assets. (See definition of “assets,” above.)

      • Wim Nusselder

        Dear Steve,

        I just happened to be reading that very piece by Zoltan Jakab and Michael Kumhof, having failed to have a closer look when it appeared half a year ago.
        It was referred to in this -equally useful, broader, more recent- piece by Richard Werner, which is however written in a style that makes it more vulnerable to criticism and being bypassed: http://www.sciencedirect.com/science/article/pii/S1057521915001477

        How is my analysis of social reality crippled by definitional problems?

        Do you agree with my idea that the reality of money is determined by the experience and perception of its users (rather than by anyone’s definition)?

        You may want to have a look at http://www.bankofengland.co.uk/research/Documents/conferences/ah0515.pdf

        • Great Werner piece, thanks. Will spend some time with it. Your style statement refers to Werner or Jakab/Kumhof? Werner certainly has impressive credentials, making him hard to dismiss…

          “Do you agree with my idea that the reality of money is determined by the experience and perception of its users (rather than by anyone’s definition)?”

          Well it depends what you mean by money. No comment on whether money’s “reality” is affected by any definition, not sure what that means. But I do think we can’t talk about it (including talking about its “reality”) if we don’t agree — at least provisionally, for the duration of the conversation — on what the word means. Cause unfortunately words are the only things we have with which to talk!

          Eliezer Yudkowsky has a great tip for rationalizing conversations that are going off track — remove the problematic word, require everyone to replace it with what they mean, precisely, by that word.

          • Wim Nusselder

            The writing of Richard Werner gives me the impression that he (feels like he) IS dismissed by too many people.
            Money is what ‘money’ refers to for those who use the word.
            The word is prodominantly used by non-economists (because every responsible adult uses the word and most of them have little clue about economics).
            Therefore agreement or disagreement among economists about its definition is not going to change a lot in its meaning.
            As economists we can describe money as anything with which people pay, store value and calculate value (all three conditions having to be met) and still have not sufficiently defined it to calculate its interaction with other variables in a model.
            That is indeed not sufficient compared to the relationships between say ‘force’, ‘speed’, ‘mass’ and ‘energy’ in physics.
            Physics is not economics, however.
            The possibility to build an economic model that fits economic reality is far less than the possibility to build a physics model that fits reality, because economic reality consists of humans that will try to circumvent the economic ‘laws’ that they are aware of.
            Eliezer’s advice may work for buildings models together, but it doesn’t work for getting clarity on what THEY mean (the other people using the word ‘money’).

  • The energy analogy may go much deeper … Energy took a long time for humans define because it’s directly related to the conservation law that exists because of a symmetry principle (time symmetry of physics), sort of like momentum (for space symmetry). In fact, energy is better defined by that symmetry principle and we should really think of energy as that which is conserved because of time symmetry.

    Is money hard to define because it is actually related to a conservation law that exists because of a symmetry principle of economics (homogeneity of degree zero: doubling supply and doubling demand leads to no change in price)?

    http://informationtransfereconomics.blogspot.com/2015/12/money-is-that-which-is-conserved-via.html

    • Jason, this is damned interesting thinking. I’ve visited your page a couple of times, but it’s going to take me a while to wrap my brain around your understandings — I’m still a long ways away.

      I’ve also been thinking a lot about money as information, though that simple formulation doesn’t do much for me, isn’t even really correct (or useful) as it stands. It needs expansion, elaboration, also narrowing, generally clarification (in my head). I want to figure out how to express (whatever it is I figure out) in Aha! sound-bite tweets. 😉

      I’m just starting Why Information Grows: The Evolution of Order, from Atoms to Economies by Cesar Hidalgo (who to my surprise and delight tweeted this post). I’ve read enough to say to you: if you haven’t read it, run don’t walk. It’s right up your alley. Definite Aha! moments in there, closely related to my thinking and I think yours.

      I’ll try to spend some quality time with your linked post over future days, love to discuss more.

      • Cheers, Steve. I replied with some discussion/answers to your comments on my blog by the way.

        I have been reading Hidalgo’s book (originally out of fear that he had scooped me! … it is definitely a good primer for thinking about information and entropy).

        And I’d certainly be interested in discussing more.

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  • I will note that because the oldest coin known is 2700 years old and made of gold & silver alloy does not necessarily mean that this is when coinage was invented. Much of Greece in that era used livestock as money as the Masai still do today. When there is a commons, livestock makes a lot of sense. Similarly, stored grain can be used as a depreciating asset and that form of money dates back at least 17000 years.

    Money defined in law as fines is found in the records of Ur 2000 BC. And shekels are in evidence from 3000 BC. Shell money is ancient and used all over the world as humans expanded across the globe. It is still in use in Papua New Guinea, exchangeable for modern money. Our earliest ancestors probably mostly followed the coasts, wiping out massive populations of sea turtles as we went – easy pickings for us until we had to turn to other things. There is evidence from Neanderthal ears that they were deep divers. Humans tend to like the beach, and I think we evolved there for a long time before going back inland. So shells make ancestral sense.

    The use of feather belts in Papua New Guinea is of unknown age. However, PNG has over 800 languages, many of them totally unrelated linguistically, and an equal number of different cultures. People in neighboring valleys have strikingly different phenotype. There is reason to believe that the feather belt money may be tens of thousands of years old, along with pigs which are still used as money there, and the shell money.

    Obsydian trading networks have been around for tens of thousands of years and obsydian is studied to determine ancient trade.

    The use of clay for script recording of debts and inventory of commodities has its earliest records in a period that post-dates the use of various commodities and placeholders like shells as money. It’s interesting to note that clay tablets are readable by the blind as whell as the sighted, and that the conical ones fit well into the hand. I think it is probable that this earliest invention of writing gave blind people a place in society that was respected. But the things to account for came first, and the exchange of those things also came first. It wasn’t until we had large numbers of people living together in sizeable towns that the need for recording became more important, and so we invented it.

    What exactly tally sticks indicate is a matter of debate. The Ishango bone might be a calendar as Marschak argues. It may be something else. I think it’s a bit of a stretch to call tally sticks accounting just because they were used for that in medieval England.

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  • Manneken

    Money is contextual information, with an open interface.

    Which is why the information society is so disruptive, and modifies so much about the way we define and exchange value.

    It also explains why current economic theory (such as it is) is so extremely poor at explaining “what is really going on” (not to quote the Donald). Since most economists lack knowledge, not only of the scientific method or social or behavioural sciences, but also of the way technology is changing, they are missing out on most of what is actually happening.

    Look at the way Open Source is creating enormous value, but without any monetary translation…

  • milo

    Steve, I like your reading of the early tally system, but have a slight problem with your time line. You say tally sticks have been used for the past 25-30,000 years– but we have no firm proof of that. Yes, we’ve found sticks with notations on them. But without writing we can’t say for sure these represent debts. More likely they are astronomical observations. The Lebombo Bone had 29 notches, for instance, and is most likely a lunar device.

    Fully articulate writing doesn’t go back much before the last 47 centuries (some will maintain 55 or 56). And at that point we certainly do find a developed, modern economy based on landowners, tenants and the urban royalty. Or, in a word, ‘civilization’.

    I’d be interested in reading any sources you can offer. One I like, available on the web, is Michael Hudson’s masterful ‘Lost Tradition of Biblical Debt Cancellations’. Well worth reading, in explanation of the problems encountered by early economists working at the Temple.

  • Macrocompassion

    I don’t find the definition of money to be so difficult because what is significant is not what it is but what it does. Money is the medium of exchange when the value of the goods, services, access rights, valuable document etc., needs to be assessed. Trust is the criterion for the amount of deficit money that can be used in a country, and today that amount can be more than 10 times the actual face value of the paper and metal currency. This suggests that these countries are socially stable. Money can be stored, although mostly it is passed on, so as that its owner can receive interest or gain of some kind for the right of exchange that having the money provides. This means that the rate of its circulation is a useful measure of macro-economic activity.

    Money is used for counting the value of property and goods, convenience in trade and limited government control of the progress of the macro-economy. Many economists treat money as being something separate from trade, and think in terms of banking and national matters, but money cannot be considered only in this way because the only real time when it is significant is when it is involved in trade and exchange.

    A country where there has been an large increase in the amount of money, in the long run will not necessarily become more prosperous, because the prosperity is due to produce not paper. Short-run changes are affected, but compensating inflation is a natural result of greater amounts of money and the long-term effect is on savers whose loose purchasing power, not producers of goods, services, etc.

  • pkrumm

    Steve,

    Hope you find this as it comes in very late, after I just found it and the post on property rights.

    I find it interesting that you defined money early on in this piece and then ignored that definition as you went along. Money is an accounting system that “tallies , , . credits and debits (gives and takes), assets and liabilities (rights and responsibilities, ownership and obligations), quantified in numbers. Accounting. (In technical terms: sign-value notation.)”

    In simpler terms, money is an accounting system that records commitments and claims on commitment. All the rest is dross.