Yes, I do know nice people don’t talk about money, and also that it makes the world go round, though I don’t remember anyone quantifying the amount of money necessary for 365 days and nights of Earth-rotation.
If you’re looking at that paragraph and wondering if I’ve lost my mind, I assure you, it’s still here, in the little jar by the bedside table where I keep it. And that none of those statements are nearly as crazy as the idea people seem to have about money nowadays.
What idea? Well, it apparently, like other things that the left fails to understand, is now called “A social construct.”
No, seriously, someone tried to make that dog hunt on my post about the minimum wage. He informed us that it didn’t matter if we paid more to people, and it didn’t necessitate the raising of prices, or replacing of human workers with robots in order for the business to survive, because “money is a social construct.”
Now to an extent he was right. Put a bunch of children alone in the wilderness, and let them grow up in ignorance of all other human civilizations and culture, and they don’t spontaneously start making currency out of leaves, just like they don’t spontaneously start to talk in a complex language, modern or ancient, and they don’t spontaneously start writing.
What they will do, though, is almost for sure start engaging in some form of exchange: my freshly hunted meat for your bowl of berries, my interesting rock for your flower. It’s just what humans are. I don’t think we have ever come across a society so primitive that people didn’t trade with other humans. Just as we’ve never come across a society so primitive that humans didn’t communicate with each other.
Sure individual languages are cultural constructs, built by cultures over millenia. And sure, individual systems of currency are social constructs, built by usually modern governments. The governments of the past, though they coined, often were not very good at controlling the currency used in their territory. In Elizabethan England, you might find French, Dutch or Spanish currency in circulation alongside the English currency. This makes perfect sense because the important part of such currency was the metal it was made of, and not the figures stamped on it.
Perhaps it was easier to associate value with the precious metals, but the fact remains that then or now, money was worth what you could acquire with it. That is, that same chunk of gold might get you a chicken in good times, but when chickens weren’t doing well, and the population was booming, it might not even get you an egg.
The value of an object is what is someone is willing to pay for it. Conversely, the value of currency is what someone is willing to let you buy with it. Clear as mud?
You see, money is a language, in the end, a system of information. It allows people to decide what is valued and needed in society and what isn’t. Or at least it would be, absent varying kinds of government interference.
If I sell my chicken for two bits of gold, or a pretty picture of George Washington, and then go across the way and convince a guy to take that same currency for a cow, it means that I either found a prize idiot or chickens are so rare in that society that they are worth the same as a cow.
Things like rarity, desirability, need, want, get fed into the system, and decided by human beings who need, want, have trouble finding, or are drowning in a given thing and a currency value is set.
That is, in principle, the idea. Social construct? Not so much. Or only because it is impractical to walk around with a cow, a chicken, or a month’s worth of compute work, to trade with any stranger who might be interested.
It would be impossible for a computer to decide and set a value to things, the same value that is set quite easily in a series of myriad transitions.
The economy is just a way of referring to this system of ordered chaos by which most of us make their living.
But make no mistake, at the bottom of it there’s that “we make our living.”
If you read as many biology books as I do, you’ll come across sentences like “The flyspecked toadswallower makes his living by hunting tadpoles in the shallows.”
Whether you’re raising chickens or cows, writing books, programing computers, or breeding prize angora cats, what you are doing is making a living.
Money is the system we use to be able to have a complex society in which NOT ALL of us need to get up every morning and go find a chicken for breakfast. That is all it is. But as such it is a brilliant invention, without which society would never have attained the sort of complexity in which people can be so detached from reality as to say money is a “Social construct” as though that meant it is made up, wholesale, out of air.
And I don’t know about you, but I’d rather use my money as I please and make contracts as needed, than to have a government bureaucrat interfere in the system and tell me what I must pay for goods or services.
Because that is the denial of what money is FOR.
Money is neither good nor evil, neither despotic, nor liberating.
It is a tool. use it advisedly.
*Francis Turner had a previous post about money on this blog and makes many of the same points: Something About Money (and Cake.) Because it’s a complex subject looking at two different approaches at explaining it might help.*