A little while back, on holiday, a friend of mine mentioned he was working on a money trading application. At some point I got interested in the technical side of it (p2p money, and I like it anonymous). Wrote a small draft idea about it, but then I also got to think about the more conceptual concepts of money.
What is it, what should it adhere to, how should it function…
So what is money? Money isn’t a coin, a piece of paper or even a piece of gold. Money is an abstract, a representation. Like the word ‘tree’ is an abstract, describing or representing a group of items with certain characteristics. So also is money an abstract and it represents something, or some things.
Originally it represented gold, or actually, gold was used as an abstract for goods and services, this because gold has a scarcity and with it some intrinsic value which apeared relativly stable. This was then followed by pieces of metal and paper that represented gold. That is, you would place your trust in a specific bank to provide with a certain ammount of gold if you’de show certain pieces of metal or paper with their specific markings on them.
At this point, you’re still basicly trading physical goods (items) with either other physical goods or services. It is still tangible, you have ‘something’, something still potentially usefull. Although already switching more to, you have trust in someone that you have something, but none the less a ‘something’.
At some point in time, this also changed. Now money represents the value of all ‘tradeable goods and services’. Which is a lot less tangible, more abstract. You now trust a bank (or actually a country) that the money has a certain -abstract- value. You might be able to get some gold for it, but that value is no longer static, it moves on it’s own like any other item. You might get a certain ammount of service for it. You might. People trust their bank/country (the people who make it) in that the pieces of paper and metal will keep a certain value. Something predictable.
This is where it kinda goes wrong, well maybe not wrong, but it certainly gets complex. Money was a representation of a physical thing, quite countable. Now it should represent something that is a lot harder to keep track of or to imagine. Kinda like calling everything green a tree, even that plastic handbag and the eyes of your girlfriend. It gets very abstract, in an artistic sense, far from reality. that is, hard to visualize. Like modern art.
Now people associate money with power and it starts to get a value of it’s own through proxy, as it no longer has an intrinsic value. Now the link with power is ofcourse a lot older than this change, even gold represented power in a way. It’s representation for goods and services meant that if you had money, you could trade it for food which would help you survive, or get people to fight other people for you, or just maintain a piece of land. This is all because people receive money, in the expectation of getting anything of value in return. A flexible tool, a powerful tool.
So money represents power, or actually no. It still only represents goods and services. Power is more of an absolute, if I have the power to bake an egg, I can, nothing to stop me. How much or what money exactly represents is a lot harder to predict. based on my location a euro can be worth anything from nothing to food for a day. A fortune for some. In time it also fluctuates, usually it gets worth less. But by what ammount is hard to tell, afteral who did predict this crisis? The dollar got worth a lot less during the run for oil, but it increased afterwards. Afterall, ‘all tradable goods and services’ is an obscurely wide abstract. There’s too much to count and what value you add to a service or a product can change by the minute. Food for instance has a greater value before dinner then after. You’re a lot less likely to buy a snack before dinner then after. Your mood also plays a role, the weather plays a role, popularity aswell (and with that the whole of complex social dynamics). Nobody really knows how much my euro is worth, besides what -they- are willing to do or trade for it.
To me, this makes it hard to crasp, and I doubt I’m alone. I know some that say it’s the cause of the entire economical crash, I might not disagree.
But if it’s so undefinable, why not redefine it? Make it simple again. Easier said than done. Going back to gold doesn’t make much sense, although gold is scarce it is little useful, it has value for some people and for some goals, but still quite specific. I personally have no use for any. So if you want to let money represent something more specific, let it be something that has value for anyone and everyone. As far as physical items go, people need food. Or to be more precise, we need certain nutrients. It’s one option, but not a simple one I think.
Something else everyone needs and has a pretty much set ammount in, is time. It’s certainly not tangible, but still fairly good to grasp and measure. Each person generally gets the same ammount at birth, which makes it rather fair. You also start looking at a less propery, more service oriented concept. Which has something to be said for when you want to discuss property. Skill is still a usefull investment, since you can do more in less time. So skill keeps it worth, so do most products, since about any product requires some time, either to collect it, dig for it, shape it, or what not. If you can’t sell your time, you can use it to produce your own food and enrich your life. If you can sell it, you can’t use that time anymore, but for the credits you get in return, you can get someone else to spend time for you. It still requires trust, but not trust in a bank or a country, but in specific individuals, who you needed to trust anyway.
Money is an abstract, and like with all abstract, they lose their value when they cannot provide an image in your head.
