I like re-inventing wheels, and doing research a little less. Re-Inventing wheels gives someone the possibility to look at a certain concept from his personal view, without infecting himself too much with existing research. Besides that it’s quite educational and just plain fun. :)

After contemplating the idea arround money last time, I decided to do a little research into time-sharing systems and ideas (as some also referred me to). My sugestion of using time as a currency had, as I already hinted on, some complications.

My time as a someone with certain skills has different value for different people. For instance, one might not want to ‘hire’ me as a carpenter, since I’ll be a lot slower then anyone with experient or schooling. This results in that the value people have for someones time is related to their skills/experience and the task at hand. Now this might not be a big problem, as finding someone with the right skills might not be too hard. It’s a matter of matching up people with tasks.

A bigger problem though is, how I value my time for someone. I might love to help out a good friend of mine with some work, but I’d rather not spend much time for/with the anoying prick arround the corner. This results in me giving a certain value to the ‘credits’ I would get for my time. Which since they are personal and depending on complex variables (social groups, my mood, the weather, etc), become rather hard to predict.

Which brings us to a general problem with currency/money.

Unless you can find a currency which is based on something that has a  static value for -anyone-, value is going to be personal and fluctuating. Even with food or nutrients this problem remains, we might -need- a minial set of specific basic nutrients to survive. But what we want is a lot more complex, I like food, I like to differentiate it, try different forms of it. This results in a complext carier for a currency. Just as bad/good as any other.

In a way our current monetary system is a religous one, we believe it has a -certain- value, and this is why it has one. Kind of like douglas adams ‘artifical god‘.  We value items and services, and in a way this is what money represents. But how we value these, or how much value we accredit them, differs. It changes per subject, per person and over time. This makes it very hard to predict or define what the value of the currency is, kind of like predicting the future. And although people have tried this, I don’t think anyone succeeded yet.

It comes down to predicting what each individual wants, how much they want it, and how that is going to change. And this for everyone who is using the currency. Now one could create a ‘hack’ arround this by making a lot of assumptions. Taking into account some group dynamics, general marketing effects, one could asume their will be some big groups which would atleast somewhat agree on how much they would like a certain thing. And since things take time to move arround in large groups, with enough information of where things are flowing between what, one could even make some predictions on how it’s going to change.

So yeah, it gets pretty vague, but it’s something. Ofcourse respect for any individual in a scheme like this is out of the question, unless you start grouping individualists into sets with certain common trades. If you can’t dump down, or simplify the information, you’ve got nothing.

Now some would asume from this, ok so money is essentially worthless, if it has any value it’s highly irregular and unpredictable. So why not just get rid it?

Money does have certain important, or atleast very usefull trades or properties. Because it abstracts the values we have for things, it makes it possible to devide, share and save it. It becomes easier to calculate things on, to share resources or goals. Getting someone to make you a meal with exotic ingredients (like a nice curry), gets a lot easier with money. Or even just making it yourself. I’d need rice, which comes from asia, paprika, potatoes, other nice veggies and some spices. Ofcourse ecologically one would want ‘local food’, but rice doesn’t grow here very well, and I like curries. Money makes it easier to share the transport of rice and veggies with other people, without me knowing them (although I might not mind that). It makes it easier to calculate the transport costs, costs for people involved in producing the products and probably more things, into one price, one value. Even though this ‘value’ might be incorrect, it is a value, where else there would be none. It makes it more concrete for me on how to get a nice curry. I have an idea on what the value of my time is to atleast certain people, and I can have an idea what part of that value can be traded to get a nice curry.

The problem with this ofcourse is, that these ‘values’ can be hopelessly incorrect. The question then is, does that matter?

I think it would depends on someones goal. If your goal is getting efficient trade systems for specific groups of people, probably not. If you want want a fair world, it would matter a lot. Then you want to value people’s work and lives correctly. And that is what it comes down to.

The problem with fairness though, is that money is a highly inadequate tool, which is most likely to express the value incorrectly. The ‘problem’ then is, that trade becomes a highly personal ordeal. Which becomes impossible to abstract. Any abstraction would actually de-personalise the transaction, making the value-judgement less precise. And any transaction would represent a social properties, afterall, personal relations gets highly mixed up in value assesments.

Now the final question that remains for me is, how do I get myself a ‘fair’ curry? I supose one not all that horrible solution would be befriending myself with a captain who would take me to india where I can befriend this chef who would be willing to make me a nice curry. Maybe not very ‘time efficient’, but I don’t think I would mind. :)

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.