Myths and fictions accustomed people from the moment of birth to:
It created a network of artificial instincts called culture that enabled millions of strangers to cooperate efficiently.
Regardless of its typical beliefs, norms, and values, culture is in constant flux.
Every man-made order is packed with internal contradictions. Culture constantly tries to reconcile them.
Equality can be ensured only by curtailing the freedoms of those who are better off. On the other hand, guaranteeing that every individual will be free to do as he wishes inevitably short-changes equality. The entire political history of the world since 1789 can be seen as a series of attempts to reconcile this contradiction.
In the US,
Such contradictions are an inseparable part of every human culture (cognitive dissonance). In fact, the discords in our thoughts, ideas, and values compel us to think, re-evaluate and criticize.
Today we are used to thinking about the whole planet as a single unit, but for most of history, earth was in fact an entire galaxy of isolated human worlds. The number of humans worlds are decreasing over time.
Homo sapiens evolved to think of people as divided into us (the group immediately around you) and them (everyone else), so the idea of universal order governing the entire world was alien to humans. In fact, no social animal is ever guided by the interests of the entire species to which it belongs. No chimpanzee cares about the interests of the chimpanee species.
But beginning with the Cognitive Revolution, Homo Sapiens began to cooperate on a regular basis with compelte strangers. Then the first millennium BC witnessed the appearance of three potentially universal orders, whose devotees could for the first time imagine the entire world and the entire human race as a single unit governed by a single set of laws.
Merchants, conquerors, and prophets were the first people who managed to transcend the binary evolutionary division, ‘us vs. them’, and to foresee the potential unity of humankind.
Hunter-gatherers had no money. Each band hunted, gathered and manufactured almost everything it required. Different members may have specialized in different tasks, but they shared their goods nad services through an economy of favors and obligations. Little of this changed with the onset of the Agricultural Revolution.
However, an economy of favors and obligations doesn’t work when large numbers of strangers try to cooperate.
The rise of cities/kingdoms and the improvement in transportation, however, brought about new opportunities for specialization. But specialization created a problem - how do you manage the exchange of goods between the specialists?
Barter doesn’t work because it is only effective when exchanging a limited range of products or else you will have to learn anew the relative prices of dozens of commodities everyday. It cannot form the basis of a complex economy.
Soviet Union tried to solve the problem by establishing a central barter system that collected products from specialist manufacturers and distributed them to those who needed them. ‘Everyone would work according to their abilities, and receive according to their needs’ turned out in practice into ‘everyone would work as little as they can get away with, and receive as much as they could grab’.
Most societies found a more easy way to connect large numbers of experts - they developed money.
Creation of money was a purely mental revolution. It involved the creation of a new inter-subjective reality that exists solely in people’s shared imagination. Money is anything that people are willing to use in order to represent systematically the value of other things for the purpose of exchanging goods and services.
Money enables people to:
e.g. shells, cattle, skins, salt, grain, beads, cloth, coins, promissory notes, cigarettes
The sum total of money in the world today is about $60 trillion (book published in 2014). Yet, more than 90% exists only on computer servers. Most business transactions are executed by moving electronic data. As long as people are willing to trade goods and services in exchange for electronic data, it is superior to physical money. It is lighter, less bulky, and easier to keep track of.
For complex commercial systems to function, some kind of money is indispensable. It is a universal medium of exchange that enables people to convert almost everything into almost anything else. It works because everyone always wants money. Because money can convert, store, and transport wealth easily and cheaply, it made a vital contribution to the appearance of complex commercial networks and dynamic markets.
Dollars have value only in our common imagination. Their worth is not inherent in the chemical structure of the paper. Money isn’t a material reality - it is a psychological construct.
But why does it succeed? Why should anyone be willing to exchange goods for a piece of paper?
Money is the most universal and most efficient system of mutual trust ever devised. Money is the only trust system that can bridge almost any cultural gap, and that does not discriminate on the basis of religion, gender, race, age or sexual orientation.
The coin was imprinted with an identification mark which:
That is why counterfeiting money has always been considered a much more serious crime. Counterfeiting is a breach of sovereignty, an act of subversion against the power, privileges and person of the king. As long as people trusted the power and integrity of the king, they trusted his coins. In turn, the power of the emperor also rested on the coins. It allowed the emperor to maintain the Roman Empire in order.
Q: Why should Chinese, Indians, Muslisms and Spaniards - who belonged to very different cultures that failed to agree about much of anything - nevertheless share the belief in gold? Why didn’t it happen that Spaniards believe in gold, while Muslims believed in barley, Indians in cowry shells, and Chinese in rolls of silk?
A: Once trade connects two areas, the forces of supply and demand tend to equalize the prices of transportable goods. When a good is valued higher in one place than the other, there is an arbitrage opportunity which balances the price out over time. The mere fact that people believe in gold in one region would cause others to start believing in it as well.
Money is based on two universal principles:
Pros: money has enabled millions of strangers to cooperate effectively in trade and industry
Cons: it corrodes local traditions, intimate relations and human values, replacing them with the cold laws of supply and demand
Although money builds universal trust between strangers, this trust is invested not in humans, but in money itself. We do not trust the stranger - we trust the money they hold. If they run out of money, we run out of trust. People rely on money to facilitate cooperation with strangers, but they’re afraid it will corrupt human values and intimate relations. Money is a double-edged sword.
Europeans at one point must have thought of the Americas as we think of Mars today. How far do you think the human species will expand in this universe? 1.Are we just inside another human world waiting to be unified with other worlds out in space?
What does money mean to you?