What is Money?
Money is a fact of life for all who grow up in a standardized market. I know the rate at which I am willing to sell my time, and how much I am willing to pay for clothing, food, and activities. Rather than bartering with those that are looking to hire me or sell me goods or services, I rely on the somewhat elusive idea of money. In Bylund’s writings, he describes a summarized process of how money became an accepted commodity for trade. When one is looking to purchase a good, they must have something that the seller values more than the good they would like to buy (Bylund, 16). In the example given, ‘Adam’ has a can of Coke, and ‘Adele’ has an apple. If the two of them decide to trade for each other’s offer, they each value what they receive more than what they provide (Bylund, 16). This analysis disregards the idea of an ‘equal exchange’ as many people know it. An equal exchange is the idea that two goods are valued as exact equals, and may be traded for each other. I was doubtful of Bylund’s discounting of an equal exchange scenario at first, but with his explanation it makes quite a bit of sense. Each party involved in an exchange is looking to trade what they own for what someone else has to offer, but they want to get something that they value more than what they already have (Bylund, 16). In stores, the price of something is already set, and includes the production cost, transportation, staffing of the store, and a mark-up for the store’s profit. There is no opportunity for an individual to barter on prices, or exchange goods for what they would like to purchase. For example, I cannot trade two bananas for a loaf of bread at the local Walmart, but I can shop around at other stores and compare the price of bread to determine what I perceive to be the best deal. This process is called ‘bidding’, where each seller ‘bids’ their prices to the consumer, and the consumer purchases from the store with the closest price to their perceived value of the product (Bylund, 22). Of course, the issue still remains that you cannot trade goods for other goods in many markets and stores today. To accomplish a seamless transaction anywhere you go, society has implemented the idea of money. Rather than having to trade two bananas for a loaf of bread, which could then be traded for six apples, one can now simply exchange their time, labor, or goods for money, which can then be exchanged for apples. Bylund summarizes this idea in the following excerpt:
”It is easier to see how the former offers many more options, since only two trades are necessary to purchase any good- first you sell goods for gold coins, then you buy goods paying in gold coins (Bylund, 19).”
Of course, America uses dollars in place of gold coins, but their function remains the same. Rather than having to keep an accurate list of what you own, how much it is worth to you, and trying to decide how much you would like to trade for a different good, money is a standard value that can be applied to any good or service you are looking to procure.
How Money is ‘Balanced’
After understanding what money is, it is key to discover how money is valued. As discussed above, money holds an agreed upon value that can be exchanged for goods or services. Few people think about why money is valued the way it is, though. Tamny examines this idea in his writings, which will be discussed briefly here. Beginning with an analysis of post World War Two Germany, Tamny observed that cigarettes replaced the official German currency in many parts of the country. This is not because the German officials made any decree or declaration that cigarettes carried any value, but rather because individuals desired the cigarettes more than the currency, and the crumbling economy that it represented (Tamny, 33). This serves to illustrate the point that any currency is only as strong as the value it represents. A dollar bill on its own is no more than the paper it was printed on, but as long as our society agrees that it is worth one dollar, it is given value.
Where does this value originate from? For decades, currencies around the world were carefully tied to each other in order to create continuity. The American dollar was tied to a gold-standard, and other countries based their currency on the American dollar (Tamny, 37). After 1971, however, Nixon severed the link between gold and the American dollar. This created an uncertainty of how much one currency was worth when compared to another. This uncertainty created one of the biggest existing markets in the world: the currency market. By 2008, approximately $3.2 trillion was traded daily in this market, and by 2016, that value had risen to $5.3 trillion (Tamny, 39). Because gold was removed from the value of the dollar, and the dollar was removed as a baseline for other currencies, the exchange rates and values of currencies around the world can now vary wildly.
”Evidence supporting this [the benefit of the gold standard] is the frenzied daily trading of currencies that never took place before money was detached from the yellow metal [the gold standard] that made it money. Losing status as a reliable measure, the billions and realistically trillions worth of global trade in goods that takes place every day must occur alongside trading of the measures themselves (Tamny, 39).”
That is to say, since the gold standard has been removed, different currencies are ‘bartered’ daily, to try and benefit the economies that they represent. When there was a gold standard to base currencies off of, everything was much more streamlined and simplistic.
Money’s Influences
In Ayn Rand’s Atlas Shrugged, he dives into the idea that money is the root of all evil. Most people have heard this saying before, and understand the concept that money is understood to ‘corrupt’ or ‘rot’ even the best people. Although there is an understandable reason behind this saying, namely that many rich people in history have been coldhearted or merciless in their lifetime, Rand goes deeper into how money and morality interact. Rand quickly divides people into several categories; ‘moochers’ that use tears to gain wealth through pity, ‘looters’ that take it by force, and ‘producers’ that gain money through honest work (Rand, 1957). These groups are very recognizable in our modern society. Moochers can include panhandlers or people who request donations due to unfortunate circumstances (whether real or fabricated), looters would include all criminals that gain wealth through nefarious acts, and producers would include the working population of America who earn a living through honest effort. Rand argues that it is only through the producers that money has any value at all. If it does not represent the effort and time of someone who created a good, it cannot have any intrinsic value with which to be traded (Rand, 1957). The value of money can only go so far, however. In Rand’s eyes, money cannot be exchanged for happiness, values, purpose, or intelligence. It can only be exchanged for tools or paths with which to find these abstract ideas (Rand, 1957). No amount of wealth can buy a well-educated mind, however it can afford you tuition at an acclaimed university. Similarly, you cannot buy contentment, but you can purchase luxuries that add to your general wellbeing. Those that try to use money to gain these ideals often lose their money and are no better off than they began. But the question remains ‘does money corrupt?’. Rand believes that money cannot corrupt an individual, but an individual can corrupt the money they receive (Rand, 1957). Someone that comes into ill-earned money is fit to indulge only harmful endeavors, in Rand’s eyes. No good can come from a corrupt individual with wealth. Rand continues to dissect the relationship between money and morals in the following passage:
“Then you will see the rise of the men of the double standard-the men who live by force, yet count on those who live by trade to create the value of their looted money-the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law-men who use force to seize the wealth of disarmed victims-then money becomes its creators’ avenger. Such looters believe it is safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter (Rand, 1957).”
Although Rand later praises America as a very moral country in their views of making money (Rand, 1957), I would argue that there is an abundant overlap of immorality and wealth in our modern country. Look no further than entrepreneurial giants such as Elon Musk or Jeff Bezos to see men who have become ‘criminals-by-right’ or ‘looters-by-law’. Using their wealth to drive the employees that work for them deeper into poverty, destroying unions, and encouraging inhumane working conditions have enabled people like these examples to build wealth at the expense of morality. As Rand says, money cannot buy values.
Works Cited
Rand, A. (2020, April 13). "Francisco's money speech" by Ayn Rand. Capitalism Magazine. Retrieved February 24, 2023, from https://www.capitalismmagazine.com/2002/08/franciscos-money-speech/
Bylund, P. L. (2016). Chapter 2: The Price Is Right. In Seen, the unseen, and the unrealized: How regulations affect our everyday lives (pp. 15–26). essay, Lexington Books.
Tamny, J. (2022). Chapter 2: The Meaning of Stable Money. In The money confusion: How illiteracy about currencies and inflation sets the stage for the Crypto Revolution (pp. 29–41). essay, All Seasons Press.
I really enjoyed reading your post. You really showed a good understanding of the material, and in addition to this, I feel as though I learned a lot more through your post than I did even reading the material myself. I really struggled to comprehend this reading my first time through, but reading your post really helped me to understand the main points that Bylund was trying to make.
I really liked when you were summarizing Bylund's ideas in the "what is money" section. Thinking about a typical bartering system being implemented into our modern day economy is an interesting thought. I got to thinking about if we were in fact able to negotiate within systems like grocery stores or retail spaces. This is not the system because Walmart doesn't need my money enough to negotiate. If I want to buy something, I can either pay full price or not get it. If there came a time where the economy did a 360 turn would there be a possibility for this system to be active? I don't know the answer to this.
This is also a very interesting thing to dive into. The US dollar used to be backed with gold which is what gave it its value, now it is not backed in gold. So the question becomes, how do we compare our currency to that of other countries? How do we justify the value of an American dollar, when in reality, there is no actual value. This is an interesting concept to think about.
The section on the quote "money is the root of all evil" is the section that I personally was the most interested in when I was reading through the material. I think you did a good job at summarizing the main points made. Personally, I really agree with your very last comment:
Your formatting was really good, and your writing over all was very easy to follow. Many of the essays that I have read up until this point had poor formatting, however your formatting was spot on. Great job on this report overall.
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