Opinions are like arseholes: everybody has one. -- Anonymous
Some time ago I sat down to write an article about what, to my personal and subjective understanding, money is. It was hastily written and in places less coherent than I'd like it to be, so I've often wished I made a better case for the ideas presented in it and to expand it. Hopefully, this will be that article.
I'll present a series of thesis and defend them the best I can. Of course, maybe you shouldn't use the opinion of some guy on the Internet to plan your financial future, and if you want sound advice, your best bet is to search for an established, accredited expert.
Nevertheless, here we go.
#1: Money is (a measure for) motivation
I mean it pretty literally: we use money daily to motivate others to do what they maybe wouldn't do otherwise. That's usually called "work," but it doesn't have to be: "art" is just as often a participant in such a transaction. There's an edge case to this when the work being done is "easy" -- for some values of "easy" of course -- or being done voluntarily, in which case money plays out more like a reward. But if we simplify this case to be "reward is a motivation for future work", it kind of often works out to be the same.
By saying this, I'm implicitly completely disagreeing with the chartal theory of money because I think the influences of governments on it are a historical aberration. If money is useful at all in a given micro-circumstance, it's not because of central management, but despite of it. And macro properties of money can only be emergent, not planned, by the nature of its usefulness being determined individually for each and every transaction.
The basis for this reaches to the idea that the function of money is for generalised barter: if you want something and another person has it, you might try to offer them goods and services, including money, to motivate them to give that thing to you. Or you could just ask.
One way of acquiring a Lambo is to buy a ready-made one from the respective company. Another way is to motivate the right amount of the right people (engineers, designers, project managers, coal miners...) to get together and build you one. The result is the same: you have a Lambo. To make things faster you might buy some pre-existing parts or materials: maybe you don't need to smelt and form metal, maybe you can motivate someone to part with some sheet metal so you can use it.
The fact that our civilisation is capable of building Lambos is evidence that the rest is just details: we just need to be motivated enough to build some. But if I know how to build a Lambo and I know it's a very sought-after item, I just might not be easily motivated to build you one - you'll need to try harder.
I can't really think of a good counter-argument. The best one is that money is not only motivation, though I think it always has motivation as a component. Here are some examples:
- Money is sometimes also a generator of social status (though these are not directly linked or always dependant on each other!). It boils down to motivation by way of wealthy people having the raw capability to motivate a large number of (less wealthy) individuals to do something for them -- either legal or illegal.
- Money is sometimes also a mechanism of coercion: by motivating enough people to part with their businesses, their land or tools, wealthy people might get a monopoly on certain important resources over a certain territory, so that simply by having enough money, wealthy people can coerce less wealthy people to buy goods and services from them.
- Money is not always enough for motivation. Often, after a certain peak is reached (which is usually given as earning twice as much as your expenses), people don't really consider money as motivation enough - unless we're talking about insane amounts - at which point it only becomes a game.
This last point also gives insight, of sorts, that the equation from the start doesn't work in the other direction: all money is (a measure for) motivation, but motivation is a much larger concept.
#2: You only need money for things you are not able to get otherwise
If you asked me nicely, I might wash your car, free of charge. But maybe I wouldn't be in the mood to do it, maybe I'd have a bad day, or be tired, or one of the hundreds of other things which would ultimately cause me to decline to wash your car. On the other hand, if you then added money into the offer, there's probably a point where I'd consider the money worth my time and find the motivation to do it. For some more money, I'd probably be very enthusiastic while doing so, even start singing a song.
Is there something you could have said or done so that I'd still do it, even with reasonable enthusiasm, without any money on the table? Probably. And I think this is how most of our ancestors got around without money.
I remember hearing from my grandma how in the old days they didn't need much money: everybody helped everybody else. If a barn needed to be raised, everyone helped. If the fields needed to be harvested, everybody did everyone's fields in sequence. Basically, money was only needed for things the village could not make itself. Like cars. And iPhones.
Today, we really need our cars and phones and TVs and microwaves and we don't know enough people to directly motivate them to build us some. Even if you know an excellent car mechanic which could bring a rust bucket to life, it's unlikely he would be able to create the engine from scratch. And it's far less likely you know both an excellent car mechanic and an electronics expert which can build you anything resembling a TV.
Hard goods are limited by raw resources and labour, and because of the depth of the manufacturing chain they are often (but not always) efficiently tradeable only for a universally substitutable / fungible concept which money certainly is. If I had an apple tree, I could sell you an apple for a (what I think is a) fair price, or I could just give it to you. Services on the other hand have more options. I could wash your car for a can of beer, if I'm so disposed, or only for a kind word.
I venture to make a claim that the concept of buying everything for money is historically a strange one, and not something we as a species, or even as a civilisation have evolved with at any length. Bartering and reciprocally helping people has had a useful function: building communities for probably hundreds of thousands of years, while the modern-ish concept of money is with us for a couple of thousand at best, and the idea of paying for literally everything with money instead of bonding with people in reciprocally beneficial arrangements is with us for much less than a hundred years (depending on your part of the world, of course).
It is likely, and I only have personal experience and anecdotal evidence for this claim, that using bartering and mutually beneficial arrangements wherever we can, instead of hard cash (even if we have enough of it) makes us happier.
#3: On the macro scale, money is divorced from motivation
While our daily lives are full of decision such as do we value an apple a certain number of units of a currency, or do we value the service of a barista enough to reward them a certain number of units of currency as a tip, motivating them to maybe be extra nice to us the next time, on large scales, money is just game points.
There's a certain inflection point at which money stops being a necessity and starts being a collectable. On one level this is because of the hedonic treadmill effect, so no matter how much we accumulate, it doesn't phase our happiness much; on another it's simply because we're as a species naturally competitive and like to brag about anything - so why not about money?
The border between the two natures of money - one where it motivates us to do what we otherwise possibly wouldn't, and the other where it's simply a number, is fuzzy, and highly dependant from person to person.
#3a: At the highest economic levels, money is never about money
It gets even crazier when money is handled by legally fictional entities - corporations, simply because they exhibit the neurotic mishmash of personal values and biases of a large number of people, often coupled with a lack of personal liability for any one of them. If there were no marker pressures and laws which attempt to guide them, corporations would be like instances of 4chan.
It almost makes sense to not use the same name (and concept) for "human sized" amounts of money and "corporate sized" amounts. While I wouldn't go so far as to claim that personal wealth above a certain unit should be measured in high-tech non-forgeable destroyed-on-owner's-death trophies instead of zeroes on bank accounts (besides, who keeps megabucks on personal accounts instead of SPVs, anyways?), it's tempting.
The way money is used on a large scale, usually either as game points or to coerce control over large swathes of resources, is so different from how it's used in daily lives of the vast majority of population that it requires a different way of thinking about it. Like both the pogo stick and a SUV are transportation tools, but you need to think about them in very different terms.
For a short time, cryptocurrencies seemed like a possible way to separate the realms of high money and everyday money, but they have fallen under the same psychological pitfalls as regular financial systems (and besides, no rules enforced by an impartial system will be followed in the long term). So the future of how this topic will play out remains uncertain.
The value of money lies in being able to forget that it exists.
I wouldn't say "value", but certainly "enjoyment" of money lies in being able to forget it exists.
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