16 Feb 2009

What’s Money Good For?

All Posts No Comments

This gentleman John Steinsvold emailed me this self-described utopian article, on the wonders of abolishing money. I told John I would post it here, so long as he agreed to go at least a few rounds in debate. I also assured him that I would keep any comments courteous. So by all means, tell John why you think he is wrong, but we don’t want him feeling like this at the end.

For my part, I’ll just criticize a few things and leave the heavy lifting to readers who care to cross swords with John.

Here John describes the alleged evils of society’s reliance on money:

Needless poverty, unemployment, inflation, the threat of depression, taxes, crimes related to profit (sale of illicit drugs, stolen IDs, muggings, bribery, con artists, etc.), conflict of interest, endless red tape, a staggering national debt plus a widening budget deficit, 48 out of 50 states in debt, cities in debt, counties in debt, skyrocketing personal debts, 50% of Americans unhappy at their work, saving for retirement and our children’s education, health being a matter of wealth, competing in the “rat race”, the need for insurance, being a nation of litigation, being subject to the tremors on Wall Street, fear of downsizing and automation, fear of more Enrons, outsourcing, bankruptcies, crippling strikes, materialism, corruption, welfare, social security, sacrificing quality and safety in our products for the sake of profit, the social problem of the “haves” vs. the “havenots” and the inevitable family quarrels over money.

So my first question is, which of the above problems are due to money per se, and which are just related to simple acquisitiveness or greed? For example, right now a heroin addict might break into your house and swipe your wedding ring, in order to get the money with which to buy heroin. But OK, suppose there is no money. Won’t the addict still want to steal my ring to trade for his heroin? Or are you proposing the abolition of trade itself, not just trading with a medium of exchange?

But let’s get back to John:

Yes, everything will be free according to need. All the necessities and common luxuries will be available on a help yourself basis at the local store. Surely, this country is capable of supplying the necessities and common luxuries for everyone in this country many times over.

I would like John to clarify his reasons for this belief. Of course the economy is physically capable of cranking out more necessities, but only if it produces fewer units of other type of goods. I.e. unless he is also going to accuse the capitalist system of wasting resources (and maybe he will take that tack), then in order to increase the amount of bread and milk produced, we will have to make due with fewer plasma screen TVs and yachts.

So now, if John agrees with me so far that more necessities will imply fewer “luxuries,” then the question becomes: Why are the current people who bust their butt going to put in so many hours? It is true that many people currently acquire their wealth in order to wear as a badge of honor around their peers. But whatever their motivation, many of these people put in insane hours (at law firms, hedge funds, etc.).

In John’s world, I imagine that most parents don’t choose to put in 100 hour work weeks. So the total amount of focused labor is going to go way down. Is John still so sure that the basic necessities will all be easily produced?

To repeat my argument: It’s not enough to look at “total output” right now, and realize that a slight change on the margins will allow enough of the necessities to be produced. Because one of the main things supporting the level of “total output” right now are the incredible hours and other energies some people devote to their jobs, when it is possible for them to amass far more wealth than their neighbors. These people might become poets in John’s world.

My other big question for John is: why do you still have Congress in your world?! We’re going to be so utopian and dreamy, that we’re disposing of money in a few paragraphs–and yet you can’t also imagine people interacting without an institution of organized violence?!

I should make clear that I am open to the possibility that a truly voluntary shift in people’s perspectives might allow something that “looked like” the abolition of commerce. For the sake of argument, suppose I am so persuasive that I convert 99.9% of the world to Christian pacifism. Since no one supports the use of violence to achieve political goals, everybody stops voting. But new, despotic governments don’t rise up in their place, because only 0.1% of the population is willing to use violence, and that’s not enough people in any given country to really setup a system of exploitation.

So anyway, in this incredible world, there are no taxes or other government distortions with the economy. So there’s unbelievable economic growth. But at the same time, you also don’t have all of the things generating crime. (You don’t have a drug war, government welfare systems, minimum wage laws, government schools, etc.) And because there is no threat of “war” (the people would forget what that word even meant after a few generations), everybody would be very very relaxed.

Now in that context, it is entirely possible in my mind that those people would be so incredibly wealthy and yet at the same time so spiritually strong, that from our perspective it would appear that they had abolished economic scarcity.

The theorems of economics would still be valid, they just would no longer be applicable. The very first assumption of economics is scarcity, the fact that consumers have unlimited desires but only limited resources.

However, in the idyllic world I am describing, perhaps desires would be so utterly different, and the material “production possibilities frontier” would be so incredibly large, that the blessed creatures of that era would no longer agree that people had “unlimited desires, limited resources.”

But anyway, even if that were possible, it doesn’t require the conscious abolition of money. That would happen naturally, as the deeper motivations of people changed.

Comments are closed.