What is money and where does it come from?
2 July, 2018
Trading began by bartering what one had for what you could get from another. If I had beans and another shoes, a barter transaction was entered into if both parties needed what the other had. Market places developed where trade of this kind was conducted. When the diversity of products grew, transactions could become complicated with one person wanting shoes but the shoe maker not wanting beans but rather feathers. The feather supplier needed beans and cabbages. So, people started issuing a promise to make good in some way for what they still owed on what they had taken in a barter transaction. The person receiving this written promise then used the promise to get from another person a product that they needed. It is easy to see that these promises can work in very simple transactions amongst a few people that would probably have to have known each other. A coin or unit of currency, a means of exchange, made it possible for transaction of any good for another without the need for a promissory note and all the associated complications. So, from this we can get an idea of money as a means of exchange. It is however much more than this.
Money also has a value associated to it. It is worth something. How does it get this worth? The bean grower guides the process of nature in a certain way to get his beans. He plants at a certain time, in certain soil types, with the right seeds, with the right support structure for the plant and so on. He uses his wits, skills and labour. When he harvests and takes the beans to market. his ‘customer’ perceives a value in the product and offers something in return. The bean farmer sees a value in what is offered in return. He might associate what he has to give in beans to what he is receiving but at the end of it all, if he has a strong need for the product that he is exchanging his beans for, and vice versa for the person who needs the beans, a transaction is entered into based on a perception of value by the two people involved. This perception of value is critical to the value that gets attached to the coin or bill of money. It is also imperative to note that it comes about from a person, a human being. The article for exchange or sale is only worth what another human being values it at.
Money now is not a product for exchange but is a means of exchange and has value attached to it. This value is given to it by the human being who made a value judgement about what he needed. Taking this further, if people want a bigger bartering power, they need to offer a product that is needed, scarce through the quality or value in it, or smart in the efficiency with which it is produced. Each of these qualities is an expression of the humanity given to the article in wits, skill and labour. Someone needs the product and gives it a value. Money, a value-holding means of exchange, is an expression of our human qualities. It is our human spirit materialised as recognised by others. I s this not awesome?
So where does it go wrong with money? Well, money is an expression of our human spirit, the exercising of our human qualities in the economic sphere. This is where the value in money comes from. When the bean farmer makes enough value, he can invest in capital. The capital can also only be put to use by the human qualities of human beings. The moment capital is detached from the human being, it starts to become lifeless and drag down the value of money in an economy. People give capital to their children or race groups associated to them rather than to competent people. The capital becomes ineffective as the best wits, skills and labour are not attached to it. It is also given to tax authorities that cannot distribute it effectively to the developers of human qualities of a society. The tax authorities have only their own pay rates as a concern for example and the value created by the economic sphere is taxed into an environment that strangulates it to some degree. Banks that receive deposits don’t know how to read the human qualities in people and so only give it out to those that have. This stops development of people and development of ideas around service and efficiency. Tax authorities get less revenue as a result. People become hoarders of money rather than allowing it to remain connected to the best human beings in question. If this were encouraged and cherished in this way, more value would be added to a currency and more tax would be paid. More human dignities could be shared amongst more people. More freedom for education and human insights would arise.
Money becomes a problem when we do not know where it comes from and where the value comes from. Others give my efforts a value. If I have a sound and honourable value system, I value certain things in a certain way. If I am unbalanced and dishonourable, I value other things. In the latter case, no value can be created other than a kind of value that relies on there being value in the first place to make use of. The prior case makes value from our interaction with nature herself. New, fresh value comes from this.