Money and Value – despair a bob, mate?
November 23, 2008
I think there is a fundamental slipping of the ties that bind money to value. The only justification for money is the unification of value to a simple exchange, a single standard for an equitable transaction. When the money itself is branded as an object of wealth creation – indeed, even tacking on the concept of material as wealth, hence endlessly accelerating acquisition and consumption – this connection is subjugated.
I don’t see any philosophical counter-arguments to a return to the basics. The explosion of ‘material’ creativity that characterises the Industrial and post-industrial age economies will probably not only continue, it will adopt ever higher standards of efficiency as a given, and it will be valued far greater than silly money-based patenting and copyrighting fancies can deliver.
Cultural change is such a ’scientific’ affirmation of values. Perhaps that is one reason Mr Obama could win an election, with his oratorical command triumphing over rhetoric (I don’t mean the content entirely, but the delivery – that’s how it sounds, very important to reach out to a lot of people who aren’t learned enough to follow the arguments, some of which are doozies).
I always did find the idea of rocket scientists generating algorithms and processes to turn blobs of money into thundering snowballs was a little nauseating.
November 24, 2008 at 4:47 am
Vickram:
A return to the gold standard – historically “a single standard for an equitable transaction” as you put it – is something that many people are talking about again these days.
Today’s WSJ has an unusual (for the WSJ!) article:
http://online.wsj.com/article/SB122748912533552007.html
where the writer says:
“In this respect the present crisis in the West will ultimately end up discrediting mechanical monetarism — and with it the fiat paper-money system in general — as the U.S. paper-dollar standard, in place since Richard Nixon broke the link with gold in 1971, finally disintegrates.
The catalyst will be foreign creditors fleeing the dollar for gold. That will in turn lead to global recognition of the need for a vastly more disciplined global financial system and one where gold, the “barbarous relic” scorned by most modern central bankers, may well play a part.”
December 3, 2008 at 1:48 pm
@Murali:
With respect, I can’t agree. Returning to gold as a common denominator is just another exclusivist fiction. As we know in India, better than any other country today, roughly half the gold ever mined in the world is held by Indian families, and the rest is in a handful of central storage vaults.
How will setting up gold be better than using a global ‘average’ denominator of a basket of commodities? This will automatically protect the largest number of nations/peoples from bursts of inflation, and minimise the disparity between nations.
The thing to realise is that, as never before, information is getting far more perfect. If a country like India actually invests in universal connectivity, and removes the incentive to ‘hide’ money (and therefore transact with hidden money), and together with this, if the concept of hidden money is removed, the scope to match up information with the actual velocity of money in the market vastly improves.
It will not be ideal, because that is Utopian, but it is better than what we have today, and will remove many of the artificial barriers that have plagued the use of physical money, and incentivised the creation of bubble money. I think. Or, as we put it in this virtual space, imho.