What would a world with no money be like?

 

Image attribution: Frank Kovalchek; CC BY-S.A. 2.0 

By Paula Whately

“Money, so they say, is the root of all evil today,” sang Pink Floyd’s Dave Gilmour back in 1973. Little did the Ancient Mesopotamians know when they introduced the idea of currency to the world around 5,000 years ago that their revolutionary idea would go on to transform the planet in such a profound way. What’s more, given what humankind has achieved by moving massive amounts of money around – the scientific discoveries, the medical advances, the mind-blowing technological developments – it kind of seems a bit ungrateful to those Assyrian and Babylonian pioneers of old to suggest that maybe we’d be better off without money, and that it’s time to start imagining a future where goods and services are exchanged in a different way.

In a world dominated by competition for resources and defined by massive economic inequality, it’s certainly appealing to think there might be a better way of doing things and that hunger and poverty might one day become things of the past. But thinking about how an alternative economic system would work in practice isn’t that simple.

A New World economy

Maybe they got it right in Star Trek, where the good old United Federation of Planets began shifting to a ‘New World Economy’ in the 22nd century, money becomes an outmoded concept and Fort Knox is turned into a museum of the primitive capitalist ways of the society of old. But this New World Economy was only possible in Star Trek because they had, in their Replicators, a technology for synthesising whatever material goods they need. Whether you’re a lowly warp drive engineer or a high-ranking Starfleet diplomat, you have equal access to food, clothes and novelty key rings. Additionally, automation has become so widespread that there is no longer any need to pay for labour. That leaves citizens free to focus on bettering themselves and improving the lot of their fellow humans, instead of worrying about the relentless accumulation of wealth.

With the advent of 3D printing, replicator-style technology might not be as far away as we thought, but for now it’s fair to say we can’t really compare our current society to the inter-planetary civilisation imagined in Star Trek. But that certainly hasn’t stopped figures at the very highest level from thinking about and discussing what the world might be like without money as we know it today.

A barter economy

Sir Mervyn King (Governor of the Bank of England and possible Trekkie) has said that there is “no reason” that producers and consumers couldn’t exchange products and services directly through “essentially a massive barter economy.” According to King, “all it requires is some commonly used unit of account and adequate computing power to make sure all transactions could be settled immediately. People would pay each other electronically, without the payment being routed through anything that we would currently recognize as a bank. Central banks in their present form would no longer exist – nor would money.”

So we just need to come up with a unit of value and then figure out exchange rates for every single one of the trillions of different products and services that people might want to exchange? Cool. I’m sure someone could make an app for that. But is it simply the question of computing power that stands in the way of a transition to a barter economy?

Not according to ex-Microsoft engineer Balaji Viswanathan, who points out what he describes as the ‘indivisibility problem’; imagine you sold all your mushrooms for a pair of socks, and then decided you wanted to buy some bread. Would you be able to split the pair of socks in order to get the bread? No, you wouldn’t, you hippy fool! What were you thinking swapping all those lovely mushrooms for a rubbish pair of socks? Other criticisms include the problem with individuals storing wealth for use in future transactions (as many of the products being exchanged will be perishable, meaning they don’t necessarily retain their value over time), and the fact that there’s no easy way of arranging unsecured or secured loans of other forms of credit.

Collaborative consumption

As things stand, it’s hard to see how the world would function without conventional currency, but that doesn’t mean you can’t start doing some small scale bartering in your own day to day life. Are you awesome at baking? Then why not offer to bake a delicious cake for the landlord at your local pub in exchange for a few pints of the good stuff? Do you have a skill that people value? Then see what they can offer you in return for your time and expertise. Just ‘cause you have a job and occasionally shop at Tesco doesn’t mean you have to be a total slave to money; people are definitely embracing the idea of bartering, skill-swapping, and what Rachel Botsman calls ‘collaborative consumption’, so now’s the time to get in on the action.

About the author: Paula Whately is a freelance writer who has been writing about financial issues such as secured loans and credit ever since the recession began.

Why money is an illusion

Money is a human construction, when we were a neolithic non-cultured species, money was a concept yet to be conceived. Perhaps it was a random intuition that briefly and dimly flickered in the consciousness of people more concerned about what was in front of them than what could be, for better or for worse, a 'reality'.

Image source: Anna Cervova

Illusions are thought to be deceptive, misleading or misrepresentational of reality. Money is believed to be an essential necessity, and indeed, it is in the world we have created for ourselves, but it is not per se a requirement for living which is what contributes to its illusory qualities. Rather it is an a priori deduction which is a conceptual abstraction that can be actualized through a printing press, and not a definitive empirical requirement for life.

In more concrete terms, look at the value of the dollar. It's not directly based on  or 'backed' by any physical collateral such as federal real estate, presious metals etc. The dollar's value is based on perceptions of its value, belief in its worth and what it represents. Currency trader's decisions aren't always if ever based on evaluation of the dollar's actual wotrh under controlled experimental research conditions for accuracy. In other words, it's based on perceptions, beliefs, indicating financial metrics, and changes in market conditions. 

It's kind of like faith! maybe that's why it says 'In God We Trust" on the back of a dollar bill.

How to define money

Money is a medium of exchange that reflects value either via limited supply and/or economic proxy. How to define money is also asking what method is used to define money. A common conception of what money is, is cash money, however money can be defined purely in terms of numerical value which itself differs within foreign exchange. Money can also be defined in terms of where it comes from, for example Investopedia defines hard money as currency backed by precious metal as well as repeated government funding.

Ancient Chinese 'Spade' or 'Pu' Money

Image license GFDL Attribution: Roger McLassus

Alternatively, money can be defined by how it is used; for example, is it used with physical or digital exchange. How to define money also involves answering different questions about what money is such as what is it made of? Gold and silver were once used as money, but are now mostly used for commemorative and collectible coins when in currency form. Thus the questions asked in defining money also offer a way how to define money i.e. the act of questioning rather than inferring meaning   Some methods for defining money are listed below.

• Inquiry in to the how, why, what and where of money
• Analysis of the answers to the inquiry of what money is
• With counter-hypothesis to reveal vague aspects of money
• Historically, scientifically, sociologically, economically and artistically

Without a method, or means by which to discover how to define money, answering how to define money may be left unanswered or simply defaulted to a basic answer such as 'Money is any object, resource or actualized concept that reinforces the idea all things have worth'.

Thus, assuming thought is a valid way to discover how to define money, thinking what it would be like without money is one way to define money. Moreover, in such instance worth would not be defined in terms of a representational currency and that would have potentially dramatic affects on civilization, society and economics.

Money facilitates economics

Money is the facilitator of economic growth, demographic expansion, and the infrastructure now required to keep so many humans living a life in modern day society. Thus, money is more than just a medium of exchange and valuation metric as defined by the online Merriam Webster Dictionary.

To define money for what it is involves understanding what money does by inquiry and extrapolation of what money is thought to be. Money is a dynamic intermediary facilitator of trade, commerce, lifestyle, standard of living, services, and exchange. Money is also a concept from which other concepts can be derived. For example, financial derivatives are a conceptual abstraction derived in part by and with the metric of monetary value.

Money also partly defines our identities as humans because we use it frequently, and our lives are somewhat dependent on what money makes possible. This is where the phrase “Money is power” is referring to, however money itself is not power but rather a tool of power or power tool! In other words, when defining money as power one means the use of the money holds influence over the actions and possibly even beliefs of others via a greater more important need to survive which to a large extent is only made possible via money. Thus money can be said to be one or more of the following:

• Global facilitator of exchange
• Influential and/or important part of society
• Basis of commerce
• Representational of human belief
• Quantitative metric
• Physical object and/or digital record
• A conceptual abstraction

Money is not an emotion

Money is not that which it represents, meaning when thinking about how to define money, one may equate money with quality of life when all it really does is facilitate standard of living. Moreover, money is not wealth but the measure of wealth; not economic status, but a measure of economic status etc.

Money is also not a feeling or emotion, but rather a means to some feelings or emotions. Nor, in the minds of many but perhaps not all, is money a god or deity which is to be worshiped. Money may indeed be worshiped on or off the record by some, but the worship of money does not mean money itself is a god or deity. Moreover, gods and deities regardless of their true existence, are most commonly personas and not objects.

Another thing that money is not is essential for life from an existential point of view. Moreover, money is a human social construct that has become almost essential for life, but only because humans have made it so. Thus, what is done, can also be undone, therefore money is not necessarily essential per se.

Lastly, money is not defined as any one object or thing. Since money can be coins, bills, an electronic balance, a goat or even a particular action, then money is not any one of these things per se and in its entirety. Money may indeed be a coin, but money just because some money is a coin doesn’t preclude it from being something else.

• Wealth or status
• That which money represents
• Gods or deities
• Emotions or feelings
• Essential for life
• A single object type of exchange

Summary

How to define money is a matter of context and context is the situation in which money is defined. For example, a simple exchange using a dollar bill in and of itself, and not taking into account the role of money in society but simply the use of money will only explain what money is used for, and some of the means by which money is used i.e. paper currency. To define money in a larger context requires the inquirer to place money in different contexts so as to define money more completely as money is more complex than it may seem.

Money as a tool is defined and used in a variety of ways via derivative metrics, multiple forms of money and within differing institutions with different functions and goals ex: non-profit vs profit financial institutions. What money is not is most clearly what it represents as money is at best a reflection of life and all it has to offer and not life itself.