There is something that everybody certainly believes in, uses most days, and yet it is purely an artifact of reasoning and is nothing more than an abstraction.  It appears in the core of every business and appears within every transaction.  It determines many people's fate and lifestyle, we often crave it and would be quite distressed if we had no access to it.

What is it?  Why, it's money of course!

Now, I'm not that interested in money and I feel you probably aren't either,  What I really want to talk about is UBI - Universal Basic Income.  But unless we are clear what money actually is, this won't make a whole lot of sense - so ... what really is Money - and what do we need it for?

The following are generally non-contentious and amounts to some very elementary economics.  [Note: I'm not an economist!]

Firstly, money is a means of exchange.  When you have frequent interactions with multiple people, money is far more convenient than simple barter.

Technically,  money is an asset that can:

  • provide a unit of account
  • be used to transfer economic value
  • be used to store economic value

Money generally satisfies the following properties.

  • Durability: monetary assets don't "decay" or "expire" - they retain value over time.
  • Portability: monetary assets can be transferred between entities without loss of value.
  • Divisibility: monetary assets can be divided up and then put together again without loss of value; typically they are discrete multiples of a unit value.
  • Uniformity: monetary assets having a given value are equivalent to any other asset having the same value.
  • Scarcity: "money doesn't grow on trees" - Monetary assets represent value purely because they require effort to obtain or manufacture.
  • Acceptability: monetary assets of any given value are broadly recognised by all participants to have the given value.

Finally, monetary assets generally take the following 3 forms:

  1. Representative money:  Physical entities that are deemed to have the value claimed for it.  It is this kind of "money" that barter is typically based upon.  Exchanges are then arranged between buyer and seller on the basis of mutual wants.
  2. Fiat currency / legal tender: tokens issued by governments and central banks to denote particular currency denominations.  The token themselves are broadly worthless in physical terms - e.g. banknotes are just printed paper, and what makes them valuable is the difficult-to-forge design etc.   This kind of money is typically controlled by national central banks.
  3. Commercial account value:  Money stored virtually by banks within bank and credit accounts.  Money is then equivalent to entries in an accounting system against individual accounts.   This is only indirectly controlled by national central banks.

I don't particularly want to consider "cryptocurrencies" as a form of  "money" - it's instead a sophisticated way of doing speculative trading (i.e. gambling) and in many ways, it fails to provide anything like a stable, reliable monetary asset - its just like stocks and shares and is even more volatile.  So, no, cryptocurrency is not "money".

Generally, money exists only because we agree that it is a useful way to manage society - except of course it isn't really.

In social terms:

  • Money was really a form of virtualised barter.
  • Money is incredibly divisive, separating rich from poor.
  • Having money dictates how people live and actively constructs poverty.  In this sense, money is immoral.
  • Money is a way to regulate transfers of resources - this role is necessary but can be very badly "gamed", so that the rich only get richer.
  • The traditional observation that "money is the root of all evil" is a mis-quote from the Bible, which says, "the love of money is the root of all evil."
  • A quip I saw recently: Evil is the root of all money.
  • Also: "The lack of money is the root of all evil" - variously attributed to GBS or Mark Twain.

I see UBI as providing a possible way out of the stranglehold that money has on society.


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