With our looming depression, it makes sense to take a look at money, as an idea.  After all, what actually changed when the stock market crashed?  The same number of people were at the same jobs producing the same amount of stuff; there was the same demand for that stuff.  There was no change in the amount of resources extracted, and no change in its distribution.  Actually, nothing changed, except some numbers in a computer somewhere.  And somehow, this is going to have an impact on us.

Money Is Not Wealth

Once upon a time, people worked to feed and clothe themselves, to get or build or improve or maintain a house, etc.  Today, we work to make money.  The brilliant thing about money is that it symbolizes value: you exchange a good or service for some undetermined thing of equal value.  Say you sell an old paperback book for five dollars.  That five dollar bill represents about 2.5 bottles of pop, or an appetizer, or 1/80th of a pair of designer jeans; if you take the money out of the equation, the transaction looks like you traded your book for 2.5 bottles of pop.

In its pure “barter juice” form money guarantees that the trade will be more or less fair, and it’s definitely easier to carry around than a selection of barter goods.  Importantly, money in this form represents actual wealth, meaning a specific amount of goods and services.

Now, it gets hazier when we start talking about intangibles.  How much is electricity worth?  Or your time?  Or putting up with grumpy people?  Engineering skills?  Ideas?  Risk?  The capitalists would apply supply and demand.  There aren’t many engineers, but lots of stuff needs to be engineered, so their time is worth more than that of someone who lifts heavy things, because although there are also lots of heavy things that need to be lifted, there are also a lot more people who can lift them.  In fact, this idea of scarcity is the entire basis of how we decide something’s worth, and it turns out to be severely flawed.

Money Creating Scarcity

Consider the impending energy crisis: we’re running out.  We need to build more generating capacity.  There’s definitely no shortage of labour, and there’s no shortage of raw materials–who has heard of a cement or steel shortage recently, for example–and we know how to build new generating capacity.  But: power plants are expensive.  Who can afford to build them?  Not many people.  The supply is there, the demand is there, but they aren’t meeting up.

Also, to build all of this new generating capacity, we need a lot of engineers to design the plants.  But there’s a shortage.  Why can’t we train more?  Because there aren’t enough teachers.  Why aren’t there enough teachers?  Because schools can’t afford to pay them.  If we collectively need them, why can’t we afford to pay them?

Of course, we also need to learn how to harvest new forms of energy, and this needs researchers, which means people with Ph.D.s, and there are lots of them (still not enough), but a lot of them aren’t doing research because nobody will pay for them.  There aren’t enough positions available at universities or private labs to employ the ones that exist at the same time that there is a desperate shortage of research staff.

To some degree, this scarcity is maintained intentionally, because if there were all the researchers you needed, supply and demand would dictate that the price would go down, and there would be no reason to pay physicists and engineers more than you paid, say, a fast food worker.  Similarly, the reason nobody is rushing to make geothermal power stations is because if power were plentiful, it would be cheap, so its trade value would decrease and the people who built the plant wouldn’t be able to make their money back as quickly.

Oddly, the reason scarcity still exists is because supply and demand punishes abundance.  We have the capacity to make a house for everyone, and to furnish it, and put a computer with access to the internet in it, and even to provide some sort of mode of transport with it.  We don’t because if everyone had these they would have no trade value, and no trade value means no potential for profit.  We have the capability to solve our energy problem, but we don’t because abundance means no profit.  In fact, I challenge you to think of a single thing that we need that we can’t produce in abundance (oil doesn’t count, because we don’t actually need it for anything, we just use it for everything).

This is the central problem of the idea of supply and demand today.  If we were to produce stuff at full capacity, we would exceed demand for everything, and since abundance means no trade value and thus no profit, the profit motive holds back progress.

The Ass End Of The Deal

Now, there is one abundance that our society consistently maintains: an abundance of labour.  If you consult an economist they will talk about the devastating impact to profitability of low unemployment: if you’re running low on unemployed people, you start having to pay the employed ones more and treat them better because they start to have bargaining power, and that hurts profits.  Most people in low paying jobs put up with them because for every ten of them, there’s one person who is unemployed and would gladly replace them because they desperately need money to exchange for food and shelter.

This point bears repeating and elaborating: poverty in the developed world is deliberately maintained.  If there were no desperation, individual people would be better able to set a fair value for their work.  The total value that a corporation outputs is the sum of value of the work of its employees and the resources they work on, and the value it consumes is the value those resources.  Therefore, the only way a corporation can profit is by paying its workers less than the value of their work¹.

On the other hand, you can get a glimpse of what abundance looks like if you imagine being a capitalist who produces things to sell.  As soon as you have a design, you can farm it out to some factory in China, where there’s such abundant labour that it’s rotting in the streets, and you can get that design built into an actual thing for next to nothing.  Anything you want!  Chemicals, electronics, machinery, weaponry, all the decadent booty of the modern age!  It’s all there for a tiny bit more than the cost of the materials, if you buy a decent quantity.

Try to imagine this sort of thing, but applied to everything.  Better yet, imagine if we were able to forget about money, and just apply our resources to solving our immediate problems.  Imagine armies of bureaucrats with nothing better to do than oversee coal plants being retrofitted with clean burners, just because, you know, that smoke sucks.  Imagine landfills being replaced with things like the Toshima Incineration Plant².  Electric cars, using those patents that the big car companies would have no motivation to sit on anymore. Hell, cities on the moon, if anyone still cares.

Anyway, enjoy your bailouts. Cheers!

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1) They could also technically charge more than their product is worth, but no rational entity would buy that.  Imagine, charging $70 for a pair of shoes that cost $1 to make.  Ridiculous!

2) http://www.washingtonpost.com/wp-dyn/content/article/2008/11/17/AR2008111702968.html

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