For someone to make money, someone has to lose it

Updated: Sep 10, 2020

Originally written on August 18, 2019. Proofread by Mary Madeline and Hannah Buckner. Thanks to both.

Said a classmate in Intro To Ethics, Spring 2016. He confused money with wealth. I was surprised Dr. Hall didn't teach him the right concept.

Money was created to be spent. Just what else do you think you can do with it? When it is spent, the user receives goods of real value, such as a pair of shoes or an umbrella. The products and services an individual has at his disposal is the measure of his wealth, not the amount of money. A man who has a house, a car, a phone connection, land, electricity, and water arguably has more wealth than one with nothing but a ton of money.

People mistake money for wealth because they are brainwashed to think money has intrinsic value. The purpose of money was to oil the barter system. Sure, money represents potential but its potential depends on how much stuff is getting sold in the market. In times of drought, when there is no food, all money becomes worthless. Thus, production has value, not money. Money is merely a tool to quantifiably measure production. Money records how much work an individual has done for other members of society. His expenses record how much he has consumed from society. A nation that produces more than it consumes is healthy and can export the surplus, while one that consumes more gets poor.

Can a nation become wealthier without adding new money to the system (to incentivize new production)? Contrary to Keynesian economics, adding more money is unrelated to economic growth in the long-term.

Consider a primitive economy of two people, A & B. Give each 50 cents to begin out $1 economy. Now, A can pay B 50 cents to go catch a fish, while he grows a potato on B’s garden for 50 cents. At the end of the day, they have a fish and a potato. Over time, they develop. B can now catch 4 fish per day for the same 50 cents, while A has learned to grow 4 potatoes in the garden. At the end of the day, they have 4 fish and 4 potatoes to eat together, making our primitive society wealthier. Soon, A learns to domesticate cows and tills the ground to grow crops for the same 50 cents, while B learns to train dogs to hunt wild animals. At night, now they have more food than ever before. They can go on to create more and more wealth as they learn to make a fishing net and develop irrigation techniques. Thus, the secret to wealth is learning and innovation. Mind that our economy started with a mere $1.

The Keynesians argue that we need to add new more money to incentivize production. They say new money is needed to expand an economy but it is just about perception. If we had added more money to encourage A and B to produce more, we’d have debased the value of the original $1. Then, 4 fish would have cost A more than 50 cents, the increase being proportional to the amount of new money added. The truth is you can replace the initial $1 with a public ledger and nothing would change. The ledger would allow them to see who owes how much to whom. The economy would grow exactly how it did. Thus, we see that money is not needed to run an economy. It only measures production.

Why is it then forbidden knowledge? What makes you think that people would slave for money if they knew that money is just a measure of wealth. What makes you think that everyday citizens would rely on governments and banks? If the truth is openly told, every community will start its own system of record-keeping, as they once used to do before central banking began. Since a centralized record can allow the record keeper to misuse it, it is in their best interest to decentralize it. In simple words, they can just adopt their own currencies.

Imagine a society where free citizens make whatever products they want to make without even thinking of money. The society would have an abundance of everything. The carpenter would make unlimited furniture that anyone can take. The farmer would grow food without thinking of money and anyone can take it. The market would always have an oversupply of everything. People who don't want to work would have to be encouraged to follow whatever vocation they enjoy. Since production is wealth not money (as I demonstrated above), this is the only order to achieve maximum production, where people wake up every day to do the job they do best. Of course, I am not talking realistically. It is possible only if the nation has a wise king who can encourage people to work selflessly, and not become slaves to money. But governments won’t allow it. Without a centralized currency, they can't tax people. They absolutely won’t be able to debase it to rob people without their knowledge.

To sum it up, money is a lie. Production is the truth. A state becomes wealthy when people make products and services to satisfy needs and wants. We measure production in money just because we want to. We don't have to. We can always say that a state produced x million chairs, y million books, and z million tons of corn. However, it would be mighty inconvenient to account for the actual amounts of every product. I have no problem with money. It becomes a big deal when people think money is something real. They confuse inches with length (example inspired by Alan Watts). Length is real. Inch is just a scale of length. You can swap it for foot.

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