Re: The Economy Of Plenty

Lee Daniel Crocker (
Wed, 17 Sep 1997 10:44:04 -0700 (PDT)

> > I can see the attraction of a system such as you propose, but even if we
> > assume that you can make the transaction costs and accounting costs of
> > a complex barter system so small that instantly trading any commodity
> > is trivial, it's still not as useful as some forms of money.
> Money, here, is... what? Not the government-issued green stuff, I assume. A
> universal standard of exchange? Somebody accepting, up front, something they
> don't need because they know they can trade it for something else, as opposed
> to running a hidden cyclic debt cancellation through the barter nexus?

"Money" as I use it here is a measure of worth used by agreement among
traders that is specifically /not/ tied to real commodities. To be useful,
it must be fictional. Government fiat is one (bad) way to do that; private
currencies issued by financial institutions (or wealthy individuals) is a
better one. What makes it "money" is complete lack of intrinsic value.

> Money is also decoupled from reality. Which institutions will survive and
> prosper; the ones that actually invest X to produce Y, or the ones that take
> your money and promise you a 7% return? At some point somebody has to use
> your widgets, or something you traded your widgets for, to produce additional
> wealth. If widgets can't be used to produce wealth, then investing widgets
> will not produce a 7% return. If widgets can be used to make hamburgers, why
> the whole fuss about units of exchange? Send the guy widgets and trade your
> hamburgers to a doctor for medical care!
> As far as I can tell, what you're saying is: "Well, if you abstract away the
> process of creating wealth into investing in a 'bank' and getting 7% back,
> then you need money." But why abstract the process of wealth creation, with
> attendant inefficiency and information loss? Getting *away* from that is what
> complex barter is all about!

Yes, money hides information; that's one valuable use for it. Money also
/is/ information, which is another. It is also data compression, which
makes transactions /more/ efficient, not less.

Your system of encrypted cyclic debt cancellation works fine for the
ordinary transactions of producing stuff, buying stuff, consuming stuff.
But let's say I wanted to tell someone what I'm "worth", to mortgage
a house, get a credit card, propose marriage, or something. In your
economy, she'd have to ask something like "how many widgets could you
buy with ready cash?", and the network would go hunting for trades--
without actually executing them--until it simulated trading everything
I own for widgets, and report that count. But what if she asked in
terms of gadgets instead, and for some reason the gadget supply was
unexpected reduced by an accident at the biggest factory. She'd get a
smaller number because gadgets would have gone up in price, and she
wouldn't know how to interpret that.

It is a common myth that only the production of real goods and services
expands the economy. Simplifying the /methods/ of trade also grows
the economy. Making it easier for Joe Blow to buy a TV by issuing
him a credit card grows the economy, whether or not anyone produces
a TV and whether or not he actually buys one. Making it easier for
him to start a business does the same thing. "Money" is one invention
that makes those things easier, simpler, more efficient. By decoupling
money from real things, it is insulated from the attendant unpredictable
nature of real things.

Lee Daniel Crocker <> <>
"All inventions or works of authorship original to me, herein and past,
are placed irrevocably in the public domain, and may be used or modified
for any purpose, without permission, attribution, or notification."--LDC