Five years ago, I started working on a documentary about money called THE MONEY FIX.  At the time, I had no idea how much I didn’t know about money.  It seemed to me that most of our societies woes could be traced to excessive pursuit of money.  Why do we deplete our resource?  To make money.  Why do we treat workers poorly?  To make money.  So what was it about money that seemed to bring out the worst in us?

I spent the first six months of pre-production trying to get a handle on the three questions I wanted to explore in the film.  What is money?  Where does it come from?  How does the design of our monetary system affect our lives?  Truth be told, today, after four and a half years of exploring these questions full time, I have learned how much more there still is to learn.  There is a lot we don’t know (economics is less a science than a belief system), but there are some things we do know.  In this article I want to share a few major insights I have had so far.  

When we think of money, most of us have a mental picture of it as being similar to water.  Water is tangible.  If you have it and give it to someone else, you do not have it anymore.  Our daily experience of money is much the same.  We go to work and get it, we spend it, and we have to go back to work to get more of it.  When we make a purchase using a debit card, we imagine the money leaving our bank account and flowing into the bank account of the vendor.  Despite our daily experiences that seem to confirm this mental picture of money, at a very fundamental level, this picture is utterly inaccurate.  

Because we have a conception of money as being a tangible thing, we usually accept without question the lack of money as being a justification for a lack of economic interaction.  For instance, an employer can’t hire a new worker because they don’t have the money, or a social program is cut because the government doesn’t have the money, or we forgo eating organic produce because it is too expensive.  

What if money were more like language than a tangible thing?  Let’s consider a thought experiment.  A traveling salesman arrives in a small town one night.  He finds his way to the local bed and breakfast and upon checking in, asks the proprietor to put a hundred dollar bill he is carrying in the safe.  The proprietor obliges, and the next morning, the salesman goes out to make his rounds in the town.  Meanwhile, since the proprietor owes a hundred dollars to the local dentist, and has had little luck collecting a debt owed him, he soon gives into temptation, and takes the bill to pay off his debt.  The dentist is relieved as well since he can now pay off the hundred dollar tab he ran up at the local bar.  The bar tender takes the hundred dollars and pays off his debt with the taylor.  And the taylor uses the money to pay back his debt to the bed and breakfast.  When the salesman leaves the next day, the proprietor is able to return his money to him, and he is never the wiser.  

Now, the real question is: did the towns people actually need the hundred dollar bill to settle their debts?  Could they have settled their debts by simply keeping track of who owed who what?  And how would they have kept track of their respective debts, if not by writing them down?  Contrary to popular perception, almost every culture that developed the written word, originally developed it as way of keeping accounts.  These systems were similar to what would have enabled the towns people to settle their debts.

When we think of money as a tangible commodity, we run into the problem the townspeople had in our thought experiment.  There either isn’t enough of it to enable the transactions we want to make, or it is in the wrong place at the wrong time.  Either way, money as a commodity is scarce.

So what is the true nature of money?  Money is simply a claim on goods or services from a given group of people.  A collectively accepted promise.  An acknowledgement of value.  You did something that I value, and in exchange I promise to provide something of equivalent value to someone else in our community.  Meanwhile, you can use that promise (or written acknowledgement) to obtain something you want.  In today’s world, the system of promises that underlies “legal tender” is entirely monopolized by the banking system.  And, given our current economic situation, it is also clear that the banking system has not done a terribly good job in deciding whose promises are trustworthy.  

However, far more important than whether or not banks have performed well as the arbiters of trust, is the fact that we all have the innate capacity to issue and redeem acknowledgements of value as we choose.  This is an inalienable right in the same way that the right to free speech is an inalienable right.  

Think of it this way: within any group of people, they way resources are allocated are up to the people involved.  If the group is large enough to have some degree of anonymity among its members, it may require some sort of way of “keeping score.”  In other words, what behaviors does the group want to count and value accordingly?  

In the context of our global economy, banks decide how to count value, since they are the ones who issue the money.  And, the way they count value is by valuing that which can bring in the most profit.  I think it goes without saying that profitability is only way way we can measure value.  There are countless other ways to count value, most of which have nothing to do with profitability.  The rules by which we collectively agree to count what we value is what constitutes a “currency.”  

In the developed world, we tend to vehemently protect the right to free speech.  Anyone can generate any new idea and share it with their fellow citizens, and the government cannot pass any law that impairs this basic human capacity.  Think of free speech as an “idea commons” that anyone can contribute to in any capacity that they choose.  If free speech is an “idea commons,” what about the “value commons?”  How we count what we value has been and always will be up to us.  Should we be using a measuring tool that is inherently scarce, or should we empower ourselves by counting value as we choose, and distributing resources accordingly?

I would not presume to say what the “right” way to count value is.  How a community chooses to count value will depend on the values, needs, and culture of that community.   However, it is up to us to recognize that we have the capacity to decide for ourselves how we count value.  The measuring sticks need not be scarce.  If we value a contribution, we shouldn’t have to wait for the money to manifest it. 

http://www.themoneyfix.org/

The Money Fix a film by Alan Rosenblith on this topic will be screening November 23rd at the East 6th Street Community Center with Skype Filmmaker Q&A afterwards.  See Souldish NYC events Calendar for details.

Trailer: http://www.youtube.com/watch?v=trl5_BCL0qs

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