We call the system within which wealth operates capitalism, and money is its vehicle. Just as modern-day underground economies are based on whatever carries value for a particular culture – cigarettes, chocolate, chewing gum, liquor, pornography – ancient human societies also experimented with different materials to enable trade. Whatever could carry value was fair game: stones, shells, beads, copper bells, cotton, cotton cloaks, logs, salt (the root of the word salary), cacao seeds (mmm, chocolate), yams, tobacco, rice, almonds, corn, barley, tea, butter, beaver pelts, buckskins, whale teeth, dog teeth, dried fish. Even live animals, including reindeer, buffaloes, pigs, sheep, oxen, cattle (from the same root word as capital and chattel) and human slaves were used. Some were failures as currency, while others were such huge successes that they can still be found operating in some places today.
A commodity’s success as money depends on a number of factors: Is it the right size? Can it be easily carried, or is it easily lost? Are there differences inside the groupings that make them inherently too subjective? (Is a healthy runt piglet more valuable than a sickly large pig?) Are the items too abundant – or too rare? (Salt may be rare and therefore highly valued by one culture but common and ordinary in another.) Is it durable, or will it depreciate (die/mold) all on its own? Does it require much caretaking? Can it be worn or shown off to impress others? Can it be recycled into something of practical use?
Few commodities could pass all the tests, but metal passed with flying colors. Metal has practical uses and lasts longer than many other items, so it retains its value. Metal can be worn as jewelry or converted into tools or weaponry – and it can fit in your pockets. So by the third millennium BC, metal ingots of different colors, sizes and composition, including iron, bronze, copper, lead, tin, brass and silver, became the preferred means of exchange for goods in Egypt, Mesopotamia and China. One metal was exceptional in that it was beautiful (resembling the sun), widespread (but not overabundant), easily smelted and hardy, and did not rust, tarnish or fade. That metal was gold. Therefore gold – and to a lesser extent silver, resembling the moon – became the most common medium of exchange.
Some of the first coins were minted in Lydia between 640 and 630 BC, sparking a monetary revolution. Making coins the same size reduced cheating and controlled the amount of gold or silver being used in exchange. In order to further their ideology of autonomous citizenry, the Greeks at the time especially embraced this tokenization and standardization as a replacement for a tedious tribute system based on kinship, aristocracy and caste. The social impact was enormous, quickly allowing Greece to develop and establish itself as a great trading society. To trade with money required a new mindset, which quantified everything in terms of size, weight, age and worth; and their scientists and philosophers developed complicated mathematics to help. Soon this invention had everyone focused on the measure of things and gave birth to the age of materialism.
As capitalism evolved, so did its way of facilitating the means of production. It is not satisfied with just using tools; instead it takes the process much further – using tools to make better tools and organizing itself in ways that make tool-making easier. Then we organize the organizations for yet more productivity. In only the last decades have we seen further refinement, in that now we have multinational corporations that can build, dismantle and move factories at a moment’s notice. All this in order to facilitate wealth and consumption.
Capitalism depends on some fundamental rules in order to work. First is the belief in private property and that people are free to do as they please with their money. Second is wage labor, by which we can sell our time for a fixed payment. Third is the right of incorporation, whereby a business can operate as a legally independent entity. The last requirement is that we respect our currency as legal tender in order to standardize its value. By cooperating within this system, even as we compete with one another, we are able to collectively realize some important outcomes. By invoking competition and innovation (new technology), improved methods of production (through organized labor), and better information about supply and demand, capitalism becomes more and more geared to change society. Such change involves, for example, improvements in technology, transportation and communication, energy generation and even cultural / personal attitudes.
Nowadays, there is a complex myriad of institutions to manage wealth, and this web reaches to the far corners of, well, everything. How, in essence, does it work? To simplify, let’s use this example. Suppose one day, troubled by the fact that money in our pockets means there is less in someone else’s, we decide to reject the notion of a limited supply of money and instead create more by producing counterfeit money on our printer. How much should we make? a thousand dollars? a million? a billion? Soon we realize that there are limits, for if we make too much and put it in circulation, it won’t be long before people catch on and reject its implied value. It requires the confidence and cooperation of the population to make our scheme work. This is the exact same principle that our government, treasury, banks, funds, markets and corporations operate on today. It is a fine balancing act that they have in place to give, invest, lend and borrow money – all the while maintaining our confidence. They can do what they please, but it is finally up to us, not the numbers on the bills, to denote the value of our currency.
These financial arrangements add up to our capitalistic system, within which wealth exists and money circulates. They form the backbone of our society; they are as inescapable as food, air and communication. Money, to a large degree, is the way we experience the world we live in – and like the sea, it is indifferent to our suffering. The only way to survive in this growingly hostile situation is not to denounce money or to denounce those who seek it, but instead to find a healthy way to deal with it.Click here for reuse options!
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