Wednesday, October 27, 2010


A simple idea that many people don’t fully comprehend.

Money represents willingness of other people to provide you with necessary things, while you provide them with some kind of service or product that they value. Let’s say you paint. Professionally. You create beautiful works of art. But you’re poor, because people do not appreciate your art. “Ugh,” exclaim some people, “to measure art in dollars and cents!” Well, it’s not really the art per se that is being measured. What is being measured is willingness of other people to grow your food, obtain and transfer electricity to your home, provide you with housing, make clothes for you, assemble together cars, computers, and iPods (not to mention make easels, brushes, paper and paints) for you — all in exchange of your creating your paintings. And people may just be unwilling to do that.

See, I may value my neighbor’s paintings. I may value them very much. But I may still be unwilling to cook for him, do his laundry, cut his grass, and educate his kids so that he can be free to paint and maybe give me one of his paintings. Sorry. There are things that I can do during the day that I value more.

This is what society is all about, in the end. The ultimate value of society is division of labor. I grow food. You chop wood. He makes tools. She makes clothes. Then we exchange them. Instead of each of us growing his own food, chopping his own wood, making his own clothes, etc. That way each person can focus on doing whatever he wants to do or can do best. Or what is more demanded or valued at the time. Or what is less supplied at the time. All of which is measured (in a market society) in money.

Money is merely a medium for exchange of the services that different members of society provide for each other. There is nothing inherently dirty, ugly, or nasty about it; no more than there is anything inherently nasty about one person doing a favor to someone in exchange for another favor.

(And just like services can be done for free, just like products can be given as gifts, money can be given as a gift too. There is nothing “not nice” about that. You’re merely giving a choice to your friend which of the products or services of the society to select from for himself.)

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