Merged A Thread for AlexPontik to Explain his Ideas

[HansMustermann]

Actually, I'm saying that Egypt did just that: it only transmitted value by actually transferring physical items. See my previous example where I'd buy a high-end slave by actually giving the other guy a cartload of stuff which he may not immediately need, and some of which I may have gotten without immediately needing. Like maybe I got that fine rug worth 5 deben because someone bought grain worth 5 deben from me (which would be a lot of grain) to feed his workers for his family tomb, and the rug was the only thing he had to give.

... Well... except for debt, which also was a thing. You could buy or sell on debt. Just get the nearest scribe, have an IOU authenticated, and there you go.

The caveat being that if you couldn't pay, you'd be sold into slavery. That was pretty much their main source of slaves during the Old and Middle Kingdom era. And given that an estimated as high as 80% of the population were slaves, yeah, they took it seriously. So I guess you'd have an incentive to pay up with anything you can, if you can.

And before someone goes, "well, IOU notes are a kind of money, innit?", you wouldn't have most of the economy running on IOU notes, because your credit limit was basically how much YOU are worth as a slave. For most people that wasn't a whole lot. In fact, we have actual documentary evidence that some people were worth a NEGATIVE value, presumably due to all the Ma'at rules that said you have to treat your slaves well, feed them a certain amount, take care of their kids, etc. So it was possible for someone to basically not be worth that expense, hence, they'd actually need to pay you to take them as a slave

Again, I'm not saying it's the best system or anything. I can see where you're coming from, and yeah, I wouldn't want to return to the days where I'd carry a big sack of grain to the market instead of a plastic card.

Just saying that you'd be surprised what people managed to make work, even if it seems utterly impracticable for people like you or me, raised in the comfort of the modern era.

 

[Roger Ramjets]

Do you really believe that only people in a capitalist economy go to extreme lengths to amass as much as they can?

No, I'm saying that only in a capitalist economy do people try to amass as much money as they can. When someone tries to amass as much of some item as they can to the point where they have way more than they need or can use, we call them a hoarder - and point to their sad life. But when the item is money, we call them rich - and envy them (maybe not all of us - I have seen closeup how destructive too much money can be to the holder).

The problem with capitalism is that it rewards hoarders of money, and makes people think that having as much money as possible is a worthwhile goal. This distorts the market (the very thing that Capitalism is supposed to prevent!), favoring those who think money itself is more important than the people who created the wealth. Recent events have shown starkly how capitalists make bad decisions due to valuing money over people.

any economy which involves money has people who amass as much as they can, and even those which don't will suffer from the same symptom.

Not true. Only capitalist economies have this problem.

That's because, as you pointed out elsewhere, the human race in general is selfish and greedy.

Not sure where I was supposed to have said that, but a lot of human behavior is learned. If people are rewarded for being selfish and greedy many will be, and if those who aren't are marginalized then selfish greed will rule.

But it doesn't have to be this way. Lately it has become obvious that only a minority think that way - a minority who are trying to push their lifestyle of selfish greed onto the rest of us. And many of us are now realizing that we don't have to be like them, and we don't have to put up with it.

 

[xjx388]

People always want to amass whatever it is that gives them the ability to live as freely in a given society as possible. “How can I have the freedom to make my own choices?” The answer to that question is what people strive for. Maybe that’s “honor” or land or political power or money. But it’s always something.

Demonize money all you want, but it’s really just a symbol for the basic human desire to be free.

 

[Matthew Ellard]

"It just makes things a lot easier, and that is about it" is what I argue as well.

It would be better to say money allows for more efficient trade. Direct barter trade, exchanges specific items, with unique demand desirability to those participating in the barter. Money, however is transferable to purchase any items valued according to the entire economy's demand / price curve. The ability to use money's transfer-ability to purchase any item increases to ability to trade faster and also purchase substitute items. This is why money, in economics, is said to have velocity. and allow for increase in efficiency through substitution.

Velocity of money
https://www.econlib.org/archives/2009/11/what_is_money_v.html

 

[psionl0]

Well, I wouldn't say it's a necessity strictly speaking, seein' as fairly advanced ancient societies managed to work perfectly well before the invention of actual money. Actual currency came VERY late after cities and trade, as in literally thousands of years later. And Egypt managed to work perfectly fine and be an economic powerhouse without using currency internally, even after they were minting coins for foreign trade.

Are you arguing that these "fairly advanced ancient societies" existed on barter alone before the invention of money or are you just using a narrow definition of money?

In the Egyptian example, my understanding is that people who delivered grain to the warehouses got receipts marked on shards of pottery which they could use to buy other things. If that isn't money then I don't know what is.

 

[StillSleepy]

Actually, Ramjets talking about hoarding money makes another point in that money, particularly in it's abstract form, can be used to store value to use for later, and to allow value to be transferred without any specific material limitations attached (besides the materials the transaction is recorded on). I'm not sure I would want to invest 30 cows at once against someone trying to build a new house where I would eventually receive 33 cows back.

 

[The Great Zaganza]

Are you arguing that these "fairly advanced ancient societies" existed on barter alone before the invention of money or are you just using a narrow definition of money?

In the Egyptian example, my understanding is that people who delivered grain to the warehouses got receipts marked on shards of pottery which they could use to buy other things. If that isn't money then I don't know what is.

that is credit, which isn't the same as money.

 

[StillSleepy]

There were various tokens in use in the Gezira, each kind seems to have been used to exchange something different. Similar tokens are known from Naqadan sites from 3500-3000 BC. The exchange for something different part is what makes them not true money, but tokens.

 

[HansMustermann]

Are you arguing that these "fairly advanced ancient societies" existed on barter alone before the invention of money or are you just using a narrow definition of money?

In the Egyptian example, my understanding is that people who delivered grain to the warehouses got receipts marked on shards of pottery which they could use to buy other things. If that isn't money then I don't know what is.

That was your receipt that you actually own that much grain in the silo. If you give that token to someone else, then now they own that grain, and can go withdraw it from the silo. Essentially you did exchange an actual good, not money, just without the overhead of actually carting it to the buyer yourself. Who would then go cart it back in the silo in his own name, if you did, because that's how they stored it.

 

[Roger Ramjets]

Demonize money all you want, but it’s really just a symbol for the basic human desire to be free.

I'm not demonizing money. Money is a useful invention. But like most human inventions, it can be abused. You say that money is a 'symbol' of a desire to be free, but for most it is a symbol of slavery.

In a free world I could take whatever I wanted from it. But in a world with money everything has a price, and someone 'owns' it. So if I want something I have to earn money to pay for it. And while I am earning the money I am a slave to whoever is paying me.

So after earning some money I am now 'free' to buy something with it - which is why it is a 'symbol for the basic human desire to be free'. But if money is freedom then whenever I spend it I become less free. So I strive to earn even more money to become freer, becoming a slave to money.

But when you have a lot of money you are free - free to make other people into slaves. You can force them to do your bidding because if they don't they won't get any money. So money becomes power. Now the people with the money make even more money and get more power, and their decisions decide what happens to all the others who have to do what the rich tell them.

The rich are constantly making decisions based on whether it makes them richer or poorer (because even though they are 'free', they are still slaves to money). So an epidemic hits and the rich immediately think about what it might do to their money. The correct response is to isolate everybody until the virus is contained. But this will reduce economic activity and threaten the short-term value of their investments, so naturally they lobby the government to let people die instead - which they have the power to do because the politicians are in their pockets.

But it's not just viruses that the rich make bad decisions about. They also oppose environmental regulations, because making money is more important than having a healthy world. They avoid paying tax, bust unions, remove social safety nets, restrict education and run down hospitals. They support corrupt dictatorships and finance wars and even make the weapons that kill people - all so they can get more 'freedom' (aka money).

Anyone who dares to doubt this path to 'freedom' is vilified, and anyone who tries to take without paying is kneed in the neck until dead. Finally, when a population ravaged by disease and poverty rises up against them, they retire to their bunkers to contemplate the 'puzzle' of how they can be rich and yet not free.

 

[psionl0]

that is credit, which isn't the same as money.

There were various tokens in use in the Gezira, each kind seems to have been used to exchange something different. Similar tokens are known from Naqadan sites from 3500-3000 BC. The exchange for something different part is what makes them not true money, but tokens.

I think that you two are using an unnecessarily restrictive definition of money. They were mediums of exchange which makes them money. They may not have been quite as fungible as later forms of money but money was evolving.

If these societies had to rely on barter alone for internal trade then they could not have become "fairly advanced".

That was your receipt that you actually own that much grain in the silo. If you give that token to someone else, then now they own that grain, and can go withdraw it from the silo. Essentially you did exchange an actual good, not money, just without the overhead of actually carting it to the buyer yourself. Who would then go cart it back in the silo in his own name, if you did, because that's how they stored it.

So what? A Treasury note used to be a receipt that you actually own that much gold in the Treasury. Nobody said it wasn't "money" in those days.

 

[The Great Zaganza]

Barter was never a significant thing.

 

[psionl0]

Barter was never a significant thing.

That leaves us with the illogical position that there was a time when trade without barter or money existed.

I don't understand why you think credit is not money. Since the end of the gold standard (when money was believed to be based on something of "value") all money is just credit. Federal Reserve notes may have value by decree or "fiat" but they appear on the liability side of the Fed balance sheet and the Fed has to pay interest to the Treasury for these notes.

 

[The Great Zaganza]

That leaves us with the illogical position that there was a time when trade without barter or money existed.

Historically, trade for anything but luxury goods was never much of a thing, either.
The grain shipments from Egypt to Rome were a tax, not a trade, for example.

I don't understand why you think credit is not money. Since the end of the gold standard (when money was believed to be based on something of "value") all money is just credit. Federal Reserve notes may have value by decree or "fiat" but they appear on the liability side of the Fed balance sheet and the Fed has to pay interest to the Treasury for these notes.

You can make the argument that nowadays money and credit are the same, but before the rise of central banks they were quite different.

 

[psionl0]

You can make the argument that nowadays money and credit are the same, but before the rise of central banks they were quite different.

You are still complicating the definition of money. Money is just a medium of exchange. It is something that a product is exchanged for which in turn then gets exchanged for another product.

Money may have evolved to the point where we don't even need tokens to represent it anymore but that doesn't mean that earlier forms of money weren't money.

 

[HansMustermann]

The problem with extending the definition that much is that then every single product ever exchanged for another product becomes "money." E.g., in certain places in Eastern Europe, people would often exchange houses, rather than sell it and buy another one. Then in your extended definition, a house becomes "money" too.

 

[HansMustermann]

Historically, trade for anything but luxury goods was never much of a thing, either.
The grain shipments from Egypt to Rome were a tax, not a trade, for example.

That is actually incorrect. Probably the most major trade network of the bronze age was for tin, with a secondary focus on weapon-grade copper. (I.e., copper with arsenic content, which makes the bronze significantly harder.) That's expensive, I'll grant you, but it's hardly what you'd call a luxury good. The purpose wasn't to have some status symbol or whatnot, but to have a functional high quality weapon for warfare. It's the equivalent of importing tungsten for AP ammo in WW2.

Wood from Lebanon was also one of Egypt's top imports, if not THE top one. There was nothing "luxury" about it. You couldn't make a navy out of local gnarly acacia trees, nor really much else that needed good wood. It was basically raw material import too. The WW2 equivalent might be something like importing nickel for warship armour. (Incidentally it was actually a thing. Relationship between Germany and the USSR started to sour over who gets Finland in its sphere of influence, long before Barbarossa. The reason being that Germany discovered that it kinda needs nickel from Finland.)

Another import seems to have been emery, which was used to cut or drill holes in hard stone. And Egypt cut whole lot of stones -- hell, it's practically FAMOUS for cutting and hauling a lot of stone -- and drilled holes in even more. Even door hinges were made by drilling a hole in a piece of stone, rather than out of metal, which was far more expensive. Even vases and whatnot were quite routinely fashioned out of rock. And I don't mean as in cooked "stoneware." I mean they'd actually take a stone and drill a hole in it. Crushed emery was hard enough to abrade even the hardest rocks, so you needed a steady supply of it. So again, it's not luxury, it's the equivalent of importing tungsten for drill bits nowadays.

Even in the iron age, metallurgy was not what it is today, and metal from different parts of the world had WILDLY different properties. Read Pliny for how wide a range of qualities it could have, and some was utter crap for anything that needs a hard metal. They didn't understand exactly WHY it was different, and sure as heck had no idea how to improve it. So they just traded for the good stuff. Noricum for example had some of the finest iron, which is part of the reason why Rome ends up in a major war to defend it.

Mind you, luxury stuff was widely traded too, but it wasn't the alpha and omega.

 

[psionl0]

The problem with extending the definition that much is that then every single product ever exchanged for another product becomes "money." E.g., in certain places in Eastern Europe, people would often exchange houses, rather than sell it and buy another one. Then in your extended definition, a house becomes "money" too.

Exchanging a house for a house is just barter. No medium of exchange is involved.

 

[xjx388]

I'm not demonizing money. Money is a useful invention. But like most human inventions, it can be abused. You say that money is a 'symbol' of a desire to be free, but for most it is a symbol of slavery.

In a free world I could take whatever I wanted from it. But in a world with money everything has a price, and someone 'owns' it. So if I want something I have to earn money to pay for it. And while I am earning the money I am a slave to whoever is paying me.

So after earning some money I am now 'free' to buy something with it - which is why it is a 'symbol for the basic human desire to be free'. But if money is freedom then whenever I spend it I become less free. So I strive to earn even more money to become freer, becoming a slave to money.

But when you have a lot of money you are free - free to make other people into slaves. You can force them to do your bidding because if they don't they won't get any money. So money becomes power. Now the people with the money make even more money and get more power, and their decisions decide what happens to all the others who have to do what the rich tell them.

The rich are constantly making decisions based on whether it makes them richer or poorer (because even though they are 'free', they are still slaves to money). So an epidemic hits and the rich immediately think about what it might do to their money. The correct response is to isolate everybody until the virus is contained. But this will reduce economic activity and threaten the short-term value of their investments, so naturally they lobby the government to let people die instead - which they have the power to do because the politicians are in their pockets.

But it's not just viruses that the rich make bad decisions about. They also oppose environmental regulations, because making money is more important than having a healthy world. They avoid paying tax, bust unions, remove social safety nets, restrict education and run down hospitals. They support corrupt dictatorships and finance wars and even make the weapons that kill people - all so they can get more 'freedom' (aka money).

Anyone who dares to doubt this path to 'freedom' is vilified, and anyone who tries to take without paying is kneed in the neck until dead. Finally, when a population ravaged by disease and poverty rises up against them, they retire to their bunkers to contemplate the 'puzzle' of how they can be rich and yet not free.

Well, I didn’t say money was the be all end all of freedom. Like humanity itself, money is imperfect.

 

[HansMustermann]

Exchanging a house for a house is just barter. No medium of exchange is involved.

Yes, but what you have there then is special pleading. In both cases you only exchange a deed, i.e., token of ownership. You don't haul the house onto a truck and give it to the other guy, either. What you exchange are basically just some pieces of paper saying you own house A now, and the other guy now owns house B.

Yet apparently according to you, one of them is money, the other is not. For no obvious reason.

So how's it different enough when you exchange a token for a sack of grain from when you exchange a token for a house? Exactly what makes the former money, but the latter not money, according to you?

To make it clear, the token for the grain wasn't some kind of bond backed by government grain. It was a receipt that you physically own a sack of grain, and it's stored for you in the city granary. But you actually own it. It's not some conversion that you might or might not make. It says that physically there is a sack of grain there that you brought there for storage, but otherwise still own just the same as if it were in your own barn.