Sunday, November 11, 2012

Economics for Occupiers Pt. 2: Money

One of the basic problems with the Occupy movement - and anyone who's suspicious of Capitalism on general principle - is that they don't understand money.  In part 1 of this series, we looked at a simple barter economy and showed that as products and markets are added to an economy, the complexity of the economic system expands exponentially. In our example, the basic unit of trade was simply vegetables and meat, which everybody apparently had a demand for. As a way of measuring wealth in a complex economy, vegetables and meat make poor mediums of exchange, because they're hard to transport and are impermanent – they don’t last.

A medium of exchange must have several features. It must be relatively small. It must be something difficult to acquire by the average person. It must be universally recognized for its value. Since recorded history, precious metals – notably gold and silver – have filled these requirements. A weight of gold or silver had an agreed value, and all commodities in an economy could be valued by an amount of gold or silver. In our part 1 example, it was no longer necessary to keep tabs on how many vegetables could be traded for a quantity of meat, or how much dung could be traded for fertilizer.  Participants in an economy longer needed to acquire goods for which they had no use except to use as trading material to get what they did want.

Money is not evil, nor is it the root of all evil.  The love of money is not the root of all evil, as will be demonstrated in future articles.  Money is a contract of trust between honest men. Only when dishonest people attempt to pervert money to enrich themselves without exchanging value does money take the appearance of evil.  But money is only as evil as those who trade it, and the market will eventually punish those who abuse the honesty represented by money.

Read more about this in chapter 3 of Economic for Occupiers, now available on

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