Why money really is the problem

It's often said that money is the root of all evil. I don't believe that money is the root of evil. I think that has more to do with fear and trauma. However I do believe that the way money works inherently incentivizes greed and therefore evil acts. 

Let's start off with some basic rules of economics. One of the most fundamental ideas in the field of economics is that of supply and demand. The less supply of something there is, generally the more demand for that thing there is, and vice versa. This is important because when an item its more scare (hard to get a hold of) there is more demand for it, which means you can charge more money for that item. This idea is the entire basis of how money works. As a society we arbitrarily decide the monetary worth of an item. The price of that item then fluctuates based on how much supply there is vs how much demand there is. Production and supply chain costs also go into the cost of an item but that is a topic for a different post.

Before we move on let’s define artificial scarcity. Let’s use corn as an example. In a normal circumstance there may be a scarcity (low amount) of corn due to a drought, pests, or diseases. This means there is not enough corn for everyone to eat. This creates an issue in determining who should receive what corn there is. Money aims to solve this problem by determining the worth of corn and letting those with money buy it. Those with more money have a better chance of securing food when there is a shortage. In a perfect world people are proportionately rewarded money based on the amount of work they do. This way no one is freeloading and everyone is required to contribute to society. 

Artificial scarcity is when there is plenty of corn for everyone but the farmer who owns the corn decides to pretend like there is a low amount so that he can charge more for his corn. He tells everyone there is a shortage of corn and that is why he has to increase his price, despite that fact that in reality there is plenty of corn for everyone. This way the farmer earns more money for each ear of corn he sells. With this increased profit he can buy more land to grow more corn and therefore he owns a larger share of the amount of corn produced. Since he now owns a larger share of the corn produced he can make that corn more artificially scarce by providing less of it to people. This lets him increase the price of his corn even more, meaning he earns more money. With more money he can buy more land to grow more corn. This process repeats itself.

What we learn from the above example though is that by operating off a monetary system based on supply and demand, we incentivize people to make things artificially scarce so that they can charge more money for them. With some items, like diamonds for example, an artificial scarcity that leads to extremely high prices doesn’t really negatively affect most people’s day to day life. People can live without diamonds. They are a want not a need. However with other items like, clean water for example, artificial scarcity and high prices can make life extremely difficult. There are things that people can’t live without, as in they will die if they don’t have them. This list includes things like food, water, shelter, healthcare, and land (to gather resources and build your shelter), among other things. Evil people realized that no matter how scarce these resources are, people will still pay any price for them since they are essential for not dying. This means that Evil (usually rich and powerful) people try as hard as they can to make these resources as scarce as possible so that they can charge as much money as they can for them. 

One of the big issues with this idea is in the way that we determine who gets resources when they are scarce. Our current currency system determines that every item has an arbitrary monetary value based on supply and demand. When people need an item they must pay the arbitrary monetary value for it. This includes essential items like food, water, shelter, etc. However this doesn’t have to be the way we determine who gets scarce resources.  We could instead subdivide items so that everyone gets a small amount of them. Or we could do a needs based system where whoever needs the item the most has a higher priority. For more parity we could also use a raffle system where everyone is assigned a random number. We could then draw random numbers out of a hat to determine who receives the scarce item. I am sure there a litany of other solutions that could work as well that I haven’t mentioned. I know this can be confusing so let’s use an example to illustrate.

Let’s say there is a town of 100 people called Townsville. One winter everyone in Townsville comes down with a mild sickness that gives them a headache for one day. John is the town pharmacist and only has a supply of 50 headache pills. Under a money based system John would arbitrarily decide how much he thinks people would pay for the pills and then he would sell them to people who can buy them. The more people who need the pills the more he can charge for an individual pill. Under this system, even if John had 100 pills (enough for every patient), it would be beneficial to him to hide or destroy some of the existing pills so that he could charge more for the leftovers. This is how money incentivizes greed and evil. It is more beneficial to John to ration the pills for a higher price rather than to meet everyone’s needs. 

Now let’s say we are in the same situation, but operating outside of a money based system. There is still a town of 100 people called Townsville. There is still a sickness giving headaches to every resident. There is still one pharmacist named John who has 50 pills. However this time John decides to try and meet the needs of every resident. He has a few options. He could subdivide the pills. Each of the 50 pills would be split in half so that every resident can receive half of a headache pill for at least partial relief. John could also do a needs based system. He would look at who has a medical history of migraines and headaches and he would determine that those people would be prioritized first. If John wanted to be more egalitarian he could also do a raffle system where he assigns a random number 1 through 100 to each resident of Townsville. John would then write each number 1 through 100 on piece of paper and jumble them up in a hat. John could then randomly select 50 numbers from the hat to decide who receives the headache pills. 

More often than not in real life there is plenty of resources for everyone. Resources are just made artificially scarce in order to drive profits. This is what leads to colonialism, racism, terrorism, armed conflicts, government coups, global warming, pollution, etc. I know this seems like a stretch but let me explain.

Imagine you live in a far off land named Europe where all of the land and resources are already owned by Kings and Queens with big militaries. You see that the Kings and Queens are rich and live extremely lavish lifestyles and you want the same thing. However you realize that you can’t compete with the Kings and Queens in Europe. They have big armies and loyal followings. Instead you decide to extract resources from other far flung lands (The Americas, Africa, India, etc.) where the native people can’t compete with your military force (or your diseases), and thus you can subjugate them and force them to extract resources for you that you can sell to people back in Europe. This is how we get colonialism. (There were too many powers in Europe competing for resources so people started looking for other places they could horde resources and make money. This is a very oversimplified explanation.)

You find a good piece of land to get resources from. A country named Victima. However you know, and other people know, that murdering people in that country and enslaving them so you can steal their resources is bad. So you have to come up with a way to justify it. So you start saying that the people you are stealing the land from are born evil and stupid and that they deserve to be enslaved and have their land taken. (This is what racism is. A way to justify stealing resources from other people.) If you believe the people you are murdering, enslaving, and stealing from are inherently evil (at least you tell yourself that) then you don’t feel so bad about committing unspeakable acts of cruelty against them. In order to keep control of the land you’ve claimed, you form a new country called Capitalismo and install a puppet government that obeys you. Again this is all in the name of gathering resources so you can sell them to people in order to make money. Money that you can use to secure more resources that you can then make more scarce in order to sell them for higher prices to make more money.

It’s 20 years in the future and you’ve been living good since exploiting Capitalismo for resources. However the people of the country are getting tired of living in poverty and struggling to attain basic resources so they organize a Coup. They overthrow your government and put in their own leader who works for the benefit of the people. This makes you (as well as all of your foreign investors) extremely mad because it messes with your supply of resources and money. Because of this you and your foreign investors organize an assassination to remove the new leader of Capitalismo. This is in order to put in someone who will obey you again. This leads to a cycle of Coups and counter Coups which destabilize the country and create a power vacuum for crime syndicates to find power in. Your puppet government is finally installed but you are much weaker than before because crime syndicates have taken power as well. You are now competing with the crime syndicates for control of the country’s resources. The instability of the country and constant fighting has also led a large number of the countries citizens to flee in order to find refuge in richer, more stable countries that offer the dream of freedom, safety, and autonomy your citizens can no longer find in Capitalismo. This leads to Migrant crises in a number of countries. 

This anecdote could be an entire book that goes in to nearly every problem we face in our modern societies. The point I am trying to make is that the currency system we use is inherently flawed. It rewards people for being greedy and cruel and we need to re-think how we interact with one another. Instead of having the mentality that everyone owes us for every item and service we provide for them we should instead think of how we can meet our own needs and then how we can fulfill the needs of others. There are many alternatives to money. Library economies are one idea that comes to mind. Everyone in a community shares scarce resources that are seldom used such as tools. The community has a shared space for these items where people can check them out and borrow them for a pre-determined period of time similar to how books are rented from a library. We could also operate off of favors instead of money. If you help me fix my car I help you paint your house. 

We could also move away from the idea of debts all together. We could just help one another because when people’s needs are met they can help meet other’s needs. Here’s another anecdote (I know I’ve used a bunch already but stick with me). Imagine you’re stuck in the woods with 9 friends and you need shelter (ignore food and water for right now). If everyone worked together to build a shelter all 10 of you would have a shelter to share the first night in the woods. It would be cramped but at least you would have shelter. If you all worked together again the next day to build a second shelter suddenly you would only be cramped in a shelter with 5 people instead of 10 and everyone would still have shelter. If you continued to do this each day until everyone had a shelter, everyone’s living conditions would get exponentially better in a matter of a few days. If people decided to work together instead of against each other we could easily meet everyone’s needs. However this is idealistic because there are always some greedy people out there unfortunately.

At the end of the day money is a made up concept. We only abide by it because we are forced to by societal pressures as well as coercion from people with more weapons than us. If we as a society really wanted to we could choose to operate outside of money and in this way we could hopefully escape colonialism, racism, pollution, and exploitation. If we do one decide to do this now that its will be a fight. Those in power will not easily give up their command of people, resources, and money.