Now that the government has shut down (and I’m not going to go into the stupid reason for that), the federal money spigot has been turned off again. As we know from the past, it is definitely a big inconvenience for some, but it is not the end of the world. Some who work in critical areas are working without pay with a good bit of confidence that they will receive back pay when a new budget passes. Those working paycheck to paycheck and making multiple time payments have to hope that their creditors also believe in the good faith and credit of the US government.
While we’re talking about good faith and credit, we should realize that for almost fifty years, the value of our money itself has been based solely on faith. After World War II, the Bretton Woods agreement solved the global currency exchange problem by making the US dollar the reserve currency by which all other currencies would be valued. The US dollar itself, however, had a fixed value based on the value of gold. In the 50’s, a lot was said about “all the gold in Fort Knox” because we had to have a lot of it to back up all the dollars in the world. In 1971, with our expenses in Viet Nam among other things, the world’s faith in the dollar was shaken and a number of countries were exchanging their dollars for the gold that supposedly backed them up. There was clearly not enough gold in Fort Knox to back up every dollar, and everybody more or less knew by then that their dollars were mostly backed up by the good faith and credit of the US government. By abandoning the gold standard in 1971, Nixon was merely confirming the obvious that the supply of US dollars had long since outgrown our gold supply.
Money is after all only paper, or nowadays, a blip in a digital memory. With the shutdown, the federal government has now dispensed temporarily with the paper and the blip, the latter in so far as it can no longer be exchanged for real goods. For the time being, nothing catastrophic has happened. In light of all this, I thought I would like to explore a little thought experiment: What would happen if we dispensed with money althogether? What would still function and what would not?
In the short term, I think we could safely say that the modern global economy would devolve into unimaginable chaos. However, it wouldn’t be because goods and services could not be supplied. All the muscle, knowledge, and wherewithal would still be there just as it was the day before. The problem would be that nobody would be willing to exchange what they have unless they were sure that they could then get what they need. One group would be out of business—the people whose business is money. That would not be a great loss in my mind. Our system is highly skewed towards the money handlers. A person who makes money with money produces no goods or services (other than letting you use their money for a while) yet their income far exceeds what a person can earn by working. I won’t go so far as to say that we can live totally without them, but they need to be more regulated and their capital gains need to be taxed much more heavily.
Marx envisioned an economy where all gave what they could and received what they needed from the government without the need of money. I’m not sure that human beings are capable of that level of trust and good will, and the concentration of power required to allocate all those resources would corrupt the allocators. George Orwell had a good fix on human nature when he concluded in his allegory on a socialist state, Animal Farm, “All animals are equal but some animals are more equal than others.” Capitalism is no better at giving out just compensation. Most of us get way less than we deserve while a few make out like bandits. All in all, though, I think a global economy has to have money. It keeps everybody’s chits so that the value of your good or service is reciprocated. It just needs to be done more equitably.
At the community level and a bit beyond, I think a moneyless economy would be feasible. We would have to interact much more intimately than we do now. A time bank like the one we tried to start here a few years ago would come into its own. One of the main tenets of time banking is that everybody’s hour is worth the same. Now, we value the time of people with specialized education far more than some people that have gained a lot of knowledge through experience. A doctor gets paid much better than a taxi driver because we see them as taking our lives in their hands. But doesn’t a taxi driver do the same?
Let’s use times like this to reflect on how we use money and how we might create a more egalitarian society.