Money and rationing

Hi All,

What is money?

Often people get confused about it. Some see it as the personification of all that's wrong with the universe. It creates a love of wealth, a skewing of resources to the many and not the few and that leads to greed. Greed leads to people suffering . Suffering is bad. Therefore money is bad and has not function in a modern, progressive, space faring society, wherein replicators can provide for free housing, healthcare, food and transport.

Except that is not what money is about .Money in its purist form , is not about wealth creation or greed. They may well be by-products of money, but they are not money itself. Money is in fact like a  three leafed clover. It is a unit of exchange, a unit of account and finally a store of value. You cannot have one without the other and should they be decoupled from one another, society and the economy quickly suffer, however advanced the technology underpinning the society.

You see without a unit of exchange , people would be forced to barter,  which creates inconvenience and no universally agreed way of  exchanging product a for product c ,  or  first having product b or d, which you might not have, but would need to obtain somehow. 

Without a unit of account, you simply don't know whether a tractor equals a chicken or 10,000 chickens .

Without a store of value, neither the industrialist  or farmer will exchange goods or services with money.  

Ah but in a post scarcity society, where one can replicate food and housing, we won't need money. We can , like Ben Bernake, simply created this stuff out of thin air for free.  While this ignores trade in services and like most socialist ideas concentrates on output of goods, rather than consumption of goods , even production by replication isn't free. It still requires an energy source and there's no such thing as an unlimited energy source.  Ergo there will be a need for a mechanism to distribute or decide what the cost of this apparent free stuff actually should be.  More on that down below.

The one thing that is unlimited is human wants and desires. In economics scarcity is defined as trying to match the limited resources of our planet, with the  unlimited desires of humanity. There is also a psychological element to this, if you've ever been lucky enough to get a pay rise, most of us will then live up to this new income and eventually not feel any different to the pre- pay rise situation.

We don't actually feel any richer as we are consuming more.  Or put it another way. A millionaire of 1870 would have less 'stuff' available to him than today's average middle class. No tv, internet, dvd player:  jetting off on cheap flights to parts unknown , as travel was done by boat and could be dangerous,  let alone the chances of surviving even routine surgery or living to 90, rather than 60. While on paper the millionaire of 1870 was a millionaire , he is actually quite materially and health wise actually poorer than today's middle class.  Yet today's middle class would not and do not consider themselves to be millionaires.

So even if we are able to replicate enough food for everyone  that's great. And if we could replicate enough so that everyone on the planet is up to a western civilisation them that's great. But people would still talk about poverty - which is always relative as my example above shows - and that's even when everyone is enjoying gourmet food, caviar and driving a Rolls Royce,  why? Because then people will consider this to be normal and a basic standard of living.  People will want to be looking at the chaps who are flying around in space ships or who have some other, more local, type of future luxury or high.

Therefore even in the future we will need money as a unit of exchange , a unit of account and as a store of value . True this is in effect a form of rationing, but maybe a way of rationing 'luxuries' of the time. Just as in 1870, money rationed what was considered luxury and today money rations luxuries ( not everyone can own Chelsea FC , a Rolls Royce or an indoor swimming pool) , but people are generally better off than millionaire in the 1800s.

You can of course suggest that the government could simply provide for a unit of exchange and a unit of account and use this to control the economy. Except we know from past experience of socialist states, that government is inefficient at controlling a command economy. It is easy to input how many goods are to be produced. It is not easy to force people to consume them or even predict if people will want them.  Even if the government was efficient, say by AI, then it will still be distributing and therefore rationing resources to people.  The difference is everyone has a say in distribution and rationing of resource in a capitalist monetary system.  With a government in charge of this distribution you are leaving it to those with the those who have the power to influence, corrupt , bully and lobby for whatever pet project or benefit they want.

Which system is better?