The strange case of the round coin round business

From free barter to exchange by paying money

And no, I don't need to write a scientific treatise on anthropology or anything like that for the account just given to be close enough to the truth of what happened for it to be valid as such, as the truth of what happened for the purposes of what I want to expose here —and I expose in the exercise of my junglefreedom.

So, these lines being a treatise on nothing, we can safely agree that (i) it was a certain (self-) imposition of a horizontal order on the group on the basis of help among equals, however elementary that organisation might be, that turned the group into a society. And (ii) that, at a given moment, that organisation became vertical, hierarchical (from the Greek hieros + arkhein = sacred, divine + to lead, rule); where a higher order, which as such implied a lower order, minted money to measure in fictitious value the help between equals and charge for it. If you think about it —and you should— the system is perverse from its very inception because those who creates and delivers value (the things that are made or given) have to pay Them who neither create nor deliver it; to Them who only create and deliver a fictitious value (money). In other words:

A real value is exchanged for a fictitious value.

Let's see it with an example —hat argumentative device that some people call «cheap», the same people who assume that cheapness is per se bad:

The doctor treats the sick farmer and the farmer, in return, gives him five kilos of potatoes. In order to be able to grow his potatoes, the farmer needs to defend his land, which the soldier does. So the farmer, in return for this security for a year, gives the soldier a kilo of potatoes and a kilo of carrots every month. The soldier, who needs rest, stays at the inn. In return for this lodging, the soldier also provides security. When the innkeeper needs the doctor, as he does not need lodging, he (in return) agrees with the farmer that this one will give the doctor (in the name and on behalf of the innkeeper) two kilos of potatoes and two kilos of beetroot and that, in return, he —the innkeeper— will give him a voucher to dine at the inn with his family three times on weekends during that calendar year. The master...

We can continue the example as long as we like without improving the idea that we want to convey: everything worked; and everything worked on the basis of exchanges within a market that formed a closed system in which the value of the exchanged goods was constantly maintained. That is:

Within this chain of exchanges that make up the market, what one gives and receives in exchange adds up to zero if what-is-given adds up and what-is-received subtracts.

The general rule of exchange, of the exchange by which payment was substantiated in a performance (creation and delivery of goods or services), thus became the operating protocol of that market —I insist: a closed system.

We can accept —and we do accept— that, at a given moment, the bartering thing became so complicated that the exchange protocol collapsed. For calculating the equivalence of services in long chains of exchanges, or in chains that involved exchanges with operators outside this market (of the neighbouring tribe that had its own market, however similar), was not a theoretical and absolute impossibility, but a practical possibility so complicated that it became a de facto impossibility.

It was no longer so simple for the doctor, the farmer, the soldier and the innkeeper to agree on the equivalence of exchanges, either because the baker, the blacksmith, the teacher... were also involved, or because counterparts from other tribes with different material conditions were also involved, which made the equivalence of performance complex mathematical problems of weighting (e.g.: the effort invested in tribe A to do thing X is not the same as in tribe B).

Of course, this gibberish, which was then, would no longer be so today with the calculating capacity of computers, the ordering capacity of blockchains, and the management capacity of artificial intelligences.

This, or under some functionally equivalent explanatory narrative, is how money arises. A unit of value is agreed on a physical piece that allows exchanges to take place, however long the exchange chains are or however many foreign operators appear in these chains. But this monetary convention is worth nothing if it is not accepted by everybody, if for some the money is worth what it has been agreed to be worth and for others it is not. So, this monetary convention must be imposed on those who do not accept it. Which leads us to the conclusion that the monetary convention must be directed (in all its phases: negotiation, agreement and voluntary or forced compliance) by someone who can be trusted by all and who is able to impose the convention manu militari; someone who is usually not the most trustworthy, but the least untrustworthy (because trust is inversely proportional to the collective of trust): the ruler of the tribe. A ruler who (in one way or another) will want to get paid for being a ruler, which includes getting paid for running the convention: for minting the money and forcing everyone to accept that it is worth what it is said to be worth.

We are thus faced with having to pay for something that has no value in itself beyond the convention: money. Money is thus something like an intermediary, not only costly (it costs money), but also at a loss (the cost is on something that has no intrinsic value beyond the value assigned to it). Since such an absurdity is absurd even for those who devised money, it is therefore suggested that money should be minted with materials that have a value in themselves (silver, other, bronze...).

But this plunges us into new problems such as the limitation, scarcity, distribution or domination of these precious materials: will the tribe have more money because it is where it is, or because it has conquered the lands it has conquered, will it have more gold, silver, bronze...?; what will happen when there are so many goods and services in flow that there is not enough money supported by precious materials to maintain the equivalence according to the value of the monetary convention?

And that is how the rulers ended up minting paper money, or whatever money, where that money has absolutely no value apart from conventional value.

And if you don't believe it, then go to an Amazon jungle to buy coconuts with dollars or euros and see how many they give you while they tell you —and for sure you will understand them even if you don't understand their language...— to insert your monetary conventions down some hole —if you still have that hole.

And beware, because power is ambitious by nature. And when rulers enjoy the power to mint money, as well as the force to exercise that power; when They can mint money and charge for it, They feel legitimised —and to top it all off, you, human, believe it too— to charge you for other things. In fact, in a not inconsiderable sense, charging for minting money is already a tax, if not the mother of all taxes. Yes —humans—, money is a very, very expensive intermediary; a worthless intermediary that devalues the chain of exchanges.

A round business only for those who mint it: the rulers —They.