Money is an Attention Allocation Technology (Part 5)
Asking yourself "What is Money?" is the 1st step into a philosophical rabbit-hole that could prove to be the most fascinating intellectual journey of your life…
The question “What is Money?” is deceivingly simple. One would expect the answer to be abundantly clear given its prevalence in daily life, but upon further reflection, most find money to be mysterious. Money is pervasive economic phenomenon, an interpenetrating field of energy influencing human perception, thought, and action. Yet despite the all-encompassing nature of money, its deepest truths remain hidden in plain sight. Here, we explore yet another answer to this curious question—money is an attention allocation technology.
How Humans Allocate Attention
Attention-grabbing is also a key characteristic of assets exhibiting relatively high or fast-growing prices. In terms or rapid price growth, no asset has grabbed more attention than Bitcoin. As “digital gold” has shown the world, where high prices go, attention flows. And where attention goes, energy flows. Seeing that prices are most useful when denominated in money, it becomes clear that we have uncovered another answer to one of my favorite questions: “What is Money?”: Money is an Attention Allocation Technology. There is no more crucial technology to the direction of human attention than money.
Such a definition of money may sound strange, but we all implicitly understand it. No work ever gets done unless someone pays attention to, or attends to, the proverbial task at hand. In other words, value cannot be created without the indispensable input of attention. Human attention is, in this sense, the ultimate natural resource. As we’ve seen, supply or satisfaction can only be created with attention. Attention-directed work is the only way to satisfy any desire whatsoever. If you don’t believe me, just try to make a living without paying any attention. Depending on the nature of your work, at best you’ll do a dissatisfactory job, and at worst you’ll hurt yourself or others.
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Again, there is nothing in this world that gets done without being attended to. The sole exception to this is through the use of a tool or a technology (which is simply a systematic implementation of tools). A tool amplifies the returns on attention allocated to a task. Assuming its constructed in a manner fit for purpose, a tool or technology improves productivity, allowing humans to accomplish greater results with the same allocation of attention. In other words, tools are devices that let us accomplish the same results with a lesser overall inputs of attention (and its constitutive elements of time and energy) . Specifically, money is a tool which lets users engage in a greater scope of trade with the same input of attention by simplifying the calculation, negotiation, and execution stages of trade.
When we save attention through the use of tools like money, we get to allocate the saved attention toward the satisfaction (or supply) of other desires (or demands). As more attention is liberated through the use of a diversity of tools and technologies, humans allocate it to increasingly specific phases of production. Productivity expands as more attention is allocated onto increasingly finer phases of production (a restatement of the division of labor) which leads to greater economic specialization, innovation, and wealth creation. In this way, an economy is a system for allocating individual attention to the phases of distributed production structures where productive skills, tools, and technologies best satisfy the manifold consumptive desires of other humans. Pricing informs us where our allocations of attention are most valuable to ourselves individually, and others collectively.
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So again, the economy is a system for allocating producer’s attention toward the satisfactions desired by consumers, and money—the conveyer of prices—is among its most useful allocation technologies. In this way, Bitcoin is especially fascinating in that it grabs a great deal of attention when its price moves significantly, but its price moves are based on the market appraisal of its worth as the perfect conveyor of prices. By perfect, I mean that Bitcoin suffers from zero unexpected debasement, and therefore the prices it communicates are free from the noise of counterfeiting, corruption, and legislation. In other words, as a pricing mechanism, Bitcoin is pure signal and zero noise because it is immune to arbitrary supply inflation. If money as a technology commands so much attention, then what is arbitrary inflation of a money supply? The answer to this particular question is one that remains hidden from popular attention today…
Thank you for reading Money is an Attention Allocation Technology (Part 5).
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Money is an Attention Allocation Technology (Part 5)
inflation: distraction.