What is Money? (Part 4)
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 an all-pervasive economic ether, an interpenetrating field influencing human perception, thought, and action. Yet despite the “everywhere and nowhere” nature of money, its deepest truths remain hidden in plain sight. Here, we explore yet another answer to this question, money is…
The Highest Form of Energy Humans Can Channel
“Man works in using his forces and abilities as a means for the removal of uneasiness and in substituting purposeful exploitation of his vital energy for the spontaneous and carefree discharge of his faculties and nerve tensions.”—Mises
“There is an impulse inwrought in all living beings that directs them toward the assimilation of matter that preserves, renews, and strengthens their vital energy. The eminence of acting man is manifested in the fact that he consciously and purposefully aims at maintaining and enhancing his vitality.”—Mises
Life is the force which channels energy across spacetime toward the achievement of aims. Plants and animals channel energy toward the achievement of evolutionarily or instinctually established ends. Only humans have the unique and reflective capacity of reason, which enables them to sacrifice present consumption to the aim of higher achievement.
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Through self-reflection, economic planning, and purposeful effort, humans can forgo present satisfaction and save with the intention of better satisfying the wants of their future selves. Sacrifice is the idea at the heart of economics, and it is the broader perspective on time that distinguishes human from animal. So far as we know, humans are the only living thing capable of channeling energy across the lines of ideological constructions toward the achievement of purposeful aims. It is only by channeling energy through work that human ideas can be made manifest: consider how humans turn blueprints into skyscrapers or hand-written constitutions into countries.
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In the process of achieving these higher aims, humans must energize more productive ideas with vaster pools of natural resources. Humans are the only life form known to isolate and manipulate the flow of energy as a tool. In the Stone Age, humans learned to wield fire, and over time forged it into an energy-tool useful for heating, cooking, and lighting. Later, other energy networks, like flowing water, were harnessed through the work of human hands. By combining ideas and energy, humans unlock further innovations and richer energy sources, in a feedback loop spurring civilization forward. All human creations begin as ideas, which are generated through the expenditure of metabolic energy. Goods, then, are useful complexes of ideas and energy. As the most marketable good, money lays claim to all ideas and energy sources under the command of market actors. In modernity, money can be used to buy energy of any sort: thermal, hydro, or nuclear. Money is a “meta-energy”: the highest form of energy humans can channel, since it represents a claim on all forms of human-harnessed energy.
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On the free market, gold as money was linked to energy through the expense of its extraction, the original “proof of work” process reciprocating in gold the energetic sacrifices made in its obtainment. Following Bretton Woods, as the US dollar was gradually decoupled from gold, the US government was compelled by free market forces to indirectly tether its currency to “black gold” to uphold its preeminence in the marketplace. Mandating that all oil contracts were denominated in US dollars supported its demand in the geopolitical arena. Even a monopolist like the US government was forced to link its currency to an energy network to remain relevant, in this case the energetic life-blood of modern industrialism—oil. Absent this anchoring, regional currencies would have benefitted from consistent demand derived from the oil trade, thereby placing downward pressure on the dollar as a global reserve currency.
Nation-states are the dominant territorial monopolies on violence. Historically, state authority has virtually always been abused to monopolize money as a means of broadening their power base. Conceiving the geopolitical implications of money leads directly into our next answer, money is...
In Part 5, we will examine the relationship of money to the territorial impulse of humans…
Thank you for reading What is Money? (Part 4).
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