What do we value?
It is important to note that this article is only a thought experiment for the purposes of reconsidering our implicit assumptions and societal conceptions of the necessities for civilization and what is “normal” behavior for humans. In the article about mysticism I pointed out that I was a psychotherapist not a theologian. Here I need to point out that I am not an economist either. This thought experiment is not advocating for any kind of specific new political or economic reality. Instead it is a way to reconsider the things we take for granted and meditate on new ideas that might allow us to conceive of a healthier and more stable society.
If we didn’t have gold what would money look like?
If we didn’t have nonperishable precious metals like gold and silver, what would money look like? There are not many other goods that can hold value in such a small and convenient package like gold, platinum, and to a lesser extent, silver. All the noble metals have a high luster, malleability, and do not deteriorate with age. How would society store value without them?
Well, there are a couple of examples of how money developed in places without gold. One fascinating example is an island called Yap, where there was little to no traditional currency. Instead, the native Yapese used massive limestone disks, some as tall as 20 feet and weighing hundreds of pounds, as a form of money. But how did this system work? How do you put a 200 lb stone in a vending machine or use it in everyday transactions?
The Yapese never physically moved the stones they used as money. Instead, they maintained an oral and collective ledger of who owned which stones. Money that couldn’t fit in your wallet might seem like a strange concept, but consider how your debit card works. There’s a collective ledger somewhere that updates every time you use your card, even though no physical money changes hands.
So, how did Yap’s money system function?
On the island of Yap, the acquisition and distribution of these large stone discs, known as rai stones, were closely tied to prestige and social merit. The process of awarding rai stones was based on various factors that reflected an individual’s status, achievements, and contributions to the community.
The primary means of acquiring rai stones was through social recognition and acknowledgment of an individual’s accomplishments. These accomplishments could include successful leadership, acts of bravery, or notable achievements in various fields such as agriculture, craftsmanship, or diplomacy. The more esteemed and respected an individual was within the community, the higher the likelihood of receiving rai stones.
The recognition and awarding of rai stones were often carried out through public ceremonies and gatherings. These events provided a platform for the community to acknowledge and celebrate the achievements of an individual. The stones were typically presented by influential community leaders or elders who acted as the arbiters of social merit.
It’s important to note that the awarding of rai stones was not a purely individualistic pursuit but rather a collective decision that reflected the consensus of the community. The opinions and judgments of community members, particularly those in positions of authority or with significant influence, played a crucial role in determining the social merit of an individual and their eligibility to receive rai stones.
The rai stones bestowed upon an individual were not meant to be hoarded or accumulated solely for personal wealth. Instead, they served as symbols of prestige and social standing. The possession of rai stones demonstrated an individual’s contributions to the community and their ability to garner respect and admiration.
The Yapese monetary system used these tangible representations of honor and status to reinforce the social fabric and common good of Yapese society.
So, in answer to the original question, “How could society store value without gold?” The answer is that they did so through a reputation system that rewarded benevolence, generosity, and innovation. The people who gave back to society the most were awarded the most value in the form of reputation, not by how many precious metals they owned.
How did gold change our conceptions of society and culture?
Gold has long fascinated humanity with its allure and intrinsic non-perishable value. The presence of gold on Earth almost did not happen at all. If there had been a few changes to astrophysical conditions, you might not have been able to find gold jewelry in stores. So, why is there gold on Earth?
The symbolism of gold in mythology often relates to the concept of the Self, a central archetype in Jungian psychology that represents the totality of the psyche. Because the ancients associated gold with being so rare and precious, it came to symbolize knowledge of the authentic and hidden self. Fairy tales that involve reclaiming a lost treasure are metaphors for self-discovery and regaining lost aspects of our identity. In these tales, gold often appears in the form of a golden key, a golden crown, or a golden apple, serving as a powerful symbol of the transformative potential of self-knowledge. These objects are typically guarded by mythical creatures or hidden in remote locations, emphasizing the challenging journey toward self-understanding.
The origins of gold as an element on planet Earth trace back to the formation of the universe itself. In the earliest moments following the Big Bang, only light elements such as hydrogen and helium were present. It was within the cores of massive stars, through the process of stellar nucleosynthesis, that heavier elements like gold began to form. These elements were forged through the fusion of lighter nuclei in the intense heat and pressure of stellar environments.
As these massive stars neared the end of their life cycles, they underwent supernova explosions. These explosions scattered their noble metal-enriched contents into space. The remnants of these supernovae, containing elements like gold, spread across the cosmos in the form of dust and gas. This dust and gas later condensed into rocky masses, including meteors that had high concentrations of gold.
If it were not for this coincidental bombardment of asteroids containing gold, there might not have been enough gold on Earth for you to wear gold jewelry or establish a monetary system based on it. So, what would have happened if we never associated gold with money, power, or value?
Why is gold associated with money and currency?
Gold is durable, divisible, portable, and possesses intrinsic value due to its luster, malleability, and resistance to corrosion, making it an ideal medium of exchange. The use of metal coins as a form of money emerged around 600 BCE in ancient Lydia (present-day Turkey). These coins were made from precious metals like gold, silver, and bronze, with value determined by weight and purity. Gold, due to its scarcity and durability, became a preferred choice for coinage.
Over time, gold became widely accepted as a standard for money, thanks to its scarcity, divisibility, portability, and resistance to corrosion. Gold coins became a trusted and standardized unit of value in many ancient civilizations, including the Greeks, Romans, Egyptians, and Persians.
In medieval Europe, goldsmiths played a crucial role in the evolution of money and debt. People entrusted their gold and other valuable assets to goldsmiths for safekeeping, receiving receipts that could be used as a claim to deposited gold. These receipts gradually started circulating as a form of paper money or representative money, laying the foundation for early banking systems.
The gold standard, which linked a country’s currency to a fixed amount of gold, gained prominence in the 19th and early 20th centuries. Governments held gold reserves to back their currency, and individuals could exchange paper money for gold at a predetermined rate. The gold standard provided stability and confidence in the currency.
The gold standard era began to decline during the 20th century, particularly after World War I, as countries shifted to fiat money not backed by physical commodities but by government trust. This transition marked a departure from the gold-based monetary system.
In summary, gold no longer serves as the basis for our economic system, but it continues to influence our ideas about money and power. Even new forms of money like cryptocurrencies and NFTs are based on old notions of scarcity rooted in our ancient relationship with gold. Our beliefs about money, debt, scarcity, and power are significantly shaped by gold’s historical role in our economy.
What does money without gold look like?
In isolated or preindustrial societies without gold, there was often a different understanding of resources and wealth. In these societies, the emphasis was on sharing and distributing resources evenly. When a need arose in the community, others would meet that need through gifts or loans. The underlying principle in these cultures was that safety and well-being were found in generosity and compassion, rather than the accumulation of material goods. People took care of one another because they believed that when they needed help, others would reciprocate. In these societies, social merit functioned as a kind of insurance.
In barter, communal, and gift economies, power did not revolve around the accumulation of wealth. Instead, reputation and social merit were highly prized. Since wealth and value could not be hoarded materially, individuals accrued value by being useful, innovative, and generous. These systems rewarded people who contributed to the community because societal regard was the most important resource, not electronic debt or precious metals.
This was because goods like food, clothing, and tools often degraded and lost value over time. There was no way to hoard wealth because all things that held value gradually lost that value if they were hoarded. In these cultures, money and value naturally trended back to equality because everything depreciated over time. People were incentivized to share and live communally in gift economies because clout and reputation held more value than any good or service. Value was stored in the social ledger of reputation, not in a material ledger of debt.
In debt and precious metal-based systems, wealth tended to accumulate and concentrate, leading to scarcity, competition, and inequality. Those with more money had access to more power and used that power to acquire even more money, perpetuating a cycle of wealth accumulation. In such systems, society was often incentivized to ignore others’ problems because the competition was for non-perishable money that increased in value, not for a reputation as a benefit to society. In fact, in these systems, other people’s problems could be seen as advantageous because they meant that others had less power and were less likely to acquire the limited wealth everyone was competing for.
Why does the non-perishable nature of precious metals like gold lead to scarcity, competition, and inequality?
The non-perishable nature of precious metals like gold contributes to scarcity, competition, and inequality for several reasons:
- Hoarding and Accumulation: Precious metals, because they do not deteriorate with time, can be easily hoarded and accumulated. Individuals or institutions can store large quantities of gold without worrying about it losing value due to decay or spoilage. This leads to the concentration of wealth in the hands of a few, as those who acquire gold tend to hold onto it rather than circulating it in the economy.
- Limited Supply: Precious metals like gold have a limited natural supply. This scarcity further intensifies competition among individuals and nations to acquire and control these resources. The limited supply of gold creates an inherent imbalance in access to wealth.
- Store of Value: Precious metals have historically served as a reliable store of value. This quality makes them attractive for wealth preservation. However, their non-perishable nature means that their value can increase over time, making them an even more desirable asset. This appreciation in value encourages further accumulation and competition.
- Power Imbalance: As individuals or entities amass significant amounts of precious metals, they gain disproportionate power and influence in society. This power can be used to manipulate markets, control resources, and shape economic policies, further exacerbating inequality.
- Lack of Inherent Utility: Precious metals like gold have limited inherent utility beyond their use as a store of value and for ornamental purposes. Unlike other commodities like food or fuel, they do not serve immediate practical needs. This lack of utility means that their value is primarily speculative, leading to a focus on accumulation for financial gain.
Is there an alternative system?
Yes, there are alternative economic systems that prioritize different values and principles, moving away from the accumulation of non-perishable wealth like precious metals. Two such systems are barter economies and gift economies:
- Barter Economies: In barter economies, individuals engage in direct exchange of goods and services without using a common medium of exchange like money. This fosters social interaction, builds relationships within communities, and requires negotiation and understanding of each other’s needs. Barter systems promote cooperation and interdependence.
- Gift Economies: Gift economies operate on the principle of giving without the expectation of an immediate return or compensation. People offer goods, services, or resources to others as acts of generosity and contribution to the well-being of the community. Reciprocity and sharing are central to gift economies, reinforcing communal bonds and prioritizing the collective over individual accumulation.
Both barter and gift economies can have positive psychological and environmental effects. They promote social cohesion, reduce economic disparities, and encourage sustainable resource utilization. These systems prioritize collaboration, generosity, and interconnectedness, fostering a sense of belonging, trust, and reduced feelings of isolation, paranoia, or competition.
It’s important to recognize that our cultural and economic systems are not the only possible ways of organizing society. We often assume that our current systems are the only viable ones, limiting our creativity and ability to envision alternatives. Reflecting on the role of value and wealth in our lives and culture can help us challenge outdated assumptions and consider alternative economic models that prioritize well-being, cooperation, and sustainability.
The quote often attributed to the Bible, “For the love of money is the root of all evil,” highlights the importance of our relationship with money and how it can shape our behavior and priorities. Money is a fundamental aspect of our daily lives, yet we rarely pause to consider what it truly represents and how our beliefs about it influence our psychology and well-being.
Incorporating elements of gift economies or reevaluating our values can lead to more equitable and fulfilling societies. By moving away from a mindset that prioritizes individual accumulation, we can encourage a sense of collective responsibility and interconnectedness. This shift in perspective can have positive effects on mental health and promote a more harmonious society.
Ultimately, what a person or society values is a significant indicator of their identity and priorities. Reflecting on where we unconsciously place value and what that says about us can lead to a deeper understanding of our goals and purpose in life. As we navigate our limited time on Earth, it’s crucial to stay in touch with what we want the purpose of our lives and societies to be. Where does your worth lie?