Did you enjoy this article? Checkout the podcast here: https://gettherapybirmingham.podbean.com/

Rethinking Money, Gold, and Value: A Thought Experiment on Alternative Economic Systems

What do we truly value as a society? This is a profound question that strikes at the heart of how we structure our communities, economies, and ways of life. In this thought-provoking article, we’ll embark on a fascinating thought experiment to reexamine our unconscious assumptions about money, gold, debt, and worth. By challenging the status quo and exploring alternative economic models, we may gain fresh insights into creating a more equitable, sustainable, and fulfilling world.

Disclaimer: This piece is a thought experiment designed to stimulate reflection and reconsideration of societal norms and conceptions. The ideas explored here do not advocate for any specific political or economic changes, but rather encourage readers to think critically about the foundations of our current systems. As a psychotherapist, not an economist or theologian, I approach this topic from a psychological and philosophical perspective.

What If Gold Didn’t Exist?

First, let’s imagine a world without precious, non-perishable metals like gold, silver, and platinum. In this hypothetical scenario, what would serve as the basis for money and value storage? It’s a perplexing question, as these noble metals’ luster, malleability, and resistance to degradation make them uniquely suited to function as currency.

To find potential answers, we can look to real-world examples of societies that developed monetary systems without relying on gold. The remote Pacific island of Yap provides a fascinating case study. There, massive limestone discs called rai stones, some towering at 12 feet tall and weighing over 8,000 pounds, functioned as a form of currency.

But how did this seemingly impractical system actually work in practice? Remarkably, the Yapese never physically moved the cumbersome rai stones to complete transactions. Instead, they maintained a collective oral ledger of who owned which stones at any given time. Ownership could be transferred without the stones ever changing location. In a sense, this functioned like an ancient predecessor to modern digital banking, where a centralized ledger tracks account balances and transactions occur without physical money changing hands.

On Yap, the acquisition and allotment of rai stones were inextricably linked to social merit and status. Individuals earned stones through contributions and accomplishments that benefited the community as a whole. Heroic acts, successful leadership, innovation, and exceptional artisanship could all warrant being awarded a rai stone in a public ceremony. The community collectively determined and reached consensus on each person’s social merit.

Notably, rai stones weren’t meant to be hoarded for individual gain, but rather signified one’s standing and prestige in society. Those with the most stones were respected and admired for what they had given to support the common good. In effect, the rai stones made social value tangible and quantified esteem.

This Yapese system provides a compelling model of how a society could conceivably store and measure value without precious metals. By tying value to reputation, generosity and making a positive impact, it created an economy that prioritized and incentivized contributing to the collective wellbeing. The social fabric itself and the bonds between people became the backbone of the economy.

Gold’s Impact on Society and Power Dynamics

Of course, gold and other precious metals ended up playing a pivotal role in how human civilizations developed. It’s fascinating to consider the cosmic rarity and happenstance of this substance and how it captured our imaginations and has been ascribed profound meaning across cultures and ages. The symbolism of gold has mythical proportions, often relating to the archetype of the Self in Jungian analysis of our unconscious psyches. We see this in tales of heroes questing for golden treasures that represent some hidden, authentic aspect of themselves or elusive self-knowledge.

Scientifically, we know that gold’s existence on Earth is a remarkable coincidence resulting from cataclysmic stellar explosions billions of years ago. The supernova of massive stars scattered precious metals across the universe, where they eventually condensed into asteroids and meteors. Some of these gold-rich objects fatefully struck the earth, depositing the metal in the crust. Only through this unlikely series of events is gold present and obtainable today.

Given the prominent role gold has played, it prompts us to ponder alternative histories – what would our conception of money and power look like in a world where gold did not exist or was not adopted as a currency and store of value?

When gold and other precious metals emerged as de facto currencies around 600 BCE in ancient Lydia, it was largely due to their physical properties – divisibility, portability, luster, and immunity to corrosion. They became widely accepted standards of value. Over time, gold-backed money, gold-based mints, and eventually the gold standard inextricably linked this metal to money and economic power.

But what other paths could we have gone down? What if, rather than latching onto gold as the universal equivalent and basis for money, we had continued to tie value to social reputation and merit as the Yapese did? What would a world look like where worth is measured not by the accumulation of non-perishable metals in vaults, but by the positive impact one has on their community?

Contrasting Communal and Competition-Based Economies

In preindustrial, communal gift economies and barter-based societies, resources tended to be more evenly distributed. Generosity was prized. When someone had a need, the community would rally to meet it through sharing, loaning, and reciprocal aid. The expectation was that such kindness would come back around in one’s own time of hardship.

Social reputation acted as a safety net and form of insurance in these environments. Prestige went to those who gave the most to support others, not to those who hoarded the most material wealth for themselves. Goods and commodities lost value over time, so they were not viable stores of value. The only thing that could be accumulated was esteem based on one’s generosity and positive impact.

In contrast, the non-perishable nature of precious metal-backed money incentivized and enabled accumulation of wealth and power in the hands of a few. Because metals could be hoarded indefinitely without losing value, they facilitated concentration of riches. Those with the most gold could continually grow their wealth and influence by wielding it to generate more, creating self-perpetuating imbalances.

The artificial scarcity and competition this system created meant peoples’ problems and misfortunes could perversely be seen as advantageous to those vying for a bigger piece of the pie. In an economic game perceived as zero-sum, one party’s loss is another’s gain. Thus, metal-based economies incentivized individualism and looking out for oneself over the collective good.

In contrast, gift economies and communal systems naturally trended back towards equality over time because everything was perishable, including social standing which had to be continually earned and maintained. This encouraged ongoing cooperation, sharing, and strong social bonds.

Rethinking Value

So what can we learn from this thought experiment and contrasting different systems for ascribing worth and storing value? At the very least, it reveals that our current paradigms are not inevitable or the only possibilities. We have a choice in what we deem valuable and center our societies around.

Even as we’ve moved towards fiat currencies and digital money not backed by a physical commodity, our underlying conceptions of worth are still heavily tied to notions we ascribe to gold – scarcity, accumulation, and arbitrary value not tied to utility or social good. Even many cryptocurrencies and NFTs, which promise a reinvention of money, still rest on artificial scarcity and speculative value assignment that concentrates wealth.

Perhaps it’s time we critically reexamine these paradigms and dare to imagine alternatives more aligned with our values and wellbeing. What would it look like to have an economic system that actively incentivizes and rewards contributing to the greater good? How would it change our social fabric and way of being if reputation, impact, and generosity were the most valuable assets one could attain?

There are certainly major challenges and pitfalls to consider in restructuring our fundamental systems. But envisioning and striving for a world where the love of money and hoarding wealth are not the root of so much sorrow, strife, stress, and inequality is a worthy undertaking. Even on a personal level, we can reflect on what we’re unconsciously placing value on and whether those priorities are truly serving us and the world we want to create.

In these turbulent times, it’s more vital than ever that we elevate these conversations and think outside the box about what kind of society we want to be. No outcome is inevitable if we collectively determine our vision and values. Exploring scenarios like a world without gold can help jolt us out of complacency and open up new possibilities. The future is wide open and ours to shape through our choices and creativity. In the end, where we choose to ascribe worth and direct our energy may just make all the difference.

 

 

References:

Fitzpatrick, S. (2018). Yap stones and the economics of traditional money. In The Construction of Value in the Ancient World (pp. 261-284). Cotsen Institute of Archaeology Press.
Graeber, D. (2011). Debt: The first 5,000 years. Melville House.
Hyde, L. (2007). The gift: Creativity and the artist in the modern world. Vintage.
Lietaer, B., & Dunne, J. (2013). Rethinking money: How new currencies turn scarcity into prosperity. Berrett-Koehler Publishers.
Mauss, M. (2002). The gift: The form and reason for exchange in archaic societies. Routledge.
Von Reden, S. (1997). Money, law and exchange: coinage in the Greek polis. The Journal of Hellenic Studies, 117, 154-176.
Wray, L. R. (Ed.). (2004). Credit and state theories of money: the contributions of A. Mitchell Innes. Edward Elgar Publishing.

Further Reading:

Eisenstein, C. (2011). Sacred economics: Money, gift, and society in the age of transition. North Atlantic Books.
Graeber, D. (2001). Toward an anthropological theory of value: The false coin of our own dreams. Palgrave Macmillan.
Hallsmith, G., & Lietaer, B. (2011). Creating wealth: Growing local economies with local currencies. New Society Publishers.
Jevons, W. S. (1875). Money and the mechanism of exchange. D. Appleton.
Keynes, J. M. (1930). A treatise on money: in 2 volumes. Macmillan & Company.
Polanyi, K. (1944). The great transformation: The political and economic origins of our time. Beacon Press.
Simmel, G. (2004). The philosophy of money. Routledge.
Weatherford, J. (1997). The history of money. Crown Publishers.
Zelizer, V. A. (1994). The social meaning of money. Basic Books.
Zohary, D., Hopf, M., & Weiss, E. (2012). Domestication of plants in the Old World: The origin and spread of domesticated plants in Southwest Asia, Europe, and the Mediterranean Basin. Oxford University Press.