What is Money and Government? A Gateway Opportunity for Low Lifes

“Nakiketas said: ‘There is that doubt, when a man is dead—some saying, he is; others, he is not. This I should like to know, taught by thee; this is the third of my boons.’

Death said: ‘On this point even the gods have doubted formerly; it is not easy to understand. That subject is subtle. Choose another boon, O Nakiketas, do not press me, and let me off that boon.’

Nakiketas said: ‘On this point even the gods have doubted indeed, and thou, Death, hast declared it to be not easy to understand, and another teacher like thee is not to be found—surely no other boon is like unto this.’

Death said: ‘Choose sons and grandsons who shall live a hundred years, herds of cattle, elephants, gold, and horses. Choose the wide abode of the earth, and live thyself as many harvests as thou desirest. If you can think of any boon equal to that, choose wealth, and long life. Be king, Nakiketas, on the wide earth. I make thee the enjoyer of all desires. Whatever desires are difficult to attain among mortals, ask for them according to thy wish—these fair maidens with their chariots and musical instruments—such are indeed not to be obtained by men—be waited on by them whom I give to thee, but do not ask me about dying.’

Nakiketas said: ‘These things last till tomorrow, O Death, for they wear out this vigour of all the senses. Even the whole of life is short. Keep thou thy horses, keep dance and song for thyself. No man can be made happy by wealth. Shall we possess wealth, when we see thee? Shall we live, as long as thou rulest? Only that boon (which I have chosen) is to be chosen by me. What mortal, slowly decaying here below, and knowing after having approached them, the freedom from decay enjoyed by the immortals, would delight in a long life, after he has pondered on the pleasures which arise from beauty and love? No, that on which there is this doubt, O Death, tell us what there is in that great Hereafter. Nakiketas does not choose another boon but that which enters into the hidden world.’

Death said: ‘The good is one thing, the pleasant another; these two, having different objects, chain a man. It is well with him who clings to the good; he who chooses the pleasant, misses his end. The good and the pleasant approach man: the wise goes round about them and distinguishes them. Yea, the wise prefers the good to the pleasant, but the fool choose the pleasant through greed and avarice. Thou, O Nakiketas, after pondering all the pleasures that are or seem delightful, hast dismissed them all. Thou hast not gone into the road that leadeth to wealth, in which many men perish. Wide apart and leading to different points are these two, ignorance, and what is known as wisdom. I believe Nakiketas to be one who desires knowledge, for even many pleasures did not tear thee away. Fools dwelling in darkness, wise in their own conceit, and puffed up with vain knowledge, go round and round, staggering to and fro, like blind men led by the blind. The Hereafter never rises before the eyes of the careless child, deluded by the delusion of wealth. ‘This is the world,’ he thinks, ‘there is no other;’—thus he falls again and again under my sway. He (the Self) of whom many are not even able to hear, whom many, even when they hear of him, do not comprehend; wonderful is a man, when found, who is able to teach him the Self; wonderful is he who comprehends him, when taught by an able teacher. That Self, when taught by an inferior man, is not easy to be known, even though often thought upon; unless it be taught by another, there is no way to it, for it is inconceivably smaller than what is small. That doctrine is not to be obtained by argument, but when it is declared by another, then, O dearest, it is easy to understand. Thou hast obtained it now; thou art truly a man of true resolve. May we have always an inquirer like thee!’

Nakiketas said: ‘I know that what is called a treasure is transient, for that eternal is not obtained by things which are not eternal....’

Yama said: ‘Though thou hadst seen the fulfilment of all desires, the foundation of the world, the endless rewards of good deeds, the shore where there is no fear, that which is magnified by praise, the wide abode, the rest, yet being wise thou hast with firm resolve dismissed it all. The wise who, by means of meditation on his Self, recognises the Ancient, who is difficult to be seen, who has entered into the dark, who is hidden in the cave, who dwells in the abyss, as God, he indeed leaves joy and sorrow far behind. A mortal who has heard this and embraced it, who has separated from it all qualities, and has thus reached the subtle Being, rejoices, because he has obtained what is a cause for rejoicing. The house of Brahman is open, O Nakiketas. [From Wikipedia: “Brahman as a metaphysical concept refers to the single binding unity behind diversity in all that exists in the universe.”]

[...] The knowing Self is not born, it dies not; it sprang from nothing, nothing sprang from it. The Ancient is unborn, eternal, everlasting; he is not killed, though the body is killed.

[...] Know the Self to be sitting in the chariot, the body to be the chariot, the intellect the charioteer, and the mind the reins. The senses they call the horses, the object of the senses their roads. When he (the Highest Self) is in union with the body, the senses, and the mind, then wise people call him the Enjoyer. He who has no understanding and whose mind (the reins) is never firmly held, his senses (horses) are unmanageable, like vicious horses of a charioteer. But he who has understanding and whose mind is always firmly held, his senses are under control, like good horses of a charioteer.’”

From the “Dialogue with Death” (who is also known as Yama), found in the Upanishads, which are part of the four Vedas, a large work of ancient Hindu philosophy, religiosity, and spirituality. To help with impulse purchases.

“Anyway, that’s what life is, just one learning experience after another, and when you’re through with all the learning experiences you graduate and what you get for a diploma is, you die.”

From Gateway, a 1977 novel by Frederik Pohl. For when the utility of getting an education is questioned.

“The story starts with the classical dichotomy: the division of economics into the theory of value and the theory of money. The dominant question in economics has been: why do things cost what they do? The first generation of scientific economists held that the price of things was determined by the number of hours’ work it took to produce a quantity of stuff. A later generation concluded that the price of goods is determined by their value to the consumer. The cost of labour adapts itself to the preferences of buyers. Value is simply market price. This is today’s theory. The point to note, for our purposes, is that neither of these explanations of value involves money. Goods cost goods: they are bartered for each other. Money, according to the classical story, plays no role in the determination of ‘barter’ prices, i.e., there is no desire for money as such.

The theory of money is concered with something else: what determines the value or price of money, or its inverse, the general or average price level? The answer given by the elementary textbook is its quantity. The more money there is, the more goods as a whole will cost; the less there is, the lower the average price. The important claim of the theory of money is that the quantity of money makes no difference to the relative prices of goods and services [ie., The theory of money argues that whether the economy is awash in cash or not doesn’t change the fact that, let’s say, people expect a haircut to cost roughly ten times as much as an orange: If there is a lot of money, an orange may cost $30 and thus imply a haircut will, on average, be about $300; but if there’s a shortage of cash and a haircut is going closer to $5, one would expect oranges to cost about 50¢ each. At least, that’s how I understand it]. All it does is to explain the average price of all of them, and that affects nothing ‘real’.

So what is the role of money in this story? The answer is it ‘oils the wheels of trade’. It enables more trade to take place than otherwise would have. But it has no effect on the terms of trade. In Aristotelian terms, it is ‘barren’: it creates nothing and destroys nothing. Today’s textbooks on banking and finance do little more than echo Aristotle. Banks simply ‘intermediate’ between buyers and sellers. This arcane phraseology serves the protective purpose of disguising the actual power of finance – and financiers – in the economy.

[...] In the 1930s, the economist John Maynard Keynes challenged the classical dichotomy with what he called ‘the monetary theory of production’. He wrote, in 1933 [that] ... we cannot separate the theory of value from the theory of money. Money enters into the ‘motives’ for trade. Goods cost money, not goods. So it is the ‘behaviour of money’ in the time between trades that we have to attend to. Money cannot be ‘neutral’, in the required sense that its value has no effect on the prices at which people want to trade, because the only prices people know are money prices. By the same token there is no such thing as a barter equilibrium – what goods would be exchanged for in the absence of money. There is only a monetary equilibrium.

So what affects the behaviour of money? This should be a key point of enquiry into the behaviour of a monetary economy. Why did money come to exist? What purpose does it serve?

[...] No one knows exactly where, how or why money started, so people are free to invent stories. The main aim of the storytellers has been to elucidate, by reference to a hypothetical past, the nature of money in our own time. Two such stories have dominated the literature of money. Adam Smith’s eighteenth-century story tried to explain why money consisted of gold and silver. The chartalist theory, dating from the end of the nineteenth century, tried to explain why money consisted mainly of credit. We can call these the metallist theory and the credit theory.

Adam Smith’s story, which goes back to Aristotle, is still the textbook favourite. It is certainly the easiest story to understand, which accounts for its popularity. Before money, it is claimed, there was barter – direct exchange of goods for goods. But barter required a ‘double-coincidence’ of wants. Both partners need to want what the other has, at the same time. So money was invented to enable one of the parties to pay the other in something which the other could use to buy something else. Adam Smith conjectured that the “something” which became the “medium of exchange” must have been “some one commodity ... (which) few people would be likely to refuse in exchange for the produce of their industry.” Though cattle, salt, shells and the like were used, metals, and especially the precious metals gold and silver, came to be preferred, for their divisibility, but even more for their durability and scarcity. It was these qualities which fitted them to be the measure of perishable things.

[...] The theory of the bartering savage is heavily indebted to the classical anthropology of Adam Smith’s day, at the heart of which is the figure of homo economicus, who pursues his self-interest in isolation from society. That this still underlies neo-classical psychology is made clear in Paul Samuelson’s famous textbook, where we read: “A great debt of gratitude is owed to the first two ape-men who suddenly perceived that each could be made better off by giving up some of one good in exchange for some of another.” Most economists have favoured the bartering savage story, because it leaves out society and government.

By contrast, the credit story, which took root at the end of the 1800s, makes money start life as a debt contract – a promise to pay in the future for something bought today. The credibility of the promise depends on the trust of the debtor. But trust is not bestowed on a stranger, so it is the existence of a social bond which makes money possible. The language of money is the language of promises: ‘my word is my bond’. As Alfred Innes writes: “By buying we become debtors and by selling we become creditors.” The credit theory of money does not automatically upset the classical dichotomy, if it is assumed that credit is simply an advance on money, which is itself an advance on goods. But it greatly weakens it by placing expectations at the centre of its account of ‘real’ transactions.”

Robert Skidelsky, in his 2018 book Money and Government, giving an adequate introduction to mainstream modern economics. For when you want to confirm your suspicion that the vast majority of economists have basically no idea what the fuck they are talking about and are literally just making up self-serving bullshit as they go along.

“The misunderstanding that has arisen on this subject is due to the difficulty of realizing that the use of money does not necessarily imply the physical presence of a metallic currency, nor even the existence of a metallic standard of value. We are so accustomed to a system in which the dollar or the sovereign of a definite weight of gold corresponds to a dollar or a pound of money that we cannot easily believe that there could exist a pound without a sovereign or a dollar without a gold or silver dollar of a definite known weight. But throughout the whole range of history, not only is there no evidence of the existence of a metallic standard of value to which the commercial monetary denomination, the ‘money of account’ as it is usually called, corresponds, but there is overwhelming evidence that there never was a monetary unit which depended on the value of coin or on a weight of metal; that there never was, until quite modern days, any fixed relationship between the monetary unit and any metal; that, in fact, there never was such a thing as a metallic standard of value. It is impossible within the compass of an article like this to present the voluminous evidence on which this statement is based; all that can be done is to offer a summary of the writer's conclusions drawn from a study extending over several years, referring the reader who wishes to pursue the subject further to the detailed work which the writer hopes before long to publish.

[...] One of the popular fallacies in connection with commerce is that in modern days a money-saving device has been introduced called credit and that, before this device was known, all purchases were paid for in cash, in other words in coins. A careful investigation shows that the precise reverse is true. In olden days coins played a far smaller part in commerce than they do to-day. Indeed so small was the quantity of coins, that they did not even suffice for the needs of the Royal household and estates which regularly used tokens of various kinds for the purpose of making small payments. So unimportant indeed was the coinage that sometimes Kings did not hesitate to call it all in for re-minting and re-issue and still commerce went on just the same.

[...] From long before the fourteenth century in England and France (and I think, in all countries), there were in common use large quantities of private metal tokens against which the governments made constant war with little success. It was not indeed till well on in the nineteenth century that their use was suppressed in England and the United States. We are so accustomed to our present system of a government monopoly of coinage that we have come to regard it as one of the prime functions of government, and we firmly hold the doctrine that some catastrophe would occur if this monopoly were not maintained. History does not bear out this contention; and the reasons which led the medieval governments to make repeated attempts to establish their monopoly was in France at any rate not altogether parental care for the good of their subjects, but partly because they hoped by suppressing private tokens which were convenient and seemed generally (though not always) to have enjoyed the full confidence of the public, that the people would be forced by the necessity of having some instrument for retail commerce to make more general use of the government coins which from frequent ‘mutations’ were not always popular, and partly because it was believed that the circulation of a large quantity of base tokens somehow tended to raise the price of the precious metals, or rather, perhaps, to lower the value of the coinage; just as economists to-day teach that the value of our token coinage is only maintained by strictly limiting its output.

[...] Adam Smith's position [on the ‘bartering savage’] depends on the truth of the proposition that, if the baker or the brewer wants meat from the butcher, but has (the latter being sufficiently provided with bread and beer) nothing to offer in exchange, no exchange can be made between them. If this were true, the doctrine of a medium of exchange would, perhaps, be correct. But is it true?

Assuming the baker and the brewer to be honest men, and honesty is no modern virtue, the butcher could take from them an acknowledgment that they had bought from him so much meat, and all we have to assume is that the community would recognize the obligation of the baker and the brewer to redeem these acknowledgments in bread or beer at the relative values current in the village market, whenever they might be presented to them, and we at once have a good and sufficient currency. A sale, according to this theory, is not the exchange of a commodity for some intermediate commodity called the “medium of exchange,” but the exchange of a commodity for a credit.

There is absolutely no reason for assuming the existence of so clumsy a device as a medium of exchange when so simple a system would do all that was required. What we have to prove is not a strange general agreement to accept gold and silver, but a general sense of the sanctity of an obligation. In other words, the present theory is based on the antiquity of the law of debt.”

Alfred Innes, also known as A. Marshall-Innes, elaborating on what he meant by “By buying we become debtors and by selling we become creditors,” in his article What is Money? from the May 1913 issue of The Banking Law Journal. To help you understand the genuine foundation of economics is not some mythical selfish profit motive, but simply the timeless need to have a friend spot you one.

“[Sims:]

Barrel full of powder, ship full of tea:

closer by the hour, bringing sick to the seas.

Bellies full of barter, thick with the thieves:

once they hit the harbor, it’s a wick and a breeze.

There goes another one, right out from under ‘em:

different sea shore, same thirty stores.

There goes another one, right out from under’ em:

world-wide mining town; steal it up, sell it down.

And not too long ago, mom and pop owned the shop.

Prognosis progress: now the Dow owns the block,

here to sell ‘em salvation or elevation—sorta;

signal disorder: it’s Celebration, Florida.

They got the medicine to fix your mood

till you learn to mind your place and eat that Sysco food.

You crave the arrogance rich folk ooze:

take life, waste life, just to get those jewels.

[Chorus:]

Uh huh, uh huh: heads will roll.

Low light low life: recite that untold,

keep with the goals, rehearse for the eleventh hour;

it will be arrow after arrow after bullet after sunflower.

Uh huh, uh huh: heads will roll.

Low light low life: recite that untold,

keep with the goals, rehearse for the eleventh hour;

it will be barrel after barrel after barrel of that gunpowder.

[Dessa:]

It seems we’ve fallen out of favor, the era ended on us.

Now the money’s just paper, the houses all haunted.

We had a hell of a run before it caught up;

for all the corners cut we got an avalanche of sawdust.

Life of the party, we’re the death of the novel;

the glass is half-empty, so pass the next bottle.

It’s the flight of the salesman, death of the bumblebee;

nothing left for the attorneys and the tumbleweeds.

They say that God’s on the right, so goes the rhetoric;

but I think that Cross is a kite that left a skeleton;

and I think that Russell was right, but that’s irrelevant friend;

for all I know there’ll be nothing left to defend tomorrow.

Sugar in the gas tank, nothing in the cashbox;

thought that we were so sick: looking like it’s smallpox.

The bullets are still on the shelves,

but when the armoury empties, we’re melting down the bells....

[P.O.S.:]

It’s the end of law and order: Dick Wolf.

Aware in America, rocking a cheap sheep suit.

Pulled wool, weave through, stay on course till

pulled over by that pulled pork: cops keeping the peace... cocked.

Catch and release like a sportsman; see ‘em in a court then:

piss poor paying them a portion, funny how they distort extortion.

Never better, P.O.S. dance to the rhetoric;

lean to the left: call me terrorish. Rock with it.

Dance fever got ‘em peeping out the prints on the floor,

true believers keep their eyes on the horizon.

Catch me sizing up the silent, check the crooked grind,

watch me fifty/fifty: keep the balance between the coping and the feeble mind.

I hope the broken folk rewind;

nothing much for token jokers here: skate off, we doin’ fine.”

The lyrics to “Low Light Low Life,” a song by P.O.S., Dessa, and Sims, from P.O.S.’s 2009 album Never Better. For when you’d like an incredibly clever, cheeky, and perceptive summary of our times.