Draft for comment–and subject to further development:

NEW THOUGHTS ON MONEY NOV. 2001

Mercy J. Harmer

The arguments about monetary reform remind me of the blind men feeling the shape of an elephant to decide its nature. Each would be able to make a valuable contribution to gaining a complete picture if only they would combine their insights instead of assuming different insights must be either 'right' or 'wrong. Our economy cannot be understood by straight-line one-dimensional thinking. It needs the interrelational approach.

At Manchester Clive Lord brought me up short by saying that ever since the invention of farming there had been economic expansion. I reviewed my knowledge of economic history. Clive is quite right but we need to look closely at the changing nature of that expansion so that we can see how to control it in a world where it is rapidly becoming a danger rather than a road of promise. As I thought more about this problem I realised that two separate lines of thinking that I had been following–the money problem and the need to move from cut-throat competition to a more co-operative economy–were both aspects of the same problem.

Farming produced food for less labour than hunting and gathering and gave time to invent other things: better clothes, better homes, the development of all sorts of crafts. Groups with different environments, different products, could exchange with each other–or simply steal–and as theft was a special temptation for less fortunate tribes defence became necessary. Specialist warriors had to be clothed and fed by the rest of their group but because they had superior fighting skills it was always possible for them to force the rest to hand over ALL their surpluses, creating class divisions and lives of luxury for the few. But there were limits to what even the strongest ruling class, together with their craftsmen, harems and myriads of servants could enjoy and organise and if they became too effete the next step would be defeat by a neighbouring tribe–so this was a self-limiting form of economic expansion.

Money brought in a new dimension. Long-distance travellers, - seafarers or nomads perhaps, could take goods plentiful in one area to somewhere far away where they were scarce. They could then gain in exchange large quantities of plentiful local products to be taken to where they in turn were scarce. The surpluses gained at each stage could bring wealth to the merchant.

As such trade became more complex precious metals which could be weighed accurately became increasingly useful to give and accept when one side did not require particular goods on offer.

Metals had the added advantage that they could be used to measure the value of goods exchanged, especially when trusted rulers had coined them to indicate (seemingly) guaranteed weight and value.

Money was so useful that in time it spread from merchants and their direct customers to everyone else, leading to important changes in human relationships. Feudal landholders, for instance, could pay their dues to the landowner in money instead of in kind giving them new freedom from manorial restrictions–but there was a downside to this freedom.

It soon became clear that desirable resources in limited supply would go to those who had MOST money; so no-one could be sure of having enough. The tenant, for instance, who had been selling food in the local market and saving the proceeds to pay his rent, could be shocked to discover that the rent had been raised beyond his reach, perhaps because the landowner wanted to farm the land himself, employing labourers who would be paid the lowest possible wages. Unlike the villein, tied to the soil but with land to supply his basic needs, the wage labourer only had income when there was work to do and the dispossessed tenant could well become one of these.

Meanwhile the aim of the landlord was to make as much as possible from the land's products so that he could outbid others for whatever luxuries he had set his mind on. Money freedom brought money insecurity with competition the order of the day (unless authorities passed laws. as happened in some towns, aimed at curbing its worst effects).

The powerful ruler of the ancient world would eventually reach the limit of what he could eat, use and enjoy but once money could buy anything the appetites of those desiring wealth and power could become insatiable because someone with more wealth could buy either coveted resources or the source of power itself.

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