Awix in Exile: How Money Works

1 Conversation

A message in a bottle
Awix in Exile

How Money Works

One of the commercials in heavy rotation on several of the TV channels I find myself habitually watching during the current period of personal limbo is for what I believe is a smartphone application aimed at parents of young-ish children. It brings the age-old tradition of pocket-money into the brave new world of online banking and the cashless society, with perhaps more than a soup¸on of helicopter parenting involved as well: ‘Your kids get to learn how money works, with their own card, while you get to control how they spend it!'

Crikey, there's a lot to unpack there; suffice to say that if I was a child presented with this marvellous prospect I think my response would be distinctly lukewarm. In any case, I'm more interested in the claim to be able to teach anyone, let alone a child, ‘how money works'. About five years ago, I wrote about the movie The Big Short and observed that, as far as most people are concerned, the inner workings of the global financial system are every bit as mysterious and arbitrary as the whims of the sky-gods were to our distant ancestors many millennia ago. I don't exclude myself from this: I watched The Big Short, read the book it was based on, really did try hard to understand how sub-prime mortgages and the futures market work, and yet my clearest memory from this whole undertaking is of the scene with Margot Robbie in the bubble bath.

How does money work, anyway? All right, the mechanics of it are fairly straightforward and well-known to all of us, but how do prices work? Inflation? Exchange rates? Is there some secret cabal of gnomes in an underground bunker somewhere deciding all of this (the thought is enough to make any conspiracy theorist's heart sing), or is it in fact just some numinous propositional beast, self-regulating, but out of conscious human control? I think the second option is the more likely one, and more disturbing. The moment where the machines go out of control and take over, dominating and dictating all our lives, has been a mainstay of science fiction for nearly a century; perhaps the notion had its birth in a moment of realisation that the financial system – a human creation, albeit a partly abstract one – was now more powerful than any single human being.

The best explanation I've come across for the how-money-works question was in Sapiens, the best-selling pop-science book by the Israeli historian and philosopher Yuval Noah Harari. Harari's take on it is that money is essentially a piece of technology we came up with to facilitate exchanges of goods and property. Sometimes you can't directly trade work or goods for whatever you want in exchange for them, so money is a convenient interim step. It's a sort of universal indirect conversion mechanism.

But what about a universal direct conversion mechanism? One of the more unlikely places where discussions of economic theory occasionally break out is between Star Trek fans, as they try to figure out how the Federation's economy functions. As Star Trek is a media franchise and thus Not Real, evidence for this on screen is impossibly inconsistent: there are a few oft-quoted pieces of dialogue claiming the Federation doesn't use money. This, coupled to the existence of the (apparently) make-anything-out-of-thin-air wonder-gadget, the replicator, has led many to conclude the Federation is a de facto example of a post-scarcity society where the basic economic problem has been solved.

Set against this is the narrative problem that a truly post-scarcity society would be a challenging one to tell accessible stories about in a TV or movie context, together with the fact that there are literally dozens of examples of characters casually talking about selling their house, buying a boat, earning their pay this week, and so on. Other civilisations whom the Federation have a relationship with still use money; how would trade between a post-scarcity society and a less advanced one operate? Why would the Federation need to trade at all? It's a fascinating and stimulating thought experiment, but what's on screen doesn't really make sense.

As you might expect, the British approach to what we should probably call economic science fiction takes a rather different form. The most interesting example that I've come across is Long Live the King, one of the final episodes of a series called Survivors. Younger readers may be more familiar with the revived version of this series which aired ten or twelve years ago (and which, in its second season at least, actually seemed concerned with issues raised by the last big financial crash), but I speak of the programme's original 1970s incarnation.

The series opens with over 99% of the global population seemingly being wiped out by a virus which is implied to have escaped from a Chinese laboratory (let's not go there), and over the course of 38 episodes deals with the impact on the tiny handful who have survived, their coming together as small communities, their attempts to re-establish something resembling civilisation, and – in the final few episodes – the restoration of the nation-state.

It's probably hopelessly optimistic (certainly compared to George R Stewart's Earth Abides, the novel on which the series is clearly based), but the episode we are talking about is genuinely interesting from our current point of view. Up until this point in the show, the different communities have been trading and bartering goods between them, but the limitations of this are becoming a problem. And so the main characters (who, one way or another, and often without really meaning to, have become leaders of the reconstruction) set out to reintroduce money to the post-apocalyptic world.

Suffice to say they meet with problems. 'That's just little bits of paper, it's useless,' is the response they get when they start handing out bank notes. Money only has value as long as everyone agrees it does: one of those ideas which is obvious when you think about it… it's just that most people don't really think about it. Or, in this case, the money has value because it can be traded in for petrol at the government HQ. The only problem is, that the characters behind this scheme don't have nearly enough petrol to pay everyone off if they all decide to cash their money in: they are trading in devalued currency, at best; perpetrating a massive con trick, at worst. But it's a necessary con trick for the good of society.

Thought-provoking stuff, if a little bit abstract and theoretical (there's another plot-line about bandits infected with smallpox in the actual episode, just to give it a bit more actual jeopardy), and it does make one think about the necessity of money and how it actually works. Is money the index case of technology going out of control and blighting the lives of millions of people? Or is it just a massive con trick in which everyone is happily complicit? I've no idea, but I'm pretty certain the answer is not to be found in a smartphone app.

24 Lies a Second Archive

Awix

28.06.21 Front Page

Back Issue Page


Bookmark on your Personal Space


Entry

A88024773

Infinite Improbability Drive

Infinite Improbability Drive

Read a random Edited Entry


Written by

Credits

Disclaimer

h2g2 is created by h2g2's users, who are members of the public. The views expressed are theirs and unless specifically stated are not those of the Not Panicking Ltd. Unlike Edited Entries, Entries have not been checked by an Editor. If you consider any Entry to be in breach of the site's House Rules, please register a complaint. For any other comments, please visit the Feedback page.

Write an Entry

"The Hitchhiker's Guide to the Galaxy is a wholly remarkable book. It has been compiled and recompiled many times and under many different editorships. It contains contributions from countless numbers of travellers and researchers."

Write an entry
Read more