I don’t wish to alarm anyone, but our economy is a bit of an illusion. Goods and services are being exchanged for currency, which is mostly held in bank accounts as electronic records, instead of a proper certificates and legal tender. Many of us have abandoned cash, opting instead in favor of credit and debit for monetary exchanges. Putting aside the astounding amount of consumer household debt in the US for another time, I want to talk about the economy of everyday life.
A very long time ago, people exchanged one good or service for another in a bartering-type system. For example, a farmer grows cabbage and potatoes, but he needs other commodities, like rice and wheat, milk, cooking oil, and fuel. So he goes to the market and exchanges his goods for the things he needs. This works well until he decides to hire someone to help him pick his crops. The farm hand cannot realistically be paid in cabbages, so a form of currency is needed. The various precious metals, copper, silver, and gold, are established as acceptable remuneration for any debt or fee, and would eventually be codified to a standard we accept as legal tender.
Fast-forward a little, and we find ourselves in our current state where money is held in accounts, not in safes or mattresses. When we pay for something, we whip out a debit card (if there’s money in that account) or credit card and authorize payment. We don’t really think about it, but what’s keeping all this going? Maybe it’s just my mind being manipulated by watching Mr. Robot, and I do get a little anxious with each episode, but I’m bothered by the way our modern banking system seems to control everything. And what’s stopping the whole thing from falling apart? (I’m searching for a specific passage in a science fiction novel where I read that the end of the world was not caused by plague or war, but by cascading failures of electronic banking computers. The entire world economy was in memory somewhere, and something went wrong, horribly, catastrophically wrong. I was sure it was Arthur C Clarke, but I haven’t found the reference.)
My point is that the economy is extremely vulnerable. If you recall 2008 when the housing market crashed, the whole thing was caused by bad loans and greedy investors. If it happened once (and it has repeatedly) it can, and will, happen again. Except this time maybe it will be caused by hackers like the ones in Mr. Robot. What will happen if money is useless? What is money, really? Like I said, that legal tender concept is nice, but it’s just paper. And coins are not worth much. They contain very little precious metal, and no silver or gold. Pennies aren’t even made from copper anymore. Money is only worth something if the authority backing it says so.
So, let’s imagine what the world would look like if banks stopped working. You couldn’t use a debit card, and there’s no electronic “wallet” or other e-payment. Online bill payment is not an option, and no one accepts checks. The little cash there is might be accepted, but it’s only paper, like I said. In post-WWI Germany, inflation was so high that people used bank notes as fuel to keep warm. Eventually, a new economy would appear. Food and firewood are the new currency. Maybe you can trade some commodity for either. If you have a particular skill like making soap or metalworking, that is definitely worth something. If you’re thinking Fight Club you’re following me.
This vision of the future frightens me. It should frighten everyone, because not many people will thrive in this environment, and those who can are dangerous. This is why the governments of the world are working hard to keep economies flourishing. They will even go so far as to artificially prop up currency valuation or offer bailouts to prevent the unthinkable. By 2009, the US had spent $700 billion from taxpayers to prevent catastrophe (according to the Forbes article, it’s much more). And I think we were closer than is generally known.
When I go to the supermarket to buy coffee or potatoes or strawberries, I am participating in global trade with many different players. Coffee plants do not grow in the continental US. They require a specific climate that is best found in mountain regions in the tropics (high altitude, lots of sun and moisture). Strawberries in February come from Chile. We have to assume that people are getting paid all along the way. But if we paid what is fair – and whose definition of “fair” are we going by – that coffee would cost five times more. And strawberries in February would be cost-prohibitive. But through a careful balance of trade deals and other machinations, we can get what we want, and we don’t worry about what we can’t see, right?
Now I don’t recommend hoarding cash. And I am not condoning a policy of austerity and self-deprivation. That said, I am not the consumerism fan-boy. Capitalism is highly susceptible to greed and corruption. Marxism is also deeply flawed. Wherever there is a monetary system, it seems that people tend to fuck it up. We could theoretically live in a society where everything is traded; no one takes advantage, and there is trust. Borrowing and lending are simplified yet rarely implemented, but everyone buys only what they can afford. In this utopian economy, would money exist? I guess if that world could exist, maybe not. But unfortunately, we live in the real world, and that world must get paid.