Is Planet Earth skint?

Is Planet Earth broke? Has the world run out of money? Are we financially so overdrawn that life on Earth cannot continue because it is skint? Is this how it all ends? Not with a bang, nor a whimper, but a knock? Consider the concept of money. What is it? When was the last time you saw some? That’s probably why people have trouble defining what it is. Money is counterintuitive, it behaves as a fluid. It represents stored energy expenditure that is temporally decoupled. In other words, it’s a token of past or future stored effort that can be moved about in time and given to someone else in return for an equivalent amount of effort on their part.

Energy expenditure in the sense that we’re interested in is essentially analogous to work or effort. For the most part, to do work involves expending some energy. Yes, even bankers and estate agents. If I bake a loaf of bread, you could do the same. However, if I bake two loaves of bread and you catch two fish, I might accept a fish for a loaf, if we both agree. If you wanted today’s loaf but you didn’t manage to catch the fish today I might let you have a loaf and you owe me a fish, if I trust you. If you’re a stranger, forget it. Same as if I burned the loaves today I could still get a fish and owe an extra loaf tomorrow, if I were known and trusted. If we had some kind of agreed token instead, we could dispense with the direct barter and I get a coin for a loaf, I give a coin for a fish, and a stranger with no loaves or fish gives a coin even though we don’t trust her. It represents the effort involved in catching a fish or baking a loaf, or some equivalent effort that we’ve all agreed on. Or we could store the money for later when we might need more of it, like to buy a small twin-engine personal jet plane. Work, or effort, therefore is associated with expenditure of energy.

Think of the work you’ve done today, or this week, or last month. It’s easy to see that working self-employed seems like a linear relationship — do a lot of work and get paid for it. Put half the effort in and not get paid as much. Put no effort in at all and get nothing. But as we all know it’s not that straightforward. In a job as an employee, it’s easy to see people putting more effort in than yourself, and people putting less effort in than yourself, yet all getting paid similar amounts at similar times. It’s easy to see that the ‘free-rider’ effect limits the amount of work in a team or group to a socially normal expectation. Even though some people coast along going through the motions of holding a job down and yet getting paid, while others excel, and yet get paid, we all actually do some amount of work. Hardly anybody gets away with doing nothing. We all work, we all expend effort, and we all therefore qualify to make money.

I said that the fluid “money” is a temporally decoupled token of stored effort. This is the essential mechanism behind trade and transactions in the modern world. Fiat money is the use of something otherwise totally useless, as the thing that money is made of. We use coins, which are not much use to eat or sleep on or anything else other than buying something else with. Similarly with paper money, which I suppose you could burn if you want to keep warm. The KLF must’ve been getting pretty cold prior to that day in 1994. Money these days as we know is simply a number in a bank database, not even backed up by a Gold Standard, and this is still a fiat currency. Even with forthcoming popularity of cryptocurrencies, the most popular of which is currently Bitcoin, we still store or exchange effort in something that is otherwise totally useless in itself.

The world has a lot of people in it. Many of those people spend their day at work in a job. Many of those in jobs actually seem to do some real work — they can’t possibly spend all morning looking at Facebook. What would they do in the afternoon? We have a lot more people in circulation in the world now than we did before this recent recession. The one that frightened everyone since 2007 to about last year when Daft Punk ended it by releasing “Get Lucky” followed by Pharrell sealing global financial recovery with “Happy”. We all perform work, put in effort, and this gets stored for later or passed around as money. We have more productive capacity now than the world has ever had.

We should not and must not persist in this dismal attitude toward economics that allows falling down into austerity measures just to tighten up and restrict production. We must realise that the planet is not broke. Where did all the money go? Where was it to begin with? Is Planet Earth skint? Broke? Bankrupt? Of course not. Planet Earth should not hang up the sign saying “out of business”. We are not a broke planet. We have the work, the effort, the temporally decoupled system of representing transferrable stored energy — the money. It’s somewhere, it can’t have escaped. And if it turns out that we didn’t have as much fiat nonsense as we thought we did, we can easily make a lot more. Let’s get to work!