Reciprocation and Money

One thing that I’ve been thinking about a lot lately is money.

What is money? Why should giving someone pieces of paper compel them to give me things?

A while ago my answer would have been “Because they think that that money will make some other people give them roughly equally valuable stuff”.

This is probably the causal reason why most people use money.

Debt: The First 5000 Years is a pretty great book, which may or may not be mentioned later.

One of the interesting points it raised is that money is pretty new, relative to debt. Primates (and probably all social mammals) have all this hard/software to keep track of things like reciprocity, and have been capable of coordinating for a very long time.

So why throw that out?

Originally, people didn’t. They did stuff for each other and kept track of, roughly, who owes who what.

This works on sub-Dunbar scales. Really easily.

When you increase in scale, you keep the reciprocity in place, but start writing things down. Like who owes who what.

Money really seems to just be an invention for easily keeping track of reciprocity. I give you something, you give me money, and I understand that I can turn that money into a roughly similarly valuable amount of thing. Rather than directly reciprocating yourself, you give me something which will make other people do the thing for me. Good enough.

With me so far?

If money is supposed to keep track of reciprocation between strangers, then why not just skip the money and reciprocate directly?

As far as I can tell, that’s a pretty good idea. I don’t need to pay rent as long as I can keep my friends at UMD happy with me staying in their room(s).

I think that a lot of people actually do do this to some extent, just not with the background idea that they’re replacing money.

If you consider a social group to be a group of people in a web of mutual reciprocation, then that group’s money seems to just measure their bargaining power within the economy around them. Which as of now, is pretty powerful.


About atucker

Provisional pronouncements and (hopefully) honest mistakes. I'd like to be differently wrong about things, and helpful to the world.
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