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Money as a Crusoe Concept
Money as a Crusoe Concept
(c) Copyright 2005, 2008 by Michael E. Marotta mmarotta-at-emich-dot-edu (These comments came from a series of posts I made in early 2005 to www.solohq.com, now called rebirthofreason.com. Based on replies – objections, mostly – I posted another version to The Molinari Institute group discussion on Yahoo at http://groups.yahoo.com/group/molinari-institute/ What follows is a narrow presentation of the basic claim. I am expanding the thesis for more formal presentation in an acadmic venue.) Economists generally recognize money as a social good, required for trade. Money is any means of indirect barter. From that, money is also a store of wealth and a unit of account. However, alone, on an island, Robinson Crusoe would need money. Money's primary attribute is that it is a store of value. This is what allows money to be a unit of account and a medium of exchange. On his island –in the Defoe story, actually – Crusoe's primary money was food. If he could store food, his labor could be invested. When he discovered that he had accidentally sowed wheat which “took” he was overjoyed. Historically, in fact, wheat (not gold or silver or even cows) was the first form of money. In other times and places, stone arrowheads -- which require significant effort -- would be a form of “money” not for trade – there is little evidence of that – but as a store of labor for the individual who makes it. As a store of effort, money then becomes a medium of exchange. It is also possible to “exchange” with yourself across time. Crusoe can fish today and catch more than he needs. Some he can dry. The chum he can bury to improve the soil into which he will plant wheat later. Thus, in planning and carrying out plans, Crusoe can engage in economic trade with himself across time. Planting today means harvesting tomorrow, but should Crusoe plant? Should he catch fish or look for coconuts? What Crusoe does on an island is determined by how he values his time and the return on it. Therefore, Crusoe needs bookkeeping of some sort and that means that he must have a unit of account. He must have money as a conceptual construct, some way to count and account meaningfully across activities and commodities. Money is a tool for quantifying choices. There are many kinds of money and almost anything can be money. He might calculate in terms of wheat because it is useful, divisible and easy to store. He might think in terms of hours, the one value over which Crusoe has the most control. Whatever conceptual tool Crusoe uses to quantify his choices, that is his money. Rather than being a social convention, money is an artifact of individual effort, thought and reward. -30- |
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#2
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Money as a Crusoe Concept
On Oct 12, 8:03*pm, Mike Marotta wrote:
Money as a Crusoe Concept (c) Copyright 2005, 2008 by Michael E. Marotta mmarotta-at-emich-dot-edu (These comments came from a series of posts I made in early 2005 towww.solohq.com, now called rebirthofreason.com. Based on replies – objections, mostly – I posted another version to The Molinari Institute group discussion on Yahoo athttp://groups.yahoo.com/group/molinari-institute/ What follows is a narrow presentation of the basic claim. *I am expanding the thesis for more formal presentation in an acadmic venue.) Economists generally recognize money as a social good, required for trade. *Money is any means of indirect barter. *From that, money is also a store of wealth and a unit of account. *However, alone, on an island, Robinson Crusoe would need money. Money's primary attribute is that it is a store of value. This is what allows money to be a unit of account and a medium of exchange. On his island –in the Defoe story, actually – Crusoe's primary money was food. If he could store food, his labor could be invested. When he discovered that he had accidentally sowed wheat which “took” he was overjoyed. Historically, in fact, wheat (not gold or silver or even cows) was the first form of money. In other times and places, stone arrowheads -- which require significant effort -- would be a form of “money” not for trade – there is little evidence of that – but as a store of labor for the individual who makes it. As a store of effort, money then becomes a medium of exchange. *It is also possible to “exchange” with yourself across time. Crusoe can fish today and catch more than he needs. Some he can dry. The chum he can bury to improve the soil into which he will plant wheat later. Thus, in planning and carrying out plans, Crusoe can engage in economic trade with himself across time. Planting today means harvesting tomorrow, but should Crusoe plant? Should he catch fish or look for coconuts? What Crusoe does on an island is determined by how he values his time and the return on it. Therefore, Crusoe needs bookkeeping of some sort and that means that he must have a unit of account. He must have money as a conceptual construct, some way to count and account meaningfully across activities and commodities. *Money is a tool for quantifying choices. There are many kinds of money and almost anything can be money. He might calculate in terms of wheat because it is useful, divisible and easy to store. *He might think in terms of hours, the one value over which Crusoe has the most control. Whatever conceptual tool Crusoe uses to quantify his choices, that is his money. Rather than being a social convention, money is an artifact of individual effort, thought and reward. -30- Your logic is falty, your assumptions are shaky and your conclusion is erroneous. |
#3
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Money as a Crusoe Concept
In article
, Voltronicus wrote: On Oct 12, 8:03Ýpm, Mike Marotta wrote: Money as a Crusoe Concept (c) Copyright 2005, 2008 by Michael E. Marotta mmarotta-at-emich-dot-edu (These comments came from a series of posts I made in early 2005 towww.solohq.com, now called rebirthofreason.com. Based on replies ñ objections, mostly ñ I posted another version to The Molinari Institute group discussion on Yahoo athttp://groups.yahoo.com/group/molinari-institute/ What follows is a narrow presentation of the basic claim. ÝI am expanding the thesis for more formal presentation in an acadmic venue.) Economists generally recognize money as a social good, required for trade. ÝMoney is any means of indirect barter. ÝFrom that, money is also a store of wealth and a unit of account. ÝHowever, alone, on an island, Robinson Crusoe would need money. Money's primary attribute is that it is a store of value. This is what allows money to be a unit of account and a medium of exchange. On his island ñin the Defoe story, actually ñ Crusoe's primary money was food. If he could store food, his labor could be invested. When he discovered that he had accidentally sowed wheat which ìtookî he was overjoyed. Historically, in fact, wheat (not gold or silver or even cows) was the first form of money. In other times and places, stone arrowheads -- which require significant effort -- would be a form of ìmoneyî not for trade ñ there is little evidence of that ñ but as a store of labor for the individual who makes it. As a store of effort, money then becomes a medium of exchange. ÝIt is also possible to ìexchangeî with yourself across time. Crusoe can fish today and catch more than he needs. Some he can dry. The chum he can bury to improve the soil into which he will plant wheat later. Thus, in planning and carrying out plans, Crusoe can engage in economic trade with himself across time. Planting today means harvesting tomorrow, but should Crusoe plant? Should he catch fish or look for coconuts? What Crusoe does on an island is determined by how he values his time and the return on it. Therefore, Crusoe needs bookkeeping of some sort and that means that he must have a unit of account. He must have money as a conceptual construct, some way to count and account meaningfully across activities and commodities. ÝMoney is a tool for quantifying choices. There are many kinds of money and almost anything can be money. He might calculate in terms of wheat because it is useful, divisible and easy to store. ÝHe might think in terms of hours, the one value over which Crusoe has the most control. Whatever conceptual tool Crusoe uses to quantify his choices, that is his money. Rather than being a social convention, money is an artifact of individual effort, thought and reward. -30- Your logic is falty, your assumptions are shaky and your conclusion is erroneous. Care to offer a correction? |
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Money as a Crusoe Concept
On Oct 13, 6:01*pm, Slime Lowlife wrote:
Care to offer a correction?- Hide quoted text - For the OP to opine that a modern day Crusoe would need money just shows how capitalism has destroyed his mind. |
#5
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Money as a Crusoe Concept
In article
, Voltronicus wrote: On Oct 13, 6:01*pm, Slime Lowlife wrote: Care to offer a correction?- Hide quoted text - For the OP to opine that a modern day Crusoe would need money just shows how capitalism has destroyed his mind. The issue would appear to be how one defines "money". Marotta seems to define it as the value of the productivity of labor. This allows him to say that money is not some social construct, but possible to define even in a "society" of a single individual, like Robinson Crusoe stuck alone on his island. I think that this definition is at best incomplete, & that money is indeed a social construct, in that its value is derived from what OTHER folks think of your labor (or what you produce from it). Since you disagree with Marotta's contentions as well, it's tempting to suggest you may be on my side of this issue. But it's impossible to say, as your only remarks have been to dismiss his arguments out of hand, & attribute his conclusions to mental defects. I had been hoping you would point out where his logic was faulty, & what a better set of assumptions would be. |
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Money as a Crusoe Concept
On Oct 18, 10:21*am, Slime Lowlife wrote:
I think that this definition is at best incomplete, & that money is indeed a social construct, in that its value is derived from what OTHER folks think of your labor ... Well, Slime, since you asked for a civil discussion and did not get one, allow me to reply now. There is no doubt that money is a social utility. My essay only developed a different starting point, with the individual. Similarly, would Robinson Crusoe need language, if he had no one to communicate with except himself? Would he need morality, or could he do "whatever he wanted" without consequences? In all three cases while the tool is social to us, each serves the individual. For another analogy to explain why I would bother with the question, consider geometry. It began as a strictly empirical solution to a specific problem: periodic flooding of the Nile erased boundery markers. However, we learn geometry as a rational endeavor, beginning with axioms and postulates and proving theorems. From that, it is possible to consider n-dimensional geometry, the rules for understanding things we cannot draw. We might allow that such theoretical mathematics has no real, empirical component. However, historically, we have found applications for such fancies. The electricity in our homes can be described using functions that include the "imaginary" square root of minus 1. So, too, with numismatics do seemingly theoretical fancies have realworld consequences: by what standard does a coin graded Poor-1 sell for a mere 1/70th of a coin graded MS-70? Are the coins of Hutt River Principality really "coins" or to be a "coin" must the object come from a government that is recognized by the US government? (Sellers of HRP coins were closed by the Federal Trade Commission on the grounds that the objects could not be "coins" and thus the advertising was misleading.) Here on RCC are unproductive exchanges over the collectibility of counterfeits, as by definition, counterfeit money is not money and (more to the point) is unlawful to possess, even though in colonial America counterfeit British coins circulated openly as money. Yet another analogy: aviation. For thousands of years, we dreamed of flying "like birds" and even attempted ornithopters to imitate them. When flight was invented, it came first as balloons and then as craft with only the grossest similarities to birds, who have neither propellors nor jet engines. Flight was possible only when someone thought the problem through from the very beginning, not in imitation. On the basis of those considerations, I wondered if Robinson Crusoe could use money -- as he used language and morality. I agree that this is only a partial answer. We do have a serious social utillity for money. But that, too, is only a partial answer. What if "no one" values your money? What if you plant a garden and cannot sell the produce? Is the time a deadweight loss like digging a hole and filling it up? Do the unsold vegetables have -no- value? It's a funny thing about money and collectors, but the worthless currency of a failed government now sells for more than it bought when the issuer was solvent I just paid $45 for 150 stock certificates that are otherwise perfectly worthless. How do you explain that? So, what -is- money? To figure that out, I started with the simplest case, one person alone. |
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