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Wednesday, December 30, 2009

The rise and fall of money (2000)

From the September 2000 issue of the Socialist Standard
Many people mistakenly believe that money has always existed and that it therefore always will. We explain why money is out of date.
Many people think that money has always existed and therefore it always will. Wrong.

Human beings have lived on this planet for hundreds of thousands of years without using money. When they were hungry, they ate. When they were thirsty, they drank. Whatever was available to anyone was available to everyone.

It wasn't paradise, because food was scarce, and growing communities were eventually forced by this scarcity into a competitive struggle for life.

First came the invention of agriculture, and the consequent need to defend the land, or property, on which crops were grown.

Although this gave communities more stability and growth, agriculture and animal husbandry could not by themselves supply everything which they needed to develop as cultures. For this they needed to associate with other communities and pool their resources. But in the new culture of property there was never again to be such freedom to take whatever was available.

And so began the exchange of products known as trade. And although some quite advanced bronze age societies managed to trade very well by using barter (e.g. the Egyptians), it was a supremely awkward way to conduct transactions. With the advent of the Iron Age, cheap metal was for the first time plentiful, and coinage was slowly introduced to facilitate the trading process.

Civilisation has since grown up on the back of this trade, whose sophistication was made possible by the invention of money. To the modern mind therefore, civilisation relies on money. This is a misunderstanding. In fact, it is only trade which relies on money. Civilisation relies on distribution of material goods certainly, but distribution is not the same thing as trade, just as give is not the same thing as sell. Modern industrial society has given us the means to free ourselves forever from that scarcity which has always dogged our forebears. Money is no longer a necessity or logical feature of society, and only a tiny minority benefit from its presence.

In history, many things become out of date, like the steam engine or quill pens. Money is about to join them.

Money today
Money is indispensable to the capitalist system, but this system is not indispensable to human society. Money as a universal means of exchange represents capital. The possessing of money enables the buyer to acquire goods and services (commodities) and the seller to dispose of goods and services. The key resource that is bought and sold is human labour power—the ability to transform initial wealth (resources, raw material, etc) into more wealth.

We live in a society where almost everything is bought and sold. That which you need to live is a commodity, you must buy it from someone who will make (or at least expect) a profit out of selling to you. It is our passport to existence in capitalism. Not only does the movement of products from producer to consumer come to be mediated by money, but the value of a product comes to be judged not in human terms but in terms of a sum of money.

The key to the rise of continuation of the capitalist system is the ability of members of the capitalist class (owners of means of wealth production and distribution) to buy the working abilities of members of the working class. They combine that labour with capital resulting in commodities that can be sold for more than it costs in total to produce them.

A high proportion of employment in capitalism consists of handling money in some way. There are hundreds of occupations that would not exist in a society that had no need for money: they range from accountants, bank and insurance staff, salespeople, wages clerks to name only some of the more numerous occupations. Tangible products needed only in a money system include bank notes and coins, account books and invoices, meters, safes and many others.

Capitalism as a market system means that the normal method of getting what you need is to pay for it. The normal way for members of the capitalist class to get money is to invest their capital to produce rent, interest, dividends or profit. The normal way for workers to get money is to sell their labour power for wages, salaries, commission or fees. If they are unable to find employment they depend on state or other handouts. The result is poverty in the midst of potential plenty—actual plenty only for the privileged minority.

Socialism: a moneyless society
Socialism means a world society based on production solely for use, not profit. It will be a classless society, in which everyone will be able to participate democratically in decisions about the use of the world's resources, each producing according to their ability and each taking from the common store according to their needs.

In such a society there can be no money—or, more precisely, no need for money. Money is only needed when people possess, and most do not.

Imagine that all the things you need are owned and held in common. There is no need to buy food from anyone—it is common property. There are no rent or mortgages to pay because land and buildings belong to all of us. There is no need to buy anything from any other person because society has done away with the absurd division between the owning minority (the capitalists) and the non-owning majority (the workers).

In a socialist world monetary calculation won't be necessary. The alternative to monetary calculation based on exchange-value is calculation based on use values. Decisions apart from purely personal ones of preference or interest will be made after weighing the real advantages and disadvantages and real costs of alternatives in particular circumstances.

The ending of the money system will mean at the same time the ending of war, economic crises, unemployment, poverty and persecution—all of which are consequences of that system.

The revolutionary change that is needed is not possible unless a majority of people understand and want it. We do not imagine all humankind's problems can be solved at a stroke.

Reforms of the present system fail because the problems multiply and recur. It will take time to eliminate hunger, malnutrition, disease and ignorance from the world.

But the enormous liberation of mental and physical energies from the shackles of the money system will ensure that real human progress is made.
Stan Parker

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