Wednesday, October 13, 2010


Long ago, in the development of the economy, money emerged as a medium of exchange to facilitate the trading process. Many different currencies were used, but some were more attractive than others. Precious metals were popular currenices because of their properties. They were easily divisible and shaped, could be transported without much hassle, they didn't deteriorate, and were relatively cheap to store. When a central government develops and taxes the people, they demand their taxes to be paid in a particular currency, say gold, and so gold becomes the most widely if not only used good as currency. All other goods' value become expressed in terms of gold. (Today, we use fiat or paper currency because that is what the government demands for taxes).

Still, at that time, money was mostly used as a medium of exchange, or put in another way, as a means to an end. The ends were consumption goods. People and eventually businesses produced goods in order to obtain other goods. The purpose of producing shoes, was to obtain food and other necessities. Once necessities were met, production could go towards obtaining luxury items. This is where the problem of distirbution really becomes perplexing as I noted in a previous post.

Once people and businesses were no longer concerned about obtaining necessity goods, they could focus on accumulation, but what good to accumulate? Accumulating the good of their production would be real wealth for they could be traded for other goods, but holding goods as wealth is a risky prospect. Eventually they'll have to pay taxes, and will need to acquire the mandated currency. This currency is also the most liquid good to hold, that is, it can most easily be traded for any other good on the market. So people and businesses desire to accumulate the mandated currency. Now, money is no longer sought as a means to an end, but as an end in itself.

In the field of economics we describe this as the M-C-M' process. The original process was C-M-C', or produce a commodity (C) and sell it for money (M) in order to buy another commodity (C'). As money became sought as an end, the process became inverted. Money (M) was used to invest in producing a commodity (C) in order to obtain more money (M').

This distorted desire for money as an end, I argue, is not only a moral problem (the worship of a false god), but an economic one. Production is now an incentive of obtaining more money and not of meeting man's needs. Work is no longer providing for one's family, but for the obtaining of wealth. Some of the purchasing power is taken out of the economic system and not put back in because of this sordid love of money. It is used for dangerous speculative gain of more money, rather than for the obtaining of food for the hungry or shelter for the homeless. Overproduction occurs chasing after this wealth, and unemployment occurs because businesses are afraid to part with their wealth. They are no longer concerned and perhaps were never concerned with the good of the people and providing for their needs, but rather they are concerned with procuring more money and this distortion is partly a result of the competitive capitalistic process. Because in this process one either makes a profit or goes out of business, grows or dies, eats or gets eaten.

Our final end is to be face to face with God in heaven, and all ends sought for on earth should help us to obtain this end. Money is not one of these ends; it does not satisfy our hunger, or provide us with shelter, it does not exercise our intellect or help build relationships, and it does not bring us closer to God. It is only good as a means for obtaining those things that do.

Further commentary from the Michael Journal

No comments:

Post a Comment