What is money?

Money! It's central to our lives, everyone needs it and most people want more of it. People are even trying to change what we use as money. Politics, in fact, can almost be thought of as a huge debate about who should really have money.

But how often do we stop and think about what it really is?

To answer that question, let's take a brief look at the history of money. In the olden days, no... not those ones, the even older older days. No, even further back to before we had even the concept of ownership! Yeah, we're talking about a tribe of early humans sitting around a campfire gnawing on the bones of their latest kill. In these times not only was there no money, there was no need for money. Survival itself meant everyone working together and sharing any meager resources they could find.

The modern human might wonder which hunter actually killed that prey, and maybe wonder if the hunter got a larger share of the meat or improved status in the tribe. But through that lens we might see the dynamics of what would become money.

In reality it's likely that one hunter found the tracks, and perhaps another herded the pray towards waiting hunters. In the end each of these people, in their own way, provided the meal for the entire tribe. That meal could be considered value in itself, as it's critical to the tribe's survival. Furthermore while three hunters may have succeeded today, a different three hunters could be the ones who succeed tomorrow. In this way, over the long term each person in the tribe is providing value to each other person in the tribe.

Let's fast forward a little bit from there, because eventually humans developed skill specialization and rudimentary societies. One person in a village might farm wheat, while another might farm cows and a third builds houses. This, at least, should be more familiar to us as modern humans but we might notice, in this thought experiment, that no one has yet invented money!

How does this work then? Well, simply put the cow farmer might need some wheat for his cows so he might offer the wheat farmer some milk in exchange for some wheat. Simple enough of course, but what if the wheat farmer needed a new house built after a particularly bad storm? The simple answer would be to trade wheat for house repairs, but what if the builder already had enough wheat? Well, the wheat farmer could find something else the builder needs and try to trade wheat for that and then go back to the builder. What we're really describing here is at heart no different than the tribal situation: Each person is trading something of value to the others.

Trading specific products in such a manner is known as the Barter System, and anyone who's played RPG video games knows how tedious that can get. Eventually, fed up with walking back and forth between a half dozen people to get an awning fixed, some clever humans decided you can carry an item around that signifies an exchange of value took place. The idea here is really that the wheat farmer could hand over a number of these items, and the builder could take them and go get whatever he needs. That item is what we now call money, and can really be anything that people agree upon. Sea shells, stone tablets, even bottle caps!

Whatever gets used though, signifies the same thing as peoples' actions did in the old days: Value provided to another person or people.

This reminds me in some ways of the concept of karma, wherein a person's actions towards others' result in receiving similar treatment. Going back to the tribal example, feeding the tribe one day means getting fed on another day.

For this reason I have come to think of money as a Leaky Abstraction of Karma.

What is a leaky abstraction? For you non-software-developers out there, an abstraction is a means to hide complexities of an operation. For a real world example, imagine having an assistant and you ask them to set up a meeting for you. The assistant then goes through the individual steps of contacting the attendees, finding time, sending out the invitations, etc.

A leaky abstraction is something like having a bad assistant resulting in you having to handle some of those steps yourself. A leaky abstraction can even cause problems, such as an assistant forgetting to invite a person or scheduling it at a bad time.

So then how is money a leaky abstraction? Well, again look back at the tribe around that campfire. Nothing was needed to track who was providing value, it was known simply by everyone being there and doing their share. No one had to work out the details, or track anything... it just happened.

With money, on the other hand, we find ourselves doing a lot of work just allocating the money to those that benefit us. Furthermore the exposed details of this abstraction can even cause problems.

The easiest example of the flaws in money as an abstraction for Karma is theft. One could sneak into a house, grab a bunch of money and flee into the night. Since there abstraction keeps no record of how money was obtained the thief is now the recipient of value they did not provide to anyone.

There are plenty more "leaks" in money as an abstraction for Karma, but this getting long so I'm going to end here for now. Perhaps if there's interest I'll do another post going through the flaws, so let me know what you think in the comments below!