Money, Happiness and Imagined Realities
This post is inspired by the book Sapiens: A Brief History Of Humankind by Yuval Noah Harari.
Money.
Just pull out the currency note from your pocket and look at it. Does it carry any value? Does it have an intrinsic value? Isn’t it just a coloured paper?
Turns out this coloured paper does not have any value of its own. We believe it has a value. And this belief is created as a result of mutual trust. We all trust that this very paper does carry a value. This imagined reality is influenced by the stories told to us by our respective governments. Yes, we are living in imagined realities.
If I give you a choice to either pick 10 rupees (or dollars; think your currency) or 10 pebbles, what would you choose?
Of course, you’ll pick 10 rupees. This is because you know that you can transform these 10 rupees into something worthy. Maybe you go out and a buy a chocolate for yourself. But how do you really know that you can actually convert your 10 rupees into a chocolate? It is because the government told you so.
Why did the shopkeeper exchange a chocolate for those 10 rupees? It is because he too believes in the power of money and he too can convert those 10 rupees that he just received into something useful. And how does he know that? Well, of course the government told him the same story.
So, what is the story that the government told all of us?
The government said, “Here, we give you 10 rupees. A sender can go to a receiver and demand anything of an equivalent value in exchange of these 10 rupees. The receiver can further assume the role of a sender and go to another receiver to exchange these 10 rupees for anything of equivalent value. This a never-ending cycle and all senders and receivers can interchange their roles whenever the need arises.”
Do you think the same exchange could have happened if instead of 10 rupees you gave 10 pebbles to the shopkeeper?
No.
Why? Because 10 pebbles don’t carry the same value as 10 rupees or money in general. This is not the story the government told us.
It is quite clear that the exchange can only happen if all the parties involved in a transaction believe in the same story. There must be a mutual trust among all the participants.
Now let us reverse the situation.
One day the governments of the world suddenly devalue all the existing coin and paper money and make little changes to the stories they’ve been telling us for long.
This is the new story they come up with.
“Here, we give you 10 pebbles. A sender can go to a receiver and demand anything of an equivalent value in exchange of these 10 pebbles. The receiver can further assume the role of a sender and go to another receiver to exchange these 10 pebbles for anything of equivalent value. This is a never-ending cycle and all senders and receivers can interchange their roles whenever the need arises.”
Now, if I again give you a choice to pick either 10 rupees or 10 pebbles, what will you choose? I can hear you say, “10 PEBBLES”. Isn’t it because of the new story that you changed your decision this time? I know, right.
You can now exchange your 10 pebbles for a chocolate. The shopkeeper will happily accept the transaction because he too believes in this new currency. And it is because the government told him.
Recently, the Government of India devalued the existing Rs. 500 and Rs. 1000 notes and introduced new notes of Rs. 500 and Rs. 2000. As a result, all future transactions involving old notes became invalid. The mutual trust shifted to the new notes and old notes now carry a status equivalent to that of value-less pebbles.
This is not to say that all the governments are telling us false stories. Can you imagine a world without any form of exchange? No coin and paper money. No pebbles.
Let me help you. This kind of no-money world existed. It was called the barter system. People used to exchange grains for rice and horses for land. They used to clean streets in exchange for meals. There was no money involved in this transaction, yet all transactions were valid.
But such a system was heavily controlled by the receiver. The receiving party used to set the price for the exchange. In a practical scenario involving lots of receivers, you can guess the scale of chaos.
Let’s say someone came to you to exchange a kilo of rice for a kilo of grain. If you think this is a valid transaction, you’ll accept it and process the exchange.
Now, if you further go to another receiver and express a desire to exchange the kilo of rice, that you just received in the previous transaction, for a kilo of grain, do you think this receiver will value both on the same scale? Maybe. Maybe not.
Maybe this receiver does not consider this as a valid transaction and offers only half a kilo of grain instead. This will surely disappoint you and you might feel cheated. If you are a hot head, you might get into a heated argument with the receiver. Imagine the same happening everywhere.
This happened because there was no common story that everyone could mutually trust. Everyone thought they are right.
This escalated the need to develop a common medium of exchange which everybody would trust. The governments heard it and currency was born.
Happiness.
It is often asked, ‘Can money buy happiness?’. Is it true?
Can money really buy something that is already in you?
Happiness is an emotion. It is the result of certain biochemical reactions that happen inside your body. The kind of reaction that takes place when reality meets your expected outcome.
Happiness is not like furniture that’ll keep adding up as you spend more on it. The levels of happiness before and after buying a furniture, or anything for that matter, remains the same because it is still the same hormones doing their regular job.
A human brain may not be that expert in evaluating our feelings as we may assume it to be. We may feel that buying a certain thing, say a car, will increase our levels of happiness. But once you own a car, you’ll still feel unsatisfied and may want to buy something more to reach a new level of happiness while remaining at the same level all the time.
This primarily happens because we anticipate a certain level of happiness but we are not sure if we’ve reached that level yet. This fuels our (never-ending) pursuit for happiness.
Borrowing from my chocolate example, if buying a chocolate makes me happy, I can buy n number of chocolates daily hoping to multiply my happiness n times. But will this simple math really give me the expected results? Or would it make me sad because I haven’t reached that level of happiness which I was anticipating?
Apparently, its the latter emotion that will prevail.
Perhaps money can’t buy happiness. Money can only give you access to the resources that will drive your reality closer to your desired outcome triggering happy emotions inside of you.
It also doesn’t always have to be a material exchange. For example, donating money to charity or just lending money to your friend in need can bring you happiness. The desired outcome in this case is happiness of others.
Also money isn’t the only contributor. If the desired outcome is to make other people happy, helping an old person to cross the road or even plucking a flower for your little kid will give you immense amounts of happiness. And this is the kind of happiness that I personally believe will truly add up.
Imagined Realities.
The most intriguing revelation by Yuval is Imagined Realities. It amazes me to think how we humans accept most of the things as a reality even when they don’t exist.
Such a reality never takes any material shape and only exists in complex biological network of our brains. And it gets there as stories told to us that we all believe in.
Money, law, human rights, companies, etc. don’t exist in real world. They just exist as stories being told to us for ages. Such a long story-telling process has in fact influenced us to perceive these imagined realities as objective realities and we therefore, find it hard to accept, what is effectively, the ultimate reality.
But this does not mean you should start rejecting these imagined realities just because you found out they don’t exist. It is better to have a rule than a chaos.
Imagined realities bring people together. They bring in them a sense of cooperation. This is necessary for a system to function efficiently. This ensures a consistent level of collective happiness is maintained.
