Does future human need money?
When you start talking about the future, the modern hunter-gatherer begins to represent you as a shaman in strange clothes with a tambourine in hand who tells how spacecraft travel through the expanses of the universe. It doesn’t matter whether you make insane statements or deep analysis, the modern hunter-gatherer is often not interested in the shaman and his ideas. He consumes them for fun, for expanding horizons or feeding his own ego.
He is only worried about his main purpose — searching for food to survive. If shaman doesn`t offer any tools to increase amounts of fruits collected, to facilitate the process of meat transporting, or doesn’t tell about new places where you can find berries and animals, then for many people it is a useless shaman. Practical application of ideas is more important now, rather than their generation.
If you even read the book written by some famous shaman which will give you the answers to all your questions about life, then… almost nothing will change. Probably, you still go to the forest looking for food, because no one has canceled survival.
But what means of survival will you go looking for in the forest? Money is the main goal of modern hunter-gatherer.
If you have money, you can buy some food, protect your home from predators, satisfy your desires. Having an excess, you will feel safe, more confident in the future; you will be able to achieve new goals and begin to call yourself a successful person.
If you can’t or don’t want to go to the forest for money, then you become a burden. You can be a wonderful and respected person, your friends and surroundings can love you, but it doesn’t negate the fact that you are another mouth that needs to be fed. Someone needs to bring money for you, or you find new ways to survive.
Whether we like it or not, our life revolves around the means of survival, which can be money. Many people find their vocation and the meaning of life in the way in which they survive/earn money.
You can be a first-class mammoth hunting consultant and get a percentage of the prey. You chose this occupation because you know that it is profitable, or you like the process of mammoth hunting itself.
Or you are an ordinary fisherman because the river is the only food source near your house. All your family is fishing, your ancestors were fishing too, and your children will also go fishing. You didn’t choose anything, because you may don’t have the time, knowledge and opportunities for that. You wake up and go to bed with the thought of fishing.
In both cases, our approach to earning money and initial conditions have a big influence on a worldview. But can we get rid of money? Can we make money stop being our means of survival and proof of our success? Or will money always be an important part of human life in one form or another?
This text is not a statement that we don’t need money, that they are “the root of evil”, blah blah blah. This article is rather a small reflection about the question: “Have we really been able to create such an idea that we cannot get rid of, and have become its hostages?”.
I`m not a professional shaman, just a hunter-gatherer who decided to try on these odd clothes. I already see that it’s not my size, but I’m not afraid to look stupid. Ok, it’s time to take a tambourine and go out.
I would like to start with the current economic situation and theory.
Nobody understands the global economy and where it’s heading
Seriously. No one.
You can be a Nobel prize-winning economist, a finance minister, a specialist in a central bank, a bitcoin maximalist, a well-known investor with your own fund, or a drunk friend who tells how the world works. No one knows how the global economy functions. Although no one needs to understand, more on that below.
There is at least one reason why no one sees the whole picture — too much information. One single person can’t fit in the head all the processes that the global economy covered.
The global economy is a whole universe which constantly weaves new threads, and the web has become so confusing and multifaceted that it’s difficult to imagine some intelligible pattern. We cannot be completely sure what will happen if we replace or remove one thread.
You can understand some basic principles of economics, specialize in a particular area, or try to cover the entire spectrum, but you will not be able to go beyond the limits of the visible universe. Yes, we can create machines and devices that will collect information and increase the range of our capabilities, but this will only mean that the limit has shifted. It hasn’t gone anywhere.
What remains to us in this situation? How can a person logically describe what is happening in the global economy?
The answer can fit in one phrase: “All is the will of the market.” And that’s a brief version of how modern economic theory looks like.
Economists believe in the invisible market forces which will judge who is better adapted and who is worse; what method should be used and what should be discarded. The market will show who is right and who is wrong. Sounds familiar, isn’t it?
As a result, we recognize that we don’t know what the global economy’s web will look like in 5 years, three days, or even one second. We give everything away to chance and some analysis, and the market will judge whether we are right or not.
This gives us the opportunity to create anything. We can create any product; develop bold ideas, such as space exploration and biotechnology; we can make any adjustments to the monetary policy; we can decide to accumulate funds, give them to charity, or buy another smartphone.
The web will still continue to weave and undergo change regardless of what we do. If we don’t do something, then someone else will.
And then you begin to understand that abolishing money will be quite difficult, since this idea has firmly woven into existing web and nothing prevents it from appearing again.
Global currency problem
Ok, let’s suppose that we don’t part with the money, at least in the short term. What could be the future of money?
We often hear that the emergence of a universal global currency should be a further logical step in globalization. Let’s look at “credits” from Mass Effect as an example of how such currency might look like.
Here is some information about the “credits” from the codex:
The credit was established as the standard galactic trade currency by the Citadel’s Unified Banking Act. This legislation was drafted by the volus, due to their expertise in financial and commercial matters.
The credit has a managed floating exchange rate, calculated in real time by the central bank to maintain the average value of all participating currencies. Some regional currencies are worth more than a credit, and some less. When the Systems Alliance joined the Citadel, its various national treasuries were linked into the credit network. A human with a bank account of Mexican pesos, Japanese yen, or Indian rupees can purchase any item priced in credits at fair market value. All economies that participate in the credit network are required to price items in both local currency and credits.
If you also found references to USD and euro, then welcome aboard.
Dollar way
U.S. dollar dominates international transactions, dollar is widely considered to be the predominant reserve asset, dollar prevails in the trade of strategically important resources, such as oil. It would seem that the winner is obvious, but I confused by the last sentence in “credits” description (in bold).
So, each country should price items in both local currency and dollars, governments should not hinder dollar usage on a par with local currency and… that’s all? Do we have a universal global currency?
Of course, U.S. dollar is the official currency in some countries, but it is unlikely that most countries voluntarily agree to lose full control over monetary policy and depend on another country. This would require incredible confidence on the part of all countries to dollar and Fed which contradicts the Triffin paradox. Any other national currency that wants to become global will have the same problem.
Well, then maybe we should choose the European Union path?
We can go to the Citadel Council… sorry, I mean the UN and ask the IMF to create a universal global currency. Note: SDR is neither a currency nor a claim on the IMF.
Option 1 — Euro. Today’s euro doesn’t look like an end-product, because the European Union is not united. If the new world currency, which will be regulated by the IMF, will be a complete copy of euro (the elimination of old currencies and a full transition to a new), then the rich countries may continue to get richer, and the poor — to become even poorer. Here is a simple analogy from one of the eurodeputies:
German economy is more efficient than Greek. This leads to the fact that Germans sell more goods and services to Greeks than Greeks to Germans. As a result, money flows away from the Greek economy and flows into the German one. Such imbalance cannot exist infinitely. If these countries had different currencies, then Greek drachma would fall in price, and German mark would go up. As a result, German goods in Greece would become more expensive, they would be bought less, and Greek goods and services would become cheaper and would be bought more often in Germany. The system would quickly come into balance. But if in these countries one currency, then such an easy return to equilibrium becomes impossible.
Option 2 — Mass Effect “credits”. But what if countries such as Greece could still regulate monetary policy of their local currencies, and also have full access to universal global currency (not national) which circulates on a par with local ones? We can only assume because there are too many factors and dependencies.
What prevents us from creating the same system as in Mass Effect? The answer is USD.
In 1979–1980 there was an attempt to form “Substitution account”, a special mechanism within the IMF. It was presumed that using this mechanism, under the control of the IMF, countries would convert their surplus dollar holdings into assets expressed in SDR. However, efforts to create such a mechanism ended in failure — primarily because of the US position which sought to keep the dollar as the dominant currency.
An idea to create some kind of “Substitution account” and converting SDR into global currency is still under active discussion. But we still need a high level of trust in such an institution, from both countries and people.
Ice starts to crack
As you can see, when we talk about the future of money, this is more a conversation about politics than economics. Politics is a knot that tightly holds money inside the global economy web.
Maybe we will be able to get rid of money or what they have become if we weaken this knot. But how do we do this? We can create a transitional solution that will continue to be used as a means of payment but will not be subject to strong political influence.
Bitcoin is the most obvious candidate for this role because it doesn’t have a single point of failure for political pressure and it’s the most decentralized cryptocurrency at the moment. These characteristics are quite suitable for the world reserve currency, but it is still too early to talk about the outcome of events like this. Bitcoin, as we know it now, is not ready yet and not a fact that will be. People too.
Why bitcoin exactly? I know that this is a controversial statement, but altcoins are not “qualitatively different than fiat”, because they have a single point of failure like a founder, the main group of developers or a company (Ripple). Here I want to quote Jimmy Song:
Bitcoin has a system where even if a whole group of developers got hit by a bus, there are multiple open source implementations that can continue to offer choices to every user.
Cryptocurrencies themselves can be an interesting experiment in the implementation of the Hayek economy with its private banks which issue their own currency and are fully responsible for it. As a result, money becomes a common commodity with invisible market forces in front and no state monopoly. Competition has to show who is actually the most appropriate, and who hides inability to provide liquid money.
I know that many altcoin lovers may not like the statement that they can turn into new banks. But guys, just remember that any Apple wants to overthrow IBM, and then it becomes a new IBM to dictate its terms. Think different, but not too different.
Bitcoin and its future counterparts are not our final stop. They will not deprive us of money, rather help reduce them to the service function.
Why cryptocurrencies are not made for humans
Automate everything is one of our main goals for now. We have already had robots-only factories; stock exchanges have already become silent since 90% of current equity trading volume comes from “trend-following” traders; we have already been thinking about the moral problems of self-driving cars.
So, we have already been trying to automate the economy.
Yes, we will hardly be able to automate the entire global economy, but we can try to make a large part of it autonomous. What will be with money then?
First, we will stop feeling them. When we are holding a pretty piece of paper in our hands and are paying it, our brain is aware that we have given something to get something in return. When we use a credit card or smartphone to pay, we don’t see that we give something. We become aware of the loss only when we check account balance. And sometimes the result surprises us.
The second scenario is becoming more common because the world is moving in the direction of non-cash payments. Cash may be completely illegal over time. Here is another quote from the Mass Effect codex:
Hard currency can be stolen or counterfeited, so electronic fund transfers are the norm. More importantly, physical transactions cannot be easily tracked, making them ideal for tax evasion or the purchase of illegal goods.
Secondly, we will cease to trace the money. Imagine that you will no longer check your account balance; robots will do it for you. Your daily payments will be automated, you will make new purchases using a voice assistant, and your favorite product basket will be replenished independently. The robot will control that the account has enough funds for the desired purchase.
As a result, you will generally stop understanding how much money you have and will lose connection with them.
When money is no longer a field of your responsibility, they will no longer speak the same language with you.
We do not use the words cryptography, hashrate, protocol, consensus or token in everyday life. This is the language of the machines, not humans. And for the money, it will soon become the main one.
But this doesn’t mean that cryptocurrency is the only outcome for the future of money. No one guarantees that they will be successful, but at least they will be able to impose good competition on the old banks and governments. Independent cryptocurrencies may become the dominant system in countries with low confidence in government and least-developed financial systems.
Corporations and states are still in the retraining process, they are learning a new language and matching it with their own. Cryptocurrencies started to speak a new language right away and want to become native speakers. We’ll see whose approach is more promising.
Is Homo Sapiens unable to get rid of the money in full?
Most likely. And the reason is that we don’t know what money is per se. They can be anything. As the above-mentioned Nobel laureate Friedrich Hayek said, “It’s a legal fiction that there is one clearly defined thing called “money” that can be sharply distinguished from other things”.
If we even reduce money to a pure service function and don’t notice their existence, this would not cancel the fact that they are still with us in one form or another. Money is imaginary, therefore we decide what they are.
Our consciousness gives meaning to everything that we create and reject. And some ideas are simply too tempting to abandon them.
Perhaps, money is the most tolerant idea that humanity came up with. They can be used by everyone, regardless of who you are, what are your political and religious views. No matter how complex the relationships were between Muslims and Christians in the Middle Ages, they didn’t really care if the Christian king or Muslim caliph was depicted on the obverse. Because they all believed in money.
However, money got into bad company. In our company.
We began to use them to our advantage, to satisfy our desires, and this spoiled the money. Each time they became worse because they were more and more adapted to our requests. We built a whole system around them, and they became the object of our interests and desires, as a result.
When you start looking at money, you can be terrified by the future with robots, because they can repeat the same path. No need to be afraid of conscious robots, unconscious robots are more horrendous, because they are susceptible to satisfaction of our desires and aspirations.
If Hegel and Marx were right and “history repeats itself twice”, then over time millions of people will appear who will also think that robots are “the root of evil”. Another most tolerant idea will be disgraced. Another invention to which we will bow and on which our life will depend.
Although you know… there is a way we can break this cycle.
The moment when money will step aside
70,000 years ago, the Cognitive Revolution turned an ordinary ape into a human as he is now. According to Yuval Noah Harari, “The Cognitive Revolution did not require noticeable changes in physiology and even in the size and external shape of Sapiens brain. It apparently involved no more than a few small changes to internal brain structure. Perhaps another small change would be enough to ignite a Second Cognitive Revolution, create a completely new type of consciousness, and transform Homo Sapiens into something altogether different”.
The First Cognitive Revolution gave us ideas and myths, such as human rights, nations, states, money, gods. They became the main weapon of humanity, we built our lives around them and shaped our approach. What can the Second Cognitive Revolution give us? Will our main weapon remain with us, or will it become a relic of human’s past version? Will we remember them?
We just started taking evolution into our own hands. And not the fact that we will create something worthwhile the first time. But if we do it one day, then many ideas and humans can repeat the fate of our Neanderthal brothers. They will step aside and give way to something new. Something that we cannot comprehend yet. Although this is only one of the probabilities.
Well, it’s time to take off these shaman clothes. Hope it was an interesting trip. But we have to return to the forest because no one has canceled survival.
