You haven't really understood capitalism until you realize that money is a bug-fix for market inefficiency. A completely efficient capitalistic market would need no money because all trade would be immediate and complete.
Discussion
Thinking through this. Thank you!
Money solves for time. It’s an emergent value storage medium.
Not sure about bug fix idea… 🤔
An individual doesn’t always have an immediate need for goods and services/trade, so trying to comprehend the notion of a hypothetically “complete”efficient marketplace.
And I want to work when I'm healthy and save for the time when I'm not ..
It solves for time and place. People save money because they know they will need something in the future, but they have goods to trade today. Or because they will have to sell goods of low value repeatedly before they get enough together to purchase something of high value.
They need some interim battery to "park" their economic battery.
"economic energy*
YES. It is a storage technology.
Storage is a solution for an inefficiency in the system. A completely efficient system would continuously flow without friction or delays.
Entrepreneurs are people who remove some inefficiency from a market at some particular point in time or place, allowing the market to be more-effcient and thereby reducing the amount of money required for the transaction. Their reward is to keep some portion of the money they removed. Because it is less money than the total, everyone involved in the system gets to keep more money, that they can then spend alleviating the inefficiency in some other part of the system. Making everyone involved better off.
Inefficiency in so much as we live in our reality and not a hypothetical system.
In a hypothetical, completely efficient farming system for instance, whenever crops needed water, it would rain. Like a closed-loop terrarium.
That doesn’t exist, and so water is stored for irrigation.
Time preference being ever-changing and highly dynamic.
Time is Money
Yes. We live in reality and there are no perfectly efficient systems here. So, we have water towers and money.
The mistake is in thinking that the water tower is an essential part of the watering system. This is an important distinction to make because the goal should be reducing the reliance on the tower by increasing the efficiency of the irrigation system.
Same way we shouldn't fall so in love with a money that we think we need it to interact or that conducting a trade so efficiently that we don't need money is some sort of irrational or immoral act. It should be a goal. Anytime we fall back to money, we are seeing a point of inefficiency that we could try to solve.
But you can't exchange a complete cow for cigarettes...
In a perfectly efficient market, you wouldn't be trying to do an asymmetric trade like that, needing money as a token.
You would be exchanging the cow for what you actually need with a person who needs an actual cow and has something you want that isn't a ton of cigarettes.
This will never happen. It's economic utopia. So, we solved this with money.
I wonder if cigarettes would even exist, in a perfectly efficient market? 🤔 Probably not, right? There are no cigarettes in Utopia. 😅
cannabis cigarettes maybe, they actually do something useful and smell nice
the market can be strongly efficient without having a sub-day delay to respond to changes in supply and demand tho
these kinds of superlatives and absolutes don't line up with the reality of the latency of information in the real world
They aren't meant to. This is meant to clarify that money isn't essential to a capitalistic system. We can completely remove it from a process or interaction without it becoming less-capitalistic and more-communistic.
For instance, if I were a butcher with a steak to sell and you had an equivalent number of apples to trade for the steak, we could just complete the transaction by exchanging goods. Each of use selling the other person the good in exchange for money, would double the number of interactions, without making either of us wealthier. It would simply make the transaction take up more time, involve some third entity (whoever issued the money, even if that is the Bitcoin network), and raise the chances that the state will levy taxes on the exchange. The cost of the exchange rises considerably, as soon as money is involved.
What made the exchange capitalistic in nature, was not the involvement or absence of money, it was that it was _my_ steak and _your_ apples.
yes, money reduces the latency
government increases it and parasites on the profit
what's the saying: "if tax on cigarettes reduces smoking then what does tax on income do?"
also, mises used the word "catallactic" to refer to the basic nature of exchange, only just dawned on me that is a variant of catalysis and the meaning has to do with how both sides gain, like how a catalyst tends to have a low cost but stimulates a greater efficiency than without
Well, someone who isn't an anarchist could argue that some measure of taxation is necessary to have a functioning state, but I bet that argument wouldn't work on you, so I won't bother. 😀
yeah, i just point to the pre 1913 situation and the sub 3% tax rates and say that the whole taxes meme has been concocted to funnel wealth to bankers, and that government has no business doing business outside of setting standards
no army
no welfare
no courts
just an organisation that gathers and publishes the consensus, that's literally all government can do without being harmful, the moment it starts to use that position to do violence against people's rights (and property, which is part of people's rights) you are on a downward spiral to revolution and neighbours killing neighbours
Inefficiency is a feature of the world we live in, not capitalism. Capatilism is a result of dealing with this limitation. We have limited time and resources and need to allocate them in the most efficient way possible. The best solution so far is to do this on a distributed basis using money and prices, aka a free market.
P.S. Capitalism is a term invented by communists to imply that we worship or are ruled by capital
I'm aware that they came up with the word "capitalism", but they didn't invent the word "capital" or the underlying system.
Money is an external record of having rendered service and delivered goods to neighbors. Before communities grow beyond a couple hundred people, money is redundant with the human capacity to share fairly and remember the generosity and goodwill of others, but it becomes essential when communities blend and grow in to the thousands.