Rushkoff, from a post on Boing Boing today:
But the notion that enterprise and production starts with banking is just another artifact of Renaissance-era currency monopolies. Back before the first central banks, production and yield actually created money. (That’s what all this hoopla about complementary currency is about.) Money was not lent into existence by a bank. Instead, farmers brought their grain to town and received receipts for the grain. These receipts served as the local currency. Currency was worked into existence. There was as much money as there was grain.
I’ve been thinking about this for the last year or so as research I’m meant to be doing for a book I’m meant to be working on. The story, or proto-story, that launched the idea for this book was the one that got me into Clarion last year, which is a bit of trivia that won’t interest you.
Anyway, Rushkoff is beginning to explore the notion of where money comes from. Money itself is an interesting idea, which I mean literally: money is an idea, and nothing more than that. We all agree that it means something, and so I give you some pieces of paper, and in return you give me a MacBook Pro, or work on my kitchen, or have sex with me. If we don’t agree on the idea of money, then you won’t feel obligated to do anything for me when I give you the little piece of paper.
This notion, that money is just an agreement, leads to some weird effects, like now, when the government prints up a bunch more of it. Since it’s not inherently worth anything, the effects of suddenly manufacturing a bunch more of it are a lot more complicated than if you suddenly manufactured a bunch more of something that was desirable in and of itself, like the MacBook Pro, or the blow jobs, or whatever. Rushkoff is getting at the notion that, once upon a time, creative output was _by itself_ equivalent to wealth production. Now, not really. Nobody recognizes the direct wealth effects of creative output except, from time to time, the state government. If you refinish your basement, suddenly they believe themselves entitled to more tax income from you. Of course, they don’t do this at any time when it would be to _your_ advantage.
But now, for the first time in a long time, we’re starting to think about wealth differently again. I can make you a web page, and in return you can do some software development. In a real sense (in the only real sense, actually) something of value has been created in the exchange, and yet the market has not mediated the exchange, or priced it. Which isn’t to say that the market setting prices is bad; or that this is better; but that this is now not only _possible_ (barter has always been possible) but that it’s now _practical_, on a large scale, between widely dispersed agents, for rather complex goods.
The implications of that are both huge and mysterious. I’m looking forward to Rushkoff’s book, which might save me a deal of hypothetical research.
UPDATE: here’s a comment to the cited post which makes some other points I think are interesting. Since I can’t link to the comment, I reproduce it here:
You are absolutely right that money doesn’t make labor, but in a capitalist system – in anything other than a subsistence society – output (measured in money) is created by multiplying labor and capital. For one hour of work a man with no capital can dig a one foot deep hole with his hands, a man with a little capital can dig a three foot hole with his shovel, and a fully capitalized man can dig a 20 foot deep hole with his backhoe. If there are no banks, a man must dig with his hands for a year, living in poverty, to save enough money for a shovel. But a bank will lend him money to buy the backhoe. Now, even if he has to give the bank the money from 10 feet for every 20 feet he digs, he is still digging ten times more than he was – he is getting 10 times as much money as he made digging with his hands.
So you are absolutely right that capital is not a “first step.” Capital is a multiplier of labor. Capital is what makes us better off. Your saying “music makes money – money doesn’t make music” is the perfect example of exactly what you are not trying to say. Music doesn’t really make much money. Look at pretty much any local band you like. They make very little money from live performances at pubs and the likes. They probably earn most of what money they do make from selling cds. Those cds are the direct result of capital, and they multiply the bands labor. 4 hours of playing in a pub? Maybe $800 if they’re good (at least in my city). 4 hours in a recording studio? A couple hundred cds at $10 bucks a pop. If you want to start making real money, you sign on with a studio, that organizes capital to a higher degree. Your labor remains the same, that labor is multiplied by a much greater amount of capital. So perhaps the real saying should be “people make music – people plus money make money.”
The exciting thing about debt is it can allow someone who has labor to get money to multiply their labor. As long as the cost of the money is lower than the amount by which the money multiplies their labor, they come out ahead. They literally pull themselves up by their bootstraps.
When a piece of software breaks, you have to decide is the fundamental design so flawed it has to be scrapped and you need to start with a whole new design? Or do you merely have to go in, and fix a couple of bad subroutines and manage memory a bit better. There is little doubt that we are getting screwed over by the various government bailouts, and by the lack of oversight in the banking arena. Our rules have been bent out of shape. I do not see how it follows that we need to throw out the entire system.