Respecting Money Too Much

It’s a huge cliché, but it’s fundamentally true that today everything revolves around money. So much so that one could even say that it is the ultimate embodiment of existential opportunism. Originally, however, it was merely a tool created to greatly facilitate the exchange of goods and services and then trade in general.

These days, money has several functions, which according to economics are:

  1. A measure of value
    Money expresses the value of individual goods, which in practice is reflected in their price.
  2. Medium of exchange
    As money is a universally accepted medium of exchange, it can be used to directly purchase all kinds of goods and services.
  3. Standard of deferred payment
    Money enables a legally valid transaction between parties, so it can also move on its own (e.g. in the form of a loan or tax).
  4. Store of wealth
    One way to accumulate wealth is to collect and save money.
  5. International currency
    Currencies that are able to perform the above functions in international circulation belong here.

All of these are extremely important in that they allow for relatively simple, quantifiable economics and trade at a social and international level. But how well can money really meet the demands and expectations of society in today’s globalised world, where virtually everything and everyone is interconnected? The first one, the value measurement function, immediately raises a problem: how can money reflect the value of different things in relation to each other, in such a way that people’s needs are met in the fairest and most efficient – and therefore the most socially and environmentally sustainable – way possible?

In principle, everyone trusts the value of money, so it can fulfill its role as a means of payment. And in a liberal market economy, how much something costs is determined almost exclusively by the law of supply and demand, and can change from minute to minute. If the demand is higher than the supply, the price will rise, but if the supply is higher, the price will fall. In economics, it is taught that the ever-changing relationship between supply and demand essentially fluctuates around the value of goods, so that it can stay grounded in reality over the long run.

Of course, a legitimate question might be, how can the value of something change from one minute to the next, even drastically? Well, its real value can hardly be, but its actual price, calculated on the basis of the law of supply and demand, can only behave in such a way that it is essentially determined by the machinations and expectations of market participants. So it is no longer just a question of the current supply and demand conditions deciding the price of something, but also of what the parties expect in the future. This phenomenon is perfectly observable in stock markets, for example, where stock prices can skyrocket or plummet in a matter of seconds, even after a single pithy revelation by a corporate leader on social media.

But it is much more complex than that, as prices are also strongly influenced by the imbalances in current market forces. Thus, even though free competition is supposed to work in any given market, businesses often keep the prices of certain products and services as high as they do executive salaries and benefits, and the earnings of certain fashion professions are also inflated. At the same time, it is also often the case that the larger supermarket chains are able to push down purchase prices to an unrealistic extent with the smaller agricultural producers.

In many cases, supply-demand imbalances can also significantly increase the price of goods that are needed to meet basic human needs. Examples include the property and rental market, where demand often outstrips or even exceeds supply, which can keep prices very high for extended periods. Thus, while some people trade in property to maximize their profits, many are barely able to buy or maintain their own homes, or are even forced to become homeless.

So it is quite obvious that in reality, supply and demand do not always regulate the price of goods and services around their real value. What ultimately underlies this is that the supply-demand market in a world of mass production and consumption does not express what is valuable for society as a whole, but what is most profitable for particular groups of people. A typical example is the astronomical amounts of money that change hands for star athletes. These are worth paying for the more wealthy clubs simply because they usually earn much higher revenues from the sale of tickets, broadcasting rights, merchandising and advertising than the significant costs, most of which then go into the pockets of managers, owners and shareholders.

But as a matter of fact, typically the earnings of star athletes themselves are not commensurate with the effort invested, especially compared to those in less popular and paid professions. The same can be said for celebrity culture and many other areas of life, where extreme income and wealth inequalities are also prevalent due to the elitism that has become dominant as a result of the distorting effect of the supply and demand market. There are also other ways in which some people acquire hefty sums (such as inheritance, gambling, grifting, or other dishonest and even illegal or borderline illegal methods), which in a significant percentage of cases do not involve any real or added value or effort, thus strongly questioning the origin of the money involved.

In many cases, therefore, money indicates a kind of social status rather than real merit or value, and it is definitely not true that it always reflects the work put in or the real value of something. But now that economics has been put on a pedestal and has become almost a religion, with money at its heart, the role of the cohesive force of societies has been taken over in large part by money from the community. In such a system, however, it is hardly surprising that people’s values are significantly distorted at the level of the individual, as well, and that in the eyes of many, essentially everything has a value expressed or expressible in money. Of course, the fact is that money really is power, because the more of it you possess, the more purchasing power you have, so you can really get almost anything for it, whether it’s by exploiting or corrupting others.

At the same time, one must also realize that not everything can be measured by it, including the most important things in life – you only have to think of such abstract concepts as happiness, love, empathy, reciprocity, generosity, selflessness or fairness, but we can also include health, peace and security, which are also not really quantifiable. Nevertheless, these are very real human needs that can only be provided for the majority if the economy, and indeed our whole lives, are not driven by individual profit and expectations.

But because the unleashed supply and demand market is an inhuman system that is materialistic in the extreme, we must always keep the economy in check and change the content behind money. These regulatory tools include income ceilings and limits on wealth and inheritance, but equally important must be a conscious change in the general attitude and culture itself. And even if we trust in a particular currency, it should not be the people with lots of money and power who decide the value of things, but all the people involved, in essence a kind of social consensus. Ultimately, therefore, power should also be held by real communities of people, because only they have the real capacity to create value in a civilized society.

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