How Societies Save For an Uncertain Future
Last week I wrote about how money is society’s technology for moving value across time. Without defining it more narrowly (which monetary economists do to their heart’s content), money is the technology by which we arrange the division of labor: I do my thing; you do yours; and we can trade the surplus production with one another. I explained how this fundamental insight of human civilization doesn’t require money – we can trade in favors or promises to one another – but codifying those promises into a detached separate item makes it easier to use them. Especially if we’re transacting with a society of strangers numbering in the millions.
Zooming out across time, the problems you face when saving for your immediate or far-off future is a perennial problem that all human societies have faced. You’re trying to figure out how to maintain yourself – survive, and even thrive – when you’re no longer young, fit, energetic, or smart enough to produce the value that previously sustained you. We know that we will grow old; slowly then suddenly. We know that we will go through rough patches of illness. We must save economic value for such rainy days.
Crudely speaking, societies have three avenues:
- promises to deliver;
- a standard where we trust the issuer of worthless tokens;
- a real-world resource standard
If we operated an economy no more complicated than a hunter-gatherer tribe or subsistence village, a structure of promises and goods-for-goods (1) works. We don’t have money, stocks, real estate, or many durable commodities, and would instead place our faith in the tribe’s future ability to provide us with what we need. We bypass the issues of money and monetary regimes by producing, distributing, and consuming directly the goods and services that we require.
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Πηγή: aier.org
