Money as Energy: Increasing the pool of money

    In the previous post, I talked about how money is basically an abstraction of the combination of resources, labor, and energy. We are fortunate that we do, presently, have more than adequate amounts of each. Distribution of such, however, is very uneven and, thus, causes areas of poverty, famine, and other physical and social lacks.

    I ended the previous post with the idea that -- although our current problems are more concerned with distribution rather than actual shortages -- the New Age idea of an unlimited pool of money is not currently a reality. Is there anything to be done about that? Is there actually a way that everyone can have more (even with distribution problems)?

    To address that question, it comes back to the three components of money -- resources, labor, and energy. It also requires a fourth "catalyst" which is technology. By using technology, energy can be converted into additional resources and increased labor availability. This argues that energy is the prime limiting factor within economics.

    We can look around at the world and see how the availability of energy (applied via technology) has increased the "wealth" of the world. Farmers, via the use of equipment (using energy and technology to create and energy to keep active), can produce much greater amounts of food than what one person working the ground with manual labor can do. Harvesting of material resources -- trees, ores, fish -- are possible on a much larger scale than a single person could do making use only of manual labor (allowing a hand-built boat and fishing equipment).

    The above paragraph indicates how energy (with technology assistance) can increase the amount of labor. It does NOT increase the amount of resources. But the amount of food for people has been increased -- isn't that an increase in resources? No, it isn't -- because the ecological pyramid has not changed. The amount of base-level food has not increased. The plankton, plants, and other solar-using food plants have not increased. The labor has been used to change the varieties of food harvested and the distribution of the food (from other animals to people). In fact, due to pollution and other side-effects of application of energy to increase labor, the total amount of food resources may go down (decrease in sea life in general, decrease in fish population, decrease in non-human animal population).

    Can energy increase resources available to us? Yes, in two ways. The first is a continuation, and expansion, of what we presently do -- redistribution. We find other, more energy intensive, methods of accessing resources. However, this often has negative environmental effects and is also just speeding up the use of resources. So, although it increases resources available on a short-term basis, it does NOT increase the amount of resource. A second aspect of this (still redistribution) is to bring resources from other places -- the asteroid belt, for example, is a potential area from which to redistribute resources.

    The second method of increasing resources requires much higher levels of energy. Besides the potential of alchemy (changing one element into another -- possible with huge amounts of energy), there are many endothermic reactions possible with increased energy available. Endothermic means "requiring the absorption of heat". Thus, it is possible to convert raw elements into more complex molecules and, finally, into "organic" materials needed for human eating, or use for furniture, or such. This is actually a metamorphosis of resources and not an increase -- but it's "close enough" for our uses.

    So, with energy, the pool of "money" becomes bigger. Distribution remains a major problem. A larger problem is making sure that the energy is renewable -- we do not want to empty the bank as that would cause widespread catastrophe for the existing economy. The other problems aren't directly concerned with energy-as-money but are related to social, and environmental, responsibility for using it in a life-affirming way.

Economics and the Meaning of Money

    I usually look at the economy as a form of applied sociology. Money is only worth something if people believe that it is worth something. This applies equally to gold and jewels as much as it applies to pieces of paper with people's pictures printed on it. In a similar fashion, money is distributed according to the rules (explicit or implicit) that people decide upon.

    A barter system works when each person (or family) is capable of doing most things needed for survival on their own. They then trade things that they have in excess for things that others have in excess. I give you an extra chicken and you give me a bushel of potatoes. I give you a length of material that I have woven and you give me a chair. Barter is a mixture of labor, materials, difficulty, and time combined into value.

    When each person can NOT do most things they need for survival, the barter system becomes very inconvenient. It is necessary to keep records/charts of equivalences. One type A chair is equal to two meters of cloth. Two type B chairs are equal to one type A chair. Ten chickens are equal to one meter of cloth. This complexity arises out of the need for each family unit to trade for many different types of things. Once this happens, the next step is to equate the value to something in common. Ten seashells represent the value of one chicken. A meter of cloth is equivalent to 100 seashells. Every item of value can be represented by a certain number of seashells. This representation of value is called money.

    Once the value of work and things have been "abstracted" into money, it is very easy to lose sight of real value. The work done by an experienced, talented teacher is probably worth more to society than that of a software developer -- but the software developer probably makes a higher salary. In "capitalistic" societies, the control of money is considered to have value in itself. That is, if I possess one million seashells then I no longer have to produce anything of value myself -- the circumstances (earned and saved, gifted, or inherited) of having the seashells allows me to distribute some portion to other people who then produce the actual value (plus more for me to hold).

    Within "new age" philosophy, it is popular to think that the economy is no longer a "zero sum" game. That is, each and every person, can earn as much money as she/he wants -- that there is not a "fixed pot" of X seashells in the pot and each can have as much as they want without reducing the amount that others are able to have. That's a happy philosophy but is it true?

    Although money makes lots of games possible with the distribution and use -- the basis of money still goes back to production and use. If 100 people each want a fish but there are only 50 fish then the value of each fish will rise until the 50 people who most want a fish have them and the other 50 do not have them. If 100 people want a fish and there are 1000 fish, then the value should (the concept of money makes direct value difficult if not impossible) be equated to that combination of labor, materials, difficulty and time mentioned above. An abundance of resources (fish) causes value to go back to basics.

    Our global economy makes distribution of resources extremely unequal. Most people estimate, however, that there are enough resources (food, labor, energy) to support everyone currently on the planet. The fact that that does not happen is a problem with distribution and allocation. But, there is still a limit. Perhaps at twice the population there would NOT be enough for everyone (in an ideal world). This argues that it is a "fixed pot" -- there is a limit of resources to be distributed. In order to eliminate the fixed pot, it is necessary to get rid of the limitations of resources.

    Is there a way to eliminate the limitations of resources? I will look at that possibility in the next blog.