Fred’s Cozy Little Nook

A good friend of mine sent me this link on an article about how China has taken an interest in Ithaca HOURS. I find it a fascinating subject the possibility of establishing local currencies and economies that are immune to the economic geopolitical hedging, speculation, manipulation and control. Indeed, it would be a good thing to have stable economies free of government control and exploitation. It would be a good thing to have some means of currency backed by something other than fiat.

It is not my intention here to discuss — or even criticize — traditional economic theory, though some of what I state will give that appearance. But for the longest time I have always been curious about currency, instruments of trade, and the human perception of value. What is is that compels so many of us to work long hours and do other things in order to gain a count of “tokens” that we then use in trade for exchange of goods and services? What is the intrinsic basis of “worth?” Why would we do something for, say, a million dollars, but not ten thousand? Just what is this human psychology of value?

Let us begin with the Individual. That would be you, me, any one person of sound mind living in this world. An Individual has needs, wants, and a desire to live. An Individual has a level of self-esteem and a level of self-worth. An Individual has certain talents, skills, traits, and — well, yes — value.

But just what is this “value”? We normally take this and other human concepts for granted, but I find it extremely helpful from time to time to take a critical eye at these default notions in order to try to understand them and what underlies their function in our inter-dependent world.

It is clear to me that “value” occurs at the Individual level. An Individual posses the notion of “value”, and, of course, that notion is relative to the Individual. And let me state this: “value” is the Individual’s perception of the exploitability of a thing. In this discussion I do not use “exploit” in a negative context, but as a neutral way to describe one’s desire to leverage advantage, which is something we all do every day of our lives. We “exploit” our cars to get us from point A to point B. We “exploit” the people we may hire to get useful goods and services out of them. At some level, we even “exploit” our friends so that we can have a sense of community. So I don’t see the concept of exploitation as a negative. Where the negative comes in is when we may exploit other individuals without just compensation. If we exploit the window washer to wash our windows but fail to pay him the agreed-upon compensation, then we have cheated that Individual and that is NOT a good thing. But this is an important issue to my discussion as well, because Governments exploit Individuals all the time without just compensation. Yes, it’s true, and think about it. Every government around the world exploits its Individuals under its rule without just compensation. And the modus operandi of that negative exploitation is based on manipulating the perceived “value” of government-created currency by means of fiat, global politics, controlling financing and debt and the like.

But I digress. But hold that thought. Individuals create the notion of “value”, and Individuals act on that perception of value for reasons of exploitation.

Individuals living in a group is what we call “community”. Each Individual member of that community has distinctive talents and skills, and may also hold various distinctive resources that may be used in trade. Some of those resources may be the result of other trades the individual engaged in in the past; other resources may be due to what the Individual himself created. (And in this discussion, I use the pronouns “him”, “he”, etc. strictly in the epicene and is understood to also mean “her”, “she”, etc.)

It is clear, therefore, that “value” is created due to human effort, and that time is involved in the creation of that “value”. It is also clear that all Individuals possess within themselves the means to create “value” of one form or another, and so to trade in time units of human effort seems all too natural. Because, in effect, we are trading some intrinsic value based on time spent creating these things we value.

But it is also clear that the time of one Individual may be more “valuable” than the time of another Individual. A window washer’s time, for instance, will simply not equate to the time value of say, a neurosurgeon. A brick layer’s time, while a valuable skill to be used, will not be of the same value as, say, a software engineer. 2 hours of a software engineer’s time might be worth 20 hours of a window washer’s time.

So how a thing is valued also has to do with supply vs. demand, which sounds like “old school” economics. Old-school economics is not necessarily a “bad” thing or even a “wrong” thing, but it does represent an incomplete picture, because it does not attempt to describe the human nature and perception of “value”, but takes it as read and creates artificial idealized notions based on some highly idealized assumptions on what “value” is, which, in the opinion of this writer, simply does not represent reality.

But back to my main point, Individuals with diverse skills, talents, and resources live in Communities for the mutual benefit of exploitation. Members of a community exploit each other for mutual gain. The concept of mutual gain is an extremely important one to keep in mind — it means that the net value of the community at large actually increases over time. With every single honest transaction, new value is created where none existed before. That value — unless it is subjected to negative exploitation by externalities — accumulates over time and results in a stronger community overall.

Strong communities are very good things. Strong healthy communities create their own intrinsic safety nets — should a particular Individual member of that community befall “hard times”, that Individual can be — and usually is — helped back on his feet by the strength of the Community and the collective value that has been accumulated over time. And this takes place without taxes, without force, without the usual mistaken “Robin Hood” notions that many in the United States and other socialist countries see as a “necessary” thing to help those “in need”.

Strong healthy communities help to foster good self-worth, self-identity, and self-responsibility. In such a positive atmosphere, Individuals are encouraged to be creative and to find newer and better ways of creating value that all with benefit from. That can only result in the community becoming ever stronger and more resilient. An emergent phenomenon that is truly wonderful is the notion of “value” to the community, which is not to be confused with “community values”, which is a moral, not economic connotation. When an Individual understands what is valuable to the Community he is a member of, he then understands how he can exploit what is value to increase his own worth and wealth, whilst adding even more to the collective value of the Community at the same time!

So if all I have said here is true, why don’t we see more of the same today? Recall, if you will, I mentioned externalities that may get in the way of this wonderful dynamic of Communities creating their own wealth. External agencies that seek to extract wealth from a community and from individuals. External agencies that seek to exploit value without just compensation, and does so by force, removing Individual choice from the equation.

You see, taxes have to be done by force for the plain reason that there is no just compensation for the Individual. If there were, force would not be necessary. If someone were to give me 3 pieces of gold for every 2 pieces I gave away, there would be no reason to hold a gun to my head! But, on the other hand, I only get back one piece of gold for every 2 I give away, I would not do so willingly, so a “gun” would have to be held to my head to force me to do it. That agency looking to give me back less value for my hard-earned wealth could only do so by way of giving me a reason to fear if I did not comply. In effect, they would have to threaten me with stealing even more of my wealth, destroying even more value!

Think about this for a moment. What effects would this have on a Community? The community that has to also deal with being robbed of its collective wealth could never become very strong. It could never create a good intrinsic “safety net” for its individual members. Creativity would not have the payoff it otherwise would. All Individuals would be discourage by the specter of getting less back for hours spent, not more. There would be no incentive for self-improvement, self-innovation, and self-actualization that is so important for growing healthy communities of Individuals.

Now, those in that communities that are less well-off will have to depend on the external agencies — that looted the community wealth in the first place! — for “help”. And that “help” will undoubtedly be of far less quality than what the Community itself could’ve offered would it have been allowed to grow strong on its own. The “help” would not be of a positive variety — one of “teaching one to fish for a lifetime”, but for a lifetime of dependence. This only has the impact of further undermining the community and its collective self-worth and collective self-esteem.

Whenever something “has” to be done “by force”, that is usually a very big warning sign that things have already gone horribly wrong. And that changes must be made. These externalities care nothing for the Individual, but have their own goals in mind for dominance and power. Whenever power and control becomes more important than the Individual, no good can come of that. Whenever the use of force becomes routine rather than the exception, we have already lost the way and freedom is compromised. Whenever we are forced to give up value in exchange for something of less value — or nothing at all, building collective and Individual wealth becomes impossible, and we forever become slaves to those externalities that see to use its negative exploitation tactics on us.

In a world where negative exploitation by powerful externalities have become the rule, how do we deal? One way is to create a system of fair exchange that exists outside of the powers to be negatively exploited. If my friend values my time and I value his time, we have a mutually valuable relationship that would be hard to negatively exploit by some external agency. We have a mutual trust and a mutual expectation that can go a long way to building our collective wealth. And this happens solely on the basis of exchange of time — my time for his time and his time for my time at a mutually agreed-upon exchange rate. And there would be nothing there for some externality to manipulate or force to our mutual disadvantage. We can build our collective strength as a community and get much accomplished.  And we would be immune to the shocks and downfalls of the global economic jungle.