03 October 2008
To which I answered thusly.
Money can arise without government because humans are intelligent creatures who can easily recognize the utility of a medium of exchange.
As for going back to precious metals, that's possible. But why are precious metals "precious"? What is their "intrinsic value"? Use in jewelry? That's a big leap.
The value of gold comes from certain physical facts. First, there's only a limited amount of it in the world.
Second, it is a chemical element -- so it is neither created nor destroyed except by very unusual processes (is gold fissionable? -- probably not).
Third, gold is malleable enough so that numbers can be printed on it easily, yet sufficiently solid so that a coin can keep its shape.
There might be a more psychological point here, one that I believe John Maynard Keynes suggested. Perhaps to our symbol-hungry minds, silver reminds us of the moon and yellow/gold reminds us of the sun, and since these two heavenly bodies are of primordial importance, so are the metals.
Government doesn't have to exist in order to inform people of such facts. They operate whether or not they are broadcast, and they keep gold valuable as a medium of exchange.
Of course other media may also come about. I'm told that unopened packs of cigarettes are frequently exchanged under battlefield conditions. The intrinsic value of a cigarette, the pleasure of smoking, may be the original inducement to their value -- just as the decorative use of gold as jewelry might have originally suggested its value as a medium of exchange -- but once they start circulating they can be sought after simply because they ARE such a medium, and continue to circulate for a long time before anyone breaks the seal, reconverting the packet into a consumer good.
But suppose the precious metals were generally accepted as a unit of exchnage. You worry about this because it "puts power into the hands of those with mines...."
So someone will have a mine, even in the absense of government? Are you acknowledging that private property in real estate -- and in the sort of expensive capital tools used to dig and retrieve gold -- would survive anarchy? [This is btw the sort of contention that my acquaintance, earlier in the exchange, had denied]. If not, you are contradicting yourself here. If no one will "have a mine" then no one will have the power you say you're worried about.
"...or has enough power to corner the market."
Precisely what I'm worried about. The Federal Reserve Board has cornered the market in federal reserve notes. Shouldn't we rebel? Or work to undermine the conditions that cause people to think this is "necessary"?
Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.