Monthly Archives: September 2015

The Money Game

The Money Game
Part 1 TVP Magazine by Tio

trade

To say that the act of trade began at one point in time is very unrealistic, as people have likely exchanged goods and services for millennia. You have sheep and I can take care of them, then you can give me some sheep meat, or fur, for my service. You have cows and I make clothes, so I get some milk and you get some shoes. You get the point. It’s important to mention though that the notion of property varied greatly from one cluster of people to the next. While we can’t exactly pinpoint any specific one, there were many tribes who never thought of the land or animals that they farmed as theirs, but more as them simply being there, and being farmed, and all tribes enjoyed the advantages. If you were to ask them who owns the sheep, for example, they would not be able to understand the question. When american settlers got ‘bossy’ with indigenous indians and were attempting to take their land, they were confused as to the borders of the indian land, because the indians just grew their vegetables in open spaces, or farmed in open spaces, not regarding the land as theirs or anyone else’s. There are also people who some call ‘nomads’, who travel all the time, never settling in one place. They view Earth as belonging to no one -it’s just thereand they take advantage of it to feed, clothe, and protect themselves. Even today, there are tribes where the notion of property is foreign to them, and trade (if it exist) is unrecognizable. So keep that in mind, as ‘trade’ is not a ‘naturally’ occurring thing that applies to all clusters of people (cultures).

So let’s go back to the people who were trading milk for shoes. They eventually invented a rule that we are very familiar with today, but it was “brand new” back then: currency. If I have a cow and want some shoes, it is impossible to quantify that cow for a pair of shoes, unless it is about milk (a cow by-product). If the guy who makes the shoes wants some cow meat in return, I can’t just cut him off a cow’s leg, give it to him, take my shoes and leave, because then the cow will die and I cannot value it anymore. I lost value. So, what if we invent a sort of agreed upon ‘thing’ that we can use to value these goods. If the cow has 4 legs, and other parts that are edible, then it may value as much as 8 pair of shoes. So if the shoes are then valued at one ‘thing’, then the cow would be valued at eight of those ‘things’. They used shells, grain, beads, and other such ‘things’ to equate for goods and services. A question is to be asked: was the tribe’s fisherman the one proposing that shells be used as currency? Think about that, because he might have had access to many more than anyone else. How in the world did these simple ‘things’ become currencies? Imagine someone coming to you and say: “Here, I have 17 shells. I want your boat.” You are likely to reply back with, “Hell no, crazy guy! I can’t do a thing with your shells… can’t eat them, can’t float on them to leave the island, can’t make fire with them… Useless!”. But hang on for a minute. Isn’t it the same thing with money today? We’ll come back to that later in this series, but let’s focus on history for now. So, learning who proposed the exchange currency may be a bit of a mystery, or perhaps it was something emergent from the culture: for instance, shells were used for other things like jewelry before that, so they may have adopted them for exchange because they were familiar with them. The employment of shells, beads, or whatever ‘things’ they used for exchange seem to have emerged many thousands of years ago, and it worked only because of the trust people had among each other.

You must be a bit nuts to give up your cow for just eight shells, right!? Well, this kind of trade initially worked because it started within groups of people who trusted each other, and it worked so well that it gradually expanded globally. It is interesting to know though that the way they valued goods and services was purely cultural-based. If you go back and try to sell your smartphone in those days, no one would give you a shell for it. People valued farming grains and livestock in those days, plus textiles (clothing mainly) and tools. Perhaps not in that order, but those were the important goods and services back then.
So a cow may have valued at eight shells and a pair of shoes at only one shell, but a smartphone or a piece of gold would be worth nothing to them. If there were more cows in an area and very little shoes, and people ‘were into shoes’ that time, then shoes would have become more valuable due to their scarcity and the fact that people wanted them. A person selling them could put a higher ‘price’ on it because the demand was greater, recognizing that people who owned cows could even afford to give two cows for one pair of shoes. It’s important to note that all of that could be reflected in a currency system that they had just invented. To make things more secure, the shells that were used for currency were shaped into beads through a laborious process (video), and making them was not so easy. So if you imagined going back into the past and just collecting some shells from the shores to buy yourself some pretty cows, a shiny pair of shoes and a boat, then you would be out of luck, as you would have to have some of those special shells in order to to do that. It’s similar to today, where you can’t just make paper money very easily, and even if you manage to, you could face harsh punishments for ‘faking’ the trading ‘things’ (counterfeiting money). From that moment on, it was just as simple as it is today: people would use these ‘things’ (the shell beads) without wondering where they came from or what their real value is. Of course, this entire trading system is what gave birth to the concept or rulers, and those who were ruled by them. Some would strive to control this ‘currency’, while others would end up controlled by it.

This kind of market system started with a few basic things that people needed and were able to trade: animals, vegetables, grains. As trade rules developed among tribe members, they were enforced by the tribal leaders and even more by their armies, and were eventually introduced to other surrounding tribes, whether by force (conquering and forcing other tribes to adopt this system) or by need (other tribes had to adapt to this new kind of market in order to exchange goods and services with them). This entire idea emerged around 12,000 years ago, but it took a while for it to become widely adopted. The more specialized trades became, and the more specialized the people became in offering services, the better this system became (by ‘better’, I don’t mean better for people, but more simply better for trading stuff). Shell beads were later replaced by a variety of other currencies, such as custom made ‘coins’ made out of metals. They eventually came to favor coins made out of gold, a somewhat rare material, because replicating gold currency is similar to trying to replicate those earlier ‘special shell beads’, but only using specific rare kinds of shells. Since people were unable to easily replicate these gold coins, it gave even more power to the rulers.

{{{Since they already controlled the means for locating and extracting the gold used to make these custom coins, they could better control the currency.}}}

So, imagine having an army of people, lots of gold, and a trading system that many accepted. You could now ‘pay’ people some gold coins to extract more gold for you (the ruler), and make far more coins out of those people’s work. You are now ‘in the business’ of making more coins out of coins (and other people’s labor). Having an army, you could also enforce rules (laws) upon people. So if you make it a ‘no-no’ (illegal) for people to replicate coins, you grow richer and richer, as you have control over the coins, the means to make them, the ability to buy whatever you need, including people, and with very little ‘work’, become more and more powerful, all on the labor of the people you are ruling over. One incredible but predictable thing about earlier tribes is that if you look at the places where they thrived, you’ll find it’s often near the line where two or more of the planet’s tectonic plates meet, where molecules of many shapes are most likely to rise to the surface by volcanic lava, and these molecules form materials that people need to build, feed, and otherwise survive. You would also find some near significant waters (rivers, lakes, along shorelines) for similar reasons, as well as easier opportunities for trading with other tribes. So, tribes clustered around places with significant resources and other advantages (like trade).