Economists to me: abolition of money

[Alatriste]

I was writing an small essay on the abolition of money for a SF group. What would be the probable consequences of abolishing money? I'm interested in your opinions.

Note: Yes, I know in 'Star Trek' future society the Federation supposedly doesn't use money but in many occasions the plot seems to contradict this assertion, and I know it's a very polemic question in Trekkie forums, etc, but no, this thread hasn't been inspired by 'Star Trek'. Actually I have never watched regularly any 'Star Trek' series, and only 4 or 5 movies.

First, societies use money as a tool to allocate production and resources trough market prices. The alternatives are rationing and mixed systems combining both markets and rationing in a number of ways. Without money the only way to allocate resources would be rationing literally everything, from iron ore to sport cars, using something similar to the old Soviet Production Plans (but as far as I know the Soviets never went so far as to consider abolishing money). And, while future technology could make those rations luxurious seen from our 21th century perspective, not everyone will possibly enjoy the equivalent of a Versailles Palace and a 1,000,000 acres park with monumental fountains, pheasants, peacocks and deers... No matter how rich the future is resources will be limited, some severely so, there is no way out of this basic problem.

Second, the abolition of money would cause an incredible amount of problems and limitations, ranging from small daily chores to big curtails of personal freedom.

Money usually is considered to serve three or four purposes

1. Universal medium of exchange, used to avoid the inefficiencies of barter, above all the 'double coincidence of wants' problem (A sells books and wants food, B has food but doesn't want so many books... using money that's no problem, without money they need to find several persons, C, D, E, F... wanting books A has and possessing things B wants) Free interchange of goods and services would become almost impossible, limited to very small scale deals between individuals, and the more specialized the service/merchandise offered the more difficult would be for the provider to find customers.

2. Unit of account. Even in a 100% communist economy, how would state officials decide between building 1,000 small ships or a big spaceship, or between 1,000 3D TV sets or 5,000 HiFi players, or between a new big opera house and two smaller ones if money doesn't exist? This use doesn't need physical coins or notes, but without the concept of money comparing costs becomes nightmarish, if not impossible. The only half serious alternative I know of is the use of energy-money, i.e. using kilowatts instead of money. That would serve some purposes as well as money or even better, but not all: how would energy-money calculate the cost of using scarce items like highly qualified engineers or very rare materials?

3. Store of value. At least at first sight this one doesn't seem so serious, but without money saving for future investments is impossible, like credit/debts. That would have a very deep negative impact on the economy and the society. If everything is rationed saving and credit could be meaningless for individuals, but what about states, towns, businesses...?

4. The fourth (but many economists think this one really is a subset of the others) would be to serve as a 'standard of deferred payment'. But without savings or debts to settle, there would be no need for such a standard.

In short, abolishing money seems on the whole clearly undesirable and probably impossible. Even abolishing money from the average citizen's life would entail very severe social and economic limitations... how would portrait painters, for example, live in such a society unless they were supported by the state? And how would their work be allocated without money? By huge waiting lists perhaps, but that would obliterate the painter's freedom... And collective long term ventures like movies? Professional sportsmen, writers, sculptors? Etc, etc, etc... Unless everyone's basic needs are covered from cradle to grave without a job (or with a job imposed by the state or its equivalent) the system seems barely viable and certainly not enjoyable.

Besides, no money would in all probability mean equality, enforced equality because accumulation would be impossible, but bettering one's condition trough work and saving would become impossible too unless some form of meritocratic society allowed the best to get bigger shares, things like sport cars, bigger houses or luxurious holidays... but then the risk would be mere apparatchiks receiving bigger shares of everything for them, their families and their cronies and that would really be the crowning irony of the concept.

On top of that police would have to watch night and day to avoid alternative forms of money appearing, and the experience of prisons, prisoner camps, etc, etc, seems to teach they would certainly appear, and swiftly, things like cigarettes, matches, transport tickets, gas coupons, etc, etc being uniform, relatively durable and in ample demand being obvious alternatives used in the past. And did I mention the black market? Perhaps a black market wouldn't appear because without money or some other way to store value being a black marketeer could be pointless, but I wouldn't count on it. There is always influence and... ahem... personal services, shall we say.

Well, these are my ideas. What do you think?

[Admiral Yi]

A lot of your conclusions follow from the assumption of state/communal ownership of production, not specifically from a cashless society.  They're not necessarily linked.

[Josquius]

No matter how rich the future is resources will be limited, some severely so, there is no way out of this basic problem.

How do you come to this?
In Star Trek yes.
But in reality?...space is big.
Assuming a future world where robotics have completely replaced labour and we have spread out into the galaxy then we do have infinite (as far as we're concerned) resources.

[Alatriste]

No matter how rich the future is resources will be limited, some severely so, there is no way out of this basic problem.

How do you come to this?
In Star Trek yes.
But in reality?...space is big.
Assuming a future world where robotics have completely replaced labour and we have spread out into the galaxy then we do have infinite (as far as we're concerned) resources.

They can be very ample, but always finite. It doesn't matter if they have 1.000.000 planets per capita, they would still to decide if everyone will have the same amount or some deserve more than others... and a method to make the allocation.

@Yi

Ah, but I'd like to hear how a cashless, technologically advanced society could work without money and without state/communal ownership of production. Any idea?

[Admiral Yi]

@Yi

Ah, but I'd like to hear how a cashless, technologically advanced society could work without money and without state/communal ownership of production. Any idea?

You'd end up with cash eventually.  Start with barter, then you start using some commodity as the common denominator (how many bushels of wheat will you give me for this house?), then you replace the physical bushels of wheat with book entries or paper scripts.  Voila, money.

[Neil]

Assuming a future world where robotics have completely replaced labour and we have spread out into the galaxy then we do have infinite (as far as we're concerned) resources.

But not the ability to transport the resources in infinite quantities.  Allocation becomes an issue.

[Eddie Teach]

Ah, but I'd like to hear how a cashless, technologically advanced society could work without money and without state/communal ownership of production. Any idea?

It couldn't. At least not with humans.

[Josquius]

They can be very ample, but always finite. It doesn't matter if they have 1.000.000 planets per capita, they would still to decide if everyone will have the same amount or some deserve more than others... and a method to make the allocation.

I said infinite as far as we're concerned.
Not literally infinite. But infinite enough for our needs. There's no way anyone could ever make use of 1 million planet, the resources have outstripped the need.

But not the ability to transport the resources in infinite quantities.  Allocation becomes an issue.

How?
Robots could handle that too.

[Grallon]

Ah, but I'd like to hear how a cashless, technologically advanced society could work without money and without state/communal ownership of production. Any idea?

It couldn't. At least not with humans.

The Borg scenario remains the only one where we can overcome our selfish destructive animalistic nature.  Thus we would no longer be burdened by emotions such as greed, avarice and lust for power that underpin all human systems of governance and resource management.




G.

[Richard Hakluyt]

A hell of a lot of allocation of resources is about social status rather than need. The simple provision of vast numbers of consumer goods does not meet this need for status.

[Zanza]

But in reality?...space is big.
Assuming a future world where robotics have completely replaced labour and we have spread out into the galaxy then we do have infinite (as far as we're concerned) resources.

Space is big, but I want a nice seaside villa on a certain beach on Earth. Let's say a million more people want exactly that villa. It becomes a scarce good. I don't care that I could have a much bigger villa with a much nicer beach that happens to be a gazillion lightyears away on some strange planet.

[MadImmortalMan]

No matter how rich the future is resources will be limited, some severely so, there is no way out of this basic problem.

How do you come to this?
In Star Trek yes.
But in reality?...space is big.
Assuming a future world where robotics have completely replaced labour and we have spread out into the galaxy then we do have infinite (as far as we're concerned) resources.

Indeed. I think it's more likely that technological advancement will create a situation where materials and commodities are so abundant and the means of attaining and/or producing them so personal that money could become obsolete simply by not being necessary.

[Eddie Teach]

A hell of a lot of allocation of resources is about social status rather than need. The simple provision of vast numbers of consumer goods does not meet this need for status.

I think this is one of the main reasons western-educated third worlders tend to return to their home countries.

[Grallon]

I think this is one of the main reasons western-educated third worlders tend to return to their home countries.

This reminds me of a guy I had a few classes with in University.  He was the son of some african backwater minister - rolling in the wealth stolen from that country's citizens of course - and abysmally stupid; you know the vacant look kind of stupid?  I swear he couldn't articulate a 200 words essay if his life depended on it.

Yet he had been accepted and no doubt graduated, after a generous donation from his bandit of a father.  And afterwards he went back to his shithole and could boast he had been educated in a 'prestigious' western university. *shakes head*



G.

[Neil]

How?
Robots could handle that too.

Ships and robots will need to be built, and have ships have finite transport capacities.  Someone will need to decide how many to build, how and where.

At any rate, what good is giving everyone the resources of a million planets when there are only a small handful of worlds that can actually be reached and exploited?