As almost any economics text will point out, money (and I include here checks, credit cards, etc. --when there is money to make them good, and in those situations where they can be used just like money) is a very useful medium of exchange for trading products because (1) it is generally or universally accepted and therefore widely convertible to available products or services (and thus allows multiple party, sequential or non-simultaneous trades rather than your having to find someone whose specific product or service is what you want and who will be willing to trade it for the specific product or service you have to offer), (2) it is portable, (3) divisible (in a way that an airplane or a cow is not), (4) combinable (so that, for example, many people, even from different parts of the world, can invest "together" in an enterprise to which they could not contribute their personal labor, individually or in combination), (5) and durable (does not decay or spoil). Also (6), as John Stuart Mill pointed out, money makes trade generally easier by setting a standard by which other things can be readily compared with each other, so that people don't need to calculate how many tires are equivalent to how many hamburgers or cars or cigarettes or wallpaper rolls. Except under certain conditions (i.e., when money "changes value" over time or across borders) $100 worth of tires is worth $100 worth of hamburger or wallpaper rolls, etc. Each trader can price his item one time --in money-- and then look for trades with similar prices.

However, money, because of its widely accepted value for trading purposes, takes on the property, not only of a medium of exchange, but as a commodity itself --though a special kind of commodity; one of virtually universal desirability and necessity, with properties and potential properties that can greatly enhance or severely retard economic stability and progress by their management or mismanagement. Further, since money is an abstraction (i.e., under certain conditions an abstract equivalent to goods and services), it can be manipulated mathematically and psychologically in ways that (without those certain conditions) have no physical or ethical relationship to labor or trade. Certain physical, psychological, and ethical anomalies can occur that cause economic harm in terms of amount and direction of work that can be done or the effectiveness, as well as the fairness, of distribution of work and its results. Money can collect in places where it does little good and (simultaneously or independently) not be available in places where work is needed or wanted that cannot be purchased, even though idle or underemployed skilled labor is available and willing to do it. Money can collect in places where it ties up labor for work that is less necessary or useful than other possible ways of utilizing that labor. Money can go where it does not seem to be earned or deserved; and it does not always go where difficult or legitimate work is done. In short, the use of money, for whatever good it may contribute to, does not automatically nor always assist important, desired, or desirable production, and may help unfairly distribute benefits and burdens. The use of money (i.e., any durable, widely accepted, divisible, combinable, portable medium of exchange) allows a number of good things to happen (which might not so easily happen, or even happen at all, without such a medium) that bring about economic progress. But it also allows for some things to happen (which might not happen at all or perhaps not happen so easily without such a medium) that bring about economic weakness, instability, or harm.

There are a number of issues, phenomena, and ordinary, relatively uncontroversial judgments that all interrelate with the ideas in this chapter. It is impossible to discuss them all at once though they often come into play simultaneously in interrelated ways. I have chosen an order that I think will be instructive, but it is not the only order that would be useful. The order of introduction of the ensuing observations and the points they support is not meant to imply anything about their relative importance; it is merely a logical way of sequentially describing or dissecting and putting into perspective things that do not occur sequentially or in isolation from each other.

The essence of what I am going to try to show is that (1) normally, though it is not normally apparent, we think of economics as being limited (in a sense I will shortly explain) by ethics and by psychology; and (2) when an economic system obviously fails in regard to either ethics or psychology, societies tend to circumvent and supercede economic principles and forces in order to more directly influence satisfactory outcomes. (3) Economic systems sometimes fail in regard to ethics or psychology, but not in an obvious enough way for consensus that non-economic forces need to intervene or change the economic mechanism. (4) Properties of money sometimes cause production, distribution, and trade problems, yet mask doing so.

When I say that economics is normally limited by ethics and psychology, I mean that ethical judgments and psychological limitations take precedence (and legitimately so) over economic principles, policies, and practices. When economic policies and practices are thwarted by human nature (i.e., our psychological tendencies and habits), insofar as psychology cannot be changed, the economic system must change or fail. To be successful, economic principles must work with human nature, not contradict it. And although human nature and psychology allow for much variety and flexibility, there are limits to what is economically and socially "practical". With regard to ethics, when economic principles overwhelmingly conflict with our collective sense of values, it is the economic principles that we change. When economic forces tend toward obvious and egregiously undesirable results, we use other means to make certain those forces do not triumph. We do that both when we are trying to prevent terrible evils that economic considerations by themselves would bring about, and when we are trying to insure obvious and important good or right that economic principles by themselves would neglect or thwart. Though not all social or economic problems result from using money as a medium of exchange, many of them have to do with the actual properties of money, with psychological mistakes money tends to foster, and with moral issues that money tends to camouflage. Those are the ones this chapter addresses.

I want to make it clear from the outset, however, that this is not a sermon on money's being "the root of all evil". I take it the term "money" in that expression is symbolic or representative of either greed or the overzealous pursuit of the kind of material possession that is at the expense of greater non-material goods (i.e., inhumane and excessive, counterproductive materialism), and what I am interested in here is the problems caused by money with regard to things other than greed or excessive materialism as such. Of course greed, in the sense of trying to (whether legally or illegally) get back (distributed) from society or a community more than one's fair share for what he or she contributes, does cause individuals, communities, and economic systems much havoc. 

Trying to get more than one's fair share illegally (e.g., theft, embezzlement, selling illegal goods and services, kidnapping, extortion, etc.) causes obvious problems, but greed of that sort, and those problems, would exist even without money. Many things besides money can be stolen, extorted, taken as ransom, etc. Further, although money sometimes contributes psychologically to the acceptability of legally channeled greed as something that is "good" when (1) greed is merely considered the same as self-interest, (2) monetary profits are confused with "real" profit, and (3) money accumulation is confused with wealth, I have tried to dispel the first two of those beliefs in other sections of this book. The third view is relevant here, but not only with regard to greed. There are numerous reasons to amass money, greed being only one; but many of the purer motives for amassing money cause many of the same kinds of problems that greed does for reasons I will try to make clear soon. Throughout the book I give examples of non-material Goods that are important and that need to be kept in mind as benefits when obtained (or burdens when lost) and that need to be included in or juxtaposed with "economic" profit and loss, whether that profit and loss are described in terms of money or in terms of the things money may or may not buy.

The free market system, even in a generally free market economy, does not pervade all areas of life, and arguably ought not to. One of the most generally accepted definitions of economics (apart from adherents of Hayek) is "the system a society chooses to allocate its scarce resources". But many such allocations are not made on the basis of money at all, and in some cases sales and purchases or economic trades would be illegal. In many cases, money is not permitted to do the talking. Even such havens for successful entrepreneurs as country clubs do not generally auction off or sell golf tee-off times or tennis court times. There is usually some sort of sign-up system that has nothing to do with money or the relative wealth of members. Wealthy colleges are not allowed to pay officials for throwing sporting events against poorer schools. Babies and children are not to be bought or sold or traded for. Nor slaves. Nor stolen property or things one does not own or have clear title to. Nor illegal products or services such as drugs or sex. The bodies of deceased loved ones are not sold for dogfood or fertilizer even though that would bring a profit; much of a profit compared to the costs of burial. In some cases one has to have a business and/or professional license to do certain transactions, or one must have a union membership or professional license to perform certain labor; one cannot do something just because another person is willing to pay to have it done. 

Police, elected officials, and judges are not supposed to be paid for special favors or to ignore wrongdoing. In a number of situations drawings are held or some other form of chance is used to see who gets a desirable scarce resource. A coin is flipped to see which football team gets a choice of kicking or receiving, or side of the field. And the other team gets the choice the first team eschews. If the team that wins the toss chooses field side, they cannot also choose whether to kick or receive. In such a case, even the luck of chance can only win for you one desired scarce resource, not both of them. Money avails either team nothing in this regard, and should not. Teachers do not sell the best seats in class or give the best grades to those who could pay for them. Job promotions are not supposed to be given to those who pay for them (whether in money, or in other personal services or favors, such as sex, though there seems to be some disregard to this latter by some of those on top and some of those working their way up). 

Sports leagues also have elaborate plans for hiring new players --drafts, chance drawings for order of participation in drafts, free-agency rules, expansion pools, monetary limitations of various sorts. In many cases the least successful teams get first choice of best available new talent, certainly an anti-free-market hiring system. The plan is in order to try to keep balance or parity in the sport and thus make the sport overall more exciting for more fans, by preventing increasingly greater residual or perennial domination by a team that happens to be athletically or financially successful one year. Whether this is fair to new players with great talent is sometimes at issue, and there are other mechanisms at work to deal with that problem. The point, however, is that team wealth is not supposed to be the only or the determining factor for hiring the best players. 

There are also a number of regulatory restraints on doing business, including the financial markets, many self-imposed by members of the trade themselves or members of the overall business community. In some cases regulation is welcomed by an industry that realizes the most efficient way to do business is not the right way to do it, but where no one can afford to be inefficient and ethical if others in the industry will not also be. Not all regulations, whether government or privately imposed, are without merit, even though they may prevent transactions between willing partners. In fact, one of the ways of looking at the ideal role of regulation, whether by government or by self-policing industry mechanisms, is to prevent those voluntary transactions that would be good for the agents involved but which would harm innocent or deserving others in society. Such regulation is meant to preclude those acts that would normally be considered wrong or unethical, and that would never be voluntarily entered into, if everyone had a stronger sense of ethics. Unfortunately particular regulations are not always the most appropriate regulations or the morally best solutions themselves, and therefore the ideal in this regard is not met. And also unfortunately, external regulation is not nearly as effective nor as tolerated and embraced as internalized ethical understanding and principles. Where there is externally sanctioned regulation instead of internally embraced ethical understanding, resentment arises from having to comply with unappreciated regulations, and loopholes are sought to circumvent the spirit of the regulation while meeting its letter. When people act appropriately out of ethical understanding and conviction, they normally do not have such resentment about what they "cannot" do, and they normally are not seeking to comply only with the letter, not the spirit, of what they know is right.

There are also a great many areas of life where we do things for each other without money, and that even the government tax agents would not consider barter or have us pay taxes on. Two families may take turns baby-sitting each other's children. A friendly passer-by may jumpstart the stalled car of a stranded motorist or might change a tire for a person unable to do it for himself. Many good Samaritans would even refuse payment for helping out. Most married couples still frequently divide labor without monetary payment, even though this often means the spouse that does most of the housework ends up with less of the money because housework and child-rearing in a marriage is normally not compensated at maid and nanny rates. People may volunteer or pool all kinds of labor to build a barn or church or school or playground, or to build or make more energy efficient, homes for disadvantaged people. Churches and schools need and get all kinds of volunteer, unpaid labor⁽¹⁾. People often freely volunteer not only their unskilled labor, but often their professional labor. Many people will use the skills they normally charge money for to do something free for someone they feel deserves charity, a reward, a favor, or just simply a helping hand. One might also put great professional effort into doing something for someone one likes simply for giving them joy or seeing that joy on their face.

Community consensus (whether local, regional, national, global, or whatever) about economic or quality of life goals makes real economic accomplishment much easier, by allowing the suspension or modification of otherwise normal economic practices and beliefs. When a country fights a war or has a particular natural disaster strike many of its citizens,⁽²⁾ non-market efforts necessary to cope are met with much less resistance, even enthusiasm; and "normal" economic policies tend to be suspended or ignored when they are seen to be impediments to achieving certain goals. For example, in wartime, jobs are expected to be held for (or given back to) those who serve in the military. There are laws in the U.S. that protect the jobs of reservists called up to active duty. And public sentiment even without such laws, in times of "popular" wars would likely punish any employer known to fire war veterans for not having remained at their jobs. As of this writing, public sentiment in the United States is gathering momentum in favor of unpaid "family leave" for workers who need to tend to sick children, infirm parents, school problems, or other kinds of family emergencies that can happen to almost anyone. But paid family leave is not, at this point, even a consideration. And few employers are understanding enough to hold a job for an employee who "only" wants to take some time off in order to work on something important to him or to have some time just to contemplate or replenish his spirit. Most people reading this would say "of course, no employer would do that". But it may be that under certain circumstances that could be most productive and profitable for a company. Even when some companies show success from (or with) such behavior, other companies are not likely to buy in immediately, but will feel they cannot "afford" it.

During times of national consensus about the suspension of normal economic practices and policies, not only are employers expected to make sacrifices, but customers tend to accept the inconveniences so that those sacrifices are not as great. As labor is channeled into the war effort, customers tend to remain loyal to companies whose capacities are diminished because of it. Interruptions in services and supplies because of sacrifices to the war effort (or hurricane relief effort) are more acceptably and even cheerfully borne by those customers effected. That will be less so, at least at first, if family leave policies become the law and cause such interruptions, just as interruptions in service are not happily accepted by customers "just because" employees are on vacation. And it is virtually impossible to expect customers any time soon to accept interruptions caused by a company's making adjustments to an employee's absence in order to contemplate life or work on some idea he thinks important. Even if we all wanted those things for ourselves, as we want vacations, somehow they seem frivolous or not in the spirit of progress. Not like efforts to accumulate more money or sell more things or stage community golf tournaments.

In fact the rise and acceptance of spectator sports as hugely profitable business is a form of community consensus about what is economic progress and worthwhile goals that people of past centuries (and I suspect future ones too) probably could not explain or imagine. Professional athletes are not only not considered idle labor, but are paid handsomely to do what they do, and are admired and respected as people for their prowess and efforts. A company, for example, which would not think to give its employees a week off, apart from vacation, to play some non-business related golf will pay those employees their salaries to be absent from work if they are helping stage a golf event the company sponsors. And customers may willingly accept the costs and burdens such business practices pass on to them because they think it is a good thing the company is doing. Community consensus about values and goals is what makes this sort of thing possible.

And this is different from simply saying that the free enterprise system simply gives people what they want, for a price. Consensus brings about a mind set that allows the suspension of normal free market practice when it is widely believed that free market practices will not provide what is wanted. Consensus says profit and price are not as important as winning a war, relieving the suffering of a particular disaster, promoting sports in a community (or chess matches or ballet or high school academic programs), or taking care of one's elders or one's children. Consensus allows the suspension of ordinarily valued "economic" financial principles in order to promote broadly agreed upon goals when we do not know how to achieve them through the normal theories and practices of the economic system. And consensus does not always come from purely financial or monetary considerations; that is why leadership (from whatever sources), education, information, perspective, and communication are potentially as important as economic principles, in achieving a better or at least more broadly desired quality of life. These things help us understand when (financial) economic principles alone impede or slow achievement.

Conversely, "black markets" --or the illegal buying and selling of illegal products and services-- flourish where a (perhaps substantial) percentage of society does not agree with the view that certain products and labor are wrong to trade even though they are illegal. 

Part of the point of trade, as opposed to just giving things away or looking for free gifts, is the notion of swapping one's labor for someone else's in a kind of fair or even exchange. When you barter fairly with someone (with neither side taking advantage of the other), you know each has earned the others' labor because you each get some product or service for your own labor. When money is swapped fairly for a service in that way, the money bestows on the one paid a public sign of quasi merit or deservingness of someone else's labor or product. When you buy something from someone for $100, you are essentially giving him a voucher or an IOU that he can cash in for a service or product from anyone willing to take his IOU to pass on to others for their services or products. Most people are willing to accept the IOU (that is, the money), at least for a service they believe legitimate to provide (e.g., something they believe is moral, legal, and not overly burdensome psychologically or physically compared with what the money can buy them). But the money does not always have to be accepted as trade for a service. That is why I used the word quasi in describing money's public significance as a sign of deservingness. Some people, who are already too overworked or busy will not be able to accept it because they have insufficient time or energy available to labor for you for your money. Or it cannot buy a product that is unavailable. Some honest people will not take another's money for a service they do not feel they can perform well enough to deserve the money. And some people will not cash in an "IOU", as represented by money, for someone they feel does not deserve what they are selling at any price, for reasons other than the spender's past labor. (On National Public Radio's All Things Considered one night a shopkeeper told about refusing to sell something she had lovingly and painstakingly made, to a woman who she thought had no real appreciation for the item and who had been quite arrogant about her collection of such items and her intention to add this one to it. The shopkeeper even refused the woman's offer of much more than the original asking price.) Or some people will refuse to provide a product or service, for any amount of money, to someone they believe earned that money illegally or immorally (i.e., will refuse to take money they feel is "dirty"). Some people will not accept money that was made in some unearned or undeservedly earned way⁽³⁾; for example, a lawyer for the working poor may not sell his services to an oil baron whom he feels has achieved his wealth through luck, through loopholes in the system, through inheritance, through taking advantage of labor that worked cheaply out of the need for mere survival, etc. Money is a sign that it is all right to trade with someone who offers it, if you want to; it is not a sign of an obligation to trade your work for their money⁽⁴⁾. One's money may "not be good" in some circumstances.

If you think of money as equivalent to a particular number of person-hours of labor (or units of skill or units of expertise -- anything having to do with some form or other of labor, whether mental or physical), then paying for something with money you earned from your previous labor means bestowing on the seller the right to have others do something for him which he will give up his "voucher" (the money) for. Giving someone money in payment for a good or service "vouches" to others that he has performed such a service and therefore deserves in return what he trades the money for. Buying a good or service with money completes the trade one began by performing a service or parting with a good for that money. And with regard to money someone else pays you for your labor, if you hold that money (say, in a drawer, as opposed to investing it or loaning it, or putting it in a bank which does those things), then you are saving up or storing up, or postponing getting, the benefits of your already completed past labor in order to get someone else's labor in return for yours, but simply in the future.

This way of viewing money puts trade imbalances into perspective different from the way they are often understood. In money, trade imbalances favor the nation making the most money; but in labor and products, trade imbalances favor the nation giving up the money, because they are getting things in return for money, for which they do not have to do labor to get back. As long as the other country does not intend to buy your products or services with that money, you may as well be writing them checks they never cash.⁽⁵⁾ Consider the U.S.-Japanese trade imbalance (or the imbalance with any country from whom we import more than we export, thus giving them the supposedly favorable balance of trade). If the Japanese do not buy American products, or buy things from a country that will, then essentially the Japanese are laboring for us (building us cars and electronic equipment) for uncashed checks (i.e., unspent dollar bills); they are trading their labor for our money and not requiring us to labor for them in return. The more monetary profit Japan makes from us, essentially the more work they are doing for us for nothing. Money is only good as a means of exchange in trade --as a means of purchasing labor or the products of labor.

The television ads and the protectionist lobbying claims that our "unfavorable" balance of trade hurts us are only true in certain regards. Any hoarding of money "skews" the relationship between labor that is available, and the money that activates that labor. As will be explained later, if you have any group of people among whom just the right amount of money is flowing to keep them all laboring and trading with each other, anything that disrupts the flow of money, distorts or confounds the trading and therefore the laboring process as well. When the Japanese (or any countries) sell to us but do not buy from us, they are hoarding our money and disrupting its flow and thus our laboring process (jobs). But this disruption is no different than if Americans hoarded money. What has to be done is either to entice the hoarding to stop or to make allowances in the money/labor/trade relationships in society for it to continue --by considering the imbalance of trade payments as being made in checks that essentially will not soon or ever be cashed, so that the money is still available to those that need it to be available, in order to sell their labor for it. Money that is taken out of circulation has to be accounted for somehow in relationship to tradeable labor (i.e., being the intermediary in trade that allows trade to happen), or it is no longer an intermediary for trade and thus slows or halts trade. When money is taken out of circulation by not being spent for a period of time, it causes to go idle for that time the amount of available potential labor it could purchase. If the time in question is too long and too many people withhold purchasing sufficient labor from the same source, that source may be unable to earn a sufficient living to stay in that business. From the idle laborer's point of view, unless there is other work for him to do, this is unfortunate; but it is not unfortunate otherwise from the standpoint of society if no one would ever care to purchase that particular kind of labor (i.e., making that labor obsolete). It is unfortunate, however, for society as well as the individual worker, if, merely by postponing purchases they will someday want, people allow or cause to become extinct the kind of labor they will then have to do without when they finally do want it. A business cannot survive only on the hope or promise of possible future sales.

For example, suppose you grow food and that you trade what you do not need to a friend who makes clothes. He trades the excess clothes he makes to you for that food. Suppose that you trade in money as a way of keeping track (since your trades otherwise may not be simultaneous) and that you simply keep passing the money back and forth between you as you trade with each other. Then suppose you find someone who will sell you clothes for less, but does not want to buy your food. Suppose they will even extend you credit after you run out of money, and that this is still cheaper from buying from your friend. Now a number of things happen. You are getting clothes for nothing (other than pieces of paper you call money), and you can either just give your excess food to your friend, since he is your friend, or you can cut back on your labor and force your friend to find food elsewhere, either by producing his own and not making so much clothes, or by finding another market for his clothes, or by going into a line of work the clothing makers you are trading with will trade with him for so he can buy food from you for you to pay off your debts if you want to. But you may not want to work so hard --you have essentially unlimited credit, after all. What is the problem for you?

The problem for you is that your new clothes maker could simply stop your credit, stop making clothes for you, or could seek repayment (and may have a legal claim on your farm as that payment). If he stops making clothes for you, and your friend has gone out of the clothes making business and cannot start up again, you are stuck without clothes. If you have to pay your debts with your farm, then you are stuck without a means of trade or food. If you have shared your food with your friend and allowed him to keep his clothes-making facilities, and if you legally do not have to give up your farm for payment of your debts, than no harm is done. You simply resume trading with your friend. He may have stockpiled clothes, or simply enjoyed more leisure, since he did not have to make any for you.

All this is the kind of thing that happens with national trade imbalances, say Japan and the United States. Insofar as there is a trade imbalance, Japan is essentially hoarding our money, and giving us their labor for that money without using our labor (by not buying our products). We have to choose then what to do with that excess, otherwise idle or unemployed, unpaid labor we have. But that choice depends on the problem that we do not know when and how Japan may want to spend its dollars. It is like paying a bet with a check that is hung in a frame on a wall --but which may be taken out of that frame and cashed at any time. If it is not cashed, we have the money to spend, but we cannot spend it if we always have to keep the money in the bank to honor the check in case it were to be cashed. The check problem is solved because checks do not have to be honored after a certain period of time. Money can only be partially solved that way.

A country could, for example, say that unless the trade imbalance is satisfactorily addressed by the "creditor" nation by a certain period, any future sales (of any sort --real estate, labor, products) to foreign countries will have a tariff, thus devaluing money that is not spent before the tariff goes into effect. Or the debtor nation could (threaten to) refuse to sell much at all to foreign countries, thus devaluing the money altogether that was not traded back to them for goods and services before that became policy. In other words the debtor nation would be welshing on their earlier one-sided trading, not because they were trying to steal past products from the supplying nation, but in self-defense of the supplying nation's knowingly skewing the buying nation's domestic economy by disturbing its money supply and therefore its money/labor/trade system. That would be like saying in the three person example above that the third party cannot, at some future time, take the farm or buy or take all the food the farmer produces simply because they were hoarding money by practicing one-sided trading earlier. If there is no mechanism for getting money savings or hoardings back into an economy, or somehow replacing it, employment will be diminished by the amount taken out of circulation. Money is durable and therefore can be stored, but labor, or particular labor, is not; nor is unpaid, idle labor that needs trade and money to survive even while being idle. Out of work people cannot just go dormant until work appears; they have needs they need money to meet. An economic system needs a way of employing and paying for temporarily idle labor without devaluing savings. Savings is legitimate, but how to have savings and trade simultaneously is a problem. Loaning out or investing portions of savings is not the total answer to the savings/hoarding problem because (1) some loans or investments are lost, (2) interest does not always have a relationship to actual or physical progress, and (3) not everyone can get loans when they need them, especially when interest rates are high.

Many exchanges that are made with money could have been made just as well without money, e.g., by direct trade or barter. And money facilitates some trades which could theoretically have been made without money, but which would have been much more difficult, time-consuming, and wastefully inefficient to do that way. For example, if I have something you want and you have something another person wants and he has something I want, and we are all willing to trade, we need to be brought together or we need to agree to the trade and allow it to take place over time so that when I see you, I give you what you want and remain content to wait until you and the third person make an exchange and you or he brings me what you owe me from him. Theoretically even complicated, large multi-party exchanges could work this way, and some do, but they are so much trouble that for practical purposes they seldom occur.

Consider the complex situation where hundreds or thousands of workers build something like large, passenger airplanes. Airlines buy them and then pay for them (or repay the loans for them) by charging passengers to take them places in the planes. These people pay for those tickets from a fraction of the money they make from selling their goods or services. Theoretically everything could be paid in direct goods and services, but that would require such work to keep track of and deliver that few such planes would ever get built.

Even interest transactions, which at first seem to be merely about money, could be expressed in goods and services: e.g., if you let me use your gun today to go hunting, I will return your gun and give you one, or part of one, of the turkeys I shoot. If we wanted to, which usually we do not, we could invest in a new company, not by putting money into it, but by getting a group of people together who are willing to feed, clothe, and shelter workers in the new enterprize until that enterprize brings in sufficient money for them to move out onto their own and then repay everyone in the goods they produce -- paying more than the equivalent services we gave them by giving us enough goods and services to count as interest on that re-payment. Or we could take people into our homes and provide for them while they go through law or medical school in return for legal and medical work they perform for us later. To make their services include an in-kind interest payment, they would simply have to repay, say, $10,000 worth of room and board with, say, $11,000 worth of legal or medical services. (That is, if 100 hours of legal service were equivalent to 1000 hours of room and board, it would take 110 hours of legal work to include the interest for each 1000 hours of room and board.)

Even financial institutions could be thought of as giant repositories for all kinds of good and services that could be used by people until they become able to give them back, along with additional goods or services they themselves now produce (or what they trade for those). This would all be cumbersome and complicated, of course, but theoretically that is what we are doing when we do all this using money instead. Money facilitates the whole process by being easier to keep track of, by allowing things to happen at a greater distance (e.g., someone in New York can invest in an enterprise in Paris or Albuquerque by swapping his labor for money, sending the money to someone in Paris or Albuquerque to swap back into needed goods and services), by allowing the combination of labor from different people to jointly support new investment, and by allowing individuals to contribute toward new enterprise with whatever fraction of the fruits of their labor they can afford to contribute. By being able to combine the equivalent of fractions of labor from different people, money allows people to invest in enterprises they might not be able to support by themselves --by turning sums of their fractional labor into other people's whole labor.

The loss of money in investment or to a loan that is not repaid is generally translatable into the (at least partial) support of people in an enterprise that did not pan out sufficiently to produce enough tradeable goods or services to give a return. It is not that the money disappeared into thin air; it was paid out for things that were consumed and could not then be traded back for money. The money was traded (i.e., paid) to others who did not have to repay it to the people you loaned it to or invested it in. It in essence went to support what turned out to be non-useful labor. And it means that you have depleted a storehouse of useful extra labor that you had accumulated by trading your services for the future services of other people. The services you then purchased by your investment were of no value to you. You traded past services for services that could have been of great value to you but which instead returned nothing to you. It is not unlike planting crops that get ruined in drought; it is wasted labor. Of course, by "wasted" I mean only wasted in the sense of having no material return. In some sort of moral, existential, psychological, or spiritual and emotional senses, the person who plants crops that drought ruins is quite different from the person who plants no crops (does no work) at all. And collectively, investment and labor tend to profit society even though some labor does not give an immediate return or sometimes any return at all. If a percentage of labor is going to fail to pay off, and it is impossible to tell ahead of time which labor will fail, then collectively there is a big difference between not laboring successfully and not laboring at all. Not laboring at all gives no collective return.

There are other properties of money that cause trade anomalies or break downs in trade. One obvious case where goods and services and their monetary equivalent part company is when the value of money changes relative to the value of all goods relatively simultaneously, that is, when there is inflation or deflation of currency, whether occurring naturally or by manipulation. When inflation or deflation occurs, money gains or loses value compared to all other goods and services; those goods and services do not change value with regard to each other EXCEPT where exchanges occur that take place over time and include money as a medium. In these latter exchanges, the value of one's labor, represented as being "stored" in money one has traded it for, changes as the value of the money changes. For example, suppose 10 years ago one hour of your labor was worth one hour of the labor of another particular person so that you regularly bartered or swapped out your services to each other evenly on an hourly basis; and suppose that was also true today, but that in the meantime inflation had cut the value of money in half so that both of you now charge others twice what you had charged for the same work 10 years earlier. If, instead of agreeing simply to swap out services on an equal time basis, you had taken money from your neighbor 10 years ago for an hour of your work, and simply set it aside to pay back to him when you needed his services ten years later, your hour's worth of labor then would only buy a half hour's worth of his work now. That is not the kind of labor trade one tends to want to make.

What inflation does is to decrease the value of money and thereby to alter the value of any labor or trade that is contracted for a later time, but in fixed amounts of money at the "value" of the money (i.e., what it would buy) at the time of the contract. Deflation increases the value of money over a time span, because of the overall decrease of the cost of goods and services. Inflation and deflation are monetary occurrences that affect the value of the return we get for our labor by affecting how much future labor we will be able to exchange our past labor for (past labor whose trading worth is "stored" in money).

Long term, fixed-rate contracts, and savings stored as fixed amounts of money not indexed to inflation nor tied to inflation-related interest rates, are the sorts of things affected by inflation that skew the value of people's labor. It is clear to most people that inflation tends to devalue money. What is not so obvious is that it essentially then lessens the trade value of the contribution one made in the past without actually lessening its real or actual and moral contribution or benefit. If for purposes of this discussion we equate the value of work with its actual labor time, it is obviously not fair for a person to make a 50 hour contribution and then only get back 25 hours worth of work in trade for it, simply because the medium of exchange he stored what was owed to him became worth less. (Foreign exchange rate changes act in this same way as inflation and deflation in this regard.)

Much of what we call inflation, however, is not true inflation. It is not inflation when one sector of the economy (i.e., one kind, or group of related goods and services) becomes relatively more expensive than the rest. That is merely a relative change in the value of, or the demand for, that sector of the economy. Such a relative change can occur for any number of reasons --scarcity of materials or skilled labor, more education or expertise or effort required because the task required has become more difficult in some way, or its criteria for being judged has changed in some way, more expensive equipment required, greater demand by people willing to pay more for the service, tolerated price gouging (whether by individuals, monopoly, collusion, oligopoly or however), improvements in the service, etc.

Trade and the value of labor are also effected by the way money comes into or goes out of circulation, and by where it goes. The mere printing of money by a government, or the finding of gold when a country is on a gold standard can cause inflation. The hoarding of money can bring trade to a halt. Imagine a large society that is a sort of perfect Adam Smith free market economy, where everyone is employed and busy working and trading with each other and everyone is contributing and feeling that he is getting a fair return for his work. Suppose they are trading with each other by using money (or checks and credit fully backed by money) as their exchange medium. Then suppose that a fire in the bank burns a substantial amount of money and the records of who had how much. And suppose there are no other records. Arguably this could severely damage trade now, even though there is still the same amount of labor available as before and the same needs to be met. By altering or removing substantial amounts of the medium of exchange, without a way to compensate for doing so, the laboring and trading relationships get adversely effected even though nothing has happened to people or the non-monetary parts of the world. Substantial hoarding of money can do the same kind of thing. It takes out of circulation money that is necessary to keep trade flowing at a desirable, level. By correlation, if sufficient new money does not come into circulation to keep trade flowing when the amount of available labor or fruits of labor increases (either by population growth or by new discoveries or inventions), labor and trade will be adversely effected in the same way.

But where money "flows to" or collects (or pools) is as important as how much is available to circulate. For example, hoarding cuts down on circulation, not because there is not money available to circulate, but because it is not being allowed to circulate in the way it needs to in order to keep everyone contributing and being distributed to (i.e., working and being paid or traded to for their work). Though the effects of hoarding are the same as if money were burned or insufficiently printed, hoarding is not quite the same because the money is available to be used and could be put back into circulation. But money does not have to be hoarded to end up in the "wrong places" and thereby adversely effect trade. I will explain that shortly, but first examine the opposite kind of case, the case where too much money goes into circulation.

If everyone is working at appropriately full capacity (which is different for different societies or under different conditions -- e.g., 30 hours/week, 40, 60, 96), and all is flowing smoothly, adding more money in some reasonably equal way, and with everyone knowing it, will only effect (increase) prices, not provide more labor or change distribution. Similarly but opposite, suppose someone has a severe loss of a resource that is useful and somewhat valuable to the community -- suppose a chicken coop goes up in flames and kills a great number of chickens, or suppose a hard freeze during the growing season destroys many oranges. Now there will be the same amount of money there was when everything was flowing smoothly, but there will be less to distribute, less to buy with that money. If there is an insurance or re-stocking mechanism in the community, that money can be used to pay for the farmer's starting over to re-supply the community when he has built back his farm. All will remain stable except that the community will have to do without chicken or oranges for a period of time. However, if there is no resupplying mechanism or the chickens or oranges cannot be replaced (or the farmer dies, moves, or decides not to go back into farming), then there is more money than necessary for the same amount of labor minus the farming, and it is very likely prices will now change on the remaining labor and commodities. There is also the question of how the ex-farmer will enter the market, if he does, and how that will effect labor, trade, and the flow of money.

These questions would have to be answered even if the trade economy of that community did not involve money. If a farmer loses a crop or stock that everyone wants to see replenished, they will have to give the fruits of their labor to the farmer in order to see him through the time when he has nothing to give them in return. They will be "paying" him but getting nothing in return except the ability to buy future chickens or oranges. If that farmer simply goes out of the farming business, new trade relationships will have to be established since people will have things they used to trade for oranges or chickens that they either have to keep themselves or trade for other things or discontinue to produce since there may not be anything available they would want. In a money economy, however, this may not be as easy to see. When people go out of business for whatever reason, others may notice they can no longer buy some things they wanted, but they see themselves as being wealthier because they now have more money. They are actually not wealthier, but poorer, since less is available to trade for, and either prices of things will go up, or they will have more money but less to buy. If you have more peaches or steel than you need for yourself and no one else needs them or can trade you anything for them, you are obviously not better off. But if you have more money then you need for yourself or can trade for anything, you are in the same predicament; it just probably will not seem that way.

Suppose now we return to our perfect Adam Smithian community and make a different kind of change. Suppose that by cutting down on his consumption, someone in the community is able to amass more of one or more products (either what he produces, or what he has collected in trade) than he has immediate need or use for. There are a number of options for him now. He might cut back on his labor (which, of course he could have done before he traded for more than he needed). He might share with the rest of the community or some people in it. He might charge less for what he produces. He might save for a longer period of time so that he can quit working altogether and meet his needs by trading away the stuff he has amassed or so that he can survive in case he has to quit working or in case he develops extra needs (i.e, save for a "rainy day"). He might exchange this extra stuff for different extra stuff. Or he might be able to entice someone to work for him or with him, or to entice someone to change the work they do, thus affecting the goods and services available to the rest of the community. He might, for example, entice a seamstress to make him very fancy clothes that take time away from her other customers, because he can pay her more than they can. 

Notice that all these choices have consequences for the rest of the community, not just for himself. If he retires altogether to live on his "savings", he removes from the community future Goods or Services. This assumes he can sell or trade what he has amassed, which, if he does, takes future business away from those who make it, though it gave them business when he traded for it. If he hires the seamstress away from her other customers, the other customers will have to do without or find someone else, or offer her more than he does -- which will take things away from others or make them have to work longer hours to produce more. His actions will effect others, not just himself. This is not any different than if the example were done using money that he had saved; it is just that the effects on the rest of the community are not always as obvious. A more beneficial use of his savings would be to successfully (which is difficult to know ahead of time) employ someone to (i.e., pay for the upkeep of someone while they) try to invent or discover a better method of doing something -- that is, essentially to employ someone to do research into improvements in labor. 

Retirement, whether forced or otherwise, always takes labor away from a community. It does so by the elimination of the work the person was doing; and it also does so by the taking from others what they could have traded for had the retired person not still been consuming without continuing to provide labor benefits. In other words, the retired person is still taking things out of the community without contributing to the community what he could. ("Economically" death differs from retirement in that death removes from a community not only the contribution of the deceased, but also the need to provide products and labor for him/her.) There may be good reasons to permit retirement and thus to remove labor from a community while still having to provide goods and services to someone who is no longer making a contribution of goods and services, -- e.g., (1) because working harder when you are younger may be preferable to working when you are older even though you wouldn't have to work as hard when you are young if you are going to work longer in life; (2) because in some cases or in some jobs older people may not work as productively as younger people so that more hours put in younger in life may be worth more to the community than hours worked when one is older; (3) because some work is psychologically and physically harder on old people and they should not have to bear it if they don't want to; (4) because people sometimes lose touch with future needs after solving their own contemporary generation's problems; and can't make as much a contribution -- in some cases (i.e., cases where experience is not as helpful as innovation); etc. Of course, retirement presumes that leisure is preferable to slowing down at work or working part time, or continuing to work altogether just because one enjoys one's work. Retirement, in terms of no longer having to contribute in order to be fairly distributed to, presumes that there is only some specific amount of contribution one needs to make in order to not have to do so any longer once one has reached one's quota of contribution or contributed labor. 

This will be more acceptable to societies that have fewer needs or demands that require human labor to meet; and less acceptable for societies that require more labor in order to have their needs met. A joke that appeared in Readers' Digest when I was young was about a group of soldiers about to engage an enemy of vastly superior force. Just before the battle their leader told them they would be outnumbered twenty to one, but he expected every man to fight as hard as he could. During the battle one soldier was found relaxing against a tree, and the leader demanded to know why he was not fighting, since he was obviously not hurt. "Sarge, I already got my twenty." That is obviously a situation where retirement is not desirable; it is not like everyone having to pick a half-pound of blueberries for pies, and the person who picks the fastest getting to relax once he "gets his half pound". As of this writing, in the United States the population is living to an older age and the proportion of people at "working age" in relation to those retired is shifting. Other things being equal, it may be that full retirement for people living longer, especially when their numbers increase in proportion to those working, may not be as acceptable or reasonable as when there are fewer retired people in proportion to the working population. This is obvious when one talks about labor needs and labor supply (contribution and distribution in terms of Goods and Services); it is less obvious when one talks about it merely in terms of money. Money obscures the relationships in cases where retired people seem to have money to retire on or where there seems to be enough money (e.g., social security or tax money or whatever) available to support them, but which in reality then is costing everyone additional labor or the fruits of labor that could be directed toward the needs or desires of others.

The caveat above was "other things being equal". Other things are not necessarily equal. In cases where technology and industry can produce more with less human labor, a smaller human labor force can, of course, support more people who are not working, and who have been deemed still deserving to be distributed to because they contributed their fair share of labor already. And even if a working labor force cannot meet all the desires of everyone if it is also supporting a non-working group of people, there may be a fair way to divide a limited number of conveniences and luxuries among those working and those not-working while still meeting everyone's basic and more important needs. This is not necessarily easy, but at least the problem can be defined in a way that makes sense. Describing the problem merely in terms of money makes it even more difficult, not only to define but to resolve fairly and reasonably. 

Where problems arise that make this difficult to see are where retired people seem to have earned their retirement, based on money they have (i.e., savings), but where that money does not represent any reasonable reflection of the amount of goods and services available now or in the near future. If there is sufficient money in a community at a given time to match the goods and services available and the needs for those goods and services, and the money is in the right places to keep trade flowing in order to match up goods and services with the needs for them, that does not guaranty that under other conditions, that same amount of money will still do that. There is no reason to believe that money flowing into savings at one point will be able to purchase goods tomorrow that it could have purchased yesterday, even without inflation. If those goods are not available tomorrow, money will not be able to purchase them. The extreme examples would be where people retire and those who remain to work die, or go off to fight a war. Or those who work could simply channel their labor toward the kinds of things that satisfy the needs and tastes of younger people not older people, particularly where those who have the most money to spend see to it (like in the seamstress case above) that those who work meet wealthier people's desires for luxury rather than other peoples' needs. Or there may not be the kinds of resources available that an older population might need --adequate medical or nursing care or transportation to grocery stores, adequate recreational or activities or opportunities to work at something one might enjoy and be able to make a contribution to. Money does not always hire labor to meet its holder's needs or desires. Even when there are people available who are able and willing to be employed in ways that someone is able and willing to pay for, the labor force may not be adequately trained or knowledgeable or the facilities and resources they may need to do the work, may not be readily available. Particularly in work that requires long term training or tools and resources that take time to construct or acquire, it is not easy to create a labor supply either for just a few individuals or for a population whose needs were not anticipated and prepared for ahead of time.

The non-alignment or misalignment of money and labor comes into play in a number of areas. Suppose there is sufficient labor available to justify there being more money in the economy to put that labor to work and purchase its products. Suppose that money is used to purchase stocks in companies that arise to employ that labor. If those investments do not pan out to create sufficient output, then stock owners will have received less for their money than that money was worth, and the money put into the economy to support the increased labor and its output will be extra money that may not be used in that way. That extra money may simply be used in the already functioning system and be divided among those already with income. And the people who would have worked at the companies could be left out of the system, both in terms of contribution and distribution.

Or, to begin with there may have been idle labor because there was insufficient money to pay for its being put to work. In a barter economy, for trade to take place there has to be a convergence of mutual interests. Let me designate people by alphabetic letters A, B, C, etc. and indicate something they have to trade by a (+) and something they want with a (-). So that A (+ extra milk, -cereal) might trade with B (+ extra cereal, -milk) so that they could both have cereal with milk. For trade to occur in a barter economy, A's and B's of the sort A (+x, -y) and B (+y, -x) need to come together, or some more extended trades might be possible if, say, the following kind of group were recognized: A (+x, -y), B (+y, -z), C (+z, -x). A could give x to C for the z which he then trades to B for B's y. This could occur whenever such a chain, no matter how long, was recognized. A problem with direct swaps or direct trade of this sort is recognizing such chains and being able to bring together the participants over time and distance. That problem is more acute when what any of the participants have to offer or need is part of something that cannot physically be divided. A (an airplane assembly line worker or company stock owner (+ 1/200th of an airplane, - 1 steak, - other things) and B (+ cattle, - airplane trip). 

Money, because it is widely acceptable and therefore convertible into and out of virtually any available good or service, and because it is divisible, combinable, transportable over space, and durable over time, helps solve these problems. In a well-functioning, stable money economy, all kinds of chains can be formed because people can accept money for the things they are willing to swap and can get available things they want for that money. An airline can buy a whole airplane and sell individual tickets, while airplane manufacturers can pay people money to build planes from stockholders' money they then repay with profit. The people on the assembly lines can take their pay to the grocer who has bought meat from processors who bought it from cattlemen, etc. None of these people have to know each other or be affiliated with anyone who knows all of them. 

Breakdowns in such chains as these occur, however, under certain conditions as well. There still may be people with needs and money but nowhere to have those needs met. That is there can be A (+ money, - youth serum) and no B (+ youth serum). There may be people who have a product they cannot convert to money because the product is unpopular or because the product cannot be useful to someone who would like it and who has money. E.g., A (+ house for sale, - money) and no B's with money who want or could use that particular house in that particular location. There can be personal breakdowns where people who have a service or product will not trade it, even for money, to people they do not want to. Winston Churchill did not like to part with the paintings he painted that he did not like because he did not want anyone else to see them, and he did not want to part with the paintings he really liked, so he kept almost everything he painted. Also, the shopkeeper mentioned earlier who refusal to sell to a woman she did not like. These cases seem benign enough, but the bad cases are where people are excluded from trade on the basis of bigotry and prejudice rather than because they are morally undeserving or because someone does not want to part with a product of his labor. And there could be trading chains that break down because the people with needs do not have either money or services that people with money will buy from them, though they have services or potential services that other people without money would like. In such cases there could coexist A (- home, + musicianship, - money), B (- baby sitting, - money, + home building skills), C (+ money, - Mercedes, - food), D (+ Mercedes), E (+ food). C, D, and E could trade with each other, but if A and B have no money and no one cares to buy food from B since they can buy it from E, A and B are left out of the trading system. 

In short, money does not always get where it needs to be to promote labor and trade, any more than barter does in cases where there are not convergent needs. Let me point to a peculiar kind of case, but one which, on a grander scale, is wreaking havoc with the current American economy. Imagine again our perfectly functioning Adam Smithian economy with everyone working and meeting each others' needs as well as can physically be done. Suppose an outsider offers this group one or two of the members' services for far less money or return goods or services than those members charge. People begin to buy from him. But suppose he buys nothing or much less than he could, in return. Soon he ends up with much cash, but if he has need of little or nothing from the people he is supplying, he gets little or nothing in return but their money, which he holds. Some strange things start to happen then, and these are different in a barter society than in a money society.

In both society's, the people whose labor the outsider undercuts lose their livelihoods. In both cases the rest of the community may help them out or may ignore them. They might let them share in the work that is still being done in return for what they were earning before, or they may just let them starve.

What is different between a barter economy and a money economy, however is that, though the outsider is only meeting needs and not taking (all the) labor (he could) in trade for it, in the money case he is taking what is necessary for trade to continue among anyone, while in the barter case, he is doing nothing to disrupt the trade between those whose services he has not undercut. As more and more money is sent from the community, unless that money is somehow simply replenished, trade will come to a halt, since money will not be available to trade with. The outsider is simply hoarding. What seemed like a good thing to the community -- more goods for less money or goods in trade-- turns out to be disastrous in the money economy though a good thing in the direct trade economy. (It is a good thing in the direct trade economy as long as there still is enough goods to support everyone after the outsider has been traded with. In the case where the outsider takes no products or services in return for what he supplies, other than money in the money economy, he will be a great boon to the direct trade society since he takes nothing away from them for what he gives them, but he will more quickly bring to a halt the money society because he will more rapidly deplete their trading resource.)

In a money economy, the opposite case from the outsider who takes nothing but money, in return for providing goods and services, is the counterfeiter who provides only money in return for goods and services he uses. The outsider contributes without being distributed to (in terms of goods and services); the counterfeiter gets distributed to without contributing. In terms of labor the counterfeiter is like a thief; the outsider is like Santa Claus. In terms of money (as long as the counterfeiting is not discovered), the outsider is like a thief and the counterfeiter is like Santa Claus. Yet both can have ruinous effects on a money economy because they misalign the monetary world and the world of goods and services.

A knowledge or physical problem exists when it is not known how to produce or distribute what is desired, or when the resources necessary to produce or distribute products and services are not available. In the nineteenth century, flight was a knowledge problem. If a country wants to farm but has barren soil and no access to sufficient fertilizers or water, they have a physical limitation problem. Knowledge or physical problems are very real types of problems in the sense that social or economic changes or manipulations alone will not solve them; invention or discovery or access to physically unavailable resources are necessary. War, drought, famine, pestilence, lack of knowledge or skill, are all very real problems.

What I am calling a trade or monetary or economic system problem is one that is difficult to solve for very different kinds of reasons. It is the kind of problem caused by the lack of a mechanism within an economic system to allow the production or distribution of what is physically possible and generally agreed to be desirable, but which laws or rules or policies prevent. These problems are particularly difficult when few believe exceptions should be made and when it is not clear how to change the laws or rules without making them even worse (i.e., the cause of more or greater problems). A barter system does not allow the kinds of trades or production, for example, that a monetary system allows relatively easily. A free market capitalist system does not necessarily have a mechanism to put people back to work meeting other people's needs and getting trade flowing again once recession or depression have taken a deep hold. 

A moral economic production or distribution problem is one that is physically possible to solve and has no mechanistic rule preventing it, but is one that arises from the moral limitations of the economic system in regard to the fair and reasonable distribution of burdens and benefits. For example, when, as has happened on a number of occasions, farmers in one section of the country airlift feedgrains they can spare to farmers in another section of the country whose farms have been flooded or drought stricken, it is not for profit and not for greed. It is an empathetic and sympathetic humanitarian response. It is to make a contribution where it is needed and where it is known it will be appreciated. Further, it is the kind of thing that is right and good to do, and is not prohibited, but it could not be afforded if everyone had to be paid a profitable amount for contributing. This is a way of solving an economic problem that is not a "physical" problem. And it is done on a moral basis, sharing with those who one feels deserve it. And once it has occurred or been reciprocated, it begins to serve as a kind of non-profit insurance as well, not so much for individual farmers with problems but when whole groups of farmers have problems beyond their control. 

Farmers are not the only groups that help each other out in this way. A dental supply company owner I mentioned this example to said that independent dental supply companies throughout the country have funds set aside for each others' use in time of need. And they establish credit for dental supplies to young dentists starting out who are not "bank creditworthy". Charities and volunteer civic groups and religious organizations often do work they know needs to be done and which is physically possible to do but which is not economically possible to do. In Birmingham, women's auxiliaries to the symphony orchestra raise hundreds of thousands of dollars by annually organizing a "decorator's showhouse", where interior designers voluntarily decorate a mansion type home that the public pays to walk through. My view is that they raise these hundreds of thousands of dollars by doing millions of dollars worth of free labor. But that is the only way this could be done because there is not an economic mechanism to employ (i.e., pay for) this labor in this way. Similarly with regard to all the volunteer baseball and soccer programs in which coaches and "team mothers or fathers" volunteer their time. These are valuable programs that are organized and function just like businesses in terms of the channeling of labor and the providing of services, but money is not what makes them run or allows them to operate; and money is not available to do so. 

Economic systems have rules that have moral consequences about the distribution of burdens and benefits. And it is extremely difficult to make general economic principles that do not cause some sort of morally counterintuitive or counterproductive consequences. If there is no mechanism within the system itself for allowing the resolution of such moral anomalies, then the system may permit, promote, and cause moral imbalances of burdens and benefits --imbalances which require a specific moral remedy, not an automatic, mechanistic one. 

There are both logical and psychological causes for the skewing of money with regard to labor. The logical causes involve properties of money, the psychological causes involve issues of value that money sometimes masks, and confusion between money as wealth (money as a commodity itself) and money as a means of increasing wealth (money as a means of exchange and labor channeling).

I have already discussed the logical things that involve amount and distribution of money -- such as there being more money than labor available, more labor than money, generational or population changes, technological increases that reduce labor needs, etc.

Psychological causes of the skewing of money with regard to labor are:
1) the fact that money tends to flow to accumulation points -- people or companies that are able to attract disproportionate amounts of money. These may be consistently the same occupations or accumulation points over time or they may vary over time, but even when different groups or occupations become the top money-makers, there tend to be money-makers (i.e., accumulators) and money-losers in a given society at a given time. This can happen in barter or non-monetary trade situations also, but it is more noticeable and more obviously problematic in those kinds of economies. In some cases there is a logical rather than psychological cause for the accumulation of money. The logical cause is when high volume, mass production distribution results in large total profit from Goods and Services that are not individually disproportionately priced. The psychological instances are when excess or disproportionate prices are accepted because the good or service is considered more valuable.

2) short term monetary profit goals that are counterproductive to long-term profitability even for the individuals making the decisions. This can happen in a non-monetary economy, but would be more noticeably problematic since most commodities have durability or storage or upkeep responsibilities that money does not have. 

3) short term profitability goals that succeed because they take profits away from future generations or exclude those generations from the economic system. These are cases, for example, where accumulating pollution or other sorts of dangers (such as the "profitable" build-up of weapons of mass destruction) are allowed or where resources are used at a rate exceeding their replenishment or at a rate exceeding reasonableness.

4) profitability goals that succeed because they exclude contemporaries from the economic system, carving up and dividing the pie among fewer individuals.

5) psychological loss in confidence in currency or in the country, or its economy, causing inflation. 

Money in the right places can facilitate matching supply and demand, but money in the wrong places acts as a barrier to matching demand and supply. This is easy to see in another kind of extreme case --the case of money coming into the hands of someone who uses it wisely versus coming into the hands of someone who uses it unwisely, and wastes it, loses it, or simply lights cigars with it. Say someone inherits wisely earned money and wastes it, or say someone wisely earns money by useful labor and then makes mistakes with it or loses touch with the market, or becomes mentally incapacitated in a way that makes him squander it unwisely and ineffectively. 

By "wise" and "unwise" use of money, I do not mean simply personally profitable or unprofitable to him, but profitable or unprofitable to the community⁽⁶⁾. There are ways of spending money that benefit oneself and a community --by increasing the size or quality of the "pie" (i.e., total benefits, or more precisely, benefits over burdens) available to all and getting one's fair share of that improved pie. There are ways of increasing one's own profits at the expense of others --by taking a bigger slice of the same pie or an even smaller one. And one can also diminish one's own fortunes and the community's by helping ruin the pie and getting a worse piece for yourself in the bargain.

But examine some less extreme cases, cases not involving simply wasting or squandering money, that show the flow of money does not always automatically go where it needs to in order to facilitate matching up needs or interests on the one hand with the available labor on the other hand that could and would be happy to satisfy those needs and interests.

Look first at major league and college sports. It did not take long to become apparent that once money got involved in the competitions, it could cause problems that defeated the original purpose or intentions of them, which was to see which teams could win --in some sense using the players that they had through some sort of natural means -- like who already lived in the city, or who already attended the college in order to get an education. Once winning, as opposed to competing hard for the fun and psychologically exciting rivalry of competition, became important to people who were willing to spend money on trying to win, then those people tried to "import" (hire) the best players available. If there were a limited number of clearly good players, and if money could bring them together in a way that chance or natural events would not, then they could dominate a sport in a way that took all the real athletic competition, and excitement , hope, anticipation, or joy, out of the seasons. Dynasties could be established if a team who won, won enough money to be able to hire better players to help them win again and thus make more money to hire the best players for the following year. Winning teams got wealthier, and wealthier teams had the best chance of winning. The money and the victories would pool up in the same places, leaving relatively poorer teams relatively unable to effectively compete without something short of a miracle happening. In many areas of life, a totally free market tends toward domination or monopoly in just that way. 

Now there are ways around this, but they are of a nature external to the market either by being non-market or by manipulating the market in artificial or imposed ways. Drafts were instituted in major league sports, whereby the worst teams got first choice of the new players for next years. Players were not free to change teams, nor owners free to try to get them to do so. Free agent legal rulings altered this latter protection against market forces because it was taking too many important freedoms and possible benefits away from players in a way that seemed unfair in too many cases. Drafts and prohibitions against luring players to change teams for more money are non-market solutions to the problem of monopoly or monopolistic type domination.

Recently the NBA has tried a market manipulation to solve the dilemma of maintaining competition in the light of free-agency and still allowing some sort of team and player freedom. They have placed salary limits on whole teams, so that teams are free to pay individuals whatever salaries they want, but no team can spend more total money on their players' salaries than any other team. That prevents a team from being able to use its wealth to buy a whole collection of the best players who all want to make the most possible money. Time will tell whether this remedy works without causing more problems than it solves and whether it will continue to be fair and legal. There may come a time where players' salaries are determined by their skills, team value, and popularity, but where the league collectively pays those salaries so that a player would gain no monetary advantage by being on one team rather than another, and where teams would trade players or players "shop" teams for reasons other than financial benefit, but this sort of arrangement may also lead to monopolistic domination, though for things less tangible, and perhaps less offensive, then money. Domination, by itself, in sports does not seem to lessen spectator interest, and may even heighten it. Arnold Palmer's success and then Jack Nicklaus's success in golf seemed to increase the interest and money flowing into the sport. Bjorn Borg's domination of Wimbledon did not harm that tournament. Various teams' success in sports (the Yankees in the late 20's, the Packers with Lombardi, the Bears with Halas, the UCLA Bruins with Wooden, etc.) does not seem to diminish enthusiasm when it is due to skill or strategy rather than money. And of course, money does not always do the job; many highly paid athletes or expensive teams have bad years. It may be interesting sport when a "hired" team loses; it seems to be less so when they continuously win.

These ideas carry over into areas more important than sports. At this writing, incumbents in Congress enjoy great power which tends to keep them in money to spend on re-election, with enough disparity over what their challengers can raise that they tend to win handily. Efforts are being made to limit the amount of funds people can either raise or spend on elections, or to limit the ways in which funds can be raised for elections. As in sports, the idea is to keep the rich and influential from retaining power simply because of a previously attained advantage, in this case the influence to attract money and the money to help retain influence. This works easier in sports because it was in a majority of owners' best interests to vote to keep competition "fair". Unfortunately with regard to elections, the people who most benefit from "unfair" rules, the incumbents, have to be the ones to change them. That is harder to bring about.

Finally, we do have notions of fairness in business, though they may sometimes be vague, ill-formed, ill-conceived, counterproductive, or even contradictory. We do not believe all is fair in business, even when unfairness "works" or is efficient. We view monopoly, even when it works well, with suspicion; and condemn and criminalize bribery, price-fixing, collusion, gouging, and fraud. We argue about what even constitutes a monopoly and whether government is a monopoly or not, or whether government(-controlled) monopolies are acceptable, if private ones are not. The point here is not that there are illegal or undesirable products and services, which there are, nor that there are undesirable and illegal ways of doing worthwhile business, which there are; the point is that monopoly in business --even when it results from fair business practices and fair initial competition-- is viewed as a skewing of money and power that is either dangerous, inefficient, or unfair to those who wish to compete with it in the future. The problem with dynasties and monopolies is not how they got that way, but how they stay that way. The fact that a person, team, or business "wins out" in the past fairly over another that they are better than does not mean they ought to be able to use their advantage unfairly to defeat competition in the future, when the competitor would actually be better if the playing field were fair or level.

Monopoly is just one way of skewing money and power. It concentrates large portions of it into one place, which may not be the most useful place to have it. Money can also be spread too thin to be useful. The point of investment, in fact, is to get sufficient money in one place to be able to bring together the labor and material to do a job that cannot be done if that labor and material cannot be coordinated. Amassed money can often coordinate labor quite effectively. Money can be spread too thin in another way, also. Individual buying power is generally not as strong as group buying power. A group of individuals may not be able to afford individual items (say, television sets or automobiles) for themselves if they act separately, but may talk a company into decreasing the prices so that they can all buy from that company in concert. It is more efficient for the company and insures a financial profit for the seller that might not be possible by simply gambling on sufficient individual sales at the lower price. Group buying power can promise ahead of time the sufficient volume of sales to bring about financial profit for the seller at lower selling prices. Group buying power tells a seller ahead of time what his volume will be, so he can more efficiently plan, and also so that he can divide his financial profit by that volume, instead of having to sell at a higher price in case he sells fewer than anticipated. It is a way of pragmatically determining the real, or a real initial supply-demand curve intersection ahead of time, and eliminating the labor and materials risk and cost (otherwise passed on to the consumer when possible) of potential over-supply or the excess profit of scarcity based simply on less than anticipated demand. If one is laboring on speculation of making a profit, one has to build in a risk cost. That risk cost can be eliminated where costs and profits can be more precisely determined before labor is done. So although increased demand is generally considered to make prices rise, it is only competitive demand that does that; consolidated demand tends to lower prices.

There are a number of things that can go awry to mess up a money-based trading system. If someone hoards money because his needs are met without it, and no new money comes into the chain, trade will be impeded as more money piles up untraded. If money is simply lost (e.g., burned) and not replaced, the system breaks down. If someone's skills are not what anyone at all wants, the system breaks down. If what someone with money wants is not made by anyone, the system breaks down --especially if he will not spend the money on something else, thereby essentially hoarding it. If what someone (or a group of people) could make requires more money or more products than any one person or particular group of people has (like an airplane or an automobile assembly line that can produce thousands of cars in a year), even though a number of people would want the products, the process breaks down. Conversely, if a number of people with a need have individually insufficient, but collectively sufficient, money, the process breaks down if they do not know of each other. If someone has needs but no money or skills, the system can leave him out (even if he could acquire skills). If someone has immediate needs, insufficient money, and latent skills or skills needing time or practice to develop, or products that require time to make, the process breaks down. Conversely if someone, A, could finance a person's time to develop something A would want, but A does not know there is a person who could and would do this, the system breaks down. If someone trades a skill or product for too much money or too little money, the process breaks down --trading for too much money is like hoarding, or it means one person's labor is now worth more than another's, and trading for too little money limits the seller's ability to be a buyer in the system. If it limits it too much, it may make him unable to be a seller (contributor) in the system as well. If there is a chain of people who could all meet each and only each others' needs, but they do not have the resources to find each other, they are unable to enter a system. If there is such a chain of people, and they find each other, but do not have the money to "get the chain" moving, and cannot get the money because they cannot pay interest --though they could pay back an original interest-free "seed money" loan-- they cannot enter a system.

Further, from a psychological, ethical, and human standpoint, as opposed to a mechanistic standpoint, a person may be able to enter an economic chain, and thrive in it by providing something for money in order to meet some of his needs or desires though he may not be able to meet the need of doing with his life what he really would like to do, would be good at, and would benefit him and others. A person can be "underemployed" in the system or simply unhappily employed in it. The system then can work successfully while not working satisfactorily or optimally. It works successfully from the standpoint of continuity and employment or utilization of all who could participate, but unsatisfactorily or less than optimally from the standpoint of meeting all the needs or desires that could be met of those participants. It provides sufficient benefits for its acceptance and perpetuation, but not all the benefits that people could have.

If one thinks of the economy as a single stranded chain of the sort above [A(+x, +money, -r) ... Z(+r,-money,-t)], then one has to somehow jump into the chain (in a sense, even as it is moving) at a point where it has an opening. And if one understands that there is not just one single stranded economic chain that we all participate in sequentially, but numerous, interweaving chains, the point is that it is difficult to form a new chain and get it connected with other chains or to form a new link to get connected with an existing chain. This is true even if the new chain or the new link would improve the whole mechanism substantially. New ideas are difficult to get accepted into the chain(s). Most people seem less able to deal with ideas than with dramatically demonstrated results, but the testing and demonstrations themselves often require a new small chain or a small break in an existing chain, and there is much inertia generally preventing this. Returning to the analogy of the Rubic cube, when most people have a niche in which they are comfortable, it is difficult to persuade them that a bit of risk or experimentation could find them a better niche (a niche in a better cube). Or, in the case of the unknown, it may be difficult to prove that exploration is worth the risk. Yet, in some cases exploration pays off extremely well; and collectively, the benefits of the explorations that succeed arguably outweigh the costs of the ones that fail. Still, most economic systems, including market economies, tend to entrench the status quo at any given time rather than encouraging exploration and experimentation with progress in mind. Overall although carefully-done experiments and well-implemented change can be extremely beneficial to a society, individual failures can be prohibitively expensive to those involved; hence, individual experiments require more courage or daring than would be most beneficial.

The prevention or repair of these problems even in a money economy, requires measures that are external to individual trades themselves. Information to match available needs (or desires) with available or potential labor willing or happy to meet them, is one of the important measures. Mechanisms that allow resources and labor to be pooled over time and over distance need to be developed. Understanding of real needs has to develop and be available in a way that makes sense and is acceptable to people. Understanding of beneficial and harmful unexpected side-effects has to be achieved and explained in intelligible and acceptable ways. Mechanisms need to be developed to allow and encourage the participation of those not automatically incorporated into the system who would like to be included. This includes children who have not yet contributed; older people who can no longer contribute; the temporarily or permanently incapacitated, simply for reasons of humanity, not for reasons of benefit; those whose skills are underutilized, underappreciated, or merely undeveloped, and those whose particular skills become obsolete, but who could happily re-train with some help, into currently useful labor. Mechanisms need to be established where explorations for improvements are sought and tested, not discouraged. This is especially true when a new niche dislodges someone else from their established niche or makes them less productive in it. There needs to be resources directed as much toward improving the whole pie as there is in everyone's trying to get a better piece no matter the cost to others.

Suppose our time-slice perfect Smithian economy again, with enough money in circulation and circulating for everyone to earn a living and trade with each other. All participate; all contribute and are fairly distributed to. Suppose then that someone invents, say, a computer program that people would like to have. Where will the (additional) money come from to allow it to sell and allow people to buy it, without taking money away from others whose work is still necessary and continuing. I picked a computer program as the example, because it is the kind of thing that is easy and relatively inexpensive to mass produce and which does not take resources away from other labor or products to make. If additional money does not enter the system to support its purchase, it cannot be purchased without someone else losing something. However, if additional money is made available for people to purchase the program, but some of them use that money for something else, an inflationary or other kind of monetary imbalance can occur, with money "pooling up" in places that can cause physical imbalances later.

As technological and manufacturing capabilities increase, capacity for new inventions, new ideas, new or additional services, and new or additional patterns of business increase with it. If lack of money or imbalances of money prevents this capacity from being realized, then the full benefit of the economic system is not being realized. When there is physical capacity for books and butter but not the monetary capacity for both, then there is a flaw in the system, since the system should be helping to realize the greatest possible potential, not prevent it. When there is the will and the capacity, but not the wallet, then something is wrong with the system. In what ways, the system can be modified without being made worse is then open to question. But it seems to me that there should always be a financial way to do what is important and for which there is the physical capacity. There are real impossibilities and there are artificial impossibilities. There are barriers of logic, physics, and (accurate) ethics to doing some things. These barriers cannot be surmounted. There are barriers of psychology and social behavior to doing some things. Some of these barriers may be impossible to surmount; others, simply difficult. There are limits to the state of knowledge and understanding at any given time, and these can only be pushed back with time and effort. All these are real barriers to progress. But our economic systems are contrived and conceptual systems. They are neither fixed nor immutable; and they should not be permanent barriers to work and efforts that are not limited by logic, physics, ethics, psychology, or lack of knowledge. When there is need, knowledge, labor, and materials available to do a job that is right to do, money alone should never be an impediment to seeing that job is done. When it is, there is something wrong about the way money is working in the system.

There are attempts at solving some of these problems; some perhaps more successful than others: e.g., investing in stocks and bonds allows group concentration of resources; money or capital or labor loans over time, with or without interest charged, help develop products or services that take time to bring to fruition; charity and some tax revenues support the permanently incapacitated; insurance protects the temporarily incapacitated; public schools, compulsory education, public and parental support for children while in school, and salaries for company trainees, contribute to the preparation of children and trainable adults for their later participation in the process; retirement funds and tax programs contribute toward the elderly; jobs programs and unemployment insurance or welfare try to sustain people while they survive or try to find useful service; public and private research tries to find better ideas and products, or identify and eliminate unsuspected problems; brokers of various sorts try to match people's needs with available services. As these measures develop, some of them, such as brokerage services, or the fruits of research and development, become part of the system of services or products traded. Some can be done fairly and well without government help, regulation, or money collection (taxes, tolls, licenses, fees, lotteries, government-owned alcoholic beverage stores profits, etc.); others may function more fairly or better when done governmentally, because a way is not able to be devised to successfully and fairly do so within a trading chain. Some of these things begin life not as trade in themselves, but as things which try to improve trade or improve society in a non-trade way altogether (as with boards of trade or government commissions). But insofar as people get paid for providing a Service which contributes benefits to the economy as a whole, they become part of the economic system even though they do not involve individual trades or transactions that benefit some particular person at a particular time.

In a barter relationship, labor exchanges (or fruits of labor exchanges) take place either simultaneously or at different times where one exchanges a good or service not for another immediately given good or service, but for a future one. Credit is a promise of paying back a service with work (or the fruits of work) in the future. Trades may be non-simultaneous for a number of reasons, not all of which are because the "initial receiver" cannot immediately return the service. Sometimes it is the initial giver who needs to have the reciprocating transaction postponed. If I have something you want but what you have to give in return is something that I have no current use for but will in the future, I might be happy to give you what I can now in return for your providing me with your service in the future. I have some friends who are quite good singers trying to build careers at singing. Photographs help them at this point and do not take that much labor on my part; they are short of money now, but I have no current use (other than pleasure) for them to sing for me. However, I have two young daughters who may some day have weddings where my friends' voices would be really nice to have. My friends feel bad about my just giving them pictures; I hate to take their money, which is of more value to them at this point than it is to me; they like the idea of paying back at a future date in a service of their labor for mine, assuming that will be feasible. The idea seems attractive to both of us. So I am giving them the photos for a possible or probable future return of their service. 

Money is different in this regard, but the difference is not especially simple. Money that is loaned or invested, or applied to one's own or an employee's training or education, is money that one hopes to get back in the future with profit (apart from whatever personal satisfaction learning something bestows), of course -- more profit than one could have earned oneself by employing the resources the money would have purchased; it is not money that one is trading for an immediate good or service. Money that is payment for a good or service rendered at the time does seem to be an immediately reciprocal transaction. But, on my view of economic transactions, it is not. Money paid for a good or service is not a returned good or service, but is a broadly recognized and accepted credit promise or voucher that can be used almost anywhere in return for an available good or service of your choice when you decide to "cash it in". Money is only good for what it will buy, and it buys nothing (other than security, which is not unimportant) until it is used. Then when it is used, it again is traded to someone else for a past (i.e., debt payment), current, or future good or service for which they receive only the promise of being able to use it for a good or service they want.

The possession of money in a sense signifies (whether accurately or not) that one either has contributed to (someone in) society by a good or service that they have provided, or (in the case of an advance or loan or investment) that they are reasonably expected to in the future. And its possession is then a voucher or sign (again, whether accurate or not) that this person is "ok" to give back labor or goods to because he deserves it in return from (someone in) society. In a sense, money is a kind of moral voucher of desert or merit for the work that others contribute to society. 

Money in this sense represents work that has been done or that could be done. It is therefore extremely important that the amount of money in a society in some way lines up with, or accurately reflects, the amount of work that can be done.

When there is more money than available labor, inflation sometimes results, and people do not get back a fair return for the labor they provided. When there is too little money in relationship to labor available, or if money is in the "wrong" place to be used, labor gets underemployed (accept for volunteerism, barter, etc.). Money gets in the "wrong" place when there is the right overall amount of it, but it is not, or cannot be used for goods and services that are somehow important and potentially or reasonably available. The simplest case of money being in the wrong place is when it is hoarded in a way that disrupts flowing trade, or trade that would otherwise take place if the money were circulated. 

A different kind of case of money being in the wrong place is when it gets into then "closed societal loops" that keep it from flowing back to other segments of society. If we start with our smoothly functioning Smithian economy, and changes occur that cause a segment of the population to be left out of the process, neither contributing nor being distributed to --not because of any fault or unwillingness to work of their own, but because of lack of apparent need or use to those with money, of their services, say by, invention (as in the initial case in this book of the automobile industry workers) or because they are part of a population growth that is not absorbed, or because of hoarding or savings that do not find their way back into use-- we can end up with two groups within a single community, one of which is economically prosperous and one of which is economically poor. The prosperous segment may see no need to employ for any serious compensation members of the poorer segment, and so the latter remain generally left out from the trading circles of the former. And, of course, not beginning with a perfectly functioning Smithian economy to begin with makes the situation occur all the more easily. In a case where money is getting into such a closed loop, inflation and unemployment can occur simultaneously because there are essentially two societies, one with decreasing money and work, and one with increasing money but with less work to do as one serves a decreasing population --the population that is making more of the money. In this case inflation can occur, not because there is extra money added to the original population that does not reflect potential goods and services or get used for actual goods and services, but because the population using the money shrinks; and if they are comfortable with the level of goods and services they can produce and acquire for themselves, they will have more money than previously necessary for those goods and services.

Being self-supporting (as an individual or as a group) is a somewhat relative concept. It can mean anything from having the bare essentials to survive, to having all the luxuries that are physically able to be provided. Any group or segment of society that is comfortable at whatever level of sufficiency or group self-support may see no reason to try to include people left out of that group. There is no economic incentive to increase burdens and there is no economic incentive to increase burdens for benefits that will only get people back to where they were if they had not increased the burdens to begin with. Enlarging or expanding an economically satisfactorily self-supporting population to include others is a moral decision, not an economic one. (Of course, one can fear rebellion or war from a nearby population that is not included, and so there can be economic incentive in that regard, since war or revolution is costly. But I am assuming a case where there is adequate defense, or where the poor population is also not aggressive or is powerless to rebel or improve their position by rebellion.) When the West Germans voted to re-unify with the East Germans, it was not necessarily because they feared the East Germans or because they were seeking a strong economy. The West Germans already had a strong economy. When Israel helped Ethiopian Jews get to Israel it was not in order to strengthen the Israeli economy. When a country excludes foreigners who are well-trained and industrious, it is not for economic reasons, but because they do not want to have to include those foreigners in a society and economy they are currently satisfied with -- one they find sufficiently self-supporting to not have to trouble with changing. Oppositely, when a country excludes from work minorities or women or whatever segment of the population that is willing to work and capable of working or being trained, it is not for overall economic reasons, but because they do not want to expand the economy to include those segments. 

Unfortunately, when the economy does not expand to appropriately utilize new available labor that labor will either be lost or it will displace or partially displace current labor. If there are two people competing for one job, instead of two jobs for them to do, only one will get the job or they will have to share it. If there is only money available to pay for one job, then they will have to share the money or one will have to do without. If there is additional work to be done that would improve the society for more people or for everyone, then the better course is obviously for there to be a mechanism that creates a second job somewhere (and the additional money to pay for it) for the second person. If there is not additional labor need, but there are people out of work who simply want to work or who it would be fair to have work (since they are having their needs met by others), then a more ideal economy would have a mechanism whereby they could share the work without anyone's having to give up any benefits by doing so. Though this latter may seem Utopian or unrealistic, it is not; and it is part of what happens, for example, when the work week for a large part of the population is reduced, not by reducing output but by "spreading out" the work among more people, each working proportionally less. 

There are other other possible ways for people to "share" jobs without having to divide the benefits and burdens among the whole working population by a reduced work week. In sports, for example, reserve players play less, and although usually paid less, are still paid substantial amounts of money. Team sizes are determined by overall league economics more than by the economics of a particular team or the decisions of players about how to divide the work and the money. For example, baseball teams would not likely entertain the idea of cutting their rosters to 13 players in order to save money. Nor are they likely to eliminate, say, the shortstop position by moving a fast third baseman over a little, and paying him a bit more to do both his and the previous shortstop's job. League expansions generally create additional teams, not additional players on a team or additional positions in a game (though the DH in baseball does the latter by dividing up the pitcher's offensive and defensive roles and assigning the different parts to different players). Giving people paid vacation or increasing vacation lengths, and having sufficient staff to take up the slack for vacationing people, is another way of spreading the same amount of work and money among more people. Increasing paid vacation time among more workers is another way of "spreading out" work (and therefore leisure as well) among members of a population when there is enough to go around but more people need to share in doing it, rather than in providing additional products or other services.

Individuals and companies as well can make the same kinds of mistakes. In a complexly integrated society or world, what seems prudent locally may not be beneficial on a larger scale, even when it is locally successful. As described in the explanation of the "invisible hand" what may be good for a neighborhood may not be good for a larger society, and may not even be what is ultimately best for the neighborhood. An individual or company may do things that make it successful in the short run at the expense of greater success in the long run. And, of course, an individual or company may do things that make it successful at the unnecessary expense of others. Being competitive by cutbacks (U.S. Steel) is different from being competitive by bad working conditions or harms (poisons in pesticides, etc.) to the environment, but the issues are similar in that people are harmed in the name of financial profit. This is a bigger problem than any one company can solve; more of a societal problem. And it needs to be addressed either by law or by boycotts of companies that pollute and kill or enslave; not because of efficiency and profit but because of moral fairness of distribution of reward and burdens. And because, in case of poisons, it is not better nor richer to have more money that you die sooner with. People who live in an economic system that makes more money and has more things available because of methods that pollute the atmosphere to the point of poisoning themselves, do not die richer than people of simpler economies who did not even have as many conveniences but who lived longer, happier, and breathed cleaner air. And a society does not profit by financially profitable cutbacks that irreplaceably eliminate resources the society may someday need.

Sometimes, an individual or smaller group does not have sufficient money to take an avoidable short term loss in waiting for the benefits of a long term gain. Sometimes they do not have sufficient power to persuade other necessary parts of society to cooperate in what is necessary for overall social gain, so that even if the smaller group were willing to take a short term loss, they could not benefit in the long term nor would society benefit, since the sacrifice would be for nothing. One executive one time on the radio explained that all the companies in his industry wanted a particular pollution control law passed that they would have to comply with because they each thought it was important to clean up the air by installing expensive equipment whose costs they would pass on to customers; but since no company could afford to go first and then be uncompetitive, all would have to do it for any of them to be able to. None of them were in a position to enlist cooperation or compliance from the others without the government's forcing total compliance by making lack of compliance very expensive.

A smaller group can succeed at the expense of others in a larger group by causing harm for contemporaries or by causing harm for (potential) future generations. As one comedian put it one time: "I don't understand all these environmental concerns about the future; I say let's not have kids and just have a really terrific time while we trash this planet." That is the longitudinal equivalent to burdening one's contemporaries while bringing profit to one's self. There are ways in which this attitude brings the perpetrating group success, and ways in which it brings failure even to them. (Poisoning one's self or one's own beloved grandchildren unintentionally because of careless disregard for others is not to succeed no matter how much money one makes from such disregard. Having to live in fear of people whom you unnecessarily caused to become dispossessed, desperate, and dangerous is not the most successful way to live even if you can afford ample hired "security". In many cases it is better to have less money yourself and live in a great community than to have more money but live in a terrible or undesirable community.) It seems to me that any society has the obligation and the right to try to prevent some of its members from harming others in ways that are avoidable and that would be unfair. And society particularly has an obligation to keep from being an accomplice in the unnecessary and unfair burdening of its citizens who are trying to comply with it and for whom it is organized. Any government economic policies which cause or permit unnecessary unfair distributions of burdens and benefits are particularly anathema since it is in essence forcing or allowing people to contribute to their own victimization. This is not to say that unequal wealth is unfair or wrong or that unequal wealth is unnecessary for the greater good. What is wrong and unfair is for burdens to be placed on some merely so that others benefit in ways that are unjustified. An easy example is the case of fraud, say, where government finds out that a television evangelist is using the public airwaves to solicit charitable donations for the truly needy, but which he spends only for his own benefit. A more complex and difficult case is where a company is accorded great privilege and power because it does much good, but where the company utilizes some of that privilege and power to achieve more gain at the expense of others than is necessary for them to bring reasonable benefit to themselves and to others. For example, although it may be financially more profitable for Detroit and General Motors to displace the residents and culture of Poletown to turn it into a GM plant, it is not clear it is necessary or fair for them to do so. At least not in certain ways. It is not clear that it is fair for a government to put a toxic waste site in a place that is picked just for its convenience and profitability when that site essentially dispossesses or harms people who have lived there for a long time and who have contributed to the well-being of the total community.

When these kinds of things happen, what is essentially occurring is that a part of the community that believes it is self-sufficient is able to impose burdens on others who they feel are not necessary or important to their self-sufficiency. This can occur even in a non-monetary, barter/trade society, but it is probably much easier to achieve in a monetary society, since money profits can be different from quality of life profits. GM can, say, buy the condemned Poletown property from residents who do not want to leave and make it look like they have done them a favor by giving them more money than they could otherwise get for the property. But if the people cannot replace what they had for that money (and they had a community, not just a house), then GM might as well have given them a cost equivalent number of goats for their homes. That would have been more obviously unfair. With money, unfairness is not always as obvious, especially when a society equates wealth or benefit with money. 

A similar case is the subsidizing of tobacco farmers (again, assuming that tobacco is harmful, as the evidence seems to indicate) because doing so brings monetary profits to the government or keeps elected representatives in office. In this case the tobacco farmers are allowed to operate because they are considered more important to the government and the (monetary aspects of the) economy than is the health of those they harm. A controlling segment of a community can decide that tobacco farmers or GM are more important than the health of smoking teenagers or the contentment of Poletown residents. Discussing these decisions only in money or money-making jobs, and thinking of money as the only form of wealth or economic benefit, disguises the physical reality that the money transactions actually represent. One can talk about the GNP or about keeping people gainfully employed. What tends to get lost then is the actual value (or cost) of that GNP or that employment in terms of the real benefits and burdens to the society, and how they are distributed. It is easier, for example, to argue that farmers need jobs and money than it is to argue that we need the tobacco they produce. Of course, the people who grow and process tobacco need jobs and money; but there are more beneficial and contributing ways for them to earn it than by growing and distributing tobacco.

1. Child labor laws are even circumvented in a perverse way, because it is legal for schools to require students to do "community service" - work at school or somewhere else for no money, while it is illegal for them to work for pay when they are under some particular age, so that they cannot be exploited. They can be exploited for "points" or credit toward graduation, but not for money they could spend to get something they might actually want. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2. Some "sufficient" number and kind of population of people seem to need to be affected by a disaster in order to mobilize the widespread support and sentiment I am discussing. If just a few people are affected, or if they are not geographically connected in some sort of community (e.g., people seem to care less about 50,000 deaths throughout the U.S. in automobile accidents each year than they do about 50 people killed in a disaster in one town or city), or if they are people who are for any reason thought undeserving, there tends not to be sufficient support and sentiment to affect normal economic pursuits. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3. Money's being in the "wrong" hands is part of a phenomenon I call the "skewing" of labor and money. Skewing of the sort I have in mind here comes about when a person or group earns, in some reasonable sense, far more (or less) than their past labor, and their future use of the money, is worth, though they are breaking no law, and in many cases not even doing anything wrong. Skewing in the gaining sense occurs, for example, when someone wins a state lottery; which is certainly legitimate, but which gives him more money than his labor contribution to society "earns" other than as a part of a contribution to the enterprises funded by the lottery. When you invest in something that pays off big, you can earn far more money than you, in some sense, deserve --certainly far more money than had you just lent someone the money you invested at reasonable interest for him to get started. The payoff in some cases is worth far more than the gamble or the original investment. Insurance benefits paid for losses, particularly death, also bring in more money than what is proportional to the contribution of the beneficiary. Skewing is the earning of a smaller or bigger piece of the pie than in the proportion that you helped enlarge or shrink the pie, or will. And it is the earning in some sense of more than your efforts deserve. Even when you invent something extremely popular, like a frisbee, or write something like a best-seller, you get far more income than just your efforts might have been worth. Even discovering a valuable life-extending pharmaceutical or medical procedure may earn far more than is in some vague sense reasonable. Skewing also occurs when one is an unproductive member of an organization that is successful and is still rewarded just because the organization distributes its wealth among all its members, whether they have contributed or not to the organization's success. 

Skewing in the losing sense happens when you invest in something worthwhile and reasonable and it fails or is not as successful as it really is valuable. It also occurs when you are forced by adverse circumstances to work for less than your labor is in some sense worth, or when you work that way out of ignorance or in some other way are taken advantage of. It occurs when you are not adequately reimbursed for your inventions (e.g., your employer automatically owns the patent rights on anything you invent, pays you a salary and reaps millions from your invention). It occurs when a worthwhile business is driven out of business by unfair means. It occurs when your money (for your labor) is stolen or embezzled, or when you are defrauded. Or when the bank or insurance company you put it in fails. It occurs when your business fails for no negligence or fault of your own. It happens when your skills or knowledge become obsolete in a way no one could anticipate. It happens when you work for someone who dies before paying you for your work and there is no way to recoup payment for your efforts. It occurs when money changes hands but is incommensurate with benefits. Skewing in the losing sense occurs any time labor is performed that is not in some sense adequately compensated or rewarded in proportion to the benefits it added to the world (or to a business organization).

There is, of course, a sense in which payoffs from insurance, investment, lotteries, etc. may be argued to be earned to a degree which is commensurate with the amount of good done - if one wishes to argue that the investment, premium, or ticket purchase contributed to a total greater good (e.g., causing greater education if the state runs a lottery for funding education). However, the person who contributes without winning has made just as worthy a contribution and is not rewarded as much. And there is therefore still some sort of skewed imbalance between what was contributed and what was received for the contribution. 

It may be difficult to demonstrate a particular case is a case of skewing; the point is to recognize it can exist, and that at least the most egregious and dangerous cases need to be prevented or remedied in some way. It is also helpful to understand it so that wealth is not in itself equated necessarily with merit, or the lack of it with no value or no legitimate effort. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4. Except under certain conditions where people do have a moral and legal right to labor they are willing to pay for. For example, minorities cannot be excluded from hotels or restaurants. Even lack of payment may not give one the right to refuse service, as in those cases where hospitals are required to treat the emergencies of indigent persons. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5. There are refinements necessary and ramifications pertinent to this that I will discuss later. (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

6. It is one thing to waste money by choosing a bad consuming option over a better consuming option, or a bad investment option over a better investment option. It is a different matter to waste money by choosing a bad consuming option over an option that would have been one of good economic infrastructure development. If a child uses his lunch money to buy a recording instead of buying lunch with it, he has simply opted for a preference that is not what we intended. Similarly if a business or government chooses to spend money on building tennis courts instead of building swimming pools. But if a business or government neglects its economic infrastructure in order to build either tennis courts or swimming pools, it has reduced its chances of doing other things later, including building courts and pools that it might have been able to do. That is like having a child spend his college tuition on partying or on a sports car. It costs opportunities that may not be able to be regained later. But, as the examples in the text will show, this is also not a matter just of financial investments; there are intangible things of greater value than money that can be lost by poor choices, even if they produce great financial profit. What is important is to increase the individual and collective benefits the most, whether they are financial or intangible. A simple example for here of a non-monetary investment -- an investment in time-- is the difference between teaching your children how to do something that is frequently needed to be done, versus doing it yourself. It will take longer to teach them than to do it yourself on any given occasion, but it will save you much time in the long run if you taught them so they could do it themselves from then on. (Return to text.)