The ethics of money in a money economy is both forward looking and backward looking. Money should be morally earned and, in an interdependent economic system that is operated primarily by money, money should be morally spent, invested, or used, particularly large concentrations of money. If it is not morally used, invested, or spent in such a society, then that kind of society has, I believe, the right and the obligation to take economic measures that somehow make up for money's not being correctly utilized, particularly large concentrations of it. The reason money needs to be morally utilized is that if it is not, it makes difficult or impossible the normal trade relationships of a society that is based on a money economy. And since people are dependent on each other and on the trade relationships of society for their very well-being, anything which disrupts trade relationships can bring great harm. Large concentrations of money have disproportionally greater influence to do good or harm than small amounts of money that is dispersed among a number of sources. 

By being morally spent or utilized, I do not mean that everything everyone spends money on needs to be somehow good for others or to be an investment. I mean only that there needs to be enough money, circulating in the right places, to make possible and feasible important work that should be done when there is (potentially) willing labor available to do it. To paraphrase Shakespeare, money that is resolutely earned should not all be dissolutely spent. Too much dissolute spending channels labor into activities that are of less social benefit, and it takes away from the supply of labor that might otherwise benefit others. If money is not being morally spent, then the social system is not likely increasing benefits and decreasing burdens as much as it might. This is recognized by many who think that too much government can increase social burdens, not lessen them. But it is just as true that money spent on any unproductive or destructive enterprise can increase social burdens in the same kind of way. As money lures people out of one profession into another, it may leave stranded the people who depended on those workers previously.

Notice, this does not require financial freedom to be curtailed or for money to be taxed at a high rate. (In some cases taxes are loathsome to people because they feel it is money that government takes rather than earns, money that is undeserved, and therefore money that is not morally earned⁽¹⁾. People also, of course, loathe taxes they believe are misspent by government.) Although government is not necessarily always the worst social administrator, it is not necessarily always the best either. What makes money morally spent is not who spends it but how it is spent --what it is spent on. There is no reason private individuals and groups who have resolutely earned money cannot understand social obligations regarding the work that could be done with money they amass. These social obligations occur where great amounts of money are concentrated because, in a money economy, great amounts of money bring about the power to harm and to help people; and the use of money for one purpose tends to at least temporarily make other purposes difficult or impossible to accomplish. In a simple case, suppose that money is spent to pay grocers not to sell food to certain people. And suppose grocers were the only source of food for people. Clearly there are cases where such a use of money would be immoral because it would be harming innocent people needlessly. Well, the same kind of thing happens, only not as obviously, and not as maliciously, if money that could go to successful cancer research is instead used to build an amusement park, grow tobacco, maintain a symphony orchestra, or fight wars. 

This is usually explained as a guns-versus-butter issue in economic books, or is discussed as opportunity costs, and merely reflects the point that we cannot always afford to do everything we want. But I believe that way of describing what I am discussing here camouflages important social and economic issues, because some ways of spending money increase economic growth and the possibilities of social benefit, while some ways of spending it decrease economic growth and add to the social burden --even though the amount of available labor is the same. The choices are not always between two things that cannot both be afforded, but are sometimes between things which are productive and those which are destructive or less productive. Money used productively does not merely bring different benefits, or benefits to different people; it can make more things affordable than money spent less productively. It may involve something as simple as the difference between eating all your chickens and breeding them. Breeding them gives you more to eat in the long run than does eating them to begin with. It is not just a matter of whether you get to eat chickens now or later since you cannot do both; it is also a question of how much chicken you will be able to eat altogether.

I think we all have the obligation, recognized or not, to spend some money, or channel some labor, productively. Not all labor needs to be productive, since it is pointless merely to produce things for future use that we never let be used. Surely some consumption for the sake of individual benefit alone is important. But to unnecessarily destroy or consume an unfair or unreasonable proportion of that which could be more productively used to benefit more people for a longer period is, I believe, morally as reprehensible as taking from someone something they already have.

In an active money economy, money tends to be both being amassed and being dispersed by different people at different times. Money that is amassed tends to be dispersed as it is spent or used. A bank or insurance company, or the government or a business may amass large amounts of money at any given time. They may invest it or loan it out or spend it in any number of ways. But eventually much of that money gets dispersed. Suppose the source that has it decides to build a building with it, or invests it with someone who builds a building. That money is then scattered among all the laborers and suppliers who contribute toward building that building. In a money economy (as opposed to a slave economy or a volunteer economy) the building would probably not have been built without the money's being amassed and concentrated in the first place; and once it is built, that money is no longer concentrated. Yet concentrated money, and the concentrated labor, it can bring, often is more potentially productive than that same amount of money, or labor, dispersed. If it takes four people working together simultaneously to do a job, then one of them cannot do it at all, let alone in four times the amount of time. In a simple case, suppose it takes two people to carry a long, fairly heavy pole. It does no good to be able to hire one person to move the pole, no matter how long you can pay him to work; you need to be able to hire two people, even if for only a short time. Or, if you take six equally talented basketball players and have them play five against one, giving the solo player the ball five times more often, he will still not likely score nearly as many points as the five. It is crucial to concentrate money at times so that labor can be coordinated in those projects that require groups of people working together to accomplish something. It does no good to have the money to hire an airplane pilot if you cannot afford a plane. Hence some sort of mechanisms are necessary to try to concentrate money for those enterprises that required concerted labor and/or expensive materials (which come from other concerted labor): monetary profits, banks, stock markets, investment consortiums, taxes, etc. Still, it is often difficult to concentrate money for worthwhile purposes. Therefore, I believe, it is important to spend money wisely that is concentrated. Otherwise the beneficial opportunities of concentrated labor become lost until money is concentrated again. But it is not money that is lost when concentrated money is dispersed to pay for things; it is the particular channeling of concentrated labor that is lost until money can again be concentrated to amass that labor and pay for what only amassed labor can bring. When concentrated money is dispersed on unwise projects, what is lost is an opportunity to have produced, at that time, a different project with more important benefits. If government or private business builds, say, a high-rise apartment that people do not want to live in, and that they either let go to waste or that they live in but let deteriorate, what is lost is what the labor that built the high-rise might have accomplished that would have been more meaningful. If private or public schools use money to hire teachers who are not very good, what is lost is what the students might have learned if the schools had hired better teachers with that money. It is not that money by itself is squandered, for that money still is in circulation somewhere; what is squandered is the opportunity to have done more good with that money. Money often simply employs or channels available labor, and the value of what that labor produces constitutes the value of the money. The money, or some similar sum, can generally be re-concentrated, but the use of that particular time and labor cannot. Wasted money can be recouped; wasted labor cannot be recouped.

Suppose the following: eight major pharmaceutical corporations fund pharmacological research in private labs and in universities all over the world, employing more than 5000 scientists in a hunt for, say, a cure for the common cold. Suppose that one small group of scientists in one university lab come across an actual remedy. Should that lab, and the pharmaceutical company that hired it, be entitled to more money than the other labs and companies which failed, even though the latter worked just as hard, and perhaps even contributed to the base of knowledge that actually let the successful lab achieve its success?

While it is clear to me that research and development in various areas is important and needs to be funded, it is not clear to me that success needs to be extravagantly rewarded by exorbitant profiteering simply because success is difficult to achieve and the labor that went into seeking it therefore needs to be far more than adequately compensated. If the actual argument is that the only way to pay for research is to charge extravagantly for the successes in order to recoup the costs of the failures, that would be a different issue, a legitimate one, and it would be open to empirical study as to whether some other means of paying for research might not be more effective and efficient. For it might be that a system which pays nearly as much for failed research and development as it does for successful research and development will ultimately be more productive and encourage more people to experiment. If, for example, it turned out that 5% of all ideas were good ones, in some sense more than worth the 95% of ideas that were not good ones, it would be more productive to encourage more people to work on their ideas, rather than scaring people away because they cannot afford failed risks or uncompensated labor. From a company's or society's standpoint, who achieves results is not as important as the fact that results get achieved. The real merit may belong in the effort, not the accidental or merely lucky result. It may even be important for society to chronicle failed attempts as much as it chronicles successes, particularly successes based on luck more than any particular actual foresight.

1. I suspect taxes are hated for a number of different reasons when they are hated, and that only some have to do with the idea of taxes being money that is not deservedly earned by the government. Most of the arguments against taxes are that 1) tax money gets wasted in appalling amounts or appalling proportions by government either through: a) inefficient use of it or by b) use of it for unjustifiable, misguided, wrong purposes; 2) burdensome taxes rob incentive for commerce and risk taking and therefore stifle the economy and produce more burdens or fewer benefits for the society; 3) taxes infringe on our individual liberty to personally choose how to spend what we have earned; and 4) the market can do more efficiently and more justifiably what the government tries to do, in many cases, so taxes to operate the government in these areas are unnecessary and unwarranted. In some cases, as during the American pre-revolutionary period against England, taxes are claimed to be unearned when they 5) are not democratically and voluntarily (through adequate representation) given to the government.

Wasteful government spending (#1), however, is not a claim that government does not earn money properly through taxation; it is a claim that government does not spend it properly -- that government does not have a moral right to money because they do not spend it morally justifiably. It is the claim that the government spends dissolutely what the people earn resolutely. It is not the claim that taxation itself is somehow morally wrong as a way to collect or concentrate money.

Numbers 3, 4, and 5 are about the government's right to earn tax money, and they go together in that taxes are less resented when they are seen to be voluntary contributions toward desired goals that the market seems unable to provide very well. Taxes considered in this way are more like dues or contributions to an organization that provides benefits that members cannot get individually or that they cannot get through market mechanisms alone. Claim number 4 tends to arise when there is disagreement about whether markets can or would do better that which government is doing, or wants to do, even if taxes are seen as voluntary. As such a disagreement, it is not so much a protest against taxes as it is an issue of whether a particular tax money for a particular purpose is the best way to accomplish that purpose.

Claim number 2 is a claim that turns on the consequences of using money in different ways. It involves a complex set of issues, part of which is "the psychology of incentive" (including risk and potential reward), and part of which is essentially the question in this chapter about how one party's getting and using money affects totally unrelated business activities beneficially or adversely. And it has to do with the constructive versus the destructive employment of money -- with mechanisms for channeling potentially available labor, through the use of money, in the most productive and reasonable ways.  (Return to text.)