I have seen the gold standard being referred to quite frequently in Austrian economics, but somehow i don’t see how it is any more productive or ethical than fiat money. Ultimately gold is just another arbitrary stock that does not produce wealth. In making the aim of a society to horde or obtain gold is bound to lead to the same conflicts of scarcity that we are faced with now. By stating that gold=value we transform human beings into “gold-getters”, and motivate human action towards obtaining an arbitrary element, spurring irrational behavior. Again just as in fiat money, gold’s value mostly represents our belief in it having value, but in the end it does not produce any real value to our society.
In my opinion largely the reason why we are where we are right now, is due to the lack of a true human purpose. We figured out how to shuffle numbers around quite well, how to create complex derivatives and stock options, but as a means to what end? There is no outlet for growth. Economic growth comes from innovations of the human mind (the automobile, appliances, the internet etc…). In the beginning an innovation always takes the form of improving our lives, it creates excitement and energizes the human spirit. However, i ask again what is the aim of our civilization? Because without understanding that, our inventions are turned into symbols of status, pornography machines and tools of war.
I think then that it is important for us to clearly define “what is value?”. Why do we link scarcity to value, when it leads to over production, concentration of wealth, and wasteful spending anyways. I channel Ayn Rand in stating that the human mind IS the most valuable commodity that we have. Perhaps i am begging the question when i restate that we misconstrue the idea of value whenever we assign it to an arbitrary metal or paper.
Ultimately the most ethical system would be one of bartering, where there is no dictated notion of value and hence everyone is capable of being self-autonomous of how they wish to live and contribute. I think at this point of time there is no real conception of possibility on how that could be accomplished, but then again we haven’t had any evolutionary pressure forcing us to adapt into any other system.
No, it isn’t more ethical. But what’s unethical about the current money system is that you’re forced to use that money in transactions. Since you’re coerced to do that, the state can happily inflate the money supply without worrying too much.
Inherently? No, not inherently. But it is convenient, malleable, fairly rare and useful enough to work. Different societies have chosen different currency instruments such as silver and salt. In some prisons cigarettes are used. In a free society it is quite possible that some new currency instrument would develop. But, for the reasons I state above gold is a good and durable choice. It also has the advantage of not oxidizing (under normal Earth-like conditions at least). In any case it is far better than Federal Reserve Notes.
We need a medium of exchange and batering doesn’t help us create civilization beyond a certain point. You can argue how much human imagination is neccessary for innovation but without money we can’t coordinate the effort of innovation.
And I don’t find pornography evil. Status symbols are for losers who don’t want to accumlate wealth. Tools fpr wars are useless except for destroying wealth and maybe scrap metals.
Well i see your point, but i think using gold or salt or silver etc… would undermine the human potential. It restricts our ability of wealth production to an arbitrary amount of gold that we find. Why would we wish to correlate what we can produce to how much gold we find? India became wealthy because of demand for spices. England for the industrial revolution. United states’ work ethic led and liberatarianism led to further technological achievement and prosperity. Im not so sure that in our modern world resorting back to gold would solve much. Okay so governments would not be able to inflate the money supply, but there would still be unnecessary presuppositions of scarcity in the world, and a constant battle over this arbitrary element.
Also suppose we find a way to create gold out of lead. (which the gold standard directly implies to be an invention of importance) then we are to become poor?
I understand that bartering has major issues with it, i think what i was advocating was a more localized form of money. I think i would feel most comfortable if our wealth was directly tied to our well being; to how efficient are our corporations, how just the government, how adequate is the education system and health care. Gold, just like fiat currency will set up all sorts of frivolous institutions that would distort our wealth and expend human capital towards their own useless cause which is bound to bust on the grounds of it’s own irrationality.
Nonesense. Wealth production is not limited by how much gold we have. If anything, if we produced lot of wealth, gold will simply have more purchasing power since the production of gold is rather limited. If neccesary we can shifit to other currencies if gold no longer fit our needs.
Austrians (at least the vast majority of us) do not wish to set gold by legal fiat as the one and only currency that you must use to trade with. In other words there would be competition. If you do not value gold as much as your neighbors you would be free to not accept it. This is your choice in a free society.
Let us assume, per your scenario, that an alchemist learns how to successfully turn lead into gold. This process will not instantly turn ALL lead into gold overnight. In other words, there will be time for owners of gold to gradually move their wealth into other instruments before gold becomes basically worthless. A similar scenario might be if an enormous new mine were discovered that, once exploited, would double the amount of gold on Earth. Also, something else to consider; just because Lamborghinis can be reproduced does not make Lamborghinis worthless. It would take labor and possibly skill to turn lead into gold.
You’re getting pretty philosophical here. If you’re trying to determine a “true human purpose” higher than material wealth, where moth and rust do not corrupt and thieves do not break in and steal, and you don’t like porn, I suggest you find God. He’s waiting.
If you are just trying to find a more reliable store of value than gold, I would suggest silver, or maybe platinum. Silver (and platinum) have more industrial uses than gold, and are in shorter supply.
The amount of gold doesn’t restricts production, if production increases gold increases its value, because in a free market gold doesn’t have a fixed value, it is values (and everything else’s value for that mater) is given as a ratio for the amount of things it can purchase, if production increases and the amount of gold remains the same, gold increases its value.
Most Austrians don’t propose the imposition of gold as the only form of money, instead they favor, letting the market decide what form of money is better suited (gold,silver,palladium,wood,whatever), by deciding what to accept as payment in exchange of good and services. Historically gold has been chosen as money.
I think a common theme amongst what you are all saying is that you don’t necessarily advocate the gold standard as much as having a system that represents wealth by a tangible resource. Then question that arises in my mind then is if you consider wood, silver, platinum etc… all forms of money, in a free market would this definition not just continue ad infinitum to the point that it is not distinguishable from barter? How could this take form in our world?
I guess i am speaking from some out of a philosophical stand point, but ultimately what i am talking about is praxeology and human action. I would ascribe boom bust cycles as larger than just monetary phenomenas. It is curious how humanity goes through periods of intellectual enlightenment and dark ages. Think of the Renaissance or the industrial revolution, when there was a boom in people who were multi talented; who had knowledge of painting, mathematics invention, chemistry etc… Then there are those times of barbarianism and blinding specialization. What i mean when i say the goal of society needs to be defined is because without it liberalism will utilize resources towards breast implants and Paris Hilton paper weights. I think it is important to understand the presuppositions we set out on which we base our economies. What does attributing a high value to gold presuppose about the direction an economy will head towards?
Yes, there’s no difference between barter and money. Good money will arise from barter, not from legal tender.
Who is anybody to say what we should spend our money on? Is a history book better than a breast implant? We would only know that people want more breast implants than history books. They have needs they want to satisfy. Making any sort of statist economic (“base our economies”) plan goes against satisfying needs, because somebody thinks some things are more important than others, up to the point where those needs aren’t optimally satisfied anymore.
That’s something about Fallout 3 that always annoyed me without end. How could any monetary system, with any prayer of being functional, be supported by bottlecaps!