By Tapiwa Gomo
We all love money. It gives us access to everything we need, want and desire. In today’s world, money has become a source of power and influence. The person with money can influence decisions — good or bad. It is my view that we are now living in a world of moneyism where money is now a major determinant factor in decision-making. Whether this is good or bad is the million dollar question.
Money has a long history in various societies. Some track it back as far as about 5 000 years ago when the Mesopotamian people created the shekel, which is considered the first known form of currency. Gold and silver coins are known to date back to around 650 to 600 BC when stamped coins were used to pay soldiers. Some evidence suggests that metal coins may be as old as 1250 BC.
In societies, where there was no money or currency, communities traded goods and services for what they needed. Trading was driven by necessity and not necessarily by the desire for monetary profit. For example, one family would trade chickens for vegetables or trade labour for assets. These transactions tell us that humans have always traded and been interdependent and that value of wealth was in the ownership of assets and their accumulation not in the medium of exchange as is the case today with money.
Over the years, as industrialisation spawned massive trading, the role of money grew exponentially but specifically to perform three major functions: To facilitate trade as medium of exchange, to store value and to act as a unit of account. These three functions tell us some vital points — that money is nothing without being backed by assets and when it represents itself — it technically means zero value. They also tell us that society can do without money and that real value of wealth is not or should not be rooted in money itself because of its insipidity, elasticity and liquidity.
This is why historically societies invested in ownership of productive assets — not necessarily to make money — but to generate more value and wealth which they could trade when necessary either via barter or monetary transactions to acquire what they needed. Economic value was stored in real assets that could generate more wealth overtime. This was in the form of livestock, property, farms, minerals, products and services.
In today’s world the role of money has changed or rather has transformed the way we view it. It is no longer just limited to those three functions. It is now a symbol of power, status and a major influence in making decisions. In some economies money is no longer a commodity of trade nor represented or backed by a commodity as should be the case. It has become a standalone item of political and economic power.
It is for this reason that the world is seeing a growing generation of money societies instead of wealth societies. The current generation of humans is now obsessed by creating more money for their bank accounts than generating wealth in productive and real value assets which are the source of tangible and sustainable value. Money tends to be individualistic, while assets can benefit society directly or indirectly. In simpler terms, money in the banks benefits its owner, while a farm or a company creates development and economic opportunities for the society.
There is a disturbing reversal of roles. Historically people traded assets or labour to secure money to acquire items or services they did not have. That was largely to create more wealth. Today people trade to make more money. Accumulation of more money is now seen as a symbol of success than generating assets and wealth. Those obsessed with money may relate to the phrase “money makes the world go round” because it is now seen as the only way to access a place to live, food to eat and all necessities needed to enjoy life. This is true to some extent, but there are challenges.
Obsession with money has seen a rise in shortcuts and short-circuiting of the most important principles of economics. No one wants to follow the rules as everyone is after money. It means most young and educated people must move from rural to urban areas to seek money as no one wants to get dirty in the farms, mines, construction sites and other productive areas. It also means the “hustling” and informal money industries will grow exponentially. There will be less interest in real productive sectors as the world edges towards a lazy generation.
With the world facing an impending global recession amid an already teething inflation, there is a real risk of a financial implosion which may see some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many global financial crises were associated with banking panics, and many recessions coincided with these panics. Paper wealth was wiped out.
Those who lived in Zimbabwe in the early 2000s witnessed how most people lost their savings, pension funds and other financial assets to an unprecedented hyperinflation. Other situations that can erode the value of money include stock market crashes and the bursting of other financial bubbles and currency crises. In short, obsession with money runs the risk of directly losing the paper wealth in the event of a monetary implosion – a scenario that may not affect a real economy that is based on real assets and productive sectors.
- Tapiwa Gomo is a development consultant based in Pretoria, South Africa.