What Is Money, How It Works, and Why We Need It
To begin to understand what money is, we take a look at its nature, how it works, why some people have it, and why others don’t.
I like to think that the need for money is triggered by a similar societal characteristic that triggers the need for law.
Both of these human-made concepts appear when a uni-individual society evolves into a multi-individual society.
Let’s take an example.
Imagine a hermit on an island. The hermit, by definition, lives alone.
He built his house by himself, feeds himself by himself, dresses by himself, and entertains himself…by himself.
The hermit’s “society” is a system made out of one person that interacts with his environment.
Does money exist? Obviously not: there is no one to buy from or sell to.
The hermit finds the needed resources in his environment, which is “free” (minimum work must be undertaken to extract and convert resources.)
The hermit’s society is utopian: there is no crime because there is no law (and alternatively, no one to kill or steal from).
There is no authoritarianism because there is no one to confiscate freedom. By the same token, the inherent (and only) condition of our hermit is freedom, because there is no one to take it away.
There is no poverty because the hermit can’t afford to be poor. Poverty would mean death, as there is no one to save the hermit.
The hermit simply “lives”, and is accountable to himself for his own survival.
If the hermit does not look for food, the hermit dies. It’s nature in action.
Notice the amount of control the hermit exercises on his environment.
If he decorates his house in such a way, no one will come to change it. If he sorts out his clothes in such a way, no one will move them either.
Whatever the hermit controls in his environment is controlled by him and him alone.
The hermit owns 100% of control of what can be controlled.