Thursday, 22 May 2014

Taking Socialism To A New Level - A World Without Money

Take a look at this guy Daniel Lambert - I saw him on the Daily Politics pre-election show a couple of days ago - he's one heck of a socialist, and quite a charismatic and likeable guy too. He wants to go one stage further than most socialists - he wants to abolish money altogether, which means abolishing the very units that make price theory work.

To see how efficient the utility of price theory is, let's humour Mr. Lambert and imagine a world without money. Some people do live this way - the Anuta tribe in the Solomon Islands have a society based on a gift economy as their currency, but they haven't advanced very far materially (an observation which itself has pluses and minuses).

For most people, though, a world without money would be a disaster for commercial transactions. It would also bring about a world of hunger, neglect and social unrest. Consider Frank who owns a garage. In an economy with currency Frank sells his services to a range of customers - people who need their car services, MOTs, brakes changed, cam belt replacements, and so forth. Their common goal is that they need Frank to perform mechanical operations that they cannot.

Frank exchanges his services for money so he can buy things he wants - clothes, food, DVDs, holidays, DIY goods, and so forth. If money didn't exist then Frank's world of selling and buying would be up in the air. Rather than exchanging his mechanical skills for the right amount of money, he would have to find people who had clothes, food, DVDs, holidays and DIY goods and make a mutually beneficial exchange. Suppose Frank wants seven DVDs - he'd have to seek out a DVD salesman who had something wrong with his car in order to offer to trade seven DVDs in exchange for a car repair. Or if he wanted a holiday he'd have to find someone selling a holiday who happened to need car repairs to the same value. It sounds like hell.
But it gets worse. Suppose the DVD salesman needs a head gasket replacement. That's going to cost him quite a few dozen DVDs - far more than Frank wants. So Frank and the DVD salesman must strike a deal; an annual supply of DVDs that Frank wants until the bill is paid over a number of years, or a few hundred DVDs which Frank can then sell on. The trouble is, Frank is now a garage mechanic and a DVD salesman. He wants a new suit - but the suit salesman only wants a new exhaust - so Frank has to offer him a new exhaust and six DVDs. Multiply that by everyone in the country and, as you can see, the whole thing would be a nightmare for all concerned.
A world without money would be a truly miserable world for everyone trying to make a living. Rather than a world with specialised skills exchangeable for monetary currency, everyone might as well become like Tom and Barbara Good in The Good Life - self-sufficient vegetable growers knitting sweaters out of old ragged garments.
It would not be impossible to live without money - but its absence would limit us all to performing only the basic tasks necessary for survival. If there'd never been any money, we'd live in a world with no Internet, no telephones, no television, no cars, no trains, no ships, no holidays, no global travel, no space exploration, no Manhattan skyline, and not much science and knowledge either. Daniel Lambert is a nice guy - and his party seems full of well-meaning individuals (they are a party that, for good or ill, works on a no leadership basis) - but they should be careful what they wish for.
* Photo courtesy of