Take-Home Message: Money holds its value in the opportunities it creates as a tool.
Money came into existence as a wonderful human response to expanding opportunities for trade. (If you want an in-depth explanation, I highly recommend The Origins of Money by Carl Menger.) It rose to popularity neither by government edict nor rule of law, but as a mechanism from innovative people to lower the barriers for attaining prosperity.
Consider this example: Three villagers would like to trade. Tom offers a cow and wants a sword. Bill offers 15 chickens but wants a cow. Wes offers a finely crafted sword but wants chickens. To facilitate this trade, all three villagers must participate and engage with one another, deciding the value of each item in correspondence to the next.
Money expedited this and allowed people to taste wealth in ways never before imaginable. It happened by eliminating the broker-dealer and third-party negotiations necessary to trade. It allowed people to deal directly with whomever they sought to do business.
Somewhere along the way, though, this perception of money as a tool for increasing global prosperity became muddied. Whatever the reason(s), be it greed, power, status, it took on a new reputation to many as the ultimate goal rather than for its role.
As money transformed into an object of obsession from its former glory as a brilliant innovation, it lost some of its value. It lost its story as a mechanism for peaceful dealings with others and as a resource for facilitating mutually-beneficial exchange. It lost its value as a means for global progress to its competing interest as a symbol of status, wealth, authority, power, or success.
I used to count myself among the crowd who views money in this light. I used to think piles of Benjamins equaled happiness. I desired the symbol it represented, and I thought of the freedom immeasurable wealth would afford. I failed to account for the intrinsically valuable experiences, relationships, and memories to be sought after in life.
All of these former thoughts and beliefs represent a key misunderstanding of not only money but also of value. I failed to see the subjectivity of value. My flawed understanding could not make sense of how different things could possibly be worth different prices to different peoples, and at different times. My error became apparent quickly as I grew and witnessed a change of value in my own life. Many things that I once thought valuable hold little if any worth to me still today. In coming to this realization, I became aware of the importance not of money as a symbol but of money as a tool.
I faced many questions on the way to this truth. Like, what is money without happiness? What is money without someone to share it with? What is a fortune without a family or friends? What is an immense income without fulfillment in labor or life? What is prosperity without purpose? And many more…
In answering these questions for myself, I am convinced of the importance of seeing and understanding subjectivity in determining worth. What I value is not necessarily the same as what you value, and vice versa. If we all valued the same things and with the same intensity, trade could not occur and the weak would be subject to the whims of the strong.
Because of this truth, though, it is imperative that we allow each person to determine what he or she values, and to allow them to pursue those things so long as they go about it peacefully.
Money holds a valuable lesson for us in this regard. It provides us a living model to observe the different preferences of all people interplaying in a beautiful orchestra of human interaction. It’s not about money as the end-goal, though. We must not forget about its origin as one of the most powerful tools for facilitating peaceful exchange among men.