Monday, 17 December 2007

Cue Card Libertarianism: MONEY

Money is a tool of exchange and a store of value.

It is the concrete form of the abstract principle that human beings should deal with each other not as adversaries -- not as conquerors and conquered -- but as traders, exchanging value for value by mutual consent.  As such it is an embodiment of productiveness and freedom (see Harmony of Interests).

“Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except the voluntary choice of the man who is willing to trade you his effort in return.” (Ayn Rand, Atlas Shrugged)

As a tool of exchange, money allows producers to voluntarily trade value for value.  In the productive complexity of a division-of-labour society, where the direct exchange of goods for goods becomes impractical, money makes possible the indirect exchange of goods.  It expands exponentially the number of one's potential trading partners, and hence our choices.

For money to serve as a means or exchange, it must be backed by goods to be exchanged.  Just as it's true that what makes consumption possible is earlier production, so too the purchasing power of money comes not from a Central Bank's printing of paper money, but from prior production.  What underpins the exchange value of money is not the power of the Central Bank's printing presses, but the value of production.  When the supply of money runs significantly ahead of the production of goods however, the value of its units decreases correspondingly (see Inflation).

Money is a store of value.  In itself, money is not wealth – it is a frozen form of wealth: of goods and services; of the expectation of future production, and the ability to purchase the goods and services produced.  As such, it is a symbolic tribute to their source: the human mind.  To concur with Christianity that love of money is the root of all evil is to say that the human intellect is evil and the material products of its exercise are evil: which is precisely what Christians – “hair-shirted despisers of the body” as Nietzsche says – have believed.  Which is why capitalism itself, as commentators beyond number have complained, has “laboured under a cloud of moral unease.”

Contrary then to the blandishments of false moralists and would-be thieves of money's value,  money is not the root of all evil -- as a symbolic tribute to the human mind, to the application of reason to job of survival, it is the root of all good.  “Until and unless you discover that money is the root of all good, you ask for your own destruction," says Ayn Rand in Atlas Shrugged.  "When money ceases to be the tool by which men deal with one another, then men become the tools of men."   The choice is stark: it's either persuasion versus force; the dollar or the gun

If it's freedom from physical coercion that you're after, then it's the pursuit of money you should support.

This is part of a continuing series explaining the concepts and terms used by NZ libertarians, originally published in The Free Radical in 1993. The 'Introduction' to the series is here. The series itself is accumulating down on the right-hand sidebar, and in the archives here and here.


  1. Without passing judgement on the value of the statement, I wish to merely correct your misquotation (and you are certainly not the first or last, including Pink Floyd).

    It is not money that is the root of all evil. It is the love of money.


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