Nothing Gold Can Stay: A thought experiment about money, wealth, power and the psychology of economy.

What do we value?

It is important to note that this article is only a thought experiment for the purposes of reconsidering our implicit assumptions and societal conceptions of the necessities for civilization and what is “normal” behavior for humans. In the article about mysticism I pointed out that I was a psychotherapist not a theologian. Here I need to point out that I am not an economist either. This thought experiment is not advocating for any kind of specific new political or economic reality. Instead it is a way to reconsider the things we take for granted and meditate on new ideas that might allow us to conceive of a healthier and more stable society.

If we didn’t have gold what would money look like?

If we didnt have nonperishable precious metals like gold and silver, what would money look like. There are not many other goods we can make hold value in such a small and convenient package like gold, platinum, and silver to a lesser extent do. All the noble metals have a high luster, malleability, and do not spoil with age. How would society store value without them?

Well there are a couple examples of how money developed in places without gold. My favorite is an island called Yap where there was little to no money. Instead native Yapese used 20ft tall limestone disks that weighed hundreds of pounds. So how did this money work? How do you put a 200 lb stone in a vending machine or slide it across a bar?

The Yapese never moved the stones they used as money. Instead they kept an oral and collective ledger of who owned what stones. Money that can’t fit in your wallet might seem like a crazy idea, but think of how your debit card works. There is a collective ledger somewhere out there that changes every time you slide your card even though no physical money is moved.

How did Yap money work?

On the island of Yap, the acquisition and distribution of rai stones were closely tied to prestige and social merit. The process of awarding rai stones was based on various factors that reflected an individual’s status, achievements, and contributions to the community.

The primary means of acquiring rai stones was through social recognition and acknowledgment of an individual’s accomplishments. These accomplishments could include successful leadership, acts of bravery, or notable achievements in various fields such as agriculture, craftsmanship, or diplomacy. The more esteemed and respected an individual was within the community, the higher the likelihood of receiving rai stones.

The recognition and awarding of rai stones were often carried out through public ceremonies and gatherings. These events provided a platform for the community to acknowledge and celebrate the achievements of an individual. The stones were typically presented by influential community leaders or elders who acted as the arbiters of social merit.

It’s important to note that the awarding of rai stones was not a purely individualistic pursuit but rather a collective decision that reflected the consensus of the community. The opinions and judgments of community members, particularly those in positions of authority or with significant influence, played a crucial role in determining the social merit of an individual and their eligibility to receive rai stones.

The rai stones bestowed upon an individual were not meant to be hoarded or accumulated solely for personal wealth. Instead, they served as symbols of prestige and social standing. The possession of rai stones demonstrated an individual’s contributions to the community and their ability to garner respect and admiration.

The Yapese monetary system served as tangible representations of honor and status, reinforcing the social fabric and common good of Yapese society.

So in answer to the original question “How could society store value without gold?” We would store it through a reputation system rewarding benevolence, generosity and innovation. The people who gave back to society the most would be awarded the most value in the form of reputation, not by how many precious metals they owned.

How did gold change our conceptions of society and culture?

Gold has long fascinated humanity with its allure and intrinsic non-perishable value. The presence of gold on Earth almost did not happen at all. If there were a few changes to astrophysical geometry you may not have been able to buy gold jewelry in the store. So, why is there gold on earth?

The symbolism of gold in mythology usually relates to to the concept of the Self, a central archetype in Jungian psychology representing the totality of the psyche. Because the ancients associated gold with being so rare and so precious, it came to represent knowledge of the authentic and hiddens self. Fair tales that have to do with reclaiming a lost treasure are metaphors for self discovery and reclaiming lost parts of our identity. In fairy tales, gold often appears in the form of a golden key, a golden crown, or a golden apple, serving as a powerful symbol of the transformative potential of self-knowledge. These objects are typically guarded by mythical creatures or hidden in remote locations, emphasizing the arduous nature of the journey towards self-understanding.

The origins of gold as an element on planet earth trace back to the formation of the universe itself. In the earliest moments following the Big Bang, only light elements such as hydrogen and helium were present. It was within the cores of massive stars, through the process of stellar nucleosynthesis, that heavier elements like gold began to take shape. These elements were forged through the fusion of lighter nuclei in the intense heat and pressure of stellar environments.

As these massive stars reached the end of their lives, they supernovae explosions. These scattered their noble metal enriched contents into space. The remnants of these supernovae, containing elements like gold, spread across the cosmos in the form of dust and gas. This dust and gas later condensed into rocky masses of meteors that had high concentrations of gold.

The earth itself almost had no gold. While the primordial Earth held minuscule amounts of gold, it was not until later stages of our planet’s evolution that the precious metal became concentrated enough for us to mine or value them. The late heavy bombardment period, around 4 billion years ago, witnessed a barrage of meteoritic impacts bombarding the Earth’s surface. These meteorites, originating from various sources within the solar system, carried with them a wealth of elements, including gold.

If it was not for this coincidental bombardment of asteroids there never would have been enough gold on earth for you to wear gold jewelry. There certainly would not have been enough for us to use as money, let alone build a monetary system around. So what would have happened if we never associated gold with money, power, or value?

Why is gold associated with money and currency?

Gold is durable, divisible, and portable, making it an ideal medium of exchange. Additionally, gold has intrinsic value due to its luster malleability and non reactivity to other elements, which further contributed to its use as a form of currency.

The use of metal coins as a form of money emerged around 600 BCE in ancient Lydia (present-day Turkey). These coins were made from precious metals like gold, silver, and bronze, and their value was determined by their weight and purity. Gold, due to its scarcity and durability, became a preferred choice for coinage.

Over time, gold became widely accepted as a standard for money. Its scarcity, divisibility, portability, and resistance to corrosion made it an ideal medium of exchange. Gold coins became a trusted and standardized unit of value in many ancient civilizations, including the Greeks, Romans, Egyptians, and Persians.

In medieval Europe, goldsmiths played a crucial role in the evolution of money and debt. People entrusted their gold and other valuable assets to goldsmiths for safekeeping. In return, the goldsmiths issued receipts, which could be used as a claim to the deposited gold. These receipts gradually started circulating as a form of paper money or representative money. This practice laid the foundation for early banking systems and the issuance of paper-based instruments representing value.

The concept of the gold standard gained prominence during the 19th and early 20th centuries. Under the gold standard, the value of a country’s currency was tied to a fixed amount of gold. Governments held gold reserves to back their currency, and individuals could exchange paper money for gold at a predetermined rate. The gold standard provided stability and confidence in the currency, as the money supply was limited by the availability of gold.

The gold standard era began to decline during the 20th century, particularly after World War I. The need for increased flexibility in monetary policy, and the costs associated with maintaining gold reserves led many countries to move away from the gold standard. Gradually, most countries shifted to fiat money, where the value of the currency is not backed by a physical commodity but rather by the trust and confidence in the government issuing it. This meant that even though there was scarcity and competition for money like there had been for gold, money was no longer backed by anything real.

Put simply, even though we do not use gold as currency or the basis for the economy any more, gold still informs our ideas about money and power. Even new forms of money like crypto currencies and NFTs are based on these old notions of scarcity that come from our ancient relationship to gold. Our ideas about money, debt scarcity and our relationship to power are informed greatly by the function that gold has played in our economy.

What does money without gold look like?

In isolated or preindustrial societies, without gold, people had an understanding that resources were meant to be shared and distributed evenly. When a need arose in society others met the need with gifts or loans. The understanding in these cultures was that safety was found in generosity and compassion not hoarded material goods. They took care of others because when they need help others will take care of them. Social merit functioned like a kind of insurance.

In these barter, communal, and gift economies power does not become the most precious resource. Instead reputation and social merit become the most precious resources. Because wealth and value cannot be hoarded materially then society allows for individuals to accrue value by being useful, inventive and generous. These systems reward people who innovate and live compassionately because societal regard becomes the most important resource, not electronic debt or precious metals.

This is because things like food, clothing and tools often degrade and lose value over time. There is no way to horde wealth because all things that contain value slowly lose that value if they are hoarded. When there is no way to horde wealth with precious metals or an electronic debt ledger, then everything is depreciating all the time. In these cultures money and value are always trending back to equality because everything is losing value all the time.

People are incentivized to share and live communally in gift economies because clout and reputation become more valuable than any good or service. These systems are empowering because when needs arise society is naturally incentivized to meet those needs not ignore them. Material wealth is always decreasing in value so social wealth has more value. Value is stored in the social ledger of reputation not a material ledger of debt.

In debt and precious metal based systems value is disempowering because wealth tends to snowball. The people with more money have access to more power and likely use that power to get even more money ad infinitum. In these systems society is incentivized to ignore others’ problems because the endless competition is for non-perishable money that increases in value, not reputation for being a benefit to society. Actually, in this system other people’s problems are a GOOD thing for me because they mean others have less power and are less likely to get the money we are all in competition for.

Why does the non-perishable nature of precious metals like gold lead to scarcity, competition and inequality?

The scarcity of precious metals allowed individuals and institutions to accumulate and hoard wealth, creating disparities in the distribution of resources. The accumulation of gold and other precious metals became a means of showcasing one’s economic power and social status. This concentration of wealth in the hands of a few individuals or entities often led to economic inequality, with limited access to resources for the majority of the population. It also led to imperial wars and conflict. This happens when the purpose of a society becomes hoarding power instead of building sustainable or equitable systems.

Is there an alternative system?

What did non industrial societies do before there was gold?

Barter and gift economies operate on different principles that can have positive psychological and environmental effects. In a barter economy, individuals engage in direct exchange, which fosters social interaction and builds relationships within communities. The act of bartering requires individuals to negotiate and understand each other’s needs, creating a sense of cooperation and interdependence.

Gift economies, where goods and services are given without the expectation of an immediate return, promote social cohesion and reinforce communal bonds. By focusing on reciprocity and sharing, gift economies prioritize the well-being of the community as a whole rather than individual accumulation of wealth. This can contribute to a sense of psychological well-being and social harmony.

Moreover, both barter and gift economies can be more environmentally sustainable compared to the hoarding of precious metals or debt based systems. These systems rely on the utilization of resources within the community, promoting local production and reducing the environmental impact of long-distance trade. In debt based systems production is outsourced to the cheapest place where the workers have the least power.

While the nonperishable nature of precious metals like gold has shaped a scarcity-based money system conducive to wealth hoarding, alternative economic systems such as barter and gift economies offer psychological and environmental advantages. These systems promote social cohesion, reduce economic disparities, and foster sustainable resource utilization.

Key Characteristics of a Gift Economy:

Gift Circulation:

The primary mode of exchange in a gift economy is the circulation of gifts. People give goods, services, or resources to others without an explicit agreement for immediate return or compensation. The act of giving is motivated by social bonds, altruism, and the desire to contribute to the well-being of others.

Social Relationships and Trust:

Gift economies are deeply rooted in social relationships. Trust and reciprocity play a vital role in sustaining the system. Gifts are not seen as isolated transactions but rather as a way to build and maintain social connections within a community or group.

Non-Monetary Transactions:

Unlike traditional market economies where goods and services are exchanged for money, a gift economy operates outside the realm of formalized monetary transactions. The value of gifts is not determined by their market price or exchange value but rather by the relationships and meaning attached to them.

Abundance Mindset:

A gift economy often operates on the assumption of abundance rather than scarcity. It is based on the belief that there are enough resources and goods to meet the needs of individuals and the community as a whole. The act of giving is seen as a way to create and reinforce a sense of abundance and well-being.

Social Obligations and Prestige:

In gift economies, there are social obligations and expectations associated with giving and receiving. Individuals are motivated to contribute and give back to the community, as failing to do so can lead to reputational consequences. The act of giving and generosity often brings prestige, respect, and social recognition within the community.

Reciprocity and Sharing:

While direct reciprocity is not expected or demanded in a gift economy, there is a general understanding of the importance of reciprocity over time. Recipients of gifts may feel an obligation to reciprocate or share their own gifts with others in the future, creating a cycle of giving and receiving.

In Conclusion:

Economic systems that prioritize collaboration, generosity, and a departure from the notions of individuality, competition, ego, and scarcity can indeed contribute to mental well-being and foster a more harmonious society. One such alternative economic concept is the idea of gift economies, which emphasizes the practice of generosity and the exchange of resources without the expectation of immediate reciprocation.

What’s the point?

We assume that ways that our culture and systems works are the only ways it can work. This can limit our intuition, creativity, and stifle our ability to imagine a better world.?What if those asteroids had missed our planet billions of years ago and dumped that gold into the black void of space? Would our culture or monetary system look anything like it does now? Again the point of this article is not to change the monetary system. Instead it is to reflect about how and why we assign value and purpose in our lives and culture. It is a reflection on what money means to a society and the way those implicit assumptions affect our psychology and well being.

Many people misquote the bible that “money is the root of all evil” however that is not what it says. The quote is that the “love” of money is the root of all evil. We all interact with money daily but rarely think about what it is and that the way we think about money changes the role it plays in our lives and how we behave.

We often talk about values in an abstract and hollow way in politics, religion and identity. We seldom talk or think about what value itself actually is. How do we decide what has worth to us and what doesn’t. These assumptions about what is valuable and good and what the point of our societies should be is often based on outdated and unhealthy assumptions it does not occur to us to reconsider. By moving away from a mindset that prioritizes individual accumulation, gift economies encourage a sense of collective responsibility and interconnectedness. This shift in perspective can have positive effects on mental health, promoting a sense of belonging, trust, and reduced feelings of isolation, paranoia or competition.

Most of the patients that I see suffer from a profound sense of separation and disconnection. Our civilization would benefit from assuming the intrinsic value of all beings and the importance of meeting collective needs rather than amassing individual wealth. Not just in economics but in our lives we should prioritize collaboration, generosity, and move away from the emphasis on individuality, competition, ego, and scarcity. What a person or society values is one of the best indicators of who they are. Reflect on where you unconsciously place value and what that says about you. We have limited time on earth and it is important to stay in touch with what we want the purpose of our life to be. Where does your worth lie?