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Is currency inefficient?

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tbj2102@gmail.com
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I have been living free of currency for several weeks now and my decision to give up money has been extremely powerful and positive on my life and all my relationships.

What I have discovered is that an obsession with quantifying profit is simply wasteful. In fact, I have found that requiring or expecting compensation or a promise of future compensation is a less profitable means of conducting business than simply trying to improve my relationships with others by helping them the best I can.

I have not once in these past several weeks of performing "uncompensated" services encountered anyone who is anything less than extremely grateful for what I do for them, except in those cases where I have attempted to impose my own values on others and performed services I thought they needed rather than only what they expressed a desire for (something I quickly stopped doing).

When I focus on finding opportunities to do the most I can for others, I generate an enormous amount of intangible goodwill that far surpasses in value what I could obtain by charging a fee for my services. This goodwill is more valuable both in terms of what it can be used for as well as its intrinsic psychological value to me. By this, I mean not only do I enjoy my work in itself, but I have never in these past few weeks felt scarcity in what I could obtain for myself if I felt I needed it.

Best of all, nothing in my life is taxable.

For some concrete context, I mainly perform pro-bono legal services. However, I have been involved in a variety of deals recently, including helping a couple sell real property by finding a mortgage company who would work with me on structuring the transaction so that the interested buyers could obtain financing. I am also working with a local professor to help her design find funding for a useful research project. I am truly a frictionless medium for those who trust me and know my capabilities because I do not ask for or expect compensation. Again, the key to this model working for me is that I do not at all feel scarcity in the resources I have access to and can use when I need to.

This has all led me to the conclusion that the most efficient form of profit is obtaining the intangible goodwill of others. The difference between what I do and where I see the villains in Atlas Shrugged is that they would attempt to use the government to substitute their own value judgments for those of others. In attempting to "help" others, they were actually debilitating them. I always make people do some work for what they want and never do it all myself. I try my hardest to use my work to demonstrate effective behaviors to others rather than making people reliant on me. In doing this, I create people loyal to me who are also more competent.

Consider the vast amounts of money spent in our current economy that either decrease or at best hold constant the skills and competency of purchasing parties. Convenience for convenience's sake (i.e. not for efficiency's sake) is a mind killer. It seems more rational to me to work hard to increase the skills and competencies of those who could potentially be useful to me in the future while at the same time increasing my own skills and competencies than to work hard for expanded rights over physical property or pure luxury services with no value to them other than the immediate gratification they bring.

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On second thought, you probably don't see my point. My point is that you're quantifying your profits too, except that you're not doing it precisely and objectively (measuring in hard currency), you're making approximate and subjective estimations (measuring it in your personal ability to get what you want, over the course of only a few weeks no less).

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I am not sure I understand what you mean by the question of how I eat and so on. I simply do what I need when I can so so with minimal burden on those offering me things. It doesn't really require obsessive pre-planning. I just try to do right in every moment and my needs take care of themselves.

I don't quantify my profits. Quantifying requires numbers. I don't see how quantification through currency is objective or precise since people perform similar actions for different people at radically different currency prices depending on their relationship statuses with each individual.

I can get money from a business transaction that leaves my counterparty hating me and gives me a bad reputation in the community. That quantity of taxable currency profit does not take into account whether I have set myself up for future successful deals or complete social ostracism.

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I am not sure I understand what you mean by the question of how I eat and so on.
How can you not understand that question? You must be aware that almost everyone in the U.S. gets food by and clothes and stuff by handing over money or a credit-card or a food-stamp etc. to a cashier at a grocery store. So, the question was an obvious one: how do you get food, clothes and iPhones? If you do not hand over one of those forms of currency, then do you steal it? do you dumper-dive? do you beg for it? do you barter for it?
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I can get money from a business transaction that leaves my counterparty hating me and gives me a bad reputation in the community.

This doesn't sound like a true story, but I'll play along. Are you saying that real lawyers, who don't work for free, are all hated and have bad reputations in the community (because they get paid in dollars, instead of in 'goodwill')?

This goodwill is more valuable both in terms of what it can be used for..

I don't understand how this trade of services for 'goodwill' can support you in the short term or long term. Do your clients give you a place to sleep, clothing, food, and transportation? If so, you're trading your services for other services (ie: rent) that are bought with money.. and so your client is just a middleman because you don't want to handle money.

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I don't quantify my profits. Quantifying requires numbers.

No, it doesn't. You should look that up on wikipedia (or, if you really want to live on the edge, buy a book on English grammar and learn all there is to know about "quantifiers").

If you wanted to talk about assigning numbers to your profits, then the verb to go with should've been "to count", not quantify.

I don't see how quantification through currency is objective

Then you should look that up too. Or ask a question about it. Though you do seem to be claiming to have read Atlas Shrugged, and Atlas Shrugged answers the question in Francisco's "money speech".

Either way, "you not seeing how" is not proof that it isn't.

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@SoftwareNerd: The question doesn't make sense to me because I reject the assumption behind it that feeding myself is something that requires any more thought or effort than obtaining oxygen. You would say the distinction between oxygen and food is that a human produces food whereas plants produce oxygen. However, my human relationships are set up in such a way that people I am around are constantly offering to give me the things they think I might need or want, including food and shelter.

My point is that plants don't mind if I breathe the oxygen they produce any more than people mind -- in the vast majority of instances -- if I eat food that is physically present when I am hungry. Sure, if I am in a restaurant and I walk up to some stranger and start eating off that person's plate, that is going to be a stupid idea. So is walking into a grocery store owned and run by strangers and walking out with a piece of fruit without paying.

However, I spend most of my time around other people I do know trying to contribute value and improve the relationships. "How" I obtain food is as varied as the relationship and the meal. I'll give some recent example of meals I have eaten since it sounds like you want something concrete. Yesterday I was at a funeral and ate lunch there that friends of my late grandfather had donated. I then stayed with my grandmother for a few hours and helped her with some things since she is also ill. She didn't mind at all when I ate some of the food in her house. I then sat with an Alzheimer's patient in a nursing home, and if I had stayed late enough for dinner someone there would have given me food because they all like me and I am helpful to them. Instead, I drove a friend (who I've also performed valuable legal work for recently) to do an errand in an adjacent town since she doesn't have a car. She gave me a great dinner -- not as a pre-arranged barter of value for value, but simply as a recognition of the value I give to her.

You may then ask how I obtained the car to help her with her errand. My family had lent me a car after the funeral that they weren't using. They knew I'd be doing good things with it that would be helpful to them. They don't mind if I use it for some things not directly related to them (such as helping a friend outside the family with an errand) since I am doing so much that is valuable for them right now. They would probably think it would be offensive and tactless to try to put obsessive restrictions on my use of their vehicle when I am doing so much for everyone.

I have been assisting my family in countless small ways recently, as well as some large ones. For example, I have been helping my dad and aunt take care of my grandparents. I am also helping my parents do a real estate transaction they want to do using my specialist skills as a lawyer. I couldn't conceive of them or anyone else in my family thinking twice about lending me anything I asked for or helping me with my own goals when I am trying to help others outside the family because I am putting so much into the family. If I borrow a car or anything else I almost always return it in a better condition than when it was lent to me.

On the topic of iPhones, I tend not to find the most expensive things interesting or useful to my goals or life, which is extremely convenient since such frivolous luxury items would take a lot of my social capital to obtain. I spend very little time on electronics (the majority of which is on forums discussing ideas). I get far more value out of physical human interactions.

@Mdegges: I said exactly what I said. It is possible to obtain money in ;egal ways that make others unhappy with me. There is no need to generalize that to all possible transactions where currency is exchanged, or even to all possible transactions for legal services. I didn't say that being paid in currency causes someone to have a bad reputation. I've simply observed that requiring payment in general for my services does not seem to be the most profitable approach when I define profit as my ability to get what I want and need in the present and future.

On your second point, I am not trading services for other services because I don't precondition my services on any kind of reciprocation. Reciprocation just happens naturally when I perform services people actually want. There is an important legal distinction between bartering, which is taxable trade, and gifting, which is taxable only in very limited circumstances.

Taxes are the price you pay so the government might help you enforce a contract.

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Nicky, I found your replies slightly objectionable... and all too typical of replies in Objectivist forums. Tbj2102 said he did not find the quantification (ie. counting, which is a common and legitimate sense of the word) of profit (through money) was worth obsessing over, and that he would rather cultivate goodwill through his social interactions or services. Further, exchange of money may be objective in some respects but it's not the final arbiter of how 'profitable' or rewarding (and hence worth pursuing) an activity is to an individual. This is not a very controversial point - someone could much prefer winning the Field medal in mathematics with its million dollar prize* than to winning the Euromillions Lottery with its 50 million Euro prize. I think if you'd employed the 'principle of charity' or whatever then you could have acknowledged these points instead of telling Tbj to go 'look things up' or 'ask questions', which is the behaviour I find objectionable...

@Tbj2102, I think you might be on to something. Direct exchange of services is definitely one way to avoid taxes, and your services can be rewarded in different ways. It's interesting that you find this preferable in terms of your happiness. I have often thought along similar lines. One problem I foresee though is that without accumulation of income, you will find it difficult to plan ahead and achieve longer-term goals/projects, and will also will be less prepared for a 'rainy day' when it comes along. Yes, your cultivation of goodwill shall count for something, but you surely can't rely on that as you could rely on a bank account. Arguably it is irresponsible of you to neglect money in this way, as you are jeopardising your independence and your long-term progress.

*can't remember if there is prize money for the Field Medal, or how much it is, or if I was thinking of another prize, but you get my point

Edited by Tyco
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Tyco - More than that, he has put himself in a position to be totally dependent upon the charity (which he calls 'goodwill') of others, since doesn't require any form of payment for his services. I think that in the long term, this will put a significant burden on the backs of his family and his clients. (ie: Let's say the OP gets ill and needs an expensive medicine, but doesn't have health insurance or any money to pay for it. (This isn't an uncommon situation.) How will he get the services he needs? I see only three options: asking his family or his previous clients for money, or getting aid from the government.)

Edited by mdegges
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Consider the vast amounts of money spent in our current economy that either decrease or at best hold constant the skills and competency of purchasing parties. Convenience for convenience's sake (i.e. not for efficiency's sake) is a mind killer. It seems more rational to me to work hard to increase the skills and competencies of those who could potentially be useful to me in the future while at the same time increasing my own skills and competencies than to work hard for expanded rights over physical property or pure luxury services with no value to them other than the immediate gratification they bring.

I don't see how this leads to the conclusion that currency is therefore inefficient. You can say that money is not the end-all goal to pursue in society, and I'd agree. But currency is pretty efficient to the extent gift-giving isn't the standard of trade. That may work alright in a small community, exactly where gift-giving existed predominantly. In fact, it works pretty well with circles of friends on colleagues based on small size. Moving towards trade on large scale among thousands of people, that doesn't work so well. I keep thinking you'll make counter-arguments involving free distribution, though I certainly would say money is a damn good way to indicate value provided by businesses, law firms, or anything else. Currency allows for long-term planning that is plainly difficult if you were only figuring out good will you've offered to society.

Consider a pretty radical goal of colonizing the moon or Mars (it's technologically feasible). I would find currency to be a way to coordinate resources for training astronauts and building rockets. Engineers need to work for you, and probably enough engineers that you can't possibly know all of them personally. Good communication technology is needed. You'd need resources from many different companies. You'd need to get technologies to integrate your computer systems for a successful mission. Simply put, I can't see your currency of good-will working for such complex modern science achievements. In some ways, currency, because it's an abstract representation of value, allows for more possibilities of trade than good-will alone. How would you go about colonizing another planet without currency?

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Sounds pretty unsavory to me. You basically are doing stuff for people with the full expectation of getting some form of further repayment eventually, counting on it in fact, but you just refuse to be clear and explicit about it with them. You just want to hide the strings attached. Seems dishonest. You give a pretense of doing something just because you like somebody or something like that, as if that is all the payment you need and expect, but you intend to get everything from food to transportation to, well, everything and anything from these people for your services. You intend to make your whole livelihood this way. I'd much rather somebody be upfront with me about their motives and let us directly hash out an exchange rate that is agreeable to both of us. It's fine to keep a really loose track of how equitable exchanges are between friends and such, since you aren't involved with them primarily for goods and services and you don't need to count on them typically for those anyway, but that's not a situation one can scale up to cover everything in life well. How is a computer ever going to get made with the zillion and one parts and people involved and how quickly the people involved can change? What if the person who actually sells a computer (somehow in all this mess) already has other people he or she is friends with for legal advice and unskilled labor and favors? The practicality of money is that it works great for passing value between even strangers, quickly, and that it doesn't require direct trades of one specific thing for another specific thing in addition to being something which you can save for later and combine.

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A barter economy is many orders of magnitude less efficient in than an economy facilitated by money. Barter cannot reliably do any of the functions of money namely being a medium of exchange, as a store of value, and as a unit of account. Without prices we do not know what products are in demand thus were to invest extra capital. The benefits of money are substantial and preferring barter completely irrational.

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@ToyoHabu (#15): How is bartering relevant to this discussion?

@Nicky (#14): Are you so attached to a false conceptual structure that anyone claiming to have evidence which challenges it must be lying? I agree that such a method of trading as you described would be a horrible way to manage relationships. It is essentially the height of passive-aggressiveness. The false assumption behind your point is that I trade at all. Trying to get someone to acknowledge that they owe you something due to a favor you did for them without explicit precondition is a terrible idea and leads people to think you always have ulterior motives when you want to help them.

@Bluecherry (#13): There are no strings attached. I do expect people to do small things to help me out sometimes, but I think you are confusing that positivist statement of how I believe things work with a normative belief that other people should help me out. People do not mind (on the contrary, enjoy) a correct, evidence-based prediction that they will behave in a way that adds value to my life. People do mind if others try to impose obligations on them they have not consented to and their level of dislike appears based on how little they have consented. Therefore, trying to reveal to someone who has not agreed to a trade that a service I performed has an obligation I kept hidden is an easy way to piss that person off and destroy the relationship.

@Eiuol (#12): Colonizing Mars is not nearly as impressive a feat as collecting the vast majority of human knowledge into a free, easily-accessible, quite accurate online encyclopedia. How did Wikipedia go about completely wrecking Encyclopedia Brittanica which was owned by a very powerful corporation (Microsoft) and had a great reputation? They have used a tiny amount of currency for running the servers, but that's a red herring compared to the immense value the community has created and continues to create.

@mdegges (#11): If you only see those three options, you're not thinking very creatively. Are you arguing that Galt's behavior towards Dagny after her plane crash was irrational and altruistic, or that Galt was irresponsible for not having significant assets or health insurance in the world outside Galt's Gulch where he lived most of his time?

@Tyco (#10): So let me get this straight: an Objectivist is telling me I am worse off focusing solely on building mutually beneficial relationships than if I sacrificed some of that relationship value in exchange for government issued currency sitting in an FDIC-insured bank account that is part of a fractional reserve banking system that receives all kinds of government subsidies? I don't see how it would help your case to shift that to saying I should bury piles of gold in my backyard or even in a hidden cave on a moon of Jupiter. I'd much rather live in a highly skilled and competent community of people who value me a lot on your hypothetical "rainy day" than a billion dollars or a pile of gold bars.

@Nicky (#8): Apparently we weren't operating on the same definition of "quantify." Yours appears more standard. Incidentally, I would recommend "Rex Barks" if you ever want to read a grammar book yourself. In any event, Francisco is one of my favorite characters in Atlas Shrugged. I see the scene towards the end where all the people die on the train as being largely a vindication of Francisco's destruction of his copper mines and an indictment of Dagny and Hank's serious immorality. In my view, which I believe is supported by Galt's statements in the book, Dagny and Hank did the equivalent of turning over a loaded hunting rifle to a deranged mass murderer and then getting the hell out before the shooting started.

Edited by [email protected]
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"There are no strings attached. I do expect people to do small things to help me out sometimes, but I think you are confusing that positivist statement of how I believe things work with a normative belief that other people should help me out. "

What would you think about these people if they did not provide you with tangible goods and services? What would you do if you could not find anybody to give you tangible goods and services just for doing them favors? What do you think would happen if everybody was operating on such a system?

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@bluecherry (#17): Question 1: This hypothetical is hard to address because what you are describing is not the behavior of people I interact with and you are not citing any kind of realistic potential cause for any kind of unpredictable significant deviation. The most I can say is that I probably wouldn't think much about these people at all beyond what I do now, which is being open to using my existing relationship with them to add value to them and myself. Question 2: I suppose I'd do something different, but I don't see your scenario of that kind of scarcity as realistic at all so I'm not sure why I would want to plan for it. Question 3: Seeing as how people who tend to operate this way appear to be the most effective, competent, and interesting to me, I'd say a lot more good things would probably happen if everyone adopted this system.

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". . .and you are not citing any kind of realistic potential cause for any kind of unpredictable significant deviation. "

Here's one then. Sociopathology. Everything you thought you knew about one of these people was all a sham. Upon being found out, they drop the charade.

". . . I don't see your scenario of that kind of scarcity as realistic at all . . ."

There's a limit to what you can get out of people. Your needs are great. Is the number of people you know who will help you out great enough to cover everything you need for the rest of your life whenever you need it without exhausting those people as resources ever, even temporarily?

"I'd say a lot more good things would probably happen if everyone adopted this system. "

That is really, really, really, really vague. People have mentioned complications that can come up with abandoning money. How do you think such issues would be handled? Also, you may have a confusion of cause and effect issue going on. People you have things in common with (and thus think highly of and will probably tend to think similarly to) may well be more likely to adopt this kind of mode of operation rather than the mode of operation making the people more competent/effective/interesting. If this is the case (which is what I think it probably is) then other people adopting this system who otherwise would not have before will still be the same kind of people they were before. So . . .

Also, just so you know, it is actually pretty standard to put little stock in anecdotal evidence since anybody can claim anything they want. We're mostly discussing things here with you right now treating what you've said as true for the sake of argument, to go on with the discussion. If all was to come out sounding like it was very sound so long as the anecdote you gave was true, THEN you'd need to provide some kind of backing for your story before we could go any further.

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@Eiuol (#12): Colonizing Mars is not nearly as impressive a feat as collecting the vast majority of human knowledge into a free, easily-accessible, quite accurate online encyclopedia. How did Wikipedia go about completely wrecking Encyclopedia Brittanica which was owned by a very powerful corporation (Microsoft) and had a great reputation? They have used a tiny amount of currency for running the servers, but that's a red herring compared to the immense value the community has created and continues to create.

Use any example you want, my principle will remain the same. Money was needed for trade to establish servers, hire some variety of work, make sure access to the servers are consistent, and so on. On top of that, wikipedia looks for donations in order to continue running, which is good-will from people who cannot offer much else in return for what wikipedia provides. The cost isn't "tiny" either, the cost is millions. I am not saying that money is the only value to be had at all, but that money aids trade of value that would otherwise impossible. You basically asked how did wikipedia manage to be successful and never answered yourself. Without currency, it would have been impossible. Perhaps you'll do okay small-scale in your local town, but grand achievements require money to function and allow people to offer you value that they can't give otherwise due to far distance, lack of time, etc.

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@Eiuol (#21): The principle is not the same. Let's compare Apple to Wikipedia. Apple seems primarily driven by tangible profit. If you wanted to talk about how wonderful Apple products were, I'd grant to you that the potential of acquiring expanded legally recognized property rights has been a substantial motivator for the creation of those products. On the other hand, the fact that Wikipedia has used some financial donations to support ancillary functions (even millions of dollars worth) is inconsequential given the huge difference between the relative value it provides the world compared with the financial cost of some of its ancillary functions. You can generalize that point across all open source projects. Some may employ some donations for some operations, but that does not mean currency is in any way an essential component of the value they provide.

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@bluecherry (#20): Paragraph 1: What adjustments would you suggest I make to my life to plan for what you appear to see as this very serious threat to me from everyone in my life turning into a sociopath without apparent reason? Paragraph 2: I'm not sure what your point is here. Why are you asking me to preplan every need or want I might ever have for the rest of my life and how I might fulfill those hypothetical desires? I don't see the point in that. Further, if pressed to answer your question, I'd have to say "yes." I do know enough people. Also, there is this great quote I read recently about the infinite productive capacity inside ourselves, and how working from that eternal inner fire only strengthens it rather than diminishing it. Paragraph 3: Your question was really really really vague so I was forced to give an equally vague answer. I am unaware of what "complications" and "issues" you are referring to. Give me specifics and I will try to answer them to the best of my ability, but I won't try to guess at the obscure referents of these words. I mostly agree with your point on cause and effect, although I don't think I'd agree with you that abandoning currency and trade will not tend to have net positive effects. If my point is being understood to be that abandoning currency is a panacea then I misspoke. It is or should have been that currency is an unnecessary hindrance for my establishing and maintaining mutually beneficial relationships. Paragraph 4: What kind of backing would you like and why do you need it? I don't feel compelled to prove I'm not lying about myself, but I'm also not interested in trying to prevent you from observing my life and the results of my actions if you want.

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"It is or should have been that currency is an unnecessary hindrance for my establishing and maintaining mutually beneficial relationships"

"On the other hand, the fact that Wikipedia has used some financial donations to support ancillary functions (even millions of dollars worth) is inconsequential given the huge difference between the relative value it provides the world compared with the financial cost of some of its ancillary functions."

These two statements of yours are at odds. If currency is a hindrance, why would wikipedia still be a great resource and still use currency? The point I was making is that currency aids trade of value. You didn't address how you actually could offer some type of good-will to wikipedia. Sure, the value of wikipedia is not the revenue it generates only since wealth is more than dollar value, but profits reflect trading value for value. Open source projects still require money, and often the only way to even offer some value in return is money. Clearly you value wikipedia, so what non-currency value/good-will do you offer? Personally, I've donated money to wikipedia because it's about the only thing I can offer. What have you done? This is an important question, because if you've done nothing and can't trade value for value, your point just falls apart.

Edited by Eiuol
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@Eiuol (#24): The statements are not at odds except in the subjective way you are choosing to read them as at odds. You make a lot of different points so let me disect them.

"If currency is a hindrance, why would wikipedia still be a great resource and still use currency?" I don't understand your question. Are you claiming that an entity that engages in any slightly inefficient set of actions can't be a great resource?

"The point I was making is that currency aids trade of value." I am not disputing this. My point is really about the inefficiency of trade as a means of obtaining value. I am not arguing that currency is inefficient to trade or inherently inferior to barter. I didn't realize this in the OP. If I could go back and rename the discussion I probably would ask "Is trade inefficient?"

"What have you done?" I have contributed to some articles, but I don't see how this fact is foundational to my point.

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