My co founders and I decided to shelve the The Pagoda Company in the summer of 2020 right as the Coronavirus was beginning its second wave in NYC. I was living in Williamsburg at the time. George Floyd was murdered on May 25, 2020. Unrelatedly, I began writing the next day on May 26, 2020. And as the summer and unrest escalated I completed 13 short thought pieces relating to money, power and politics. This is the first of those writings.

5/26/2020

What is money?

Common answers to that question range from definitional – “a medium of exchange” – to lofty and idealistic – “freedom”, “independence” or “autonomy”.

Money is multifaceted and hard to wrap your head around. Most people avoid thinking about money because it's stigmatized. Maybe they have been made to believe that they are bad at math. And developing a healthy relationship with money is difficult. Humans learn mimetically but exemplary money consciousness is rare among the general public.

Whether in the form of dollars, gold or bitcoin, money at the most fundamental level is nothing more or less than a power structure used to harness and control raw potential energy. More specifically, money is the accounting system through which any individual can accumulate, store, access and spend that raw potential energy. In physics, physical potential energy is the energy held by an object because of its position relative to other objects, stresses within itself, its electric charge or other factors. The monetary value of a bank note is the potential energy held by the bank note due to its relative position and relationship with competing bank notes and the individuals who trade their labor for them.

Sure – you might say – but, in the physical world, gravitational potential energy is derived from the relationship of two bodies in physical space… so where does the raw potential energy in money come from?

Consider for a moment that the raw potential energy in money is nothing more or less than accumulation of past reciprocity and cooperation between individuals. At smaller scales, to receive money you must provide a valuable service over a period of time. Being compensated or paid in dollars simply means that you can take the good deeds that you do for one individual and benefit from the “reciprocity” of another individual that didn’t necessarily benefit directly from your original labor. Money allows for the delocalization of the norm of reciprocity, if you will.

Note how money also is the tool used to hold that reciprocity hostage.

The tricky thing about raw potential energy is that it acts on the other bundles of raw potential energy around it. The denser or heavier the ball, the more potential energy it accumulates when lifted from the ground and also the more counter gravitational force it exerts on the earth itself. Accumulated reciprocity is no different. There is a weight, heaviness and density to accumulated reciprocity. As it is conceptualized and allocated today, money passively and powerfully attracts further monetary value (accumulated reciprocity) on its own. And those who don’t have much money leak what they do have to the people with larger accounts. The payday lending industry is a striking example of this. We are seeing this real time in crypto.

Through this frame, it makes sense that guilt and stigmatization so frequently come hand in hand with gaining money or losing money or being gifted money or lacking money. Because intuitively we all know that the way money is distributed and allocated today is a partial bastardization of the norm of reciprocity.

How can we build a world where money is what money should be and monetary capital and social reciprocity are aligned? Blockchain technology makes this alignment possible but not guaranteed. It requires the proper institutions - no different than any other form of social organization - to do so.