Is It Worth It?

Another Great Post by Jags Arthurson

Jags Arthurson is the pen name of a Brighton, UK writer. Jags has been a research chemist and company director.  He has lived and worked in over 40 countries. His novel, the crime thriller Pagan Justice, is available on Amazon with all proceeds going to charity.

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We usually measure the “value” or “worth” of something in money, so first let’s look at that. 

It’s quite a surprising story.

Since time immemorial people have asked how humans are different from the other animals, with little convincing success in answering the question.  But there is one way that Homo Sapiens is indisputably unique — imagination.  Mankind is the only animal that can conceive of things that haven’t existed, even things that cannot possibly exist.

Look at what humans have created that are purely imaginary: countries, magic, gods and their associated religions, nations, governments, laws, and companies to name but a few.  And people become so convinced by these imaginary constructs that they start to believe they actually exist.

Take, for instance, countries.  There may be some small argument that an island, bounded completely by ocean, is the ‘property’ of one group of people and that those people constitute a nation.  Less so when two territories are delineated by an easily crossed natural barrier such as a river.  None whatsoever when the border is marked by nothing more than a line on a map (both of which — lines and maps— are also artificial creations). Yet people will love “their” bit of ground, no matter how mean or impoverished and will fight – even die – for it.

But possibly the greatest construct of all is money and the idea of  “the economy” that surrounds it.

Money was a great, maybe even an essential, invention but it is purely imaginary.  In times gone by, trade was precipitated by barter.  I have pigs and you have grain so we can swap some of one for some of the other.  All good.  But the problem is when, instead of grain, you have, say, eggs.  “Five hundred eggs may be equivalent to one pig,  but do I want five hundred eggs all in one go?  Or could you even supply them?”  I might suggest you pay me in installments, but then we have the problem of keeping count.

This was the situation facing the farmers of ancient Sumer about nine thousand years ago.  When they delivered their grain to the king’s stores, the officials needed a mechanism to keep track — so they invented writing: cuneiform symbols on clay tablets. 

It is highly possible that money was created almost by accident.  When each farmer deposited his grain, not only was the quantity noted in the storeman’s log but the farmer would have needed a receipt — another clay tablet.  It is likely that these tablets – being redeemable at the royal granary – would have been seen as having value in their own right.  We can never know, but it is a compelling image to see the ancient farmer offering a clay tablet (“worth” so many bags of grain) in exchange for a new wheel for his wagon or a roof for his home.  But it was just a worthless clay tablet.

In 600 BC the very first actual money was created by King Alyattes in Lydia, now part of Turkey.  They were small metal discs and they, too, had no intrinsic value.  And neither has modern money.  A little known fact is that less than eight percent of all the money in the world is in any physical form, and all the rest is represented as bits and bytes in computer records.  So, far from being physical items – coin and notes – that represent an imaginary concept, more than ninety percent of modern money is actually, really, genuinely imaginary!

And this presents a problem.

M. Barrie (in his book Peter Pan) suggested that every time a child stops believing in them, a fairy dies. And this is true of any imaginary item. No matter how passionate the faith of the originators of a religion, when the believers stop believing, the gods stop existing.  Mars, Zeus, Odin, and Ra – gods for whom people gave their lives in times past – are now viewed as no more than interesting intellectual artefacts.

Likewise money, too, ceases to exist when people stop believing in it.  In Germany after World War II, during a period called “die grosse Knappheit” (the Great Shortage), people stopped believing in the Reichsmark so it became worthless and would buy nothing.  A new currency grew up spontaneously: cigarettes.

If money is truly worth nothing then what about the things it buys?  How much is something worth?  The traditional answer would be, ‘whatever somebody is prepared to pay for it.’  So how does anybody arrive at ‘a value’?

Try this.

How many items too few does it take to create ‘a shortage’?  The answer, perhaps surprisingly, is “one”  Take an ancient market.  If 50 buyers want pigs and there are only 49 available somebody must go without.  If rich enough, the unfortunate buyer may approach a seller, who has already agreed to sell his pig to another buyer for sixpence, and offer a penny more.  This disappoints the other buyer who now offers a higher price to the next seller — on around the loop until the established price is now seven pence.  If the buyers are desperate enough,  and wealthy enough, the next round will raise the price to eight pence.  Onwards and upwards.

The reverse is also true.  If there are too many pigs, a desperate seller may reduce the price to five pence, four pence, and so on down.  This is the so-called “Law of Supply and Demand.” It seems to work, but what about when the market is huge?  What about when there are millions of pigs and buyers and sellers and pennies?  How will anybody even know there is a shortage or a glut?  Well this is where imagination takes a hand.

Take the example of houses.  Regardless of whether or not there are enough houses or enough buyers, the price depends purely on imagination of a special kind: belief.  If enough people believe that house prices are about to rise then they will.  Sellers will hold off selling: “Why sell my house now?  In a month or so I will get more for it.”  Buyers, on the other hand, will jump into the market: “Why wait?  Buy before the price increases.”  So the market suddenly has a lot fewer sellers and a lot more buyers and we’re back to the pigs in the market with spiralling prices.  Equally the reverse is true.  House prices will fall?  “Sell now while I can get the best price.”  “Hold off buying until it is cheaper.”

And that’s it.  If buyers imagine something is worth a lot, it is.  And if they imagine it’s worth less (or even worthless) then that, too, is true.

So, as you see, ‘they’ don’t decide what something is worth;  you (and your imagination) do!