Money is only a symbol

Money is not real wealth, but the symbol that gives a claim on real wealth. For example, one does not keep oneself alive by eating money, but food. Money is a unit of measurement, like inches and centimeters, but not wealth in itself. To consider money as a reality, a commodity, brings about the perversion of the whole economic system. This is what Clifford Hugh Douglas and Louis Even, of the Social Credit School, taught, and this is also what American philosopher Alan Watts (1915-1973) wrote in 1970 in a book entitled “Does it matter? Essays on Man’s Relation to Materiality”. Here are excerpts from Chapter 1, “Wealth versus money”:

by Alan Watts

Let me explain the major obstacle to sane technological progress, by dwelling on the fundamental confusion between money and wealth. Remember the Great Depression of the Thirties? One day there was a flourishing consumer economy, with everyone on the up-and-up; and the next, unemployment, poverty, and bread lines. What happened? The physical resources of the country — the brain, brawn, and raw materials — were in no way depleted, but there was a sudden absence of money, a so-called financial slump. Complex reasons for this kind of disaster can be elaborated at length by experts on banking and high finance who cannot see the forest from the trees.

But it was just as if someone had come to work on building a house and, on the morning of the Depression, the boss had said, “Sorry, baby, but we can't build today. No inches.” “Whaddya mean, no inches? We got wood. We got metal. We even got tape measures.” “Yeah, but you don't understand business. We been using too many inches and there's just no more to go around.”

A few years later, people were saying that Germany couldn't possibly equip a vast army and wage a war, because it didn't have enough gold.

What wasn't understood then, and still isn't really understood today, is that the reality of money is of the same type as the reality of centimeters, grams, hours, or lines of longitude. Money is a way of measuring wealth but is not wealth in itself. A chest of gold coins or a fat wallet of bills is of no use whatsoever to a wrecked sailor alone on a raft. He needs real wealth, in the form of a fishing rod, a compass, an outboard motor with gas...

But this ingrained and archaic confusion of money with wealth is now the main reason we are not going ahead full tilt with the development of our technological genius for the production of more than adequate food, clothing, housing, and utilities for every person on earth. It can be done, for electronics, computers, automation techniques, and other mechanical methods of mass production have, potentially, lifted us into an age of abundance in which the political and economic ideologies of the past, whether left, middle, or right, are simply obsolete. There is no question anymore of the old socialist or communist schemes of robbing the rich to pay the poor, or of financing a proper distribution of wealth by the ritualistic and tiresome mumbo jumbo of taxation.

A national dividend

If, if we get our heads straight about money, I predict that by AD 2000, or sooner... everyone will get a guaranteed basic income or national dividend, issued free, beyond which he may still earn anything more than he desires by an art or craft, profession or trade that has not been displaced by automation. (At this point in his book, Watts refers to the writings of American economist Robert Theobald of Columbia University who is in favor of Douglas’s Social Credit system.)

Naturally, such outrageous proposals will raise the old cries, “But where's the money going to come from?” or “Who pays the bills?” But the point is that money doesn't and never did come from anywhere, as if it were something like lumber or iron or hydroelectric power. Again: money is a measure of wealth, and we invent money as we invent the Fahrenheit scale of temperature or the avoirdupois measure of weight...

By contrast with money, true wealth is the sum of energy, technical intelligence, and raw materials. Gold itself is wealth only when used for such practical purposes as filling teeth. As soon as it is used for money, kept locked in vaults or fortresses, it becomes useless for anything else and thus goes out of circulation as a form of raw material; i.e. real wealth. If money must be gold or silver or nickel, the expansion and distribution of vast wealth in the form of wheat, poultry, cotton, vegetables, butter, wine, fish, or coffee must wait upon the discovery of new gold mines before it can proceed.

This obviously ludicrous predicament has, heretofore, been circumvented by increasing the national debt — a roundabout piece of semantic obscurantism — by which a nation issues itself credit or purchasing power based, not on holdings in precious metals, but on real wealth in the form of products and materials and mechanical energy. Because national debts far exceed anyone's reserves of gold or silver, it is generally supposed that a country with a large national debt is spending beyond its income and is well on the road to poverty and ruin — no matter how enormous its supplies of energy and material resources.

National credit

This is the basic confusion between symbol and reality, here involving the bad magic of the word “debt”, which is understood as in the phrase “going into debt.” But national debt should properly be called national credit. By issuing national (or general) credit, a given population gives itself purchasing power, a method of distribution for its actual goods and services, which are far more valuable than any amount of precious metal.

Mind you, I write of these things as a simple philosopher and not as a financial or economic expert bristling with facts and figures. But the role of the philosopher is to look at such matters from the standpoint of the child in Hans Andersen's tale of The Emperor's New Clothes. The philosopher tries to get down to the most basic, simple principles. He sees people wasting material wealth, or just letting it rot, or hoarding it uselessly for lack of purely abstract counters called dollars or pounds or francs.

From this very basic or, if you will, childish point of view, I see that we have created a marvelous technology for the supply of goods and services with a minimum of human drudgery. Isn't it obvious that the whole purpose of machines is to get rid of work? When you get rid of the work required for producing basic necessities, you have leisure — time for fun or for new and creative explorations and adventures.

But with the characteristic blindness of those who cannot distinguish symbol from reality, we allow our machinery to put people out of work — not in the sense of being at leisure but in the sense of having no money and of having shamefacedly to accept the miserable charity of public welfare. Thus — as the rationalization or automation of industry extends — we increasingly abolish human slavery; but in penalizing the displaced slaves, in depriving them of purchasing power, the manufacturers in turn deprive themselves of outlets and markets for their products. The machines produce more and more, humans produce less and less, but the products pile up undistributed and unconsumed, because too few can earn enough money and because even the hungriest, greediest, and most ruthless capitalist cannot consume ten pounds of butter per day.

The sole rational solution would be for the community as a whole to issue itself credit — money — for the work done by the machines. This would enable their products to be fairly distributed and their owners and managers to be fairly paid, so that they could invest in bigger and bigger machines. And all the while, the increasing wealth would be coming from the energy of the machines and not from ritualistic manipulations with gold.

In some ways, we are doing this already, but by the self-destructive expedient of issuing ourselves credit (now called debt) for engines of war. What the nations of the world have spent on war since 1914 could, with our technology, have supplied every person on earth with a comfortable independent income.

But because we confuse wealth with money, we confuse issuing ourselves credit with going into debt. No one goes into debt except in emergency; and therefore, prosperity depends on maintaining the perpetual emergency of war. We are reduced, then, to the suicidal expedient of inventing wars when, instead, we could simply have invented money — provided that the amount invented was always proportionate to the real wealth being produced. We should replace the gold standard by the wealth standard.

Alan Watts