The fear of what will happen to the economy during the pandemic permeates our daily lives. Politicians, entertainer-journalists, and your friends and neighbors are frightened about the financial future. "What will happen to the economy?"
The Fantastical Beast Economy
I am fascinated that we refer to the economy like the weather. As if we do not have any control over it, the economy roams the planet devouring currency and disrupting markets. We lose jobs, our homes and possessions because of 'the economy.' The value of our labor and the products and services we offer changes because of 'the economy.' Leaders suspend protective laws, start wars, and base taxes on 'the economy.' If the economy isn't a creature like the Loch Ness monster or a force of nature like a hurricane, what exactly is it?
The definition of the word revolves around the production, distribution, and consumption of goods and services. We are the producers, the distributors, and the consumers. So do we fear ourselves? If the economy collapses we are out of work and cannot afford to consume. It's an ouroborus, the serpent eating its own tail. Or is it? We are the force behind the economy. Perhaps the problem we will face after the pandemic isn't 'the economy,' but what we choose to value.
As individuals we have different interests and passions. A Michael Jordan autographed photo has little value for myself and others. However, there are those who would pay top dollar for his authentic autograph. Of course, there is some complexity there. Were I to have stumbled onto a Jordan autograph, I may be tempted to find someone who would pay a pretty penny for it. This is how our society operates, trading valuables for promissory notes.
Prior to the 1930s many countries used the gold standard to back currency. A dollar represented a number of ounces of gold. Like the example above, I don't really have a need for gold. I don't create electric circuits or desire gold jewelry. Yet, gold was a commodity that one could trade for necessary items like food and clothing. Whether currency is backed by gold or not, I cannot deny that it is nice to have a standard accepted by everyone.
Once again, we are talking about representation. Money and the system obscure what is happening and the real value being traded. The economy represents production, distribution and consumption of goods and service. Currency now represents monetary policy, instead of gold. We've agreed I should be paid currency for my production. I will use the currency to pay others for their goods and services. During the COVID-19 pandemic, there is less production as we get ill and stay home. Though, we all still need to consume necessities. Thus, 'the economy' is failing?
'The economy' is about our work and consumption, right? Money is a stand-in for the things we need and desire. The currency is used to bridge the gap in what each of us value. I make a wooden chair, you trade me some promissory notes that I can exchange for some shoes from someone else. With my very basic and general understanding of 'the economy' it is hard to understand how it can fail. Of course, I am not getting into the speculation market and stock exchange. Perhaps that is what we fear will fall apart, not the economy.
One definition for 'value' is worth. Another is meaning. The fact that nurses and doctors are working incredible hours in dangerous conditions during the pandemic is not about monetary worth. What they are doing has meaning far beyond currency. After being in a car accident, the value of my partner holding and consoling me is worth more than a suitcase full of currency to pay for a new car. No one wants the money for cancer treatment, they need the treatment.
Without promissory notes people barter. Prisoners find value in barter since cash is hard to come by and perhaps not worth as much as tobacco or real cheese. When Greece went through the recent financial crisis a barter economy emerged. In fact, the website created for this barter market in Greece exchanges credits similar to bank notes. So what is the difference? I would argue connection. A small community of people bartering is building a network of human connection. The value bleeds into meaning. We often take pride in helping others. We trust the people in our networks and those closest to us. Emotional connection creates a healthier society. Perhaps one where N95 masks are given freely to those in need and not hoarded for profit.
The 1913 Liberty Head Nickel
The economy represents how we interact with each other and currency seems more like a placeholder. That Michael Jordan autograph may be worth a new TV to you, but I would likely only value the paper it was written on. I want the paper, you want the autograph, neither one of us needs the bank notes in reality. We only use them to represent value we create. There are only 5 Liberty Head Nickels. To a collector this single coin could be worth $2-4 million dollars. To the bank, the coin is still only worth $.05. Value is in the eye of the beholder, so how will our economy fail? The stock market, or gambling on the how people may value future goods, may indeed fail.
One of the disadvantages of the gold standard was the distribution gold deposits. This means some countries would have more than others and that could limit trade and growth.'The economy' is a system born from us. It is not as important as what we value. Perhaps the pandemic is an opportunity to examine what worth truly is?