On January 23, the Foundation for Economic Education (FEE) published “Is Star Trek’s Dream of a World Without Money Utopian or Dystopian?” an article that does not serve the cause of freedom well. Of course, the article is not written in bad faith. But it ends up justifying a parasitic form of capitalism that has less and less to do with entrepreneurship and which increasingly gets along with and corrupts regulators and political authorities.
Money yes, money no — How to debate pointlessly and wrongly
The question of the disappearance of money has long been at the center of intense debate. Probably, some got acquainted with the idea thanks to the cult science fiction series star trek. Yet long before that, classical Greek thinkers like Xenophon, Plato, and Aristotle pondered the function of money. And there are also more recent discussions on this question: from political theorist Anitra Nelson to industrial designer Jacque Fresco. However, two millennia of debate have not yielded much of a result or anything like a consensus on what function or functions money serves.
In this context, the unwarranted claims of eclectic billionaires become the unwitting targets of the misplaced defenses of today’s monopoly and crony capitalism. Henceforth, this type of capitalism – or regime of accumulation, as some economists call it – is called “neo-feudal” capitalism. Even paradoxically, perhaps, since the authors of such articles really believe they are defending freedom and individual self-determination. Recently, the Foundation for Economic Education (FEE) published an article entitled “Is Star Trek’s dream of a moneyless world utopian or dystopian?”, which is a clear example of such a misplaced defense of the neo-feudal capitalism in the name of entrepreneurial enterprise. , capitalism generating freedom which does not exist.
Namely, the piece samples many of the weaker talking points in the libertarian field and reflects narrowly conceived economic theory. First, the text creates a false equivalence between capitalism as it is today, raising living standards and reducing absolute poverty without critically observing the data and properly informing their readers. Second, it oversimplifies most counter-arguments by ignoring the many problems of neo-feudal capitalism and recent findings in behavioral economics.
Instead of just criticizing, deconstructing these arguments offers an opportunity to imagine a broader front of freedom fighters. After all, Mises, Keynes, Marx, Sowell and Friedman disagree on the way to, rather than the notion of freedom. So, libertarian, conservative and progressive economics should reject the current form of predatory capitalism, not defend it.
Argument 1: Capitalism has been incredibly successful in lifting most of humanity out of poverty
One of the most often repeated arguments by libertarians, neoliberals and conservatives to defend the current form of capitalism attacks the problem of poverty. In fact, the article says that capitalism has “succeeded in lifting most of humanity out of poverty”. But, did he?
Indeed, this is true when considering the UN data on absolute poverty; or “severe deprivation of basic human needs”. And the UN lists these “basic needs” as “food, clean water, sanitation, health, shelter, education and information”. In fact, the authors themselves use the graph from Our World in Data (OWD) showing the reduction in absolute poverty since 1820. In addition, Figure 1 (below) also shows the graph from OWD showing the share of the world’s population in absolute poverty. Still, it would be interesting to ask whether it is possible that almost 90% of the world’s population is extremely poor at some point in time.
Figure 1 Data on extreme poverty, (A) absolute figures and (B) percentage. All data is before taxes and transfers. (Graphics from: Our World in Data)
Looking at the methodological note on the OWD website, the solution seems to be tied to the definition of absolute poverty. In fact, the graphs count people who “lived in conditions similar to the living conditions of the world’s poorest people today”. Therefore, OWD assesses poverty as if the 20and the “fundamental needs” of the century were universal or trans-epochs. This is clearly, logically and rationally econometric and statistical nonsense. Conversely, we should not be surprised that at the 19and century, sanitation, education and information were of lesser quality.
Indeed, “as countries get richer, the value of what they consider to be ‘basic needs’ increases”. On the contrary, the reason lies in the constant evolution of society, which generates new needs and stimulates new technologies – also before modernity. Thus, the real success of an economic system lies in increasing the number of people who can lead a decent life in standards of their time. And economists have given this measure a name: “relative” or “social” poverty. According to the World Bank data in Figure 2, the current version of capitalism has achieved little or nothing in this regard. On the contrary: “the total number of poor people in society is essentially at the same level as in 1990 due to the increase in world population”.
Figure 2 World Bank data on relative poverty between 1990 and 2015.
(Data source: Jolliffe and Prydz 2017; graph: author’s elaboration)
J1 Data on relative poverty from Jolliffe and Prydz (2017).
Argument 2: Fiat money circulating in free markets creates free people
The second argument for the incontestability of money stems from Ayn Rand’s theory Atlas shrugged.
Money rests on the axiom that every man owns his mind and his effort. […] Money does not allow deals except those that mutually benefit through the unforced judgment of traders.
For anyone with an up-to-date understanding of economic theory, this is pure naivety. In other words, there should be nothing in a monetary transaction apart from the free will of the participants.
Yet there are enormous conditionings that weigh on the outcome of any transaction beyond its free will. For example, there may be regulations prohibiting the provision of certain services to specific individuals (eg international sanctions). Again, rules may set the minimum or maximum price for certain goods and services (eg the United States Office of Price Administration). In addition, indirect taxes, surcharges and subsidies change prices, causing some not to buy and others to buy more. Finally, laws can mandate a transaction (e.g. US law mandated covid-19 testing, but employers or employees had to pay).
Even assuming that there is no state intervention, one cannot ignore the balance of power in the economic sphere—let’s mention one. In fact, neo-feudal capitalism is replete with monopolies and oligopolies with stratospheric margins that dictate unreasonable prices and pressure regulators. Additionally, large corporations tend to develop “predatory” traits and wipe out any competition at first glance – or even in the cradle. Moreover, behavioral economics shows that advertising and other practices surreptitiously alter preferences and behaviors, with the potential to generate inefficiencies.
Clearly, statements to the contrary prove that Kurt W. Rothschild was right when he wrote “power is neglected in contemporary economic theory.” Moreover, they lead to a completely false reading of economic history. In fact, the fierce criticism of the authors of Marx and of Marxism goes so far as to say that “the workers chose industrial jobs because they paid better than those in agriculture” in 19and century in England. Truly, this reconstruction may seem “rational” to a libertarian but, as Karl Polanyi wrote, it is simply false. In fact, wealthy individuals began to “enclose” previously common plots of land, forcing poor farmers to move into cities. And once there, disorientation, hunger and competition from other desperate people dispelled any semblance of fair wage negotiations.
Argument 3: Instead of a conclusion: a call to action
Certainly, the purpose of this article is not to prove that the abolition of money would create a utopia. Nor to support the authors’ claim that it would almost certainly lead to a dystopia. In reality, money is not a guarantee of freedom, but neither is its abolition. In the meantime, given that today’s societies are already on the brink of a dystopian future, talented libertarians like authors should refrain from pursuing counterproductive critiques of outlandish speculations like a moneyless society. Indeed, neo-feudal capitalism seems unable even to abolish cash – let alone cash itself.
Instead, it is high time that libertarians, conservatives and progressives to join forces to protect civil and economic freedoms. Each of these groups can contribute with a different and differentiated analysis of the current deep crisis. Yet only by forming a united front can they stop neo-feudal capitalism’s mania for social control, monopoly and state capture. Essentially, no one supports an embryonic social credit system, the death of small and medium-sized businesses, and reckless monetary policy. Yet it is in this direction that neo-feudal capitalism is leading humanity at an accelerated speed.
Once this formidable adversary is gone, libertarians will have plenty of time to criticize some risky progressives. In addition to serving as an uppercut to the cultural traditionalism of some conservatives. But until then, everyone’s attention must be focused on stopping the current drift before it’s too late.