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Money: Is it good or bad?

By Edited Jun 14, 2015 0 0

Classically, the main benefit of capitalism over socialism has been stated to be that capitalism provides a greater incentive to work than socialism does. Money or cash is the medium in which capitalism differs from socialism(if the same amount of money is distributed to everyone then what's the point of a unit of currency(cash) in the first place?).

There are more currency types than traditional dollars so socialism is always about what degree of socialism you are trying to apply per number of currency(are you striving for equitable distribution of cash or everything that has any marginal benefit). If a person has an apple tree in his backyard that's a thing of a value. If a person has a better location that's a thing of value. A society can never equally distripute goods and services.

There is only one thing that can easily be distributed equally amongst individuals and that's currency(money). Does money actually provide us with anything good?

Does money provide an incentive to work? Most of the best people at their jobs would do it for free and love it. Most people can't improve their performance at their job even for more money. Some people work at their jobs because they feel like they have to in order to live in society. Somebody has to do the jobs people hate. There are always non-monetary incentives: work at a job because there's a girl you like; work at a job because you want a cleaner neighborhood. There will always be free riders like if someone decides to pick up the trash then the whole neighboorhood benefits but only one person has to do the work. As long as at least one person does the work then things are solved and there are always social pressures to try to achieve an equilibrium outcome.

Money makes people do things that they hate instead of doing things that they love that they'd be more productive with. In that sense money decreases the production possibilities fronteir as those workers aren't doing what they love.

Money makes things more efficient by giving a unit to barter with rather than having to trade say 2 pigs for 3 cows all the time.

Money however creates a lot of jobs that have no productive value like banks, credit card companies, and the stock market. Money creates an ineffeciency.

Is the efficiency of having a good unit for barter greater than the ineffeciency of having a whole industry that performs no productive value? No. Each market could create it's own currency and that market currency would be immune to manipulation unlike cash.



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