Money: Symbol of Human Effort

Money, at its core, is a symbol of human effort. It embodies the hard work, creativity, and dedication that individuals invest in their pursuits, whether it be through labor, business, or innovation. The universal understanding that money is a representation of one’s hard work and contribution to society forms the foundations of economic systems. This concept isn’t something that is new, nowhere is this concept more apparent than on the island of Yap, where the large stones with holes serve as a testament to the deep relationship between effort and value. These limestone discs, often weighing several tons, symbolize a form of currency that has fascinated economists and anthropologists across the globe. However, beneath the surface, money’s true nature is far more in depth than just the tangible effort it signifies.

The island of Yap is in the Pacific Ocean located near Australia, it exhibits a special economic history centered around limestone discs called fei. These stones were quarried on a distant island and transported to Yap by canoes, a remarkable feat of human effort. The fei served as the islanders’ currency. In Milton Friedman’s “The Island of Stone Money,” the reader is introduced to this curious form of money. Friedman describes the social structure of the island, emphasizing their intimate system of trust, where the stones themselves didn’t even need to physically change hands for transactions to be made. The people of Yap did not need to actually move these heavy stones during transactions. Instead, ownership of a particular stone was transferred verbally, and the whole community acknowledges the change in ownership. This system of trust allowed the fei to serve as both a marker of value and a medium of exchange, challenging conventional notions of money as physical currency. This trust-based system sets the stage for an exploration of the nature of what actually gives our money value.

Carl Menger, a pioneering economist of the late 19th century, offers a great theory on the origin of money. Menger’s Theory of the origin of money gives us insight into the evolution of currency. According to Menger, money originated from the barter system when people searched for a more efficient means of exchange. This transition from the barter system to money happens when certain commodities gain widespread acceptance due to their use. When we look at the island of Yap’s stone money, we can see the similarities with Menger’s theory. The citizens of Yap, faced with the problem of exchanging massive stone discs for everyday goods, relied on the trust and recognition of these stones as a mark of value. In a sense, the Yapese had created their own form of money, mirroring Menger’s concept of a commodity evolving into money as it becomes more widely accepted in exchange. The fei stones, although cumbersome and immobile, represented the culmination of trust and effort in a monetary system. It is a testament to the flexibility and abstract nature of money in societies. 

Carl Menger proposed a very thought provoking theory, I believe we still utilize a barter system and money is just a form of us making the system more efficient. I think in history at some point we as humans realized that we can’t keep trading goods, because it becomes difficult to procure something from someone if you don’t have something they are willing to barter for. If you were bartering with grain that you harvested by hand you would most likely barter for something that you were willing to put in the effort to harvest the grain for. Just like grain having value because of the effort put in to harvest it, Money is a placeholder for the good and it represents the efforts we put in to procure it.

The concept of money is ever changing and in recent history we have seen the emergence of crypto currencies, currencies that rely on block chains to operate. Cryptocurrencies like Bitcoin and Ethereum, existing purely in the digital world, challenge the traditional physicality of money. They get their value from user trust and a network of users, mirroring the trust-based system of the Yapese fei stones. Bitcoin mining is like a digital race where powerful computers solve tricky math puzzles to confirm transactions on the Bitcoin network. Miners use mining rigs designed just for this job. When they solve a puzzle, they create new bitcoins and make sure all Bitcoin transactions are secure and correct. It’s a competition, and miners work together in groups called pools to increase their chances of winning. According to the New York Times, “There is generally a new winner about every 10 minutes, and this will continue until there are 21 million Bitcoins in the world. At that point, no new Bitcoins will be created. The network is expected to reach that cap in 2140.” This process keeps the Bitcoin network running and makes it trustworthy. The common denominator is the effort put in for the money, bitcoin is only awarded to the rig that mines the most efficiently and puts in the effort.

In conclusion, the profound relationship between money and human endeavor is a timeless testament to the intricate history of human society and its economic systems. Money stands as a symbol, one that stands for the very essence of hard work, creativity, and determination. Whether it takes the physical form of colossal limestone discs on the island of Yap, exchanged through trust and communal recognition, or the digital world of cryptocurrencies like Bitcoin, where the effort is channeled into complex mining processes, the essence remains the same. Money, in all its diverse forms, serves as a mirror reflecting the values, efforts, and aspirations of a society. It is a reminder that behind every note, coin, or digital token lies a story of toil, innovation, and resilience. The journey from barter to money, as theorized by Carl Menger, echoes across time and cultures, showing that money is not only a medium of exchange but a symbol of the recognition of the sweat and dedication invested in its obtainment. Money holds its value because society collectively acknowledges the effort, determination, and ingenuity it represents. It is the embodiment of human aspiration, a symbol that transcends the physical and digital realms to unite us in our pursuit of prosperity and progress.

References

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money (1991): 3-7. Web. 23 Sept. 2023.

Glass, Ira, Chana Joffe-Walt, Alex Blumberg, and Dave Kestenbaum. “423: The Invention of Money.” This American Life. Prod. Planet Money. 7 Jan. 2011. This American Life. Web. 23 Sept. 2023.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 23 Sept. 2023.

Kanopiadmin. (2009, September 23). Carl Menger’s theory of the origin of money: Ludwig von Mises. Mises Institute. https://mises.org/library/carl-mengers-theory-origin-money

Yaffe-Bellany, D. (2022, June 8). New to the crypto world? here are the terms to know. (published 2022). The New York Times. https://www.nytimes.com/explain/2022/cryptocurrency-guide