Imagine a crisp hundred dollar bill is sitting on your desk. What is that $100 bill actually worth? What does that number 100 actually mean? Upon close inspection, it is just a piece of paper, with letters and numbers printed on it. A portrait of a man named Benjamin Franklin. It is a very difficult to duplicate piece of paper, with all kinds of intricate printing, but it is a piece of paper nonetheless. So why is a piece of paper with the number 100 printed on it meaningful at all? Suddenly, your stomach starts to grumble. You are hungry. Your body is telling you that you need food. Unfortunately, you finished the last of the food in your house early in the morning. You don’t have a vegetable garden to pick fresh tomatoes from. You don’t have any chickens that have recently laid eggs. You don’t have a cow to milk. There is, however, is a grocery store only one block down the street. In the grocery store are vegetables grown in someone else’s farm, milk from someone else’s cows, and eggs from someone else’s chickens, and bread baked in someone else’s oven.
You walk down the street to the grocery store with the $100 bill. You enter the store, pick up a basket, and as you walk up and down the aisles, you fill the basket with the eggs, meat, bread, and vegetables. The value of the $100 only becomes apparent when you try to leave the store. If you simply walk out of the store with the food, you will be angrily chased after and scolded, maybe even taken and put in a metal cage. To leave the store without causing a scene or upsetting anyone, you are expected to hand the $100 bill, the paper with numbers, to a person who gives you back pieces of paper adding up to fewer numbers. In this case, you are given back three $20 bills, totaling $60. Your pieces of paper now add up to less numbers in total, only 60 instead of 100. But, you now can leave with milk, bread, vegetables and eggs without being chased by anyone. Something very interesting happened. You were actually prevented from taking and using the resources in the store unless you handed someone the bill. You were then given back paper with lower numbers, but you now have in your hands something both real and useful. Real food. Real milk, grown by real cows. Real eggs laid by real hens. Now you can eat well, and are no longer hungry. What you have done is traded some of the numbers on the piece of paper to gain access to useful resources.
You now have an answer to why the $100 bill is valuable. Why it means anything. You can trade some it for real, useful stuff. You try this trick several more times. You trade $20 for a shirt you like. You trade $20 for a hammer. You trade the last $20 to get a decent haircut, using half an hour of someone’s time and skill, itself a resource. Each time, the paper with numbers can be traded for a useful thing. A thing you want, or a thing you need. In a very practical sense, the $100 is useful because it can be traded for useful things. Of course, the $100 wouldn’t mean anything at all if it couldn’t be traded for resources. If you went to the store and you couldn’t trade the paper for milk and bread. If you couldn’t trade for a t-shirt, or a haircut, or anything else, then the paper wouldn’t be useful at all. It wouldn’t mean anything. It would again be just a piece of paper with numbers printed on it.
Of course you don’t really need money. Nobody does. What you really need is food to eat. A warm place to sleep out of the cold. Water to drink. Maybe a book to help pass the time. What you really need is resources. At the very minimum, enough resources to stay alive. If you had a house in the woods, sealed tight from the cold. Trees growing all around. Enough clothes to keep warm. If you had a garden in the back with enough vegetables growing to provide you with food. A population of your own chickens to give you eggs and to eat, and maybe a cow to milk, you wouldn’t need any money at all. You would have no need for a store, because you can get enough resources without it. You already have all the resources you need. You can of course live indefinitely without any money, as long as you have some way of getting the right resources. It is only when you need or want access to someone else’s resources, someone else’s work or labor, the labor of your society that money becomes necessary. In our society, through systems of markets and social convention, money can grant access to resources produced by others.
Money is valuable in a completely different way than a useful resource. Money is able to grant and control access to useful resources without being a useful resource itself. Money therefore has purely symbolic value. Any kind of information that represents access to or ownership of resources has symbolic value. A title to a car has symbolic value, because it is information that gives you access to a car. The car itself has true value, because it is useful in and of itself to help transport you from place to place.
WHERE THE VALUE OF MONEY COMES FROM
The money itself, the symbol of value, does not actually have any value of its own. Useful resources have value. Food, houses, clothes, technology. These things have true value, because they are useful in and of themselves. The useful things that money grants access to, or the true value, is where all of the value is.
The reason money has value, is because access to resources is restricted by law unless money is exchanged for those resources. The money is only valuable, only meaningful in any way, because people can't get access to resources without it. Our system of social norms, laws, and law enforcement that restricts access to resources is actually what makes money, or symbolic value of any kind, meaningful.
For example, if you had access to a house, car, all the food you wanted, all the technology and information you wanted, you would have no need for money.
Our legal and social systems that enforce private property rights are therefore central to giving symbolic value meaning.
The true value, remains in the actual resources, actual technologies, actual knowledge that exists in the real world.