Understanding money

Political Economy

To get a good understanding of money and its role in society, it is necessary to go back to the beginning, so to speak. When Adam Smith, Ricardo, and others first started studying economics, they did so under the name “Political Economy”. Economy is as much about relationships between people, as it is about producing and distributing goods and services.

Wikipedia summarizes political economy thusly:

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As a discipline, political economy originated in moral philosophy, in the 18th century, to explore the administration of states’ wealth, with “political” signifying the Greek word polity and “economy” signifying the Greek word “okonomie” (household management). The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781).[1]

In the late 19th century, the term “economics” gradually began to replace the term “political economy” with the rise of mathematical modelling coinciding with the publication of an influential textbook by Alfred Marshall in 1890.
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So to explore what money is and what it means, we need to look at political animals and the moral philosophy that they develop and adhere to.

Credit accounting and token accounting

There are 2 basic forms of accounting. One is credit accounting and the other is token accounting. These two forms of accounting often work closely together to facilitate specific patterns of human interactions. Accounting, at its most basic, is a technology, that allows people to act in a way that intergrates planning, communication, negotiation, and conflict.

Credit accounting is using communication to assign properties, attributes, or or merit to a particular person or entity, which serves to encourage others to allow them unique privileges, or give them access, roles, or responsibility. Meanwhile, token accounting is using physically embodied signs or symbols, called tokens, to track net accumulations from culturally defined interactions involving token transfer. It can be used to meter resource use, measure the balance of exchanges, or otherwise enforce some limitation or encourage selection.

The difference between token and credit accounting, is that credit accounting is always attached to a person or entity, while token accounting uses embodied physical symbols to extend the scope of accounting beyond personal relationships and what can be remembered and recorded as enumerated interactions. The accounting rules are then made relative to the accumulation or transfer of tokens, and not the assessment of enumerated actions or a narrative of history.

Anthropologically, human societies have often used tokens to help define and reinforce notions of social credit or value. Jewelry, clothing, collections, adornment, housing, body modification and more, all serve to this effect. A tattoo is a physically embodied token that serves to communicate something about a person to themselves or others.

In my definition of credit accounting, I said it involves some form of communication. Tokens are often used for this effect. Using token accounting does two main things: it decontextualizes accounting — norms and rules are applied based on recognizing tokens, and not specifically to a person or entity, and it forces accounting rules that follow conservation laws. Like any kind of abstraction, it hides some information or detail, in order to highlight some other relevant aspect to distill a useful piece of information.

This is not complete, and I will work on finishing this essay soon.
— Derek 4/4/2019