Anthropologists look at money from the perspective of human society. Debts are promises of future payments. A community is a group of people prepared to be indebted to one another. Money is transferable debt within a community. Communities have many ways of tracking debt, and money is the mechanism for tracking and discharging transferable debts. Examining money helps anthropologists understand what the community values. Economists look at money from the perspective of resource allocation. There are many forms of money – fiat currency, commodity money, common tender, complementary currency. Some economic communities are semi-coercive, such as the nation state. If you seek coercion, simply try to withdraw from the nation state ‘community’ by not paying taxes this year. For economists and anthropologists, money is a medium of exchange across space and time.
The economist Harold Innis was fascinated by empires and posited that the media people choose will affect the shape and durability of their society. He divided media into two types, “space-binding” and “time-binding”, for example space-binding papyrus of the Greek literature and time-binding stone of the Egyptians monuments. Money as media was further developed by Innis’ student Marshall McLuhan, “money … gives great spatial extension and control to political organization, just as writing does or the calendar. It is action at a distance, both in space and in time.” In the fifth century BC Herodotus said of the Lydians, “they were the first of men, so far as we know, who struck and used coin of gold or silver; and also they were the first retail-traders.” Day traders today can move across borders and buy and sell currencies, stocks and commodities on a global basis. We’ve gone in a decade from the idea of car boot or garage sale or flea market being local affairs for the school or church or community centre, to the great jumble sale in the sky of Ebay. As Long Finance surveys the ravaged landscape of our financial systems, a number of us seek to understand money before we start rebuilding.
The Eternal Coin is a Long Finance thought experiment that speculates on whether a coin that never loses value could exist. An Eternal Coin would be a call on future wealth. We have to surmise what our great grandchildren will value. In some ways, it’s the largest scenario planning exercise we can undertake. As the journalist Simon Carr remarked, “Money turns out to be whatever we agree it to be. It is a collective work of the imagination.” Dr Malcolm Cooper has written a fascinating booklet, "In Search Of The Eternal Coin: A Long Finance View of History, exploring different views of eternal value over the ages. The Eternal Coin approach has produced proposals for coins based on traded currencies, commodities, time to depletion of major resources, genetic materials and stories, the argument being that people will always buy stories and perhaps we could build a coin centred around shares in book or films plots.
The two big themes of our times are globalisation and sustainability. An Eternal Coin makes you think differently about both. Globalisation makes you think about equitable dealings across the world. Is this a fair trade with a developing country? Globalisation makes you think about externalities such as pollution. Are you paying the right price? Sustainability makes you think about resources. Is this purchase of fish, timber or metal fair for future generations? Sustainability may also help you think about fairness to you and your great grand-children. Is your pension a fair inter-generational arrangement? Commercial transactions and money are inextricably linked to trust in the community. Antiseptic, neutral exchanges of currency don’t exist. Each transaction with another person links us just a little bit more to the other person’s societal mores, them to ours, and both of us to the future. Without aspirations, our communities have no future, and our coins no value. As community values do change over time, so will the value of indebtedness amongst the community; thus scepticism over a solution to the thought experiment is valid.
So as “money truly makes the world go round”, let’s return to the origin of money as media. Money is both space-binding and time-binding for most societies. Having examined the enduring value of land, sustainability issues and population issues, Dr Cooper concludes, “Eternal Coins were driven by aspirations, and for much of the last couple of centuries these have been underpinned by a general belief in human progress towards a wealthier, more comfortable, more secure future.” One of the answers to the Eternal Coin is that greater choice has value. What would give your great grandchildren more choices? This leads to our Long Finance koan – “If you have some trust, I shall give you trust. If you have no trust, I shall take it away from you.” Does your Eternal Coin balance trust across space and time?
There's a historical solution to this: the ancient Celts used to lend money to be returned in the afterlife. If they were right about the nature of the afterlife (including its existence), then that's how to have an Eternal Coin.
If you don't believe in an eternal afterlife, then an eternal coin is problematic. Even if the human species somehow manages to survive indefinitely, it seems unlikely that the legal/regulatory system underpinning the debt transfer assocated with the coin will last for ever. So I guess the question is really, what kind of coin could retain value as long as the associated regulatory system lasts?
Some property rights survive 1000 years (although many don't). Three things that we valued 1000 years ago and still value are (a) Land rights. The coin could represent ownership of a plot of land. (b) Labour. The coin could be exchangable for an hour of human labour. Some local currencies (e.g. the Cam, used in Cambridge) are denominated that way. (c) Art made from durable materials. Tastes in art vary over time and space, but flowers appear in folk art pretty much everywhere. So the coin could be an exquisitely-carved artwork in stone, metal or hard-wearing plastic, depicting flowers.
Suppose that we *could* have a regulatory system that survives as long as the human species. Would we want it? Would it be right for us to determine the financial and legal structures of our descendants for ever? Another thought experiment: what would our financial system look like if no-one was required to respect the wishes of the dead?