Money: More Than Just Stuff, It's Trust

We all understand trust and how essential it is for people to live and work together. Civilization itself is built on it. Money, while newer in human history, is just as woven into the fabric of our lives.

Think about the word "trust" for a moment. It's a fascinating word because it works in different ways. We can trust someone to do something (that's a verb), or we can have trust in a friend (that's a noun). It's a word packed with meaning, and at its heart, it's about depending on something. When we trust information, we depend on its accuracy. When we trust a person, we depend on them to act in a way that's generally good for us, or at least in a way we expect.

When we think about money, most of us picture physical things: coins, banknotes, maybe even gold bars. This makes sense because we use money every day to buy groceries, clothes, and other material goods. Historically, gold has also played a big role as a form of money. It’s easy to see money as simply representing "stuff."

But if we zoom out and look at the bigger picture of the world economy, this "money as stuff" idea starts to fall apart. There simply isn't a fixed relationship between all the money in the world and all the physical goods. Think about inflation – prices go up, and suddenly your money buys less "stuff." In fact, the total value of all the money in the world is estimated to be around $100 trillion, while the value of just land alone is much higher, in the hundreds of trillions! If you had all the money in the world, you still couldn't buy everything in the world.

This thought experiment shows us something important: money isn't really like physical goods. Physical things are tangible and real, but money is more abstract. It's something we believe in and agree to use. It's almost like an idea, a shared understanding that allows us to exchange value.

So, if money isn't really "stuff," what is it? A helpful way to think about money is to compare it to trust. The historical connection between money and gold isn't about gold being inherently valuable, but about the challenge of making something abstract (like trust) feel real and tangible.

Now, "trust" usually feels like a personal thing, something between individuals. But money operates on a much larger, impersonal scale. When you receive money, you might know who paid you, but you likely don't know where it came from before that, and you probably don't need to. This is part of the magic of money: it creates a system of trust that works even between strangers.

Imagine a simple example: a miner digs up iron, a blacksmith makes a plow, a farmer grows wheat, and a baker makes bread that the miner eats. This cycle could technically exist without money, but everyone would have to trust each other completely. Money simplifies this. It acts as a go-between, a way to build trust into the system itself. Once we agree to use money, this cycle can run smoothly, even if the miner and the baker never meet.

Why does it matter what we compare money to? For our everyday shopping, thinking of money as "stuff" is usually fine. But when we think about bigger issues, like fairness, value creation, and how society works, the "money as trust" idea becomes really important for several reasons.

Firstly, understanding money as trust reveals its potential to unlock greater value. Just like interpersonal trust allows people to cooperate and achieve more together than they could alone, so too does monetary trust expand what’s possible in an economy. When trust in money is strong, people are more willing to invest, trade, and innovate. This increased economic activity can lead to new opportunities, better goods and services, and ultimately, a higher overall quality of life. Think of it this way: more trust in the system means more possibilities for everyone. Less trust, on the other hand, shrinks those possibilities, making it harder to create value and prosperity.

Secondly, a deeper understanding of money is crucial for effectively pursuing fairness. Many people feel strongly about creating a fairer society, and that's a worthy goal. However, if we misunderstand what money truly is, our attempts to achieve fairness can be misguided and inefficient. For example, if we believe wealth is a fixed pie and that billionaires are simply taking pieces away from others, we might advocate for solutions that, while well-intentioned, could actually harm the economy and reduce overall prosperity. When our approaches to fairness are based on flawed understandings, they can appear incompetent or out of touch. This, in turn, can weaken our ability to persuade others and build broad support for positive change. By grasping the nature of money as trust, we can develop more effective and well-reasoned strategies for creating a fairer and more prosperous world.

Think about the common feeling that it's "unfair" for billionaires to exist. This feeling often comes from the idea that money is just material wealth, and billionaires are "hoarding" it, leaving less for everyone else. This can lead to unhappiness and even anger.

But if we understand that money is more like trust than physical goods, this feeling of unfairness can shift. A billionaire's wealth isn't a pile of physical stuff taken from others. Instead, it represents a massive amount of trust that society has placed in them, or in the systems they control. The question isn't simply whether billionaires exist, but rather how that trust is earned and used.

It's essential to evaluate the actions of all individuals, regardless of their wealth. Just as anyone can act in ways that build or erode interpersonal trust, so too can actions within the economic sphere strengthen or weaken societal trust in money. Concentrated wealth can amplify both positive and negative impacts. A wealthy individual who invests in projects that create jobs, advance innovation, or contribute to the common good can strengthen trust in the system. Conversely, actions that are perceived as exploitative, unethical, or harmful to the broader society can erode that trust, regardless of the individual's wealth level.

Therefore, our focus should be on evaluating the impact of actions, not simply the existence of wealth. We should examine how individuals, regardless of their economic status, contribute to or detract from the overall trust in the system of money and the broader society. This approach moves beyond simplistic notions of fairness based on material distribution and encourages a more nuanced understanding of economic responsibility and the importance of maintaining societal trust.

Thinking of money as trust isn't just a word game. It's a shift in perspective that can change how we see the economy, wealth, and even each other. It highlights that money's power comes from our collective agreement and belief in it. It's a system of reciprocal dependence – we trust that when we accept money, others will also accept it in return, and this trust fuels cooperation and economic activity on a massive scale.

Like any form of trust, this system isn't perfect. Trust can be broken, and sometimes people misuse money or act dishonestly. That's why we have laws and institutions to protect the system of monetary trust. But these problems don't invalidate the fundamental nature of money as a form of trust.

By understanding money as a form of trust, we can move beyond simplistic ideas of wealth as just "stuff." We can have more nuanced and productive conversations about economic fairness, responsibility, and how to build a more cooperative and prosperous society for all. It's about recognizing the powerful, abstract social agreement that underpins the money in our pockets and the global economy.