Money is Indistinguishable from Magic

Noah Smith points out that Neal Stephenson, an excellent science fiction writer, has a weird obsession with money and some wacky ideas about it.  I view that as pretty forgivable, mainly because money was the main MacGuffin of Stephenson’s Cryptonomicon, one of my favorite fun novels.  I say MacGuffin because the novel wasn’t really about cryptocurrency or lost Japanese gold, those were just the driving forces for an excellent adventure.  But Stephenson is rather obsessed with gold, and succumbs to the all-too-common fallacy that only gold, unlike money, is a “stable store of value”.

One science-fiction author who has done some more serious and interesting thinking about money is Charles Stross, specifically Neptune’s Brood.  This is also an adventure tale, but one that is much more visibly obsessed with the question of money.  The question the book attempts to answer is an inherently goofy one, “how can interstellar exchange work without faster-than-light communication?”.  The basic answer Stross comes up with is “slow money”, money backed by extremely long-term bonds.  The trick is making sure each one is only spent once (a fatal issue with Bitcoin, incidentally) – so the trick is distributed verification.  This requires multiple “handshakes”, or queries to neighboring star systems to check the distributed registry of ownership.  It requires multiple light-speed roundtrips, and so actually spending this money can take decades – hence “slow money”.

Money is a problem that humanity really has yet to crack.  It’s one of our most profound inventions, but it’s pretty unique that we invented it long before we had any idea how it works.  Even back in ancient times, we had come around to the idea that money is a symbol rather than something inherently valuable.  But we haven’t gotten much beyond that, and as Smith points out we haven’t yet figured out what money symbolizes – is it a medium of exchange, a store of value, both, or neither?  People now seem to think it’s both, but not always at the same time, and it’s not always particularly clear when it should be one or not the other.  And even beyond that, the question is deeply tied into political economy – who should control money?  We can now be fairly confident the answer is not “the Spanish treasure fleet“, but beyond that the answers are often unclear.  The Fed is hardly perfect.

The rewards for figuring out money are vast – potentially an end to recessions and inflation.  And more than most technological questions, it seems seductively possible to just sit down, think hard, and figure it out.  It is pretty natural that science fiction writers are obsessed with money.

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