Economic Theory: The Way Of Making Money Is Changing Rapidly.
The second half of the past decade and the first few years of the current one have seen economic realities like cryptocurrencies and the infamous NFTs take off (Quite literally). These assets have seen simply unbelievable gains and crashes and made many individuals rich or poor in the process. While the validity of these asset classes is up to debate, the underlying theme that causes them to exist and explode in value may surprise you. It has nothing to do with currency at all. Let’s take a dive beneath the surface and explore what causes an economy to exist at all, what will happen in the future, and why more individualized ways of making money will shape the economy in the future.
Irrespective of any physical form, human beings create desires and needs throughout their lives. Needs like food, shelter and clothing are basic and universal, and today’s civilized world is doing a good job of feeding and clothing its citizens as an effect of their own effort.
Desires are more individual things that occur as an effect of contrasting realities that the individual faces in his/her life. Some of it may be inherited through family tradition, while some of it is selected by the individual’s own volition. Combinations of realities help form opinions, beliefs, morals and convictions, and these, in turn, help shape and evolve an individual. In order to evolve and grow, a person may require things. Could be material things or information. In either case, the individual is under the necessity of consuming what he/she may need for their development.
These are the two variations of what people consume in their lives. Society has, in most parts of the world, so advanced from its crude beginnings that, as I have said, humans are no longer primitive animals scrambling and fighting just to satisfy basic needs. This is an evolutionary step from “one kingdom” to the next. Collectively we’ve been able to rise out of these humble beginnings and take a step into this new world. But because humans are naturally impelled to evolve further it would be wrong to stop here.
Society has in my opinion come to a complete dead stop since the emergence of the modern and civilized world. We invented, made discoveries and increased the quality of life… And then stopped? We’ve gotten so comfortable with modern life that we no longer see any reason to evolve further.
The younger generations see this too, and the cry for “something more and better” is louder than ever before. They believe that things cannot go on as they used to be. The “laptop” lifestyle is an example. Young people today literally make millions from business models such as dropshipping, social media marketing management for large companies, or selling their own unique advice online. The desire to evolve and to rise above and beyond the cruel existence of living under the iron fist of some ‘old world’ employer or government institution, to make money that will be taken away by the state, is quickly coming to an end.
What is money even? Is it something truly valuable, or is it just units of currency that circulates while being kept in check by the monetary authorities? Money is supposed to represent value because possessing money gives an individual opportunity. The more units of currency, the more opportunity irrespective of inflation or deflation (someone with more currency will always have more opportunity than someone with little currency).
Money is also the “agent” of private property. The rights of individuals for private property are to a large extent protected by money. “If you can’t afford it, you can’t have it”.
The process of making money, however, is where things become more complicated. Now, unless someone is abnormal, it is logical to assume that every human being desires freedom, potential and prosperity. In the “old” world where the race was under necessity for constant reproduction for survival and economic growth (as was the case post-WWII), these things were primarily represented by status, potency and the ability to birth strong offspring. In the modern world, however, where the conservative way of living (getting a job, getting married and starting a family) is being replaced by a more individualized way of living, the methods of making money are changing too. As I have said, the cry for freedom is larger than ever before, and as the world changes, the way of making money must change too.
The younger generations desire the freedom and the opportunity of “being in charge of my own existence through my own effort” which is the conventional way that money works, but without having their lives consumed by a low-paying existence where they must dedicate their whole lives to return to a job every day during the week. This is where things get interesting. The prospect of receiving a high wage is no longer enough to persuade some members of the younger generations into getting degrees and dedicating themselves to a career. They want much more than that. They want complete control. This is shaping and changing our perception of money. In the old days, money was seen as the “overlord” that granted someone access to what one needed in order to function just enough to return the next day and perform the same task that granted someone access to the money in the first place.
Today, money is still perceived as a medium of constructive exchange that simultaneously protects private property rights, and grants access to what is desired, but the effort-to-value ratio is shifting. How this will shape the value and perception of money in the future is impossible to say. One of the old ideas of money was that “scarcity” creates value.
How a quote like that will work in a world where people are less inclined to possess money by the sweat of their brow is difficult to tell. Either the trend of small personal online business will go on, and our ability to grow and evolve will create new forms of value that would seem unbelievable to someone today, and then create an economy around these new types of value, or we are going to completely re-invent money and come up with new ways for individuals to be in charge of their own existence while having their earnestly acquired possessions protected by the perceived value of a common medium.