The “why” of money and how it can make you wealthy

We all know what money is. We grew up watching it in awe, having it (or not), using it, desiring it. If you know economics, you can give a formal definition of it. We read and watch videos about ways to get more of if. We are pushed into school since we can barely walk up until we are fuly grown, sacrificing our youth, so that we can have a good shot at earning it.

It’s and understatement to say: money is a big deal.

But none of those things actually help you get it and use it in your favor. It’s actually the opposite, ignorance breeds a kind of fascination about money, a fascination that turns into subjugation, more typically seen in vassals than in fully realized and independent human beings.

That’s because we largely ignore the real ‘why’ of money. Why does money exist in every country? Why do we all use it since the dawn of civilization? It’s way, way deeper than “oh, it’s just more convenient than exchanging goods directly”, which is true, but only a tiny fraction of it.

To better understand it, we have to take a quick trip in time to when money didn’t exist, when societies didn’t need it. We have to go to pre-agricultural, hunter-gatherer societies.

The idea of money in a small tribe of hunter-gatherers would be so absurd as the ideia of you charging your mom when she asks you take the garbage out. Research indicates that, when in groups under 150 people, we have the natural capacity of keeping tabs on everyone. We know their name, what they are like, their behavior, their history. This is known as “Dunbar’s Number”, and it is a common, instinctive, maximum number for several types groups even today.

So in a tribe, as in a family, if you do something for someone else, you don’t need to charge anything because it’s an ongoing relationship of favors being exchanged back and forth that’ll last a lifetime. In functional tribes and households, everyone knows what they have to do to contribute to that whole, because they know what everyone, literally everyone else is doing. Such a small, self cointained community, then, basically runs itself automatically, on instinct, specially considering the human tendencies to reciprocate deeds and to shame possible free loaders into contributing to the whole.

But we didn’t stay in tribes, of course. Since the advent of agriculture and animal husbandry, we started being able to store food and goods. Reproducing became not only easier, but necessary, because more hands to work were increasingly in demand. So we exploded Dunbar’s Number millions of times over. We needed more tools, more plots of land, security, services, knowledge. More people, more space, other groups to trade with. It wasn’t feasible to contribute to a big societal pile and then expecting that all your needs would be taken care of by your community. Because now everyone was contributing with lots of different things, and everyone needed different things depending on their activities, and no one can know who’s who in such a complex society.

If you have physical goods with you, it’s easy to approach someone and offer a deal. My wheat for your apples. Money would be more convenient for this trade, but not strictly necessary. But if you’re a farmer between crops, or if you provide a service, not goods, it’s harder to make a deal with a person who doesn’t know you. How can they know that you’re a good farmer, or that you just teached all the kids in your neighborhood how to sail, or whatever it is that you do?

That’s the deep and beautiful purpose of money. In a big society, it is a much needed symbol. It is a proxy for how much value you gave to other people, and how they vouched for you, basically saying “this person did good deeds; feed them, shelter them, reciprocate. They earned it”.

Even today, and until (if ever) intelligent machines generate goods and services at zero cost, we live in a world with limited resources. And those resources require labor to be transformed into what humans need or desire. And labor itself, meaning effort and time, is also limited. That’s why we are aware of free loaders — our ancestors who were not couldn’t survive long enough to leave descendants.

So, if you want something, you have to give something. If you want something big and shiny, that few people have…. well, you’re gonna have to provide unusual value for others.

But what this all shows is that we don’t have to worry about money per se. Money is not nourishing, it doesn’t carry meaning for a human story of life. It is a tool, a means to an end — to get what we need or want of the world, which is always the result of the combined effort of other people. What we do have to worry about, then, is creating value for other people, so that society, in turn, can easily and happily return the favor and create value for us, as we show proof that we are truly worthy of its riches.

The struggle to get money, to get rich, then, is obviously misplaced and misleading. To get on a more prosperous path, you have only to observe carefully what people truly find valuable, and try to provide it. Understanding this is the key, not only for a life of abundance, but for more meaninful work, which, in turn, leads to the true treasure: a satisfying experience of each day we live.

Some of the books that were used in this idea are:

Influence, by Robert Cialdini

The Righteous Mind, by Jon Haidt

Sapiens, by Yuval Noah Harari

The Ratonal Optimist, by Matt Ridley