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Can Economies Survive Without Money?

Defi project Resereum MAX is acquired by Assetrix Labs in 2024. In this regard, the project changed its domain address to ASSETRIX.ORG

Can Economies Survive Without Money?

We are living in a world of money. Everything depends on it and obeys it. The whole world’s economy could be described as a simple exchange of money for goods or services and goods or services for money. It seems simple and convenient, but most of the world’s problems arise from the same source – money.

We would like to remind you that Reserveum Group is working on creating a protocol for fair non-inflationary money. In this article, we are meditating on an idea even more revolutionary than the idea of creating non-inflationary money. Is it possible to create a system of economic relationships with no money involved at all? Read more in our new research.

What is money?

If we put aside the superficial terms, money is a form of debt. It comes from promissory notes that were exchanged deep in the past – according to British scientists, the age of debt as an economic phenomenon is around 5000 years. It is hard to believe in and compare modern-day money to the clay plates, twigs, pieces of animal skin where people put marks, therefore, bookkeeping the amount and expiry date of debt, yet all those schemes worked well and are grand-grand-parents of the modern money system.

Comparing our complex financial system to the ancient ones, we laugh at their primitivity. “Why would they pay with a piece of animal skin or a wooden coin, it was all based on pure faith!” But we shouldn’t jump to conclusions, just remember that today’s paper money is not that different from the past and in a way, are below them valuewise. Yet we, so modern, so smart and educated, trust these paper wraps completely and speak of its security.

How did we end up in a state that would bewilder our ancestors so much? It probably happened when the world’s community decided to step aside from the gold standard.

The gold standard is the only “real money” in our whole history. All other variants can be viewed as money surrogates or quasi-money. For more details about the gold standard read the article by Reserveum Group – “The Gold Standard is Not Standard Anymore”.

Gold standard rejection was a necessary measure, and people had to put up with it; afterwards, everything went by its own momentum, and the economy gradually adapted to the new money model.

Dollar – Government-sanctioned Ponzi Scheme

Very soon, it turned out that gold standard rejection was just a catch that helped USD to become the world’s hegemon among currencies and domineer. The US Dollar started setting the game rules and interfering with the economy and politics of other countries. For quite a while, it was seen as a bitter pill to swallow – nasty, but necessary; however, the 2008 crisis that started in the US mortgage market showed the rotten and half-decayed construction that had been disguised with the US prosperity before that. Then everyone understood that the stability of the world’s economy is a myth that can dissolve any minute.

It has been almost fourteen years since that collapse, but we are still recovering from it. The money system continues as it was, and we are paying for our short views and inertness with inflation, crises, collapses, and whatnot. There are financial speculations everywhere, more and more financial bubbles pop up, and the money with a centralized emission is manipulated by the government with zero control.

Alternative Money

Over the past ten years, people have been discussing the ideas of an alternative to money that could spare the world from the burden of collected problems. But the discussions have not led to any solution yet, most likely because they are held not to solve but just to show people trying. Those who managed to grip the money switch will never let it go, so they will keep protecting the idea that money is a right and necessary thing, even though, in fact, money has long since become a relic; without it, our economy could thrive more than ever.

The closest we have got to the idea of new digital money are the so-called stablecoins supplied with digital assets. But they still have a major disadvantage – their value is based on the US dollar. Read more about stablecoins in our article – The Anatomy of Stablecoins.

What comes next may bring a sceptical smile to your face, but it’s ok since our views on life and our minds work according to the reality we live in. A person living in the market economy and familiar with some failed samples of command economy cannot even consider the idea of the world living without money. Our mind instantly offers a range of unpleasant pictures with the seizure of private property, capital redistribution, total grey-out, coupon system, and a line for free soup. There is nothing we can do, for us, money is a symbol of well-being, and it is rooted too deep.

This is a question of mind reset, which is an extremely complicated and long evolutionary process, so it really is naive to debate about it seriously. Now, let’s get back to the hypothesis that the economy can work without money; let’s look at the facts that can prove it.

No-money Economy

The main function of money is an intermediary in exchanging one type of goods or services for another. It makes a wrong impression about money as another type of goods, a universal one needed by everyone. But in fact, money is only needed for one reason: it is ineffective to exchange goods themselves, there are too many producers and consumers, it would be too hard to regulate the supply and demand. Well, maybe it worked once in history, but not anymore. Now we have digital technologies, and their main purpose is to regulate complex systems and make sure they work well and smoothly.

We all have a huge pool of needs, and each and every one of us at some point takes part in creating something. Eventually, we all have the same one priority – satisfying all of our needs, this is what we call prosperity. So, the main thing is to systematize all the economic elements and bring them to work in a well-orchestrated manner.

Digitally, it can be made in a form of a smart contract that would consider the number of consumers, the number of producers for each participants, and regulate the production and consumption volumes correspondingly so that we produced only as much as we need. In this system, every participant is valuable, and everyone will get what they need.

Note that I’m not speaking about people being standardized, this is what makes the no-money economy different from the ideas of communism. People are not the same as each other due to their nature, but this inequality should be fair. For instance, in this kind of system, those who input more can have a bigger revenue: they work more, they acquire complex skills or unique knowledge, in other words, they put more effort into producing goods. Another advantage is zero parasites (the ones we see every day now); since the system is decentralized, there is no power switch, so there will be no one trying to take hold of it.

Of course, there are always certain social groups that have to live on other people’s work – children, elderly people, and people with disabilities; but overall, with all the current mass production volumes, their needs will not be a burden for society. Also, right now, working people are paying for them with their taxes, this is characteristic of a civilized society. Of course, not these unprotected groups cause poverty, but the 1% that has claimed 99% of all the riches.

Yes, the idea of an economy with no money seems utopian, but technically, it is already possible. The main obstacle is, of course, those who benefit from the current money system, those parasites with the mints that don’t produce anything other than coloured papers, but, due to the imperfection of the system, become rich at the expense of the real economy participants.

For more information on how central banks cash in from money emissions, read “Seigniorage: how to make billions on money emissions” by Reserveum Group.

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