[blts]

Money is quite simple - it is the accumulation of value of individual work. The same way batteries store electricity - money store value of work. The same way batteries exchange stored electricity to perform work, money is exchanging stored value to work of others that we desire.

[sgc]

Modern money is more debt and promise rather than fruits of labor. Most money is created by loans which are 90% invented money (10% deposit to loan ratio, Federal Reserve "funding", etc). So 90% of all loan money is just a marker of debt and a promise to repay rather than the fruit of anyone's labor. But you pay massive amounts of compounded interest on that invention, and many/most people work most of their lives to pay off their mortgages. So we must churn out grain our entire lives for basic necessities because people have access to this marker, and they will price you out of a home if you won't get on the treadmill with them.

There is a social/historical commentary and a philosophical/political science discussion to be had here, but unfortunately I don't have the time right now...

[Excel_Wizard]

The Labor Theory of Value is a fun toy model, but it isn't very accurate.

[Nasrudith]

Yeah even putting aside demand (just because someone spent 50 years making one really good vase doesn't mean 50 years of pottery wouldn't be better even if the potter had to dredge all of the clay themselves instead of using apprentices or hired servants) it has been obviously broken since the Industrial revolution at least but had predecessor cases that pointed out it wasn't true. Aquaducts or irrigation canals alone snap it in half.

It goes from "effort to haul X ammount of water Y distance by N people" to "and it just flows after this constant work".

[blts]

You mistakenly equate effort with value.

[randallsquared]

They're explicitly arguing against equating effort (labor) with value.

[yehaaa]

Why? A 100 dollar bill, is a reciept that promises to buy you 100 dollars worth of value. Previously that value was tied to gold, but now it’s a more flexible notion.

[asmodeus666]

What do you mean? It has been proven empirically, see work done by Paul Cockshott. Coming from pure reason, the theory is pretty sensible as well, and provides a good model to understand the origin of value in the economy. It is especially useful when trying to understand the effects of massive automation on society.

[moate]

>>it is the accumulation of value of individual work

But it's not though is it? When money itself can do the work (investing) then this whole thing sort of falls apart. A battery can't create a larger battery by itself. Also plenty of people inherit their "batteries" or find them through random chance (lotteries, sweepstakes, etc.)

This all sounds good in theory but I don't think it really holds up when examined closely.

[logfromblammo]

That's not entirely it. Money is a generic and nigh-universally honored claim on future production.

It is the "pay it forward" method of splitting full barter trades into two time-separated half-trades. Instead of giving you a chicken for a bag of milled chicken feed, I can buy the feed for money now, and you can spend that money on a chicken later. Or on something else. It presumes that there will be a chicken to buy later, and that other people won't end up wanting the chicken more than you.

In order to accumulate value from individual work, that value has to be rolled into something durable, or it decays and is lost.

When labor produces a consumable good or service, the value exists only until the good or service is consumed. Why would anyone work on consumables? Because we live on consumables. We eat; we drink; we drive; we set thermostats; we end-user-license IP.

When labor produces a capital improvement, future labor output is multiplied. That's a permanent increase in value, provided that there is some useful purpose for that multiplied labor to work toward. The fisherman can trade fish for a net, or trolling motor, or ice-chest, and thus have more future fish to trade per unit of labor.

The stream of consumables is created by labor, multiplied by capital, and then annihilated by consumption shortly thereafter. That value can be stored for some amount of time in stockpiles and warehouses, but then entropy eats some of it, rather than making it to the consumers.

Money allows the holder to bid for some fraction of the stream of consumables. Divert a tiny stream toward your personal cup for a fraction of a second, and then drink it.

When you hold money, its value is the flow rate of the consumption stream, divided across the quantity of all money.

It's not a battery. It's a voucher for a quantity of grid power. As long as the grid operates reliably, it works the same in practice. But if you really want to store the value of your work, you need to buy goods that multiply the consumable output of your work, or stockpile consumables whose values decay more slowly over time than most.

So it's not quite that simple, especially when some people start issuing themselves claims on future production when they are not actually producing anything now, or planning on producing anything in the future.

[fxj]

How does this explain the loss of value of money by inflation?

[gagege]

More batteries, without there also being more electricity made.

[fxj]

There exists the law of conservation for charge (aka electricity) and energy, but no conservation law for money.

Money behaves more like entropy.

[gagege]

Yeah, it's definitely not an airtight metaphor.