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The metastasis of money through every aspect of life in the modern industrial world is a good example. While no past society, as far as we know, took this process as far as we have, the replacement of wealth with its own abstract representations is no new thing. As Giambattista Vico pointed out back in the 18th century, complex societies move from the concrete to the abstract over their life cycles, and this influences economic life as much as anything else. Just as political power begins with raw violence and evolves toward progressively more subtle means of suasion, economic activity begins with the direct exchange of real wealth and evolves through a similar process of abstraction: first, one prized commodity becomes the standard measure for all other kinds of wealth; then, receipts that can be exchanged for some fixed sum of that commodity become a unit of exchange; finally, promises to pay some amount of these receipts on demand, or at a fixed point in the future, enter into circulation, and these may end up largely replacing the receipts themselves.
This movement toward abstraction has important advantages for complex societies, because abstractions can be deployed with a much smaller investment of resources than it takes to mobilize the concrete realities that back them up. We could have resolved last year’s debate about who should rule the United States the old-fashioned way, by having McCain and Obama call their supporters to arms, march to war, and settle the matter in battle amid a hail of bullets and cannon shot on a fine September day on some Iowa prairie. Still, the cost in lives, money, and collateral damage would have been far in excess of those involved in an election. In much the same way, the complexities involved in paying office workers in kind, or even in cash, make an economy of abstractions much less cumbersome for all concerned.
At the same time, there’s a trap hidden in the convenience of abstractions: the further you get from the concrete realities, the larger the chance becomes that the concrete realities may not actually be there when needed. History is littered with the corpses of regimes that let their power become so abstract that they could no longer counter a challenge on the fundamental level of raw violence; it’s been said of Chinese history, and could be said of any other civilization, that its basic rhythm is the tramp of hobnailed boots going up stairs, followed by the whisper of silk slippers going back down. In the same way, economic abstractions keep functioning only so long as actual goods and services exist to be bought and sold, and it’s only in the pipe dreams of economists that the abstractions guarantee the presence of the goods and services. Vico argued that this trap is a central driving force behind the decline and fall of civilizations; the movement toward abstraction goes so far that the concrete realities are neglected. In the end the realities trickle away unnoticed, until a shock of some kind strikes the tower of abstractions built atop the void the realities once filled, and the whole structure tumbles to the ground.
We are uncomfortably close to such a possibility just now, especially in our economic affairs. Over the last century, with the assistance of the economic hypercomplexity made possible by fossil fuels, the world’s industrial nations have taken the process of economic abstraction further than any previous civilization. On top of the usual levels of abstraction – a commodity used to measure value (gold), receipts that could be exchanged for that commodity (paper money), and promises to pay the receipts (checks and other financial paper) – contemporary societies have built an extraordinary pyramid of additional abstractions. Unlike the pyramids of Egypt, furthermore, this one has its narrow end on the ground, in the realm of actual goods and services, and widens as it goes up.
http://thearchdruidreport.blogspot.com/2009/10/twilight-of-money.html