oes money make the universe go round? Future currencies may take a variety of forms, from numbered virtual dollars to 10-ton Yap stones to the generic but ever-popular "credits," but the basic idea will never go away. There are units for measuring time and distance and mass, but these are inherent properties of the physical universe. Money is more abstract: a set of units for measuring the value of things in human (or nonhuman) society. It's arguably one of the most powerful ideas ever invented, since it liberates trade from the location of goods and services. That is, it allows me to buy a bushel of your apples for an hour of my labor, regardless of when the labor was performed or where you acquired the apples. It's a neat trick, and there would surely be no civilization without it. Still, presenting the future of money realistically is one of the great challenges of science fiction today.
Utopian daydreams of a post-money world rarely hold up under scrutiny; in Star Trek there's no cash to carry around because food, clothing and energy are too cheap to meter at the personal level. By the shipload, though, they clearly have value, else the Enterprise wouldn't have to fight off space pirates in the shipping lanes. Too, the scarcity of real estate is addressed through the colonization of an infinite supply of Earthlike planets. But why do some people live in cushy paradises while others have to work hard just to survive? What's to keep the Edens from filling up, if not elitist money? Indeed, the alien Ferengi can sell goods and services at a profit anywhere in the galaxy, because even the Federation knows there are some things only money can buy. The scarce, the unique, the clandestine or quasi-legal: these things will never be free.
"Hard currencies" are not really money at all in the modern sense, but trade goods with stable values. A shipping container full of BMWs is hard currency; so is a communication satellite in orbit around the Earth. Since their replacement costs can be measured precisely, they can be traded for goods or services at a known rate. For more portable wealth, people have traditionally turned to materials such as gold and diamond, which are hard to find yet never wear out. Gold coins dating back as far as ancient Greece are still good as new today, and a diamond, as they say, is forever.
Soft currency may not survive
Unfortunately, since more of this stuff is extracted from the Earth every year, the supply is always increasing. As a result, the value of even the rarest minerals tends to decline over time. Technology can accelerate this process, too, with sometimes shocking results. Until the advent of electrolytic extraction techniques in 1886, pure aluminum was rarer and more valuable than gold. Really! But today we throw it in the trash, because the value of an individual soda can is much less than a penny, our smallest unit of currency. Like the clothing on Star Trek, it's just too common to have value. In the near future, look for tumbling prices on titanium and diamonds as well.
Two minerals—crude oil and coal—defy this rule because we burn them for energy rather than storing them in vaults. The on-hand supply can vary wildly, leading to large price fluctuations. Also, whether we like it or not, the supply of these goodies inside the Earth itself really is finite. If we keep on burning them, sooner or later we'll run out. As a result, fossil fuel prices can be expected to climb and climb until alternative energy sources are finally competitive, at which point the demand for mineral oil should level off, while the demand for exotic substances like helium-3 (used in nonpolluting nuclear fusion) skyrockets.
On the other hand, agricultural commodities like olive oil and rice—and in the future probably biodiesel and reclaimed garbage—are renewable, and except for the occasional bad harvest they should enjoy stable prices well into the future. Our agricultural efficiencies are improving all the time, but even if we had a Star Trek replicator to synthesize rice inorganically, the process would still take a finite amount of energy, materials and labor, just as it did in ancient Sumeria 5,500 years ago. The number of grain sacks we own (or could own if we wanted to) is thus an excellent and timeless measure of our actual wealth. And baby, we are a lot richer than the Sumerians.
Still, "soft currency" is the kind we're most familiar with today. The best example is paper money, whose value is not pegged to any particular commodity but rather determined by governments and free markets. Rice is rice: a measurable, physical thing. By contrast, paper money is a kind of shared fantasy—a fiction we all agree to for the sake of convenience. The U.S. dollar is fairly stable as such things go—people generally prefer it to the Polish zloty or the South African rand—but at any moment the stroke of a politician's pen could still render it valueless, or so valuable that ordinary people can't afford to use it. Given enough time, even the strongest of today's soft currencies could eventually go loopy on us.
Money for nothing
We see can see this phenomenon writ small today in the economies of many massively multiplayer online role-playing games (MMORPGs). As more players enter the game, as more dragon hoards are wrested from the hills and more magic swords are forged, the total wealth of the imaginary world increases. This tends to drive down the value of the local currency, creating both price inflation and mushrooming fortunes for a tiny upper class. The rich get richer while the buying power of the poor erodes steadily. In their ham-handed attempts to correct this, the game publishers often crash their own virtual economies, creating misery among the players and driving them away from the game. This may sound silly, but it's a testament to the power of currency to make or break us in any world, real or imagined. Indeed, in the future these games may serve as laboratories for the development of sound money policies right here on Earth.
Even more ephemeral are financial instruments like stocks, bonds and other assorted IOUs. These are subject not only to fluctuations in the currency itself, but to the changing fortunes of particular ventures, corporations, governments and even specific individuals. In a changing world, the value of a share of stock is almost never stable. But with risk comes reward; stock price averages, more than any other commodity, seem to rise and fall in direct proportion to real growth or shrinkage in the economy. If you want to beat inflation, to watch your fortunes rise along with civilization itself, the stock market is the best place to do it. In this sense, stocks are more "real" than the currencies that measure them.
Still, it's possible to envision a future where money plays a smaller and smaller role. Beneath their veneer of legitimate business, many societies have barter economies, where goods and services hold relative but not absolute values. This leaves a loophole for clever businessmen to "trade up"—a spoon for a knife for a shovel for 10 more spoons—but with enough goods in play it's certainly a workable—and largely untraceable—system.
In today's world there are also items that are given away free because they have some embedded return value to the donors. Advertising-laden TV and radio broadcasts are a traditional example, but today the list includes free software, free cell phones, free samples of food or addictive drugs, etc. The idea is to get people hooked and then, in some way, make money off them in the future. If this concept could be tied somehow to the barter system, with intelligent computers to keep track of it all, then the future might indeed hold exotic economies where goods are given away for seemingly ephemeral reasons, and everyone somehow ends up richer for it.
Indeed, even today there are pure donation economies, which approach the true ideals of communism more than any government could hope to. A good example is the traditional Amish barn raising, where the whole town shows up to build something an individual farmer could not, knowing their neighbors will someday return the favor. This system relies on social pressure to limit abuses, so in large, anonymous communities it's less effective. Still, in the "global village" of our telecom future, it may be easier to track and punish cheaters, or to recruit willing participants. The Linux operating system shows how good "free" can be when large numbers of people cooperate in this way. If you also have food and clothing and energy so cheap that no one bothers to pay for them, you might indeed see a future that appears both moneyless and happy. It's a nice thought!
But prick the surface and you'll always find the Ferengi, the up-traders, the brisk gray-market peddling of energy and raw materials, keepsakes and real estate, sex and drugs, vengeance, glory, intellectual property and political favor. And that's a nice thought, too, because it tells us that even in the future there'll be people trying to hustle us, secure in the knowledge that hard work and cleverness carry their own unique—and measurable!—rewards.
Sources used for writing this column can be found here.
Wil McCarthy is a rocket guidance engineer, robot designer, nanotechnologist, science-fiction author and occasional aquanaut. He has contributed to three interplanetary spacecraft, five communication and weather satellites, a line of landmine-clearing robots and some other "really cool stuff" he can't tell us about. His short writings have graced the pages of Analog, Asimov's, Wired, Nature and other major publications, and his book-length works include the New York Times notable Bloom, Amazon "Best of Y2K" The Collapsium and most recently Lost in Transmission. His acclaimed nonfiction book, Hacking Matter, is now available in paperback.
