Farming and animal husbandry led to more sedentary lifestyles. Larger societies formed: associations with widely differing constituencies and internal orientations came to be led or “governed” in one way or another by some acknowledged authority. At the early stages of this development, everyone produced the additional organs they needed themselves. Gradually, various individuals specialized to assume these tasks, which was to everyone’s benefit. These items could be produced better, quicker, more rationally and therefore at lower energy costs. Moreover, those who needed such goods could acquire them in a transactional process. This clearly raised a problem: What could be given in exchange for the desired items?

With some luck, the producer of the goods required services that turned out to be acceptable to the producer. The product could then be exchanged in a barter transaction for that particular service. In other cases, the customer him- or herself produced goods that the partner required. Let’s assume, however, that someone needs a sword, and that that person makes shoes. The effort required to produce a sword and a shoe differs considerably. The sword maker was not interested in acquiring the equivalent in shoe pairs – he needed other things that the shoemaker wasn’t able to supply. In this case an exchange was clearly impractical. This example may sound naive, and in fact such transactions initially proceeded along quite different lines and were not conducted as freely as indicated because, over long stretches of history, various power structures and privileges severely restricted or even hindered free enterprise. My aim here is merely to demonstrate the principle: the same underlying problem ultimately led to the same solution everywhere, namely the introduction of money as the necessary mediator to overcome a ubiquitous dilemma.

Such a universal mediator – whether it be made of paper or metal, whether it be a natural product (for example a cowry shell) or some other object – proved to be indispensable. The following causal chain of events, in a strongly simplified form, can be reconstructed as follows:

First: Expanding the capabilities of the human body required additional organs.

Second: The fabrication of such objects – whether they be a shoe, a house, a stone axe, a bridge or a fountain – requires expending energy and having the necessary abilities, which must be learned (i.e. new control mechanisms or “wiring” in the brain). Specialists can make better products, can better rationalize the process and speed up production. They can also spare every non-specialist the effort, time and energy that mistakes inevitably entail (notwithstanding that most individuals could never produce complexly manufactured goods). The need for such specialists is indisputable.

Third: The difficulty, then, is to actually acquire the desired object, to be able to offer the producer the equivalent value for his or her service. The prerequisite for established such  specializations and therefore for boosting human capability with additional organs is the discovery or creation of this mediator, regardless of the pathway taken.
This mediator must fulfill two preconditions: it must enjoy universal recognition within the respective society and it must be divisible. The latter is crucial so that the value of every service can be subdivided into small portions, allowing the owner to spend one portion for food and others for additional necessities.

Fourth: Neither money nor its inherent features are haphazard inventions, but functional necessities for human progress. Human ingenuity allowed us to overcome this barrier, even if the ultimate solution allowed little leeway. The process is analogous to the mental achievement of a dog that fetches the meat on the other side of the fence either by finding a hole in that fence of finding the end of the fence. This task also has few degrees of freedom – success requires this one specific detour. Additional organs were a prerequisite for human progress, and their production was therefore crucial. This also required a detour to proceed rationally and smoothly. The producer receives money for his goods and utilizes certain portions to then purchase what others have to offer: food, additional organs, or specialized services.

It was smooth running once this functional hurdle had been taken. “Supply and demand” determines the value of each service or product, i.e. how many portions of money the producer or supplier will receive. The fact that the intrinsic value of money doesn’t change is a problem that society must somehow come to grips with. How the customer and producer find one another is an additional problem that is solved in public forums (such as open markets) and by a class of professionals (tradespersons) who mediate between supply and demand. Money is a jack-of-all-trades that can convert any one service into any other, that can equate any one product of human specialization into any other product. Of course, this only applies when the customer actually has the equivalent value in his or her pocket.

Another advantage of money is that it can be “saved”, accumulated, and that the owner can steadily increase his or her purchasing power. Saving long enough can therefore enable particular expensive purchases or major investments.

The invention of money decisively improved energy gain in another way. Farming and animal husbandry enabled us to spare ourselves long migrations across wide expanses: we could achieve practically the same goals in a much small area. This intellectual detour involved planting seeds into the soil rather than eating them, and feeding and caring for captured animals so that they produced as many young as possible. With the advent of money, people no longer actually had to produce food in order to feed themselves. You could make a pair of shoes and, presto, they were transformed into cabbage heads and grilled sausages. Someone working as a gardener was able to put soup, a steak and dessert on the table. Help a man in Australia purchase a machine made in Sweden, and you can pay for your family’s vacation or your favorite aunt’s operation. If you are an avid stamp collector, you can also use that money to purchase an old, misprinted stamp. For every service that someone, somewhere needed (and that you delivered), you can buy, rent or hire yet another service. This is a neat one-sentence summary of what “economy” means.

Does “money” as a transactional tool represent a new energy form? In the physical sense the answer is no.

First: It can only be converted into other energy forms in those settings where that currency is recognized.

Second: The purchasing power, i.e. the convertibility into other products, can fluctuate widely depending on the economic or political situation.

Third: Money’s inherent power can sink to zero in uninhabited regions, for example in the Sahara Desert. If I use money to purchase food at some location (as an energy source for me, my family, or our pets), then the chemical energy contained in the food has a known monetary value at that precise moment in time. If I invest in a windmill that converts kinetic energy into electricity, then the result – the profit – can be compared with the technical efficiency of any other energy conversion (after factoring in the amortization of the facility).
Note, however, that when the last person on earth dies, the energy equivalent of money will drop to zero.

The customer, the client, has become a new source of energy. If that person has amassed a surplus and if I can induce him or her to part with some of that money for a service or a product (which is also a service) that I can offer, then I can transfer some of that person’s potential into my pocket. I can subsequently convert this into any number of energy forms to serve my needs. Wilhelm Ostwald, who was the first to fully recognize the importance of energy in our daily lives and in economics, termed every tool and every organ an “energy transformer.²²” This is valid for every aspect of evolution and human progress. After all, energy requires specific material structures to differentiate or manifest itself as work or services. In this sense, every working person, every business, every corporation is an “energy transformer”. These entities use their particular material inventory (guided by control mechanisms) to force energy to perform specialized tasks. Although this energy is initially in a crude form capable of only very primitive reactions, the refined tasks performed and goods produced once the energy is “sublimated” have a defined value in our supply-and-demand world. Money can then transfer this value into other investments, other energy transformations, or the fruits of other labor. Within a defined area, money is therefore an energy transformer. Its energy value by no means remains constant, but depends on environmental factors, on the respective desires and abilities of the people, on the purposes for which it is used, and on the results achieved. If I throw a banknote out the window, then it can be converted into other forms of energy by the lucky finder. An unclaimed banknote is functionless. Money, as opposed to energy, can be destroyed.

The last 3000 million years have yielded no new significant form of energy gain beyond those practiced by plants and animals. The former capture unbridled energy flying by at the speed of light and subjugate it for their purposes. Animals then steal this energy from plants or from their animal counterparts. All of a sudden, a new, indirect form of energy gain appeared on the scene. It is also extracted from other organisms, but  not in a violent, predatory act. It is gained via barter, and the transaction is again successful only when the balance is positive. Note that we are referring here to the energy balance – the financial and energy balances are not identical.

What efficient, practical strategy can help us indirectly gaining energy by selling products, providing services, or mediating between supply-and-demand? Let’s view this from the perspective of an animal – a universalist that switches to this new principle – and let’s assume that the animal thinks much like we do. What spontaneous comments might it express about the new alternative? The answer might well be:

First: “Although more thought must be given to this new form of acquiring energy, one thing is clear from the onset: the underlying principle here is also to exploit the weakness of others. Everything revolves around need, and this already represents the first weak spot that I can exploit. As an experienced predator I am always on the lookout for prey vulnerability. If I want to sell something then I will focus on weak spots here as well – this has been my strategy in the past and is nothing new to me.”

Second: “Just as in true predation, I can learn some useful things here by keeping an eye on the competition. In particular, where have they discovered prey and where can I join in on the action? If I’m clever, I can study their behavior and save myself a lot of unnecessary work. Moreover, selling goods and services takes place in a much more gentrified environment and, with few exceptions, I need not fear any serious injuries. By being faster, more clever, and making an even better impression on the customer, I can probably shake off a competitor here and there. Whether the act be predation or salesmanship, the key is to find prey. In the former, energy lies in the prey organism’s tissue and must be extracted with considerable effort. In the latter, the customer’s wallet contains all the energy. The decisive advantage is that this cash is immediately and fully activable. There is no need to arduously extract energy from protein molecules. And money’s versatility is unparalleled. Once it lands in my pocket I can improve and empower myself in innumerable ways. Still, I do actually have to get my hands on the money first and, like in biological predation, my competitors can both a hinder and guide me. This allows me to employ my traditional tactics.”

Third: “Whether profiting from a predatory act or from solving the problems of others, I see nearly complete agreement in one important parameter – rationalization. I’ve already mentioned that speed is essential. Equally important in this friendly form of acquisition is to carry out the individual actions precisely, enhancing the prospects of success and helping to ensure that income considerably exceeds output. The goal is a big fat profit. This line of business probably fluctuates like any other – times when things run smoothly alternate with hard times. This calls for avoiding a carefree life and making provisions for rainy days, i.e. stockpiling reserves. Of course, these very reserves will attract my competitors. It remains to be seen whether this money can be better hidden or otherwise stored than in the fat reserves that once hampered my agility. At any rate, this business is one in which I can build on my past experiences. For example, I can successfully employ deception to sell my products or services, much like in the predatory situation. In predation, I had to prevent the prey from fleeing. As far as I can tell at this stage, salesmanship also relies on reeling in the customer that has taken the bait. Although the methods may differ, the goals are largely the same. Taking the potential customer by surprise, taking advantage of his or her mood, even applying a bit of pressure to prompt a favorable decision will allow me to come out on top. Such transactions even harbor the possibility of unexpected bonanzas, whereas the mouse I once hunted could never yield more than the energy it contained.”

Fourth: “A pleasant side effect is the reduced threat of landing in someone else’s stomach while concentrating on the hunt. This line of business is truly much more civilized and attractive. If I play by the rules, then society, the legal system, and the state will protect me. Or have I missed something here? Money can fulfill any wish – doesn’t each “killing” I make put me in danger? Not the transaction itself, mind you, but the result? I find it hard to believe that violent predatory acts, as deeply engrained, traditional behavior patterns, have been entirely eradicated in modern human societies. While it’s certainly not worth the risk and effort to make a meal out of a human, the victim’s tools and furnishings – all his or her belongings, especially the easily convertible cash – make me think that earning money does involve a degree of risk. Considering the many methods that we predators have developed, I can well imagine that people who have amassed greater fortunes can expect to encounter major trouble. Wouldn’t such people be particularly susceptible to seemingly friendly business transactions, making them targets of momentarily irresistible sales pitches that turn into smoke the very next day? The psychological tricks I learned as a predator could come in quite handy here as well.”

At first glance, predation and business transactions appear to have certain things in common. One key difference, however, remains. To reiterate it once again, energy gain is and will always necessarily be the central problem in life and in overall human progress – a prerequisite for even minimal advances and developments. The crucial difference between  energy gain via predation and the novel two-fold barter or business transaction (in which money is first earned for some service provided and then used – in a second, independent act – to buy food or other goods) is the diametric reversal of energy gain in plants and animals. Namely, the effort is now no longer devoted to acquiring immediate necessities (e.g., food in animals). The originally decisive act becomes secondary, almost an afterthought. The sights must be set on an entirely different object and novel problems solved: human beings who have money and certain needs become the new target. The behavior expressed toward that person will decide between success and failure, potentially even deciding between life and death. When times get tough, humans can theoretically always revert to their original strategy and forage for food themselves. Practically, however, the changes brought about by newly empowered modern human beings are so deep and overwhelming that original alternate strategies – which were by no means simple even then – have been entirely blocked for most of us. Although it is rare for anyone to starve to death in the affluent societies of today’s highly developed countries, a high-tech, modern war, with its highly destructive weapons, could lead millions to starvation. Our empowerment through the transactional processes outlined above is the foundation for all current human progress. Energy gains involving food have been relegated to secondary status. On the one hand this has enabled us to visit neighboring, uninhabited planets, on the other hand it could one day be responsible for extinguishing the evolution of life as we know it.
 

Back to the Table of Contents

Continue to "7^th Premise: Energy gain via transactions calls for new strategies"