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Yuval Noah Harari: Money

Article · January 2018

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  bibliographY review 

Yuval Noah Harari

Money

Vintage, London, 2018

Money in Harari’s historical, system, and ultimately, on society. In the

B
philosophical and technological light of historical experience, a more reliable
approach conclusion can be drawn from our technical
knowledge.
Based on the two already-published works, Sa-
piens and Homo Deus by Yuval Noah Harari,
the renown Israeli historian, a collection entitled The appearance and spread
Money has been published by publishing house of money
Vintage, London. The collection includes the
parts on money and the functioning of the The first part of the collection is a retrospective
economy from both books. Although Harari historical summary about the appearance
analyses money from a historical point of view, and spread of money. The author presents
this book also considers temporal and cultural the functions of money: a measure of value,
constraints and correlations, in contrast to the means of transaction, transformation and
technically-oriented literature. It is especially accumulation. The stages of the development
needed in the middle of the Fourth Industrial of money and money substitutes, from barter
Revolution that is currently in progress. This to modern loans.
technological revolution has a huge impact on It might seem trivial, but the book and the
the functioning of the financial and economic financial system have the following definitive

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axiom: trust served as a coverage for money shekel, which had no intrinsic value anymore
throughout history. The financial system is and represented certain weight of silver (8.33
based on trust. This trust is not something gr). The next step was the appearance of coins.
that grows suddenly, rather it took time to be At the time already, silver did not need to be
built. During this process, its form was also weighed each time, it was enough to handle
gradually transformed. it according to the value indicated on it. This
In the beginning, only barter existed. Later, stage presumes stronger trust, principally in
small communities living on gathering and the issuer of the coin, who guarantees the
agriculture formed self-sufficient economic quality and usability of the money.
units. Within the community, the role of Due to trade, certain coins spread
money was played by a system based on extremely fast. In some respects, money can be
mutual favours and barter. At the time, the considered as the most tangible appearance of
specialisation of professions was uncommon. human tolerance, the only human trust system
The aforementioned groups already started which is capable of bridging cultural and
trading, but the significance and volume religious distances, while not discriminating
of trade were very low. The role of money against anybody from the point of view of
was taken by barter and swapping. Once usability. Of course, money has a negative
settlements started develop with continuously side, as well. On several occasions, morally
growing population, various specialised troubling things which should not be subject
professions came into existence. Such to sale or purchase or not even to evaluation
professions required the exchangeability of the are measured in money.1
individual products for other products. Barter,
which worked well earlier, became difficult,
as relative prices had to be calculated in the The appearance and expansion
case of product again and again, but even this of capitalism
method could not ensure the demand-supply
balance. The solution could only be the spread The second larger part of the book deals with
of an intersubjective (existing only in the the evolvement and expansion of capitalism.
collective human mind) belief that is called capitalism is not only considered to be an
money. Money is a fix reference point that can economic system, but also as the ethical and
be used for all products. Initially, money types philosophical trend of everyday life.
with intrinsic value became widespread. As According to Harari, to understand the
far as its use was concerned, the instrument system of modern economy, one word should
that functioned as money had value in itself. be kept in mind: growth. As long as people
The barley money used by the Sumerians was believe that the economic situation will be
a good example for this. Its intrinsic value more favourable in the future, the system of
was given by the fact that it was suitable for modern economy works. The aforementioned
sowing. belief in progress has proved to be a self-
As people’s trust in the common belief grew fulfillig prophesy over time. It works in the
and the number of transactions increased, following way: if economic operators believe
demand for a new instrument that could in a more favourable future, output and
function as money arose. This was the start of consumption will be higher, therefore there
a significant breakthrough. The new money will be a point in lending. Once lending as
appeared first in the form of the Mesopotamian a self-fulfillig prophecy starts, the source of

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production is available, and when the things As opposed to earlier periods, another
produced are sold, loans can be repaid from important “improvement” was one of the
the money earned. If for some reasons there is main ideas of capitalism: on the one hand,
no trust in a more favourable future economic economic operators mutually depend on each
situation and in growing production and other, therefore the success of one economic
consumption, lending does not make sense operator is positively affected by the success
since surplus cannot be sold if output fails to of the other. On the other hand, instead of
increase, therefore loans cannot be paid back. accumulating a fortune, profit should be
Throughout history up until the end of the turned into capital, which means that it should
15th century, it was generally believed that be reinvested. The two above-mentioned views
individual well-being could only be improved became widespread, while a new philosophical
to the detriment of others, the per capita approach was built on them.
value of productivity could not change, which To sum up: the basic idea that people will
means that no matter how we cut up the “pie”, live better and better in the future, brought
all we can do is redistribute the pieces, but about the start of lending and the spread of
we cannot increase the size of it. The income the capitalist ideology, which led to the estab-
of an economy can only be increased if it lishment of several institutions that had been
takes from others, or increases the number unconceivable earlier. The “intertwining”
of its subjects or perhaps utilises new areas. of science, capitalism and politics was the
However, all this does not lead to increasing pinnacle of the process. The capitalist system
efficiency, therefore the per capita income does enables the financing of discoveries and
not change. If the process described above is research projects on a large scale, as a result,
true, with a few exceptions, it is not worth there will really be a larger amount of stock
lending, as borrowers will not have enough available in the future. The state as a regula-
money to repay loans. Of course, a military tor guarantees the security of investments,
conquest can serve as a collateral, but when sets the “rules of the game”, supervises their
a state acquires goods from the other, it only observance or, if required, enforces them. At
changes the distribution, but not the amount this point, cultural elements, such as the form
of the total income. This kind of approach of government and legal certainty, contribute
was proven false with the development and more to the economic performance of the
interconnection of technology and sciences. country than natural resources. The author
If productivity can be increased, the per also presents the downside of capitalism,
capita income, that is the “pie” can grow, as arising from the unrestricted character of free
well. Economic operators can become richer markets. An example for this is the Atlantic
without detriment to others. Of course, this slave trade, which did not evolve due to some
process took place gradually, by going through kind of racist ideology, but as a consequence
several beliefs which can be called smaller of cold calculation driven greediness.
milestones. This cultural change provided the
background for the evolvement of modern
capitalism. Here are some examples for the The appearance and spread
beliefs which make investments, lending, and of robotisation
through them growth possible: democratic
systems, legal certainty, joint stock companies, The last and final part focuses on the future
capitalist thinking. instead of the past. The 21st century may

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bring about significant changes owing to “superfluous” social class. This assumption may
technological and scientific development. be criticised as being unnecessarily exaggerated
Several values of the liberal administrative because, as the industrial revolution proved,
and philosophical system prevailing in the the disappearance of previous professions does
20th century may be threatened. Due to the not mean the disappearance of jobs since jobs
modernisation of warfare and manufacturing, are only transformed and new tasks come into
crowds of people will become redundant existence. This was true as long as people were
because they will be replaced by robots and not replaceable by machines due to the hu-
machines. This may undermine the “alliance” man cognitive abilities, and machines could
of capitalism and liberalism as economy will only be used for facilitating physical work.
relay much less on human resources. In the However, nowadays, algorithms and artificial
20th century, the ideology of liberalism intelligence can also carry out cognitive tasks
claimed that we do not have to choose between in a much better quality than human workers,
ethics and economy, as the protection of hu- in a split second. Artificial intelligence is still
man rights and the spread of fundamental lagging behind humans if we consider all of the
freedoms constitute such a great motivational abilities. On the other hand, as far as modern
force that is vital for economic growth. jobs are concerned, such abilities are needed
However, in the 21st century, as only to a limited extent, therefore humans
consciousness and intelligence separated, cannot keep up with artificial intelligence. The
the economic power attributed to people is specialisation of the individual work processes
threatened. Up until now, only individuals is another important thing that facilitates
with a conscious mind were capable of the spread of automation/robotisation. For
performing more complex tasks, such as example, it would be very difficult to replace
driving a car or making a medical diagnosis, a prehistoric hunter/gatherer with a robot.
etc. This has now changed. Which is more For such a machine would need to complete
important: consciousness or intelligence? several very different tasks, which might be
Until recently, this question could only be a challenge impossible to cope with. Today,
discussed from a philosophical point of view, professions are more specific, though take
but today, it is now an actual economic and much longer to learn, than earlier. However,
political issue. For armies and companies, such specialised jobs are easier to automate. As
intelligence seems to be a necessary condition, people are made redundant in the labour mar-
while consciousness seems to be only optional. ket by algorithms and machines, power and
Jobs require a specific specialised task to be wealth may be concentrated in the hands of
performed, and no other abilities and skills a thin layer of elite. One of the big questions
matter. For example, a taxi driver might be and challenges of the future is where will
more “complex” than the software of a self- people work after the automation of most
driving car, as the driver has a lot of other jobs? One of the common ideas is that dealing
abilities and skills. At the same time, in the with arts will always be the task of people.
course of their work, taxi drivers need only a However, a Californian professor proved it
limited number of such abilities, in which the wrong by writing a computer programme
software is much better. In the future, some that can also compose music on its own. This
jobs will be automated or robotised, which programme can not only imitate the style of
might result in unprecedented unemployment composers, but it can compose its own pieces.
and the development of an economically So it can easily happen that people will not

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simply become unemployed, but it will also we submit our personal data free of charge to
be impossible to give them work. As we do tech companies, such as Facebook, while in
not know what kind of jobs will be in demand return, we receive funny videos or an e-mail
in the long run, it will be very difficult to account.
adjust education to future changes. It is more These changes are not primarily brought
likely that the traditional life cycle, according about by programmers and “nerds”. Biologists
to which the period of studying is followed play the most important role, as they were the
by the period of work, will cease to exist. We one who have discovered that organic creatures
must prepare for continuous change instead, are actually algorithms. This discovery
where life-long learning and training will be removed the wall separating organic and
needed. inorganic creatures. However disquieting the
Another important liberal idea is processes discussed above may seem, millions
individualism that believes people to be not of people are willing to loose their individuality
only valuable, but also to be able to decide and sacrifice their personal data by living a
what is good and bad for them. The problem significant part of their lives online. In this
with this is that in the future, masses will be situation, individuality seems to disappear not
needed instead of individuals. Every human because of a strong external attack, but rather
may be viewed as an algorithm. In order to due to a much more dangerous slow internal
understand ourselves, we do not necessarily degradation. Nowadays, many big companies
need to turn to philosophy or religion. If a offer customised services, breaking down
huge amount of biometric data is collected individuality to a mass of biochemical data. As
about us, in the future an algorithm can be a result, nothing remains from individuality,
used to analyse them to an extent that it can but religious imagination.
tell us who we are and what we want, and The development of technology might
also what we need to do to achieve it. We further increase social inequalities. At a
can also consult the algorithm before taking certain level, liberalism managed to solve
life-changing decisions on relationships, the problem of inequality by raising the
career building and changing our habits. experiences of individuals to the same level of
Though in turn, people will have to give importance and assigning identical value to
up being individuals who have the right to them. In the elections, the votes of rich and
decide freely what kind of things are useful, poor people have the same weight. However,
beautiful and good for them. Instead, they in the future, there may be differences not
will become part of a global network in which only in terms of property, but also as far as
the narrative self will not have any role. Of biological characteristics. If that happens,
course, in such an imaginary system, voting will the liberal model still work? The great
will not be necessary, as the algorithm will medical discoveries of the 20th century aimed
be able to represent individuals better them to eradicate diseases. In this sense, they served
the individuals themselves. In the elections, the public good by identifying a healthy
the algorithm will not vote on the basis of physical and psychological state that everyone
actual mood, imagination or the narrative self, should be entitled to and allowed to reach. At
rather on the basis of real interest and feelings the same time, in the future, the focus may
embodying biochemical data. As a result, the shift to the improvement of health, which is
most important human resources of the 21st not an egalitarian, rather an elitist project. A
century will be personal data. In many cases, good example for this is the development of

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super memory and the acquisition of above- 2008 crisis, the thorough understanding
average intelligence. The shift of focus from and reconsideration of the fundamentals of
the absolute towards the relative may become finance became inevitable. For example, the
a very serious source of conflict, as due to its appearance and spread of cryptocurrencies
character, it does not aim to create equality. meant a new challenge for financial decision-
People are more sensitive to comparing makers and regulators. At the same time, this
themselves to people above them, which means technical innovation is insignificant compared
that we tend to compare ourselves to those to the challenges of the technological
who are in a better situation. As since there revolution forecast by Harari. Based on
will be not only financial, but also biological historical experience, money and finances
differences, the role of the subordinated have contributed to political and economic
becomes obvious. The development of societies stability, therefore they cannot and should not
will probably not need masses in military or be torn out of social context.
economic sense, which may pose an extremely In order to understand the historical
serious disadvantage for poorer social layers experience related to and the social aspect of
living mainly in developing countries. the problem, Harari’s approach might be a
There are theoretical and practical good starting point.
conclusions to be drawn in connection
with Harari’s book, with changes seen in Tamás Pesuth – Bendegúz Tamás Varga
economics added: as a consequence of the E-mail address: tamas.pesuth@uni-corvinus.hu

Note

1
For detailed information on moral dilemmas related to finances and sale/purchase see: Michael J. Sandel (2012):
What Money Can’t Buy: The Moral Limits of Markets.

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