The Buck Starts Here by John Steele Gordon
The Bear on Aug 09 2008 at 8:26 am | Filed under: Culture, Economy
The most revolutionary invention in history is so ingrained in our daily lives that we scarcely consider it an invention at all.
One technology replaces another only when the new technology is better or cheaper (or both) than the old. When an invention reduces the price of an important part of the economic system radically enough, the result is an economic—and therefore political and social—revolution. The printing press greatly lowered the cost of dispersing knowledge, spelling the end of the already waning Middle Ages, just as the micro processor has reshaped the world by making the storage, retrieval, and manipulation of information inexpensive.
Such world-transforming inventions are usually material in nature, but not always. The scientific method developed in the 17th century is an intellectual tool of transcendent strength that helped powerfully to make the West the world’s dominant culture. And like the scientific method, some of the most important inventions are not the creation of one person or team, but the creation of the collective genius of the human race.
Consider another invention, one so deeply embedded in our daily lives that we seldom think of it as an invention at all: money. It was a creation not of an individual but of the free market. And while money was once exclusively a material object, it is today increasingly abstract.
Human beings are, uniquely, trading animals. Trade has allowed both individuals and entire countries to specialize in what they are good at or have in abundance, selling the surplus to acquire what they lacked. Trade allows us to exploit what economists call “comparative advantage.” Because both parties to a transaction value what they receive more than what they trade away, wealth is created. And nothing has facilitated trade more—thus fostering the enrichment of the world—than the invention of money.
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Without money, people who want to trade what they have for something else they want must barter with someone with a complementary interest. If a man has apples and wants oranges, he must find a person who has oranges and wants apples. Economists, with their usual talent for turning an unmemorable phrase, call this a “double coincidence of want.”
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