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Of Mind and Money

Written By ADITYA

By Tara Thiagarajan , Madura Microfinance

Ever since I found myself unwittingly heading a microfinance institution I have had money on my mind. Not so much how to make more of it, but what it means. It’s such a critical component of so many human interactions, so caught up in so many aspects of our psyche and so baffling in its complexity. It can make and break bonds in human systems, foster marriages, alliances and enterprise, or bring them down. Or it can vanish in slow trickles, dissipating into a vast ocean, leaving behind a pile of random stuff as a reminder that it passed through.

Of Mind and Money

Dr. Tara Thiagrajan. Image-credit:thinkchangeindia.org

But what is money? The money the way it was first conceived several thousands of years ago is easy to understand. It was a mechanism for simplifying exchange, making it easy for two people who did not have a fair trade of goods (I have something you want but you have nothing I want to give me in return) or had a mismatched timing of goods (my wheat has harvested now but you won’t have your strawberries until the winter) to transact by way of some third product that was not easily destroyed and had widespread utility. This kind of ‘commodity’ money – like salt for instance – had intrinsic value, it was something everyone needed. As it morphed to metal for the convenience of portability, it still mirrored its melt value or its utility as a standalone product. It did not matter if you ‘counterfeited’ it because it was worth simply its utility and the effort of mining it. But metal is still heavy and inconvenient to port so then there came notes, pieces of paper that represented some amount of metal, typically gold, that was held somewhere safe. Not too different, but with a faith in the issuing party that you could exchange the piece of paper for metal – a material of real value and utility.

And then, over the last fifty years, it has morphed ubiquitously into ‘fiat’ money, delinked from anything of real physical value so that any amount of it can be made without restraint. Nothing but a piece of paper with symbolic value in which we place implicit faith. But faith in what and why? The word ‘fiat’ in Latin means ‘Let it be done’. To me, this represents faith in the human spirit. It is an implicit belief that we can create more value by our ability to morph matter and to transform our world than we could gather up in raw material from it. In this sense, how much money we should have in the system should be driven by our best judgment of how much value we can create. Misjudgment can be devastating and collapse nations. It is an extraordinary transition from linking our currency to something of inherent physical value, to linking it instead to the human mind. Fiat money is worthless unless the minds that encounter it are able to make good on our collective faith to ‘Let it be done’. And if money is worthless without mind, should we really define poverty in terms of money or in terms of the potential of mind? Or a combination of both?

And what is it that defines the potential of mind? No mind acts in isolation of society at large. We are a complex interacting network each with our different knowledge and circumstances, different perceptions and value judgments. As money flows among us, enabling, facilitating and catalyzing our struggle to make good on this faith, it is no wonder that it is so deeply caught up in our psyche and our judgment of ourselves and the world. Our collective faith in fiat money ties us together into a common system rather than isolating us as individuals. To understand poverty and progress, therefore, we must understand the flow of money among us and its relationship to mind – how we make our judgments of value individually and collectively. Over the next few weeks, my column will focus on my thoughts about this.

Money, it’s not so simple. Think about it.

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