I don’t know about you, but it’s been years since I’ve sat down to play a game of Monopoly. Nevertheless, if I were to get my hands on a Monopoly set and a couple of friends to kill an entire afternoon and evening with, I feel fairly confident in our ability to play the game without checking the rules. That’s because Monopoly’s rules come from our very familiar economic system. There’s money — a concept which allows me to store my wealth, transact with others, and gauge the relative value of different things. There’s private ownership — if my friend lands on Connecticut Avenue and buys it, I have to pay him rent for also landing on it. There’s credit — I can mortgage a property to receive a cash infusion which I can repay later… You get the point.
This is far from a novel observation; it’s actually very much by design. Monopoly, initially The Landlord’s Game, was created in 1904 by Elizabeth Magie, a champion of the then progressive economic ideology of Georgism, to highlight the dangers of private ownership and monopolies. Thus, the similarities between Monopoly’s rules and our economic system are no coincidence… but for one rule:
The Bank cannot go bankrupt. If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper.
Some of you may see the parallel to the United States Federal Reserve — an institution which can effectively print endless amounts of dollars at will. A smaller number of you, however, would have also realized that for the majority of Monopoly’s existence, this rule did not reflect reality, as the United States was on a Gold Standard until 1971.
You may have heard of the term “fiat money” used to refer to money as it exists today. Fiat means “by decree”, meaning the bills in your wallet only have value because we all agree that they do. What’s fascinating to me is how we were able to build a global economy based on shared beliefs, even though society seems to be unable to agree on anything nowadays. I think it serves as a nice reminder of how our ancestors shaped the modern world and how we should continue to shape the future. Let me explain.
When homo sapiens first appeared in East Africa between 200,000 and 300,000 years ago, other hominid groups such as the homo erectus and neanderthals had already spread across Europe and Asia. But in a couple hundred thousand years, a blink of an eye in evolutionary terms, we now outnumber them 8 billion to zero.
How did we do it? We weren’t the strongest hominids, nor did we have a numerical advantage at first. Instead, we prevailed because of our ability to contemplate and communicate the abstract. We thought up ideas in our minds, shared them as stories to others, and when enough people believed them, the stories became reality. These collective narratives enabled larger groups of homo sapiens to work together to defeat our adversaries.
Approximately 12,000 years ago, the Agricultural Revolution began. We went from nomadic hunter-gatherers to sedentary farmers. Farming settlements grew into towns and cities. People began specializing their labour, kicking off the exponential growth curve of technology that we find ourselves riding today. And once again, the driving force behind the progress we made were the stories we told — stories of Jesus and Mohammed, of the United States and Rome, and perhaps the greatest story of all, money.
Today, the story of money is an incredible feat of collective imagination. It can be created electronically by central banks. It can be destroyed by a single tweet from a high-profile figure. Yet it also determines who eats and who goes hungry.
In this multi-part series, we will attempt to tell the story of money to understand how we ended up here. Along the way, we will explore how money has shaped our philosophies, relationships, and sense of meaning, and how we can tell a more compassionate story in the future.