In this video I am going to nerd out a little bit, because we are talking about what Star Trek’s philosophy on Money.
VIDEO SUMMARY
Star Trek’s Philosophy
I am a big fan of Star Trek. When you examine Star Trek’s philosophy on money, it leads you to some interesting conclusions.
To start, Star Trek is obviously influenced by Socialism. In Star Trek, humans no longer use money. The writers were very clear about this from the beginning. In the final episode of the first season of The Next Generation, they unfreeze a stock broker from the 20th century. It is all very funny because the stock broker is angry and selfish, and says things like “What do you mean there is no more money?” Captain Picard explains “We are no longer obsessed with the accumulation of things. We have eliminated hunger, want, the need for possessions. We have grown out of our infancy.” [The Next Generation: The Neutral Zone. Jean-Luc Picard]
The Fundamental Question
This raises a very fundamental question I want to explore: Do we need money? Star Trek is not the only science fiction story that paints this picture. There are many books written about Utopian societies in the future that do not use money. Is this possible?
Star Trek History
When you dive into the history of the Star Trek universe, humanity develops by following the socialist model and abandons currency-based economics. This does not happen for political reasons, but rather for practical reasons. Technology advances so much, that all basic needs essentially become free. Things like food, transportation, shelter, energy, and medicine do not cost anything. If everyone has all their needs met for free, why would they submit to a social structure where there is rich and poor? This is the basic socialist philosophy, where there is a social revolution, people do away with capitalism, and stop using money.
That is the economy of Star Trek, and it is a radically different social structure than today. Today’s world functions on currency-based economics. We use money to make decisions. In Star Trek, they make decisions based on a philosophy of self-enhancement. Both systems are seeking to answer the question, “what is the value of this action?” In our case, we use money to determine the value. In Star Trek, they somehow make an assessment based on their desires and society’s needs.
How Money Works
I really enjoy Star Trek, but I am also an accountant. These stories are missing an important idea about how money works. Money provides information. It is a piece of technology we have developed to help make decisions.
Let us look at a typical decision. If I am trying to decide something, I need two pieces of information:
- What is valuable to me
- What is valuable to someone else
I know what is most important for myself. But I do not know what is important to someone else. You cannot read someone else’s mind. The greatest value is created when you find the intersection between your wants, and the needs of everyone else. If you can find that intersection, that is where you make profits, because you are engaged in an activity that provides value for your community. Money communicates that piece of information to you.
The Price of Giving Up Money
For a society that gives up money, you are giving up a piece of technology that provides you useful information. Imagine you are in the Star Trek world with no money. Your philosophy is self-enhancement. Your goal is to make decisions that generate the greatest good for yourself and society. You walk into a room with 100 people. How would you answer the question, “What should I do to create the most value?”
Without money, this is a difficult choice. You know what you value, but you do not know what these 100 people value. Maybe you could take a survey. Some people might want food, or new clothes, or entertainment. But then how would you determine the degree of intensity of their desire? It becomes a very difficult question. If you insert money into this same scenario, you instantly have your answer. Because people will pay for what is most valuable. Money gives you information on what will benefit society. It makes your decision very simple.
A Practical Example
These are very abstract ideas. Let us talk about something very concrete. Let us use Starbucks. Starbucks makes coffee all over the world. Leadership at Starbucks makes the decision “How do I take my coffee shops to the next level?” Money provides a very simple answer. The amount of money you make tells you how much value you have created for your customers.
Imagine Starbucks if there was no money. They would not have easy access to information on what customers value. Starbucks could decide that they would only make espresso shots, because that is what true coffee drinkers like. For the rest of us that like lattes, we would be out of luck. Starbucks knows what the company values, but they do not know what the customer values. Ultimately, businesses start to shut down, because value is not created.
The Concept of Ownership
Most people understand the concept that when you create value, there should be some compensation. Where people start having difficulty is over land. A small amount of rich people own most of the land, and the rest of us pay rent. How is that creating any value? Would it be better if everyone just shared the land? This is another fundamental concept called “ownership.” Ownership is also a piece of technology. Ownership means you could take your land and use it as payment to communicate your value to another person. Without the concept of ownership, money is not possible.
An interesting point to all of this, is we have examples in the world today of cultures without money and without ownership. They are small isolated communities, but we can study them and see what happens. And what we have found is very clear. When you take money away, progress does not happen. When you take ownership away, progress does not happen. These are two important pieces of technology we have developed to communicate the value of things.
A World Without Progress
Let us bring this back to Star Trek. What Star Trek is saying, is that technology has advanced enough, that we can slow down progress and just enjoy our existence. I am not saying that progress will not happen, but it certainly will not be as fast or as efficient as when we had money. We are giving up the problems of having rich and poor, but we are also slowing down progress. That is the real picture presented by Star Trek: Humanity slows down the continual drive to expand.
Personally, I do not see this ever happening. The common thread of humanity is that we always want to expand our experience. We are always going to want to better ourselves. Let us say we have enough resources for a certain level of experience. If we want to improve humanity to a higher level of productivity, by very definition, that creates scarcity of resources. We start at one level, but we want to get to a higher level. To get there we will have to expend resources in a targeted way to achieve our goals. Allocating resources in the most effective way requires society to create inequality between rich and poor. Those who can generate the most value provide the most benefit.
Conclusion
I am not suggesting that money can solve every problem. It cannot. There are obvious problems that business and economics cannot solve. But it is foolish not to acknowledge money for the positive things it can do. Money is a tool that provides valuable information.
I want to end with the big question “Do we need money?” I think that people get scared of money, and frustrated with money, and so they want to do away with it. But I believe we actually need the opposite. Money is the key to unlocking our future potential. The better you can understand money, the more value you will create. As an accountant, I think about all of this stuff. The point of tracking money in a business is to identify where value is being created. By counting the money, we are trying to make the world a better place.
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Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.
I think this is a little naive – arguably just as naive as the writers of Star Trek… We have this new type of economy now: it’s called the Attention Economy – and value is extracted from you and me (without any exchange of money) by tracking another thing that we “spend” every day:
time
To take your Starbucks example, they in fact DO have very easy access to information about what their customers value – by simply recording (ie TRACKING) exactly what we are drinking… Before making the decision to only make espresso shots (or lattes) or whatever, they can look at how many people are actually drinking each type of variation, which will tell them which is more or less valuable, compared to the others – and money does not need to be involved in this decision whatsoever.
In fact, often times taking this simplistic view that money is the ONLY way to measure value can lead to poor – even catastrophic – outcomes, because that is simply not enough information to make a meaningful decision, sometimes – and worse still sometimes you actually HAVE more information available to you (like who is drinking how much of what type of coffee) which you would ignore in favour of only looking at money at your peril…
Ownership is another interesting concept and I wonder if you have actually read much about any of the studies of the people in those cultures you have mentioned? Because they do not “take money away” to see what happens – and “progress” is a rather vague term to describe what you seem to take as “superiority” over these cultures. If you look at other measures (“happiness” is one which often comes up) I think you might be surprised at which cultures are actually doing better and in which direction we have been making “progress”.
To be fair, I do actually tend to share your view that the money-free lifestyles presented in Star Trek are not very realistic or even likely – but not for the reasons you have outlined here.
Let’s stay technical. Imagine that Star Trek’s replicator technology was created. A replicator can create anything in its buffer pattern, anything. Now replicate a replicator to everyone. Now everyone can create anything for themself. No one will have a need or want. The things that can’t be replicated, people will aspire for. Experiences and skills still also fall in this direction. So ultimately, humanity will aspire for its betterment. I abhor socialism. I believe in working smart and hard. I believe in Gene Roddenberry’s vision of the future.