Monday, 5 November 2012

How can money serve as a replicator?

As promised in our post yesterday, we will lay out the elemental principles of how money (or precisely, capital) can act as a form of replicator, dubbed "mon" by the Hungarian mathematician László Mérő. Firstly, we'll prove how "mons" are different from "memes"; simultaneously that they indeed exist; and finally, how their presence changes the way scientists may observe the field of economics, by applying the methods of genetic biology and memetics to it.
(Warning: If you're scared away by proofs for scientific phenomena, scroll down to the last paragraph. You'd loose out on the essence of the post, though. Don't worry - it's not as tough as it seems.)

Why can't money be a meme?

The concept is easy - bluntly put, every not too precisely self-copying and self-distributing idea is a meme, and being ideas, memes are unique to humans. The usage of money clearly is a distinctively human phenomenon - why can't we simply consider the usage and replication of money as a meme then?
The answer lies in the dual nature of money. Entrepreneurs and investors have long known that in any given company, the separation of the employee and owner is very important. Why is that so?

The dual nature of money

Let's take a share company, in the business of cow farming as an example, with two participants; you and a friend. Your friend is only an investor - you are an investor and an (and the only) employee, who milks and attends to the cows. (Such an ownership structure can easily emerge when you don't have enough money to found the company on your own, so you ask your friend to join you. Mérő's example in the book was a fishing company, but to follow this blog's line of analogies, we are developing a different one.) 
The money you receive as an employee (the salary) in this case goes to financing your direct, personal needs - like food, bills, movie tickets and the occasional trip to Hawaii or wherever you prefer. In this case, your salary is an expense of the company, and doesn't add to the final profit (which is the money remaining inside the company, generating the actual replicators as we'll show).
On the contrary, if the owners decide to take the capital out of the company in the form of a dividend, then that money will be of a different nature - it originates not from the expenses, but the profit of the company. If the owner's take out too much money, the profit may disappear entirely, the company run a deficit and it may go bankrupt - hence, the separation of these two roles is not only objective, but vital.

Why is capital a replicator?

This paragraph will be a short, but vital one - we have to prove that capital is, or creates, a form of replicator.
In a successful company, the capital of the company (more or less, remaining on the amount of dividend) remains inside the company - in fact, since the base capital never get's taken out, the extractable capital is in itself a surplus, seemingly appearing out of nowhere. To use an analogy - capital in a company is what bacteria are on a Petri dish; if the conditions are right, they will both replicate endlessly; the company expands, the bacterial colony gets bigger.
If capital is not the gene(meme) in the analogy, then what is? According to Mérő, the mons - ideas which attract the capital into a company. A single mon can't generate a living being (a company), but multiple ones (such as a),Someone milks cows; b)Someone attend after the cows; etc.) can.
Having shown this, the question remains whether it was indeed necessary to introduce mons as a concept? Can't memes do the job?

Psychological distinction

So far, we have shown that money can exist in two forms - "consumption money", and capital. How does that make money - precisely, the second form of it, capital - a form of replicator distinct from memes?
The answer lies in the phenomenon called cognitive dissonance. Now what is that?
Basically explained, cognitive dissonance is a kind of discomfort experienced when humans experience conflicting contents of consciousness - basically, ideas. The concept is that people would do anything to reduce this dissonance, and that such a dissonance can't be kept up for long.
 To make this more clear, let's bring up a literally classic example - a fable of Aesop about the fox who wanted to eat grapes.
The fox really, really wanted the grapes (this is the first idea), but since it wasn't tall enough, was unable to reach out for them (the second idea). Discouraged, the fox decided that the grapes were probably sour, and probably not worth eating at all. (The discouragement the fox experiences is the cognitive dissonance; his theory that the grapes are sour is the dissolution.)


You're still reading? Good, since we are nearing the end of our argumentation.
Now let's suppose that both the capital and the consumption form of money is a meme, an idea.
The two roles are clearly conflicting, as we have shown above - if both of these concepts were truly memes, idea-based replicators, then how come CEOs don't experience constant cognitive dissonance? The paradox can only be resolved if we claim that capital is not a meme - but since it is a replicator, capital has to be a replicator distinct from memes.


That certain ideas(mons) can generate a company automatically like genes generate a living being, is a concept which brings up many possibilities in economics. How?
Once again  simplifying one of Mérő's examples, mathemathic proofs and theories are also memes, and hence replicators - and the mathematician Kurt Gödel has proven, that taking a system of axioms (analogy: a capitalist environment/the DNA building rules), there are bound to be mathematic statements which can neither be proved or disproved. Hence, given that mons are replicators, the same statement is true to them as well.
 Economically speaking: in a capitalist environment, there are bound to be goods which theoretically can be produced in a successful company, but in reality can not. Pretty intriguing, huh? However, the inclusion of money in the replicator family opens up even bigger possibilities - the opportunity to apply the totality of methods of memetics and genetic biology to economics.

There is still a lot of work to be done - but the new age has began.


László Mérő: The evolution of money. (Original: A pénz evolúciója) Budapest, Tericum Kiadó, 2007.

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