Another real gem was The ABC of Technocracy, by Frank Arkright. The word “technocracy” means “rule by experts” and a lot of people were talking about it near the beginning of the 20th Century, people like H. G. Wells and Thorstein Veblen. But by the time the Great Depression rolled around, it had turned into a crank economic theory, holding that the problem was that the value of money fluctuated (which is mostly true), so it should be instead based on something whose value didn’t fluctuate (which is probably impossible). The Technocracists decided that money should be based on energy, with the basic unit being the erg.
I think I recall a mention of Technocracy in Martin Gardner’s Fads and Fallacies in the Name of Science but there’s no substitute for the pure uncut stuff. What I mostly recall from The ABC of Technocracy is just how tired I got of the endless repetition of the slogan, “an erg is always an erg.” (And you thought you got tired of the phrase “Guns, Germs, and Steel,” in the PBS series). Yes, from a physics standpoint it’s sorta kinda true that the erg is invariant, but from an economics standpoint, context still matters. An erg of electricity in my toaster is still more valuable to me than an erg of heat on my roof.
I’m guessing that the notion of a unit of energy as money came from the labor theory of value, the notion of Ricardo (and Marx) that all economic value is derived from human labor. Confuse “labor” with “work” and confuse the latter’s meaning in economics with it’s meaning in physics and bob’s your uncle.
Of course, even in physics, “work” isn’t the same as “energy,” since thermodynamics limits the amount of work that can be extracted from any given source of energy, but that’s hardly the most egregious error in the mix, is it?
And jeez, why the erg? I mean, that’s a tenth of a microjoule, and a joule is much closer to human scale, one watt-second, enough to lift a kilogram about tenth of a meter. An erg will lift one microgram one centimeter. What good is that? It would be like trying to base your money on micrograms of gold. That’s too small to even see.
Gold, at least, has some advantages as a commodity basis of money. It’s not a consumable, for example. It lasts more or less forever. It’s nice and compact, so it’s easy to store. It’s pretty, so you can always make a necklace out of it.
Of course any commodity-based money puts your money supply at the mercy of changes in relative commodity values. Gold in California resulted in a huge local inflation (e.g. the legendary ten dollar eggs), followed by a national inflation, which was then followed by the inevitable compensatory deflation. It was such a joy to be a commodity producer in the 19th Century, though I admit, it did beat being an inhabitant of Central America in the 16th Century.
The essential error here is confusing what are called “institutional facts” and “brute facts.” The former depend upon human institutions, like the value of money, the location of a state line, the name of the President of the United States, or, indeed, the existence of the Office of President, or even the United States itself.
By contrast, water freezing is a brute fact, as is the weight of a certain volume of gold, or the conversion of one form of energy to another. All proceed untouched by human hands.
There’s a related error here, however, and that is the notion that brute facts are somehow superior to institutional facts. One can make all sorts of conjectures and claims about “objectivity” vs “subjectivity” and the nature of human institutions and the physical world, but I rather suspect that a big part of the attraction of Technocracy and its erg-based money was the idea that scientists and engineers would run things better than politicians, bankers, or even economists. After all, energy is better understood than money, right? So why not use energy as money?
And there lies the error in the idea of technocracy in its more general meaning, “rule by experts.” It has at its center certain prejudices about what constitutes valid expertise. But a politician is an expert in his own field; if you don’t believe me, watch what happens if you try to get any given physicist elected to Congress. Everyone believes that their own job (or class, or race, or political philosophy) is more difficult and more important than the next guy’s, so why not try to gimmick the system to make sure that the “right” people run things?
And there’s no idea that is so loopy that someone won’t re-invent it:
Quoted in The Economist’s View:
A new kind of money, by Julian Darley, Alternet: The decline in the availability of cheap energy is likely to be accompanied by an equally ominous possibility of world financial meltdown. That we are facing both of these threats now is not an accident: energy and financial stability are intimately linked. I believe the solutions for dealing with these twinned threats are equally linked. To build an environmentally sustainable, monetarily stable world, we need to create an economy in which locally produced energy provides the backing for local currencies. ...