In my last post, I mentioned the foolish attempt at price controls by the Thai government. In this article Thomas Sowell
, one of my favorite economists, offers this simple definition of money as a system of self-rationing. He says:
Resources are limited but desires are not. That is the basic and defining problem of economics.
Prices force you to limit your claims on what other people have produced to the value of what you have produced for other people.
Those who want to promote their own power through more government control hate the marketplace because the voluntary exchange of efforts and products through the use of money is the opposite of government coercion. It decentralized power instead of centralizing it. It promotes a more meaningful form of equality based on our individual and unique effectiveness and desires against the "pit one group against another" mentality of government. To promote government as the solution to everything (i.e. the government as God), you have to deny that resources are limited or that human desires are infinite. You have to sell the idea that government can change natural limitations by simply passing a law or that human desires can be conrol simply through proper re-education.
This basic economic problem (infinite desire versus limited resources) also explains why strategy exists. Sun Tzu's strategy defines this struggle in terms of "positioning" rather than money because money only works for what can be traded. Many critical elements of value cannot be exchanged for money. For example, you cannot exchange your skills for the skills of another no matter how much money you have. Specifically, your relationships, that is, what people think about you, cannot be exchanged. Economic reduces to equations what can be reduced. Strategy recognized that problems still have to be solved when their complexities cannot be reduced to equations.
Recognizing that not everything of value can be exchanged for money does not, however, nullify the utility of money or make it immoral.
UPDATE: Lest we think that everyone today outside of the 3rd world governments understands the whole "limited resources/infinite desire" problem, read John Stossel's article about proposed drug price controls by our own government shows this is not true.