Money is fundamental to progress
Advanced societies developed money to tally the value we each create and consume. Instead of trading 3 pairs of shoes for a decade of haircuts, we can carry and exchange money from our pocket. Efficient economic trade is the foundation of labour specialisation, and instrumental in advancing society.
We earn money by creating value for others, and spend money on the items and services we value. The game of creating and capturing value is perpetual, because human desire is endless and markets are merciless. Money is easy to spend, and hard to earn.
To navigate the modern world is, in essence, to traverse a money-time continuum. Almost any experience can be bought with money, but we're all running out of time. We can pay other people instead of spending time on a particular activity, but we can't slow or stop the clock.
We spend our time competing to have the energy we extert valued by others, so we can get paid. We want to get paid, so we can use that money to impact the people and causes we care about. Anything we don't spend, we can save.
Accumulating money comes from the arbitrage between value created and the costs incurred. Spending less than you earn accumulates a balance; a net positive between credits and debits.
In a big enough pile, we refer to money as "capital", and in a big enough hole, we refer to it as "too big to fail".
Capital is how we direct human energy
Capital is the accumulated value created by a person or group of people; the combined energy that humans have created and stored. It's the savings put aside to defend against uncertainty, or to be used in exchange for the energy of other humans.
Capital-ism is a set of principles:
- freedom to create and own goods and enterprises, and
- market prices that signal the demand of each creation
Capitalism (without croynism) is a game anybody can play, and most days the market will tell you how well you're doing.
We have consistently increased human prosperity over the long term, and capitalism has an instrumental role. Entrepreneurs who figure out what humans want, get rewarded as part of the non-zero sum nature of innovation. The entrepreuer creates value for all the customers, and gets to keep a slice.
The role of capital is to finance innovation and trade, with entrepreneurs building companies to meet the evergrowing range and standard of human desires. Capital is at the core of organisations, and allocating capital is how we direct our human energy to create change.
Organisations are stewards of capital
Organisations are collections of people acting towards a common interest. By gathering and directing resources, organisations create value, and capture some in order to survive. Organisations that effectively allocate capital to innovation, operations, or the rainy day fund, prosper long term.
For thousands of years, capital management was the domain of organisations alone. Churches, governments and then corporations collected capital in order to carry out their purpose. Financial regulation arose to address the increasing complexity and impact of organisations, and the need for greater accountability.
This regulatory environment, along with generations of standardised education, groomed people to be an employee at an organisation. Organisations managed capital, and people worked for organisations. Even trying to be a part owner, as an investor, in organisations has been historically difficult.
The dominance of organisations is soluble
Investing in, or owning a small portion of, a company has traditionally been elitist and intentionally opaque. In most western countries, there's more regulation preventing investment in companies than gambling.
It's ironic that "non sophisticated" investor restrictions purport to be protective, yet there are far fewer, "non sophisticated" gambling restrictions. Financial regulation and tax legislation tends to keep opportunity and wealth with the wealthy, and the lower classes simply employed.
Fortunately, these tides are turning. Investor requirements are loosening in many countries, and mechanisms like crowd funding increase opportunity for capital market participation. With software eating the world, we have productised company infrastructure, and turned it into code.
SaaS subscriptions can replace teams of people, and lower the barrier for company formation. Shopify means anyone can run a shop. Stripe means anyone can take money. As startups race to solve the pain points in each industry, everyone benefits by vertically integrated solutions, and lower barriers to entry and operation.
The barrier of company formation has dropped to requiring but a single staff member. The company of one.
Individuals are free to become sovereign creators
A fine artist is the longest standing creator, and the original "company of one". Artists were funded by patrons to create specific works of art, or a living wage to create multiple.
In our era of crumbling barriers and rampant digital leverage, a creator can take any shape, anywhere in the world. The cam-girl selling underwear is as much a creator as the journalist with a gigantic newletter audience. Each need only a few thousand fans willing to pay for their work, to earning a living from anywhere on Earth.
We each earn our money, and pay for the things we value. With the internet, we are finding and valuing the individuals that resonate with, and serve, us.
Investing in individuals is the future of capitalism and work
No longer the exclusive domain of organisations, individuals are increasingly shaping the world around us. Increasing digitisation offers anyone a practically infinite global reach, right from their smartphone. The stage is set for each of us to create and consume with astounding scale.
“Give me a place to stand, and a lever long enough, and I will move the world. ”― Archimedes
Capital is a lever for human energy, that we use to create prosperity. Historically organisations have weilded this power, but now we are now building the social and financial fabric to allocate capital to individuals.
The greatest gift we can give the world is work we find meaningful
There is a pair of questions as illuminating as they are confronting:
- If you could work on anything, what would you work on?
- What are you working on now?
The more similar the answers, the closer the person is to spending their time on work they believe is important. The more mismatched, the more their human energy is being restrained and misdirected. This may sound trite, or "nice to have", but it is not.
Motivation, ingenuity and grit have directed human energy and increased prosperity for countless millenia. Progress does not come from idle, disaffected employees. Progress comes from zeal, persistence and human energy aimed at important work.
For most people, the mismatch is difficulty earning an income doing the work they find important or enjoyable. Instead, they are forced to take work that "pays the bills". The world is ruthless, so employment to pay the bills is no less noble, but a clear second choice to work that lights our eyes.
Harnessing human energy and directing capital have brought us to this point, and with stronger alignment, we can better tackle the grand problems of our time. I'm most excited about capital flowing to individuals, particularly early in their lives and careers.
Let's give everyone a wealthy, progressive aunt
Imagine a wealthy and open-minded aunt, with adored nieces and nephews ( aka niblings). For each nibling, the aunt invests in their future, by funding the great work they are itching to do.
With early investment, the niblings are free to use leverage to shape the world in unimaged and wonderful ways. With an open mind, and even though the "professions" weren't conceivable to her or invented yet, the aunt funds a cohort of gamers, bakers, artists, programmers and educators.
If everyone had a wealthy, progressive aunt, the world would be filled with people free to create solutions to the problems we all face. This future is important, because we can get paid to do the work we care most about.
Sovereign Autonomous Individuals
I'm fascinated by a future where can all do the work we care about, and create prosperity in a non-zero way. Channeling capital to individuals by investing in their lives and careers is one way, and I'm sure there are others.
We've spent decades building computing infrastructure and now have the tools to program identity, capital and information flows. By applying the concepts of Decentralised Autonomous Organisations (DAOs) to individuals, we can fund, influence and share in the value creation of impactful people.
That is a future I think is important to work on.