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The Death of Capitalism and The Rebirth of Religion

This is Part 2.

In Part 1 – The Truth About Money – We discuss the properties of Money and explore why Money should be considered debt.

In Part 2 – The Death of Capitalism and the Rebirth of Religion – We discuss how society is rejecting the long-established rules around Money (and Capitalism) and why that will usher in a new era of Religion.

In Part 3 – Money in a Diverging World – We examine how the current geopolitical conflicts in Europe and Asia are interesting case studies to explore the ideas we have discussed around Money, Capitalism, and Religion.

In Part 4 – The Issues With Capitalism – We discuss the issues that Capitalism is already facing before the coming challenges in an era of Religious ascendence.

Most people have a complicated relationship with Money.

In The Truth About Money, I pin this complex love / hate relationship on the observation that Money is debt.

Money is a way to get someone to do something for you.

But in order to get someone to do something for you, you must promise to eventually return the favor.

That’s Money.

Money is a promise.

Money is a promise to your local restaurant or local shopkeeper that if they give you something today (a meal, a toy, something), they will receive these magical pieces of paper that entitles them to get something back from you (or someone else in the same ecosystem) in the future.

If that sounds an awful lot like debt to you, then you’d be right!

Money is debt.

The more Money you have, the more society owes to you.

For the same reasons why people have complicated feelings toward debt, it certainly explains why society has complicated feelings towards Money!

The thing that makes debt objectionable isn’t the part where you get something from someone else (like all the wonderful goodies that Amazon sends to your door)…we all want something from someone else.

The thing that makes debt objectionable is that you’re obligated to give something back!

Debt is a promise.

Making a promise is easy, but depending on what promise(s) you make, repaying it can be a problem.

Despite society’s complicated feelings towards Money, Money is possibly the greatest invention in the history of humankind.

Without the invention of Money, it’s impossible to get someone to do something for you unless they trust you.

For example, most families generally have internal trust. You trust that your family will be there when you need them, and they trust that you will be there when they need you. Among people with trust, you don’t need Money to get them to do things for you. You can ask your spouse or your children or your parents to do something (reasonable) for you without paying them. You don’t need to give them Money as a promise. They already implicitly trust (and expect) to be able to lean on you in the future in return if / when necessary. In fact, in high trust relationships (like among family members and close friends), bringing Money into the equation (unless it is an outright gift) is often a very bad idea because the presence of Money suggests a lack of trust.

While it is possible to avoid the explicit obligations of Money through a trust-based system, developing trust takes a lot of time and is highly unfeasible for a large society. It is highly unfeasible in large societies because you need to deeply know and learn about people, which is simply not possible in networks involving more than several hundred people.

Money is a beautiful invention because it allows you to ask anyone to do something for you, even if you’ve never met before.

You just have to give them the right amount of promises. And the person receiving these promises does not have to know anything about you because they know that these promises can be repaid by someone / anyone in that society, even if they never see you again.

Elon Musk does not know who I am. But if I have enough promises in my bank, even I can get him to do something for me (though the amount of promises I need may depend on what my request is).

The magic of Money is that it allows society to coordinate and do things together, even among strangers.

BUT – even though Money removes the trust requirement among strangers, it does not completely remove the need for trust at a societal level.

No one accepts promises without believing that it can be repaid. All of us as individuals trust that society will repay its debt to us when we perform Work.

No one accepts Money without trusting that it can eventually be used to get something they want in return.

You don’t have to trust the exact person that gives the Money to you, but you do have to trust that there is at least one person in society that can repay that debt by doing something you want.

This is the nature of Capitalism, facilitated by promises called Money.

While the word Capitalism was coined less than two hundred years ago (and, interestingly, it was coined 50 years after the invention of the term Socialism…coined by Socialists to denigrate people with Money), the concept of Capitalism has been around for thousands of years.

Capitalism has existed for as long as Money has existed.

And it has always worked the same way – You do something that someone else wants. In exchange, you get promises that allow you to make someone else do something you want.

You have to trust that someone will eventually give you what you want.

But what happens when other people can’t or won’t give you what you want even though you have these magical pieces of paper called Money?

It doesn’t take a whole lot of imagination to figure out that if you can’t get what you want, you would never accept these pieces of paper.

These magical pieces of paper stop being magical if they can no longer compel people to give you what you want.

Capitalism is a grand bargain.

If someone shows up with magical pieces of paper asking you to do something, you should do what they want (assuming you can perform what they want). If someone is willing to pay you for something, Capitalism has always assumed that it’s not necessarily your place to question why it is wanted because “the customer is always right”.

This is what economists refer to as a Price Signal.

Prices are signals. If the price of something is high, it usually means it is valuable. If the price is going up, it means society wants more of it, and you should help supply more of it if you can. You do not need to know why it is valuable or how it is valuable. All you need to know is that the price tells you it is valuable, and for that reason, people that can provide it should provide it.

The grand bargain falls apart if society does not honor its side of the exchange.

If you cannot use these magical pieces of paper to get what you want, you would neither accept these pieces of paper to begin with nor would you provide goods or services to others in exchange for these potentially useless pieces of paper (unless you want to be a charity…).

There will always be some fringe elements in society that violate this grand bargain, but if enough people violate this grand bargain, then Capitalism cannot work.

If you are running a restaurant, you would never accept Money in exchange for the food you make if you cannot reasonably expect to use that Money to eventually get what you want. You would neither accept Money nor would you cook for someone else.

This brings me to a rather uncomfortable thought – Capitalism is dying and few people seem to be paying attention.

Seems like a strange idea to have, especially as our world becomes more and more financialized with everything being turned into tradable assets, but the financialization of things you’re seeing is not Capitalism at all.

What you’re seeing is actually the rebirth of Religion. And Religion is quickly gutting Capitalism as we know it.

Most people think of Money and Capitalism as inseparable and interchangeable.

But that’s not true.

Money is just a promise.

Promises can be made in ways that have nothing to do with Capitalism.

Capitalism is a very specific bargain – You do something for someone first, and society will do something for you in return. This order cannot be reversed.

You cannot request a Capitalist society to do something for you first (you might be able to do this with a trusted family member or friend or perhaps a known business contact, but you’d be hard pressed to find too many strangers that will agree to do something for you first without paying them).

You must Work for society first to earn the necessary Money to make others Work for you.

But there are many other ways that society can operate that does not involve this very specific bargain.

Religion is one alternative.

Remember – Money is just a promise.

If you can create promises, you can create Money.

Money is a concept (a promise) that can be entirely separated from the pieces of paper that is oftentimes used to count it.

Religion historically has pursued a very different bargain from Capitalism.

Many Religions promise that if you do certain things that are viewed favorably by that religion, you will be rewarded a beautiful life in Heaven or the afterlife.

It’s interesting that many of the most valuable and beautiful objects in the history of humankind are religious in nature. Some of the most beautiful buildings are religious in nature.

You would assume that these religions needed A LOT of paper money or gold to create these things…

Things like the Notre Dame in Paris:

Source: Introducing Paris

Things like the Hagia Sophia in Istanbul:

Source: Hürriyet Daily News

Things like the Leshan Buddha (carved into the side of a mountain) in China:

Source: The Architect’s Newspaper

How much paper money or gold would it cost to create these things?

Probably more than most societies can ever have…

But Religion didn’t need to have a lot of paper money or gold to compel people to create these things.

Religion doesn’t need paper money because it has its own kind of Money – promises in the afterlife.

Money is a promise.

If you can create a lot of promises, then you can get a lot of people to do a lot of things for a very low cost like devoting their life to building religious structures, creating religious art, or traveling to far distant lands to convince non-believers to convert (I say all of this in the most respectful way purely as an observation and have absolutely no intention of denigrating any religion).

IF you only have Capitalist money to incentivize people to do these things, there might not be enough Money in the world to accomplish all the grand feats you’d like! Capitalist money requires you to do something first, but Religious Money does not.

But there’s an even better system than creating promises in the afterlife.

Even as good as this system seems, there is still a grand bargain in place: You do something for the Religion in exchange for promises.

Although these Religious promises are cheap to make (since the Religion doesn’t really have to perform real Work to repay those promises…at least not in this life / world), the greatest system of all is one where you can completely rid yourself of the need for promises.

What if you can get people to do something without them ever expecting anything in return?

Well that would be something wouldn’t it?

It’s possible!

The way you accomplish this is by convincing the person that whatever you want them to do IS what they actually want, too.

You never have to repay the debt, the promises you make if the person doing the Work for you thinks they are doing the Work for themselves.

Religious systems are very good at this!

If you can convince followers that what the Religion wants is what the follower wants, then you can accomplish anything.

Our world is financializing more than ever.

But make no mistake – Capitalism is dying.

Capitalism is dying because we work for pieces of paper that are increasingly hard to redeem.

In a functioning Capitalist system, I can do Work for you in exchange for promises, and I can redeem these promises to get you to do something for me.

This kind of system used to exist, but it’s dying.

It’s dying because of Politics.

It’s dying because of Culture Wars.

It’s dying because of Religion.

In a true Capitalist society, if someone shows up at my door with a wallet full of promises, it’s not my place to question why they would want what they want because society owes this person a debt. And it’s certainly not my place to refuse service to them because of how they look or how they think. This person earned that Money by doing something that society already found valuable. And if we want this person to keep doing that valuable thing (whatever it may be), we better give them what they want.

If I refuse to give them what they want because I disagree with what they want or who they are, then there is a chance that person will stop doing whatever they did to earn the Money to begin with.

Increasingly, the divisions in our society are becoming deep enough where this very phenomena is happening.

The divisions in Politics, in Culture, and in Religion (I use the term Religion here conceptually rather than to refer to any actual religion) are causing us to not honor our sides of the societal bargain.

Increasingly, people are refusing to provide goods and services to people that have different Politics, different Culture, and different Religions.

This is a dangerous game.

It will increasingly pressure our Capitalist system until it collapses.

I’d like to see Capitalism survive, but it’s becoming increasingly clear that Religion is taking over.

The new Religions of our world might include things like cryptocurrencies.

The new Religions of our world might include concepts like Climate Change, Wellness, Human Rights, Ethnic or Cultural Superiority.

The new Religions of our world might include political systems of governance like Democracy or Autocracy.

Nothing is necessarily wrong with most of these Religions (though I do personally disagree with some of them). In fact, these Religions have strong and growing followers because they do appeal to people.

But Capitalism can die in a Religious world because Religion can create Money in a way that a Capitalist society cannot.

And by being able to create Money, Religions can compel people to do things that might never be possible. But not all of the things encouraged by Religion should necessarily be done.

For example, there are some admirable projects in cryptocurrencies, but many cryptocurrency projects also seem entirely frivolous. But the Religious nature of some of these projects are compelling talented people to stop doing real and necessary work needed to keep our Capitalist society functioning.

And Religions kill Capitalism when it compels its followers to not perform Work for non-believers.

If you look closely, fanatics of Religions involving Politics and Culture Wars exhibit a lot of these tendencies.

If you look closely, fanatics of some cryptocurrencies exhibit a lot of these tendencies.

These Religions do not seek to empower a Capitalist world where people are free to have different opinions…but to consume it.

In a true Capitalist world, everyone is free to have your own opinions and wants. As long as you do something for society first, society is obligated to at least humor your opinions and give you what you want.

In a Religious world, non-believers are heretics. And pursuit of any “one true religion” could end society as we know it, even if the world increasingly financializes before our eyes.

One common phrase I use a lot around here is: We are in a Chaotic era, an era of Change.

While most people are focusing purely on tech change, I think people should start paying attention to the nearly invisible shift from a true Capitalist society to a Religious one.

We are in a Chaotic era, an era of Change indeed.