I have been asked to explain why I constantly refer to what I earn as “my money”. The suggestion being that since government prints the money it is actually the government‘s money and I should be grateful for whatever amount they allow me to retain. Principally, I am claiming ownership of the value (my) money represents because it’s value I created with my own body and mind. The money itself is simply a substitute for the value I created.
Government did not create that value; they simply provide the service of facilitating exchanges and protecting property. Government coins money to ease simple exchanges of valuable property and labor. That service provides a value for which we pay a percentage (taxes), but the initial value comes from the labor of the citizens. As such, the money which represents that value belongs to those citizens who labor. On the face I have difficulty understanding the question as the answer seems self-evident to me. However, since it has been asked of me repeatedly I will break out the sentiments that inform my statement when I reference “my money”.
To begin, we must bracket and put aside questions about the money itself. Before we can talk about who owns the money in my pocket we must understand the concepts of ownership and value. These two concepts, what Plato would call ideas, are primary to any discussion of money because the concept of money flows first from value and ownership.
What is value? In some ways asking for a definition of value is philosophically akin to asking for definition of “being”. A standard characteristic of value is that it’s subjective and relational. It is an attempt to quantify how much individuals desire something. Gold is just a shiny rock and oil is just a flammable organic liquid, valuing these items in their natural state any more or less at a given moment is not connected to any change in their characteristics. When labor is applied to these items, labor which brings them from their natural state, they can be turned into things people desire. It is from this that they derive their value.
The refined product has more value than the raw product because labor has been added to it. The new value represents the base value and the value of the labor combined. The base value of the unrefined product is simply an approximation of what the eventual refined products may be worth. Oil in the ground has value, oil out of the ground has more value, and oil refined into gasoline and kerosene has even more. The additional value comes from the labor applied to the oil. However, all of this value, that of the material and that of the labor applied to the material, is still only a function of how many other people desire that material in its various forms. Something has value when lots of people want to own it.
This brings me to the concept of ownership. That which you own is said to be your property, you have a claim to it. Why? Who supports or asserts your claim? English Philosopher John Locke argued that the individual ownership of goods and property is justified by the labor exerted to produce those goods or utilize property. (Second Treatise, Chapter 5). In a sense this means that if I pulled it out of the ground, or shaped it, or built it, I own it. Locke also goes on to say that nature on its own provides little value to society but that the labor extended in the creation of goods imbues those goods with greater value.
I am positing that ownership of property is created by the application of labor. I took down a tree, used the wood to build a house. I planted seeds and grew food to feed myself. I killed and butchered a dear for the same reason. I pulled rocks from the ground to fashion tools and ornaments. All of these things are now mine because they are the fruit of my mind and body. This ownership precedes any claim by the government. Government comes in after the fact for protection of my rights to the property I own by virtue of my labor. Even though I provided the labor to pull it from the ground and shape it, others may apply labor to take it from me by force.
This is why we decide to form a society. If I have to sit in my house and protect my property from others who seek to take ownership of it, I have less time available to produce food or materials or acquire more property. However, if I gather some people together we can decide to take turns keeping watch for criminals. If I am really efficient we establish a government to hire professionals to do the job for us; trading things of value for the labor of security professionals. This government can also serve as a neutral party to arbitrate disputes between members of the society and establish common weights and measures so trade can be accomplished fairly.
Now that we have analyzed the nature of value and property we can apply these concepts to the nature of money. We empower the government to establish a mutually accepted currency which we agree to accept in place of actual goods. Trading the wheat I grow for some sheep from my neighbor so I can get wool to bring to the weaver and meat to bring to the butcher is wildly inefficient. We empower government to coin money because it makes it easier to trade if we all agree on the value of a single unit of trade. It could be coffee beans just as easy as gold coins or scripts of paper. After the Soviet Union fell, while the ruble was worthless, a fairly effective system developed where people used cigarettes for the small things, vodka for middling and Courvoisier for the big purchases. essentially because we all agree to accept that money as a substitute for the actual products we value. That’s all money is, a substitute for things with actual value.
If money is just a substitute for the value I created, then the money I earn in exchange for my labor is no less my property than the labor I exerted to earn it. The things I buy with money are said to be my property because I purchased them. I entered into a contract where I agreed to give over some money for a finished product. When I purchase a television I am trading the accumulated value of some of my labor, represented by the money in my hand, for the value of the labor involved in taking various materials and shaping and combining them into a television. The television is mine, as is the money I used to purchase it.
Government is entitled to a percentage; to pay for the services they provide to facilitate that exchange but the money in my pocket is not theirs. Essentially, they were hired by the citizenry to produce the money so we could have a simple medium of exchange. Just like hiring someone to pull rocks out of the ground for me, the money we hire government to produce is ours. My money represents the value I produced with my labor. If my labor belongs to another I am slave. I am no less a slave if the money which substitutes for the value of my labor belongs to another, even the government.