Aphoristic Greek wisdom, though attractive for its brevity, can be confusing because of the possibilities it has for multiple interpretations — as when an old Stagirite said that man is a political animal, but did not indicate the purposes to be served by his observation. SFEcon posed an economic meaning for Aristotle’s aphorism in our distinctions between organisms and superorganisms: politics permit stable divisions of labor whereby higher primates create superorganisms for themselves; and these civilizations (for it pleases us to call them that) then function as instruments whereby the power and dexterity of apes become magnified in the economic efficiency of insect hives constituting the superorganisms of their entomological realm.

Many will object to our account of political cohesion in the wholly materialistic terminology most favorable to our science, and then insist that morality must be the predominant substance of civility. If this difficulty is ever to be resolved, it will most likely be in a realization that our morality formed in even more primal considerations of commercial rectitude, as argued in this passage from Nietzsche’s musings On the Genealogy of Morals:

. . .  the feeling of guilt, of personal obligation has, as we saw, its origin in the oldest and most primitive personal relationship there is, in the relationship between seller and buyer, creditor and debtor. . . . We have found no civilization still at such a low level that something of this relationship is not already perceptible. To set prices, to measure values, to think up equivalencies, to exchange things — that preoccupied man’s very first thinking to such a degree that in a certain sense it’s what thinking itself is. Perhaps our word “man” (manas) continues to express directly something of this feeling of the self: the human being describes himself as a being which assesses values, which values and measures, as the “inherently calculating animal.” Selling and buying, together with their psychological attributes, are even older than the beginnings of any form of social organizations and groupings; out of the most rudimentary form of personal legal rights the budding feeling of exchange, contract, guilt, law, duty, and compensation was instead first transferred to the crudest and earliest social structures . . . along with the habit of comparing power with power, of measuring, of calculating. The eye was now adjusted to this perspective, and with that awkward consistency characteristic of thinking in more ancient human beings, hard to get started but then inexorably moving forward in the same direction, people soon reached the great generalization: “Each thing has its price, everything can be paid off” — the oldest and most naive moral principle of justice, the beginning of all “good nature,” all “fairness,” all “good will,” all “objectivity” on earth.¹

Crane the contractor approaches Wolf the lumberman for a load of wood with which to complete a row of houses. Wolf lets him take the wood, debiting his accounts receivable. Crane credits his accounts payable. Such practices are a commonplace of business, and generally referred to as ‘vendor financing’.

At the end of the month Crane has not sold any houses, so he asks Wolf to carry his debt and Wolf agrees. Crane begins paying Wolf the going rate of interest on his account. Have not Crane and Wolf thus created money in the amount of their account? An answer to the affirmative is given through consideration of the effect that a preponderance of such activity has on the value of the currency in which these accounts are denominated.

It is especially important to emphasize for later reference that this bit of inflation occurs even though no coins or bank notes were created by the transaction — this even though the accounts created are certainly denominated in the coin of some realm, perhaps even a realm that passed into history long ago. Note also that this creation of money has its inflationary counterpart in that a quantity of lumber was removed from the market, is no longer for sale, and therefore exerts no downward pressure on prices.

It is now six months later and Crane has sold a house. He chooses to pay his debt to Wolf rather than continue paying him interest. Reversing the logic that brought us here, must we not now say that Wolf and Crane have annihilated money in the process of squaring their accounts? Again, permit us to emphasize that no coins or bank notes were destroyed by Crane’s voluntary business decision to terminate his connection with Wolf.

there’s nothing new about virtual money. Actually, this was the original form of money. Credit system[s], tabs, even expense accounts, all existed long before cash. These things are as old as civilization itself. True, we also find that history tends to move back and forth between periods dominated by bullion — where it’s assumed that gold and silver are money — and periods where money is assumed to be an abstraction, a virtual unit of account. But historically, credit money comes first, and what we are witnessing today is a return of assumptions that would have been considered obvious common sense in, say, the Middle Ages — or even ancient Mesopotamia.²

The Federal Reserve Board controls our money supply.³