Paul Davidson (economics prof. at the University of Tennessee) suggests
as much. He says (in green):
“… one wants to explain the empirical fact that involuntary unemployment
is only associated with money-using contractual economies. In other words, real
economies that do not use money and money labor contracts to organize
production (e.g., feudalism, slave economies, South Sea Islanders discovered by
Margaret Meed, etc) may possess important nonlinearities and even an uncertain
future — but there is never an important involuntary unemployment problem.
Slaves are always fully employed as well as are serfs in feudalism…….Finally it
should be noted that herds of animals, schools of fish, etc organize together
to solve the economic problems of What? How? For Whom? Without using money,
contracts or markets, these animals still face complex nonlinear problems in
their search for food and interaction with other herds. Yet animals never
suffer from involuntary unemployment!”
I have doubts. My hunch is that as economies become more complex, barter
becomes impossible, so money has to be used. And unemployment rises. But
unemployment results from the complexity, not from money I think.
To illustrate with reference to a simple Robinson Crusoe economy… Crusoe
lands on desert island where there are about ten families who eat fish, and
make grass skirts to wear and mud huts to live in. Crusoe’s speciality is
fishing. So he does that, which means the price of fish in terms of grass
skirts and huts will drop. But that increases demand for fish, so everyone is
employed. (That’s Say’s law at work – at least as I understand Say’s law).
But if the same economy used money, much the same thing would happen:
the price of fish would drop, etc etc. You get the picture.
So the introduction of money does not exacerbate unemployment. And here’s
another illustration.
Suppose the US or European economies tried to abandon money and employ
barter instead, the result would be complete chaos, including (I suggest) far
more unemployment than exists at the moment.
Conclusion: money doesn’t exacerbate unemployment. However, complex
economies HAVE TO employ money, and unemployment is associated with complex
economies.
H/t to Mike
Norman.
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