How to build a State in a non State environment?

[TheCurmudgeon]

In certain societies money is not necessary or it consists of a natural resource or food item. In a more complex society that can support the infrastructure money is very important. I guess the protectorate would have to assume that responsibility.

[slapout9]

In certain societies money is not necessary or it consists of a natural resource or food item. In a more complex society that can support the infrastructure money is very important. I guess the protectorate would have to assume that responsibility.

Yes, barter can be prevalent but even that is a form of money because you keep accounts, checkbook money which is all it really is. But here is idea for you. I grew up in Florida while Disney World was being built and EPCOT. EPCOT stands for Experimental Prototype Community of Tomorrow. Disney solved the problem you are talking about, of course it was butchered by the shareholders and with Disney's death the original concept was lost. But the idea was to build a totally self sufficient city. It was designed to be totally self sufficient and evolving (constant process improvement through engineering) largely based upon the ideas of Buckminster Fuller, might want to try and Google that and see what you come up with. There were some fantastic stories published in the local paper at the time about what it would be like. Bur greed squashed it.

[M-A Lagrange]

In certain societies money is not necessary or it consists of a natural resource or food item. In a more complex society that can support the infrastructure money is very important. I guess the protectorate would have to assume that responsibility.

For the best or the worst, such societies do not exist anymore. What ever you say, even in the most remote places everything is valued on a money base. It can even become silly but the concept of money is everywhere.
It's for example on of the biggest problematic of youth integration into post conflict South Sudan.

Also, the function of central state to edit money is tricky. In many places, populations will use a foreign currency to trade. You actually can govern without using national currency.

[TheCurmudgeon]

For the best or the worst, such societies do not exist anymore. What ever you say, even in the most remote places everything is valued on a money base. It can even become silly but the concept of money is everywhere.
It's for example on of the biggest problematic of youth integration into post conflict South Sudan.

Also, the function of central state to edit money is tricky. In many places, populations will use a foreign currency to trade. You actually can govern without using national currency.

I don't disagree that money is everywhere, I just don't believe that you have to have it.

However, your second solution is much more elegant. Simply use US currency. As I understand it, it is currently one of the benchmark currencies used in the world (at least until it becomes the Chinese yuan).

Heck, we were using it to bribe everyone in northern Iraq prior to the invasion. Although another currency that is not as easy to counterfeit might be better. Maybe the Australian dollar.

Actually, the more I think about the problem the more I think an external currency would be best. The reason I preferred not having money is because non-specie backed money (paper currency not tied directly to the value of gold or silver) the value of the money is largely dependent on the trust in the value of the government. Where there is a weak government you tend to have high inflation. So if you have no government the natural response is to have no money. However, as you have pointed out, that idea is antiquated. It would be smarter to us an external benchmark currency until the territory had a stable government.

[slapout9]

Buckminster Fuller on money

At present 99 percent of humanity is misinformed in believing in the Malthusian concept of the fundamental inadequacy of life support, and so they have misused their minds to develop only personal and partisan advantages, intellectual cunning, and selfishness. Intellectual cunning has concentrated on how to divorce money from true life-support wealth; second, cunning has learned how to make money with money by making it scarce. As of the 1970s muscle, guns, and intellectual cunning are ruling world affairs and keeping them competitive by continuing the false premise of universal inadequacy of life support. If mind comes into supreme power within a decade, humanity will exercise its option of a design revolution and will enter a new and-lasting epoch of physical success for all. If not, it will be curtains for all humanity within this century.

Highlights are mine and this goes to the central problem.

[Stan]

However, your second solution is much more elegant. Simply use US currency. As I understand it, it is currently one of the benchmark currencies used in the world (at least until it becomes the Chinese yuan).

Heck, we were using it to bribe everyone in northern Iraq prior to the invasion. Although another currency that is not as easy to counterfeit might be better. Maybe the Australian dollar.

That's been the gold standard since the 70s and even today both in Africa and on this end of the world. Even as much as the dollar fluctuates most prefer to deal in USD. The Euro is not as trusted and not sure it's any harder to counterfeit based on stats in Europe.

Actually, the more I think about the problem the more I think an external currency would be best. The reason I preferred not having money is because non-specie backed money (paper currency not tied directly to the value of gold or silver) the value of the money is largely dependent on the trust in the value of the government. Where there is a weak government you tend to have high inflation. So if you have no government the natural response is to have no money. However, as you have pointed out, that idea is antiquated. It would be smarter to us an external benchmark currency until the territory had a stable government.

Excellent point ! In fact most were discerned in early 84 when half of Zaire switched to the USD for trading. They even named the trading street "Wall Street" situated on the curb across from our embassy

It wouldn't be long before few performed any transactions in local currency other than the government and military. That led to a whole new set of problems though.

[Fuchs]

That's been the gold standard since the 70s and even today both in Africa and on this end of the world. Even as much as the dollar fluctuates most prefer to deal in USD. The Euro is not as trusted and not sure it's any harder to counterfeit based on stats in Europe.

Our counterfeiters are better than yours!

[slapout9]

The reason I preferred not having money is because non-specie backed money (paper currency not tied directly to the value of gold or silver) the value of the money is largely dependent on the trust in the value of the government. Where there is a weak government you tend to have high inflation.

Excellent, you just exposed the Gold and Silver fallacy. How do you determine what gold or silver is worth....a government sets a "Price" on what it is worth and that "Price" becomes Money kept in a bank account which is why using a gold or silver standard has never worked and certainly will never work in any type of modern economy. I agree with you, you would probably be best using a foreign currency at least to start with. But debt can be crushing to developing countries.

[TheCurmudgeon]

I agree with you, you would probably be best using a foreign currency at least to start with. But debt can be crushing to developing countries.

I think the debt would be less crushing if the people lending the money did not demand a complete governmental bureaucracy. That is the whole point behind doing it as a minimalist operation - let the society develop at its own level and not demand it to be something it cannot afford to be. Of course, the expense of administering the country would fall on whomever is acting as the protector, and a cost/benefit analysis would need to be made as to whether it is worth doing in the first place. But assuming that the analysis indicates that intervention is necessary and cost-effective, then the protectorate seems to be the logical choice.

[M-A Lagrange]

Where there is a weak government you tend to have high inflation. So if you have no government the natural response is to have no money.

Actually it's not that simple. Zimbabwe as Tito's Yugoslavia show that under strong (rigid) government you have a crazy inflation.
The value of national currency is based on the international perception but also (mainly) on national perception of its value compare to external currency for non international exchange market currencies.

The natural response in a non state/government environment is, as Stan just pointed it, to go for the most stabe foreign currency.

By the way, dollars is the most appreciated curency and its easiness to counterfake is part of its popularity.

[Stan]

Actually it's not that simple. Zimbabwe as Tito's Yugoslavia show that under strong (rigid) government you have a crazy inflation.
The value of national currency is based on the international perception but also (mainly) on national perception of its value compare to external currency for non international exchange market currencies.

The natural response in a non state/government environment is, as Stan just pointed it, to go for the most stabe foreign currency.

Case in point, 84 to 94 in Zaire, then although a total cleptocracy was relatively stable, millions in foreign aid, and a very strong government/rule. The official ROE was 50 Makutas (one half of a Zaire, or 50 cents if you will) to one USD, and the black market rate (directly in front of the US Embassy) was 28 Zaires to one USD. When I departed in late 94 the rates were more than 5 million Zaires to one USD.

At restaurants most of us paid in USD or held a credit account til the end of each month. Grocery stores did not post prices on the shelves. The value of your purchase was calculated during the arduous process of ringing up your total.

[TheCurmudgeon]

Actually it's not that simple. Zimbabwe as Tito's Yugoslavia show that under strong (rigid) government you have a crazy inflation.
The value of national currency is based on the international perception but also (mainly) on national perception of its value compare to external currency for no international exchange market currencies.

Admittedly, my knowledge of economic theory is not that great. I would guess it is a question of perception, both internal and external. Do the people in the country have faith in the currency; will the people outside of the country accept it in exchange for goods. How "good" the government is at governing may or may not necessarily matter.

That being said, I think we have a consensus that using an external currency until a self-sustaining government can be formed is the best option.