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Gold's Fools

“…they value [gold] no farther than it deserves—that is, in proportion to its use. So that it is plain they must prefer iron either to gold or silver, for men can no more live without iron than without fire or water; but Nature has marked out no use for the other metals so essential as not easily to be dispensed with. The folly of men has enhanced the value of gold and silver because of their scarcity…”

-Sir Thomas More; Utopia



Born in 1478, Sir Thomas More was canonized a saint in 1935, despite executing John Tewkesbury and Richard Bayfield, whom More celebrated was “well and worthely burned,” for attempting to distribute English translations of the bible so that more common folk could read it. But I suppose it makes sense. Being Lord Chancellor to King Henry VIII and recognized by Pope Pius XII, More had friends in high places. And as most practicing Christians will proudly tell you, spiritual eminence after death is not what you do so much as who you know.


To his credit, Thomas More never let his knowledge of the world get in the way of envisioning how the world should be. In his famous work, Utopia, which was required reading for me in high school, but I don’t know about you, he lays out his idea of a perfect society through a fictional example in the recently discovered Americas.


It’s easy to take the title ironically. For one thing More can’t seem to get past his traditionalist streak, “wives serve their husbands, and children their parents, and always the younger serves the elder.” There’s also a paucity of details in crucial areas which makes him come across as naïve. Like where he says, “If any man aspires to any office, he is sure never to compass it.” That’s a nice idea especially in the largely classless society described by More (where powerful people like Caesar and Trump can’t feign disinterest in power while actively seizing it), but it’s still impossible to enforce. Timothy Kenyon wrote about More’s problematic view of freedom in The Problem of Freedom and Moral Behavior in Thomas More's Utopia. Slavery also exists and is sanctioned by law, but only as a form of punishment (just like in the United States of America today).


To his credit, many of his detracting elements, while often simply reflecting his own era’s biases, often reflect a legislator’s thoughtful, even if misguided, understanding of human nature. And take a look at this: in this society, punishment is held proportionate to the crime. Basic material needs are met for all people. Leaders (called magistrates) are elected to represent communities within a society. The death penalty is abolished. Religious beliefs are respected. And while there is a strong emphasis on community, how individuals choose to live their lives is largely respected as long as it does not come at the unwilling cost of others. You know, radical ideas like that.


The thing about the word “utopia” is it's based on the Greek word for 'nowhere' (which means it doesn't exist), which I don’t think is lost on Thomas More. Odd as it might seem to some readers, many people, by which I mean me two years ago, would find his most unrealistic proposition to be related to money (as opposed to say the unrealistically balanced and righteous magistrates). In a passage I quoted in the opening, his reasoning seems to be that since gold has no actual use, it is only the vanity of humanity that compels people to prioritize its possession and may even perpetuate economic inequality. The solution, according to Utopia, is to remove society’s value for gold (and therefore money) in a society. After all, the love of money is the root of all evil.


“Wait just a minute,” I would have said two years ago, “Doesn’t this fool realize that money is a neutral force (at least in the long run)? That it merely reflects the scarcity of a good or service in comparison to how much that good or service is valued in society? If you removed money, you’d still have the problem of people hoarding goods and prioritizing frivolous things only without the guidance of prices with which to optimize our consumption and savings. Society is so complex that without money to establish prices, we would soon have an abundance of things we don’t need and a shortage of essential things. The problem is not money (in this case gold), the problem is greed in general. To attack money itself is to miss the root of the problem.” I’m here to tell my pragmatic friend of two years ago, and other equally pragmatic colleagues and friends, that you’re missing the point. That Thomas More is reflecting an ancient wisdom that has been lost to us to our bourgeois society at the cost of stability and justice.


Because gold isn’t just a commodity from prehistoric times, it’s almost universally sacred and deific. The Mesopotamians and the Mesoamericans both applied it abundantly for worship and sacred architecture since prehistoric time. In Exodus, God was said to carry his sacred testimony in an ark covered in gold and, in turn, nearly lost a popularity contest to a calf also made of gold. And gold’s dual status as a substance for both the profane market exchange and the sacred alter was blended more often than not. The Conquistadors’ famous motto was “God, Glory, and Gold,” and Columbus’s zealous motive for sailing the Atlantic Ocean in the first place was to acquire enough gold for Spain to fight another Crusade and reclaim the Holy Land. Clint Eastwood called a sack of gold “sunshine in a bag” – gold is radiant and of the cosmos.


Like most things held with sacred reverence, there’s a strange mixture of awe, delight, and fear associated with gold which is expressed in our literature. In “The Pardoner’s Tale,” one of about three of the Canterbury Tales I still remember from high school, three young men wanting to cause trouble, as young men do, look for Death is so they can fight him. Eventually an old man informs them that Death is under a tree on a hill in a specific location. The men go to said location and find a large sack of gold. If you have any intuition for narrative, or a solid understanding of Game Theory, you probably know what happens next: the men contrive to have each other killed to keep the gold for themselves and they all succeed in the first part. And then there’s the tale of Midas who wished for the god, Dionysus, to make everything he touched turn to gold. By the end of the story, Midas is predictably repentant and has the wish undone. I also don’t think it’s an accident that the One Ring in The Lord of the Rings was made of essentially indestructible gold. Consistently, gold serves a similar role as a serpent, Siren, or temptress in old stories: possessively, almost transcendentally, alluring, sometimes even subliminally erotic, and extremely dangerous.


The problem with scientific/positivist/literal thinking is it tends to obscure rather than eliminate biases, superstitions, and irrational behavior from bygone days. We consequently don’t notice them even when their impact is prevalent as ever. Seemingly dry and straight-forward economics is not immune. In the first volume of Capital: A Critique of Political Economy Volume I, Karl Marx says, “A commodity appears, at first sight, a very trivial thing, and easily understood. Its analysis shows that it is, in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties” (Marx, 47).


Marx tried to explain the rationality behind the absurdity that Moore addressed in the opening: why precious things like gold and silver, which “Nature has marked out no use,” can fetch more money in the market than “useful” things. Part of the problem, Marx claims, is that the market often fails to differentiate between the use-value of a commodity and the exchange-value. One of his examples is a carpenter who turns wood into a table (a commodity) as use-value. Meanwhile, you can buy a $666 burger with literal gold on it from “Douche Burger” in New York City. You notice there is some use-value here, everyone needs to eat, but the exchange-value overwhelmingly takes precedence. Often enough the distinction is blurred and not easily dissected.

Money itself is some sort of this nebulous thing that is simultaneously a commodity and not a commodity. Its exchange is used to determine the price and, implicitly, the value of everything. This creates a kind of illusion of every item and service having an objective, irrefutable, value that is reflected by the price mechanism even when contrary to evidence. Marx called this power that price and money had over our way of thinking, not just our motivations, Commodity Fetishism. In case you're worried I’m taking the erotic sublimination too far, fetish didn’t refer to anything sexual until Alfred Benet in 1887. By “fetishism” Marx is referring to a mundane object which is said to be imbued with supernatural characteristics like a totem or, as I’ve just argued, gold. It’s only fitting that during Marx’s time, the countries he lived in relied on the gold standard for their currency.


This criticized and absolutist logic is rejected in most morally conscientious circles, and yet most people unwittingly subscribe to it in their daily lives. It’s also what’s explicitly taught in business school. In The Value of Everything: Making and Taking in the Global Economy, respected economist, Mariana Mazzucato, says,

“When students learn about microeconomics in the classroom (e.g. how prices are determined, including wages), they are not told that this is only one of many different approaches to thinking about value. It is, as far as they are concerned, the only one – and, as a result, there is no need to refer to the word, ‘value.’ The term essentially disappears from the discourse. It is simply Microeconomics 101. (Mazzucato, 71-72).

I was there. I took Economics 101 and Microeconomics. This is what they teach us. The value of a good or service is interchanged with price.


Midas’ obsession with his commodity of perceived innate value (gold) unintentionally lead him down a path as absurd as it was perverse when he momentarily killed his daughter by turning her into gold. By building our economy on the notion that a commodity’s value is irrefutable, our results are also absurd and perverse. To go back to Marx, “It is, however, just this ultimate money form of the world of commodities that actually conceals, instead of disclosing, the social character of private labour, and the social relations between the individual producers” (Marx, 50). Through price mechanisms, the value brought by the worker in creating a good or service is obscured. No one would argue that the work of a teacher, firefighter, or honest and conscientious police officer is less valuable to a functioning capitalist society like our own than the work of an investment banker who’s ultimate goal is to increase profits for a massive company, often by small margins. In fact, Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar has done an excellent job in showing situations where the hypothetical investment banker is doing more harm than good. Yet who’s paid more? You could argue this distortion comes from the fact that the police officer is a government worker and that the government distorts prices, but what about the nurse, the truck driver, or the farmer? The fact remains that the investment banker is paid more not because she necessarily brings more value to an economy, but because she fetches a higher profit for an interested group. But all of this is obscured by the fact that price and value are inappropriately interchanged.


Over the last few decades, wages have been stagnating while the wages of the top 10% have grown exponentially (DeSilver). Additionally, the cost of living (higher education, housing, the necessity of two cars, etc.) is ever-growing. There are a number of unfortunate rationalizations and justifications, and I’ll get to them some other time, but right now I’m talking about people who say the rich are getting richer because they are the ones contributing the most to the economy and their wealth is a mere reflection of the deserving. Lloyd Blankfein, previous CEO of Goldman Sachs, justified the lavish bonuses and salaries of his investment bankers in 2009, in the midst of mass unemployment largely caused by those same bankers, by saying, "The people of Goldman Sachs are the most productive in the world" (Mazzucato, 3). OK, buddy.

By this logic, many hardworking people really are the undeserving. When workers complain that their wages are not keeping up with the cost of living, politicians dismiss the problem by telling them to learn to be self-sufficient and stop asking for handouts, as though a decent wage for a good day’s work is supposed to be a handout or theft of some kind. During a crisis, these same politicians sing a different tune for these essential workers. Again, without reform and without realizing the irony that the underpaid workers are “essential”. Price, and by extension wage, is an all-encompassing totem to these people. An absolute truth of what work is worth and at what value. Price is a fetish if you will. I don’t mean to shame these people, but they have a money fetish (if you catch my meaning).


This is not to say that prices do not serve an essential role. Austrian economist extraordinaire and Nobel-prize winner, Friedrich Hayek, explained how essential prices were to coordinate a complex economy to optimize the allocation of resources and effort. Something that would be nearly impossible otherwise. In “The Use of Knowledge in Society” he says:

"Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply" (Hayek, 526).

Hayek never had the power to inspire with words, but his reasoning checks out (at least in our current market economy) and it applies to both price and wage. My problem is not the use of market-based price mechanisms per se, but the deification of price mechanisms. In The Exorcist, Father Merrin says, “the demon is a liar, but also mixes lies with the truth.” Price mechanisms tell the truth, but they also mix the truth with lies. Lies which have become ignored over time.


Mazzucato addresses the absolute nature of prices when she says,

“Marginal utility and scarcity need a couple of additional assumptions for price determination to work as intended. First, all humans have to be one-dimensional utility calculators who know what’s best for themselves, what price to pay for what commodity how to make an economically rational choice. Second, there must be no interference, for example from monopolies, in price setting” (65).

She’s obviously not arguing against people’s ability to make their own decisions, but for us to not be so singly reliant on economic models that rely on every single individual meeting these characteristics.


To be fair, Economics 101 courses don’t ignore the fact perfect standards aren’t always met and ideal outcomes not always achieved. Many exceptions are relegated to “externalities.” Generally speaking, whatever benefits or harm a company brings to a society is supposed to be reflected in its net worth. If a company makes a product that is actually needed or wanted for a reasonable price, they will profit more than a company that charges a premium for a product that is neither wanted nor desired. Externalities make the exceptions where society benefits or is harmed by a company in a way that isn’t reflected in the company’s overall net worth. A company saving money by legally polluting a community’s water source is an externality. So is giving exceptionally good training to your employees that makes them valuable employees for other companies.


The problem is that ideal circumstance (all else being equal) are presented on day one as the norm and repeated throughout the course, and the externalities portion is covered over a single class period and mentioned about once on the final. What kind of impression is that supposed to leave a student on how the world works? Especially when it’s possible that externalities effect the economy far more often than not but go unobserved because students are taught that equilibrium is the norm unless it can be shown otherwise. Rhetoric matters and how information is presented matters.


This might be obvious to people who are not economists, business leaders, and policy makers. I think it’s obvious to most of these people too. The problem is enough people (or the right people) are persuaded by these price-is-right arguments while the rest of us remain oblivious and the results are reflected in our economy over the last few decades.

A further consequence of this unrecognized distortion is that the wealth earned by contributing something of value (like creating Microsoft) is not differentiated from rent-seeking (when someone owns a precious resource like land, oil, or patents and uses it to squeeze as much money out of buyers as possible). The former is beneficial to the economy, and you can make an argument that such a laborer is worthy of their “wages,” but that’s for another time. On the other hand, just like deciding how much of a commodity’s value is use-value and how much is exchange-value, it’s not always clear if the rent-seeker is more beneficial or harmful to an economy. By allowing such a practice to run rampantly unchallenged, policies that are conventionally considered helpful to an economy, like deregulation, often increase the opportunity for rent-seeking instead of wealth creation. Rent-seeking, since it carries substantially lower risk than innovating, often becomes more appealing for businesses that would otherwise have come up with the next big idea. I’m not sure it’s a coincidence that economic innovation has deteriorated since the 1970s, a phenomenon explored by Robert Gordon in The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War.


Some companies hold on to land so that the price of real estate goes up with rent. Other companies hold on to the insulin patents and charge a criminal price, bleeding the economy dry. Thanks to rent-seeking, the price of essential goods go up at the expense of the consumer while conventional measures of economic well-being (like GDP) say the economy is doing very well (just look at how much money these companies are making). Measurements like GDP often struggle to differentiate between who is making money by contributing to the economy and who is making money by (legally) taking from it.


The sad part is concern over the difference of value added to the economy and price extracted from it had been a central concern for economics since its foundation in the 1700s. David Ricardo (one of the founders of classical economics along with Adam Smith, Karl Marx, and others) warned that too many big players in Britain were getting rich by possessing large quantities of a limited resources and charging a premium. He even predicted that Britain’s economy would be at the mercy of landlords as the population exploded while land availability stayed the same. His apocalyptic prediction turned out to be wrong thanks to the innovation of skyscrapers, where your neighbors are now vertical of you instead of horizontal, and modern utilities like air conditioning and heating, making the sultry desert and frigid tundra habitable. But the rent-seeking landlords caused a lot of grief for working people, nonetheless. They still are and will continue to do so unless tenants express interest in living in Antarctica or the moon (and considering the crafty rent-seekers, that still probably won’t be enough).


It happens too often in culturally significant centers (like academia) that the losing idea isn’t always beaten by superior logic so much as it loses power to engage in debate and is then ignored. According to Mazzucato, that’s exactly what happened here; “the debate between the ‘classicals’ [who ran more in line with Ricardo, Smith, and Marx] and the ‘neoclassicals’ [who more or less see price as the irrefutable representation of value] would later disappear so that most students of modern economics don’t even know it happened” (70).


I don’t have a solution except that we think more clearly as a society as to who is truly contributing to our economic well-being and who is taking from it and redirect policy and attitude accordingly. Politicians, policymakers, and pundits have done a fine job portraying the “takers” in our economy as the ones who have had the most taken from them in the first place and the real “thieves” as our greatest contributors with intellectual sleight of hand that most of us haven’t noticed. Hypnotized into equating wealth with value, just as the ancients warned us not to equate gold with value, we are committing a terrible injustice to our working people.

"He gave her gold and purple pall to wear, And triple crown set on her head full high, And her endowed with royal majesty: Then for to make her dreaded more of men, And peoples hearts with awful terror tie, A monstrous beast bred in filthy fen"


- Edmund Spenser; The Faerie Queene







Kenyon, Timothy. “The Problem of Freedom and Moral Behavior in Thomas Mores Utopia.” Journal of the History of Philosophy, vol. 21, no. 3, 1983, pp. 349–373., doi:10.1353/hph.1983.0080.



Marx, Karl. Capital: A Critique of Political Economy Volume I, https://www.marxists.org/archive/marx/works/download/pdf/Capital-Volume-I.pdf



Mazzucato, Mariana. VALUE OF EVERYTHING: Making and Taking in the Global Economy. PUBLIC AFFAIRS, 2020.



DeSilver, Drew. “For Most Americans, Real Wages Have Barely Budged for Decades.” Pew Research Center, Pew Research Center, 7 Aug. 2018, www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/.



Hayek, Friedrich A. “The Use of Knowledge in Society.” The Use of Knowledge in Society, vol. 35, no. 4, Sept. 1945, pp. 519–530. The American Economic Review, https://statisticaleconomics.files.wordpress.com/2013/03/the_use_of_knowledge_in_society_-_hayek.pdf.

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