The great intellectual vice of modern economics is to create the delusion that transactions are real, and everything else — you know, reality itself — is slightly less so. It has, bizarrely, made us victims of a tool, money, which we ourselves created. Understanding that mistake is crucial if we are to escape the Alice in Wonderland rabbit hole we have jumped into.
Money should serve, not rule. It is an essential instrument, but that is all. Recognising that financial systems are a human creation rather than natural systems governed by 'capital flows' — and all the other second rate nautical metaphors that economists are so fond of — would be an important step to conceiving a more robust and equitable system. To ask what kind of society we want and only then work out what we want money to do for us is to put the horse back in front of the cart.
Even critics of capitalism fall into the error of treating transactions as the primary reality. It is routinely claimed that the capitalist system is unsustainable because it relies on endless growth (by which is meant consumption) in a world of finite resources. This is misleading. Capitalism relies on growth in transactions, and transactions are not the same thing as consumption. Financial activities, for example, are transactions but consume few resources; they are usually small bits of digital information. Paying for a service like physiotherapy involves a transaction but no significant consumption of resources need occur.
Because of increased efficiency in primary industry and secondary industries there has been a shift in developed economies towards services and so called 'knowledge industries' (which do not operate on scarcity because knowledge can be sold or shared without being lost to the owner). It has led to dematerialisation, suggesting that if there is over-consumption of resources it is because we have designed systems predicated on creating waste. It is possible to reconfigure that, have a system in which transactions go up while depletion of finite resources declines.
Another myth created by contemporary economics is the claim that markets are always, ipso facto, right, and if only governments would get out of the way then people would self organise into a materialist utopia. Like all the better deceptions, it has a kernel of truth. Markets do self organise, and they do seem to have a collective intelligence that exceeds the sum of the parts. They