Vīta Brevis, Wit Artefāctōrum Ætērna Podcast

The Story of Money: How Delayed Gratification Matters

I mentioned the concept of delayed gratification in passing back in Episode 010 [https://ashstuart.substack.com/p//ecfin010-the-story-of-money-the-core-foundations-of-trade] while talking about certain elements alongside the phenomenon of trade. Let’s not delay any more! We haven’t met our fictional friends in a while, so let’s go back to the setting in Episode 012 [https://ashstuart.substack.com/p//ecfin012-the-story-of-money-understanding-property-rights] where Steve, Bryan, Brenda and Irene are sat in the garden looking around as Bruno the dog and Iris the cat are doing doggy and catty things around. Specifically, Bruno brings in a bone and buries it next to his kennel, which leads them to digress from their task at hand to philosophize. It’s a sunny afternoon after all and the beer won’t drink itself! Brenda is like, isn’t that clever of little Bruno? Irene going, yeah, he’s saving up for the future, very prudent. Bryan reacts by saying, pah, what’s the big deal, he’s just burying a bone, with Steve adding, well, I mean humans don’t do such silly things, if I have a good sandwich in my hand, I’d eat it right away, why let it rot. Brenda snaps back, no Steve, that’s not it, Bruno is showing restraint now for enjoyment later. Bryan starting to see, oh wait, that’s right, Steve, we do such things all the time as well, with Irene adding, that’s true. Steve, I mean after every harvest don’t you store up some of the produce for the next season’s planting, surely you don’t eat it all right away? When the Waiting’s Worth It Yes, that’s it, it’s that simple. Delayed Gratification is simply about sacrificing the prospect of immediate reward in favor of something likely more valuable at a future point in time. While this is mainly treated under the discipline of psychology, this, like many other concepts in that domain, has significant economic bearings as well. So let’s explore it from that angle. This can be compared in many ways to the notion of the time value of money we discussed in Episode 007 [https://ashstuart.substack.com/p//ecfin007-the-story-of-money-time-and-its-relationship-with-money], along with capital we saw in Episode 005 [https://ashstuart.substack.com/p//ecfin005-the-story-of-money-is-capital-just-money] - money, or using money and capital can be put to good use right now rather than later, allowing it to produce a return, a sort of a mirror image of delayed gratification. It could even be human capital, like even though you want to stay in bed, it’s Monday morning after all, you resolve to and do get up early to write, as scheduled, that new piece about, let’s say, forgoing immediate enjoyment for long-term gain! In making such choices, we are also applying the idea of opportunity cost. The cost of the lost opportunity of doing something productive and thus more rewarding longer-term is what you pay by snoozing and staying in bed (although there are times it may be justified!) The most famous experiment around this is the 1970s Stanford University ‘marshmallow experiment’, where 4-year-olds were offered either one marshmallow they could eat right now or had to wait, in a closed room unsupervised, to get two later. (It’s almost as if one cannot ever write a piece on this topic without mentioning this particular experiment - it’s the marshmallow tax!) Kids who turned out to show restraint in that experiment were generally seen to be more competent and successful later in life. But let’s look at more specifically economic ramifications. As you Slow So Shall You Reap Back in TecC 10 [https://ashstuart.substack.com/p//tecc-10-seeds-of-civilization-the-first-great-bargain-sowing-time-reaping-change] in my other series here on the story of human innovation and progress, I spoke about the advent of farming - human existence in sedentary agricultural lifestyle is like the last 5 minutes of a 24-hour day, compared to the hunter-gatherer living over the rest of that 24-hour analogy. And the central dilemma there was just that - how did the early farmers develop, first the idea, and then the ability, both individual and institutional, to store up the seed for future productive use rather than consume it right away - it may be obvious to us but we must be mindful it was a completely new idea to them representing an intellectual breakthrough! There’s another classic example: education. The human species is said to have the longest childhood in the animal kingdom, and given childhood is that phase for any individual creature to learn the realities of life as relevant, humans expend the greatest effort in providing for it, unlike any other species. And this - delayed gratification, scales from the individual to societies, institutions and nations - it’s at the very foundation of what we generally call civilization. Those of these bodies that are constitutionally built for long-term thinking and action may be expected to show better outcomes, economic and otherwise. (The question of how much short-term restraint many of our institutions from corporations to governments show compared to the 4-year-olds is left as an exercise to the reader.) So, yes, this is a lot more than a dog and a bone, we’ve seen how this seemingly unrelated idea is intimately linked with concepts we’ve touched on in previous pieces, from capital to interest (time value of money), debt to opportunity cost to trade itself. But there’s one other key concept vital in crystallizing the concept of delayed gratification in more specifically economic terms, one key concept needed to put flesh on the bone, and that’s what’s coming next. So between now and a week to come: it’s delayed gratification! Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC 10 - Seeds of Civilization: The First Great Bargain [https://ashstuart.substack.com/p/tecc-10-seeds-of-civilization-the-first-great-bargain-sowing-time-reaping-change] This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com [https://ashstuart.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

The Story of Money: Exploring Standardization

So, much like with the previous episode, I have indeed written earlier about standardization, but as I said there in the context of innovation. Here we take a slightly different angle. Once more, that older innovation-series article, TecC 19 [https://ashstuart.substack.com/p//tecc-19-footprints-in-dust-how-hidden-hands-once-worked-unlikely-wonders] demonstrates by way of fiction how the idea might have arisen. So taking that as our standard, let’s proceed! We saw in the very first episode of this series, Episode 001 [https://ashstuart.substack.com/p//ecfin001-the-story-of-money-what-is-money-anyways], that money can be seen as a social contract, which essentially works only if people agree to give the same meaning, value, to a certain piece of paper or other artefact. Back there I also likened this aspect of money with language. With small differences, a standard is the same, isn’t it. From the perspective of this series, standardization would have been the logical outgrowth of the foundational concepts we’ve previously touched upon, especially trade, Episode 010 [https://ashstuart.substack.com/p//ecfin010-the-story-of-money-the-core-foundations-of-trade], and specialization, Episode 011 [https://ashstuart.substack.com/p//ecfin011-the-story-of-money-understanding-scarcity]. Let’s dig a bit deeper into what might be different or unique about this concept. Intuition to Institution In the earliest times of human interaction via practices such as trade, especially as the scale and scope of such exchange expanded beyond a small isolated community, the need to identify compatible agreed-upon ways of doing things across group divisions, or at least the benefit of doing so would have at some stage become apparent. It would lower the barriers to the matters of exchange - in modern parlance, it would lower transaction costs - an economics term that I believe may be more widely used and understood beyond the field. (My intent in my writing is to use purely non-technical terms to describe these phenomena, but this one’s a glaring violation!) But perhaps, the phenomenon of standardization deviates from the emergence of money, and especially language, somewhat sooner, in the involvement of a centralized body to oversee its use. This could be a standards body constituted of the different participants defining and policing the rules of engagement, comparable to the developments we traced in Episode 002 [https://ashstuart.substack.com/p//ecfin002-the-story-of-money-what-is-the-market] around the growth of the market, or it could be an even more overarching institution, the State, especially as the scale increases. Quite often, such bodies may be semi-autonomous arms of the state. So one might say that even if at first emergent, practices at some stage undergo a certain formalization to become a standard. The Standard-Bearers In both this and the innovation (TecC) series, time and again there has arisen the question of the dichotomy between two systems of organizing anything: top-down vs bottom-up. Usually, as we’ve seen, the forces at play in each case have appeared somewhat in opposition to the forces in the other dynamic. However, standardization is one of those things that’s pertinent in not just top-down systems, where it’s easy to conceive of it, but also in bottom-up systems. The classic telephone system was built as a top-down, central exchange-based standard. The Internet, a bottom-up system where any node can join the internetwork, is an expressly protocol-based design, where the protocol serves as the standard. One may even argue that standards, by way of the just-mentioned protocols, are even more fundamental in bottom-up systems. And as I’ve said before, the best clues to this come from nature / biology. It can be argued that every aspect of planetary behavior, and every aspect of cellular behavior, operate on the basis of some kind of a ‘standard’, whether encoded in the laws of gravity or embedded in the codes of DNA. But coming back to human affairs, standards are still pervasive. But we usually only realize this when something goes wrong: you’re at the nice cosy cafe and you try to stick your charger cable into the socket and it doesn’t fit! So we may conclude that standardization is an unalloyed blessing in our lives. Or may we? Promulgating a standard, which means eliminating other ways of doing that particular thing, we may say, has its own opportunity cost (Episode 009 [https://ashstuart.substack.com/p//ecfin009-the-story-of-money-what-is-opportunity-cost]). In the design of complex systems, how do we know this approach to formulating a standard is in the long-run better than that? Only where there is some sort of competing standards can we have an opportunity to see which one’s working better? But then if we have multiple standards, are they even standards? (And often there’s the spectre of the wrong standard prevailing, owing to custom or other factors - the QWERTY keyboard most of us use was expressly designed to slow down the typists banging away on those early typewriters that jammed easily!) So yes, the fundamental question is - what is the right balance between standardization and variety / competition? And then, the top-down/bottom-up dichotomy comes back. At what stage in the development of a new system do we formalize emergent practice as a standard? What is the right engagement of top-down versus bottom-up forces in this? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC 19 - Footprints in the Dust [https://ashstuart.substack.com/p/tecc-19-footprints-in-dust-how-hidden-hands-once-worked-unlikely-wonders] - one of the greastest examples of standardization ever * TecC 29 - Common Grounds: The Neat and Sound Worth of Grassroots Growth [https://ashstuart.substack.com/p/tecc-29-common-grounds-the-neat-and-sound-worth-of-grassroots-growth] - the emergence of bottom-up standards This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com [https://ashstuart.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

The Story of Money: Understanding Specialization

In fact, I’ve previously written about specialization, in the context of exploring how innovation accelerated at a crucial historical juncture - TecC 43 [https://ashstuart.substack.com/p//tecc43-making-work-art-making-art-work-engineering-excellence]. However, let’s look at this from the perspective of our story here. And indeed, apart from the historical angle, I do have a fictional depiction around how this arose, in that episode. But, fiction and history apart, let’s now focus on the core concept itself, in other words, let’s specialize! In Episode 010 [https://ashstuart.substack.com/p//ecfin010-the-story-of-money-the-core-foundations-of-trade] we touched upon the specific concept of trade. Whilst in the smallest isolated communities, every member would have bothered with every aspect of making things they need, from trade, ie the ability to get certain items from someone else in exchange for what you have or can make, it naturally proceeds that different individuals could focus on making the different things they need. This proffers a few striking advantages to the group as a whole. Different individuals have different propensities, so they might be inclined to do, or learn to do, one type of work better than another. It has been shown that broadly it’s easier to focus on a few things than to keep switching tasks all the time: code-switching is hard, it’s a cognitive load (just imagine ejecting and inserting separate CDs into your working personal computer every few minutes!) Furthermore, there is a limit to how many skills single person can master - the classic jack of all, master of none, stuff. As communities get larger therefore, with their needs growing, it becomes quite compelling for such division to emerge or be enforced. Divide et Coopera The classic explanation of this phenomenon, division of labor is of course that by the economist Adam Smith in the late 1700s. But let’s take a look at a more recent example or argument of this at play. There is this question, should a very highly skilled professional, say a brain surgeon, wash one’s own car before heading to work in the morning? The answer economists (and the Association of Car-washers) would give is, no, they should hire someone to do the job for them! If we think about this, especially having considered opportunity cost in Episode 009 [https://ashstuart.substack.com/p//ecfin009-the-story-of-money-what-is-opportunity-cost], the brain surgeon would utilize one’s time and exertions to far better outcomes in the operating theater than outside the house. The car-washing can be done by someone with far less training and expertise than the brain surgeon: your time has a market value, act accordingly! (Of course, if our professional expert finds the car-washing act itself therapeutic there can be a carveout made here, but how about we relegate that to Saturdays...) Twixt Skills and Wills So yes, in a nutshell that’s what specialization is about, a concept we are so used to in the modern day, that one may be justified to ask, what’s the big deal? Allowing different members of a group to focus on different areas of work, whether it’s in a small village or a big industrial setup, allows them to, by way of gaining experience in that area, become much more skilled at it. Again something we take for granted. But this helps significantly increase the overall quality of output, and when combined with innovation as I’ve demonstrated in the quoted piece, even build much better, far superior, more ambitious things. Therefore specialization is an accelerant of value creation, Episode 004 [https://ashstuart.substack.com/p//ecfin004-the-story-of-money-on-the-worth-of-value-and-gain]. However, there are a few problems with specialization, and we cannot ignore them. Most obviously, specialization leads to interdependence, which is generally seen as a good thing, but it relies on the larger system of trade and cooperation to continue to function. And then, the inability or difficulty for us to switch from one silo to another can feel stifling, and the more the degree of specialization the harder can this be. We end up being cogs in the wheel. The philosopher Karl Marx most famously complained against specialization insisting, I paraphrase, anyone should be able to do anything at any time. (I only know how to make the left shoe, Dave makes the right one) Some of the greatest examples of genius we have were in fact not specialists at all. Leonardo da Vinci, perhaps the greatest example from the Renaissance was one such - he dabbled in a great many things, from canal fortifications to dissecting corpses to designing flying machines that won’t become reality for another 500 years! He was good at most of those things, he was indeed brilliant, but he was also easily distracted - a great many of his ventures were in the end left half done. So yes, generalization has costs and limits, but specialization also comes with costs - what is the right balance between the two for any of us? Specialization may have worked in da Vinci’s time because things were less complex 500 years ago than now. It might have been necessary in the early industrial era because there was no other way we knew to carry out that level of industrial scaling. But then, today we have better instruments and techniques which have also progressed in line with the increase in sophistication, so we are after all, in the modern, post-industrial knowledge age, rather more generalists than we think we are? And then, the application of machine intelligence to more and more aspects of modern knowledge-based work, especially for the more mundane stuff, can surely allow us to, without sacrificing quality thanks to such cognitive tools, become more and more generalist? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC 20 - A study in the catastrophic breakdown of specialization [https://ashstuart.substack.com/p/tecc-20-systems-scaling-systems-shattered-from-command-to-collapse-innovations-hidden-vulnerabilities-and-points-of-failure] This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com [https://ashstuart.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

The Story of Money: Understanding Property Rights

I trust we’ve seen so far that the story of money involves a lot more than just cash and coins. In this spirit we’ve dug into some of the core concepts that make up the foundation of economics, today let’s explore one more such. Let’s first do a quick fictional round. Our friends Steve, Bryan, Brenda and Irene are sat in the garden, some of them halfheartedly taking stock of their recent business activities to keep the books up to date, but mostly in the mood to just take it easy - it’s a sunny afternoon, the birds are chirping. Bruno the dog and Iris the cat are playing out there. So they just need an excuse. That’s when they notice Bruno bringing in a piece of bone with a very proud look on his face. He buries it carefully making a place for it next to his kennel almost as if it were a sacred ritual of a treasure deposit. He then goes away to sip some water and.. Iris the cat sneakily saunters over and just sits on it (cats are not particularly into bones, remember!) Bruno is seething, he starts barking at Iris furiously but the cat won’t budge. Our four friends, amused watching this, have found their theatrical excuse to digress from work for a fine philosophical treatment of the just-observed phenomenon. Bring on the beers! From Bare Bones to Smartphones Yes, so we now know the burning question. Who does that bone belong to? Or to come back to human reality, who does anything belong to? This has been a question thinkers in many societies have grappled with. Let’s do the same (start stroking your chin..), and let’s get down to first principles first. Back in Episode 004 [https://ashstuart.substack.com/p//ecfin004-the-story-of-money-on-the-worth-of-value-and-gain], when we discussed value creation, we saw that things exist in nature as such. And the starting point for value creation is that we take something from the pristine surrounding and do something with it making it suitable for human use. In other words, there is a difference between something unused in nature and ‘appropriately taken’ (the proper word here would have more aptly been ‘appropriate’ with its inherent meaning of ‘proper’ and ‘property’, but sadly there are too many judgemental connotations to that now loaded word that I hesitate. Given our goal for now is to get to the concepts without any ideological baggage. As promised before in the stated episode, I’ll come back to the thorny questions of... impropriety in due course.) But yes, the etymology there is quite clear, all those words, derived from Latin ‘proprius’, do have those shared and related senses, also add in ‘proprietor’ and ‘proprietary’ to that list. High-hanging Fruit So at the conceptual level, this line of reasoning offers a framework for the core question posed above. And once someone has taken a said natural resource, put their own labor into it (in the simplest theoretical example, the mere act of stretching out and plucking an apple from the tree), they have attribution. But who’s to say someone else won’t lay claim to the labor of someone, just as we saw in our silly story above? How is one to affirm that attribution in practical terms? How can such a system as outlined above practically work? That’s where the enforcer comes in: the State. In most practical cases, it is only with the State, the legal apparatus that sets the rules of engagement, that we can really have a functional system of property rights. Let’s think about this for a moment, in practical terms, any functioning ‘right’ is indeed a construct of the State? Otherwise, we are just whistling in the air, shouting in the wind? We may say, in principle, we have a right to something, but in practice it needs enforced? (Don’t get me wrong there’s a lot of well-constructed argument along moral lines for a theoretical basis of rights, but I’m only refering to the practical application in this case. And that said, this remains a highly debated area, so take this with that in mind.) The First Principal Let’s now go back to another principle. What drives the whole process of resource extraction and value creation is agency. It’s agency that thus also informs attribution. In this context, I’ve so far been vague about ‘someone’, but what is the unit of agency? An individual? Groups of individuals acting as a unit? I’ll come back to the aggregate question (of groups, institutions, corporations acting in collective capacity) for that deserves its own detailed treatment, but ultimately the individual is the smallest unit of agency and thus of rights? It’s because agency requires discretion, and the individual is the smallest unit where decisions happen. (Think about it, even in the most collectivist arrangements, there has been one, say, Supreme Leader, who has had the final say?) In any case, beyond the individual, we can’t split it further down, despite economist’s penchant for saying “on the one hand...” and quickly contradicting (or hedging) themselves by going “on the other...” * I once remember watching a video of the very first contact with some remote uncontacted tribes in the deep Amazonian interior. Having never seen modern goods and clothing, one of the bewildered tribesman walks up to one of the explorers and starts to pull out his T-Shirt, clearly fascinated by it and wanting to try it on. And we can agree not out of greed per se, but quite simply because they had no concept of property rights. While a more ‘communal’ system might work for small, isolated everyone-knows-everyone, hunter-gatherer groups who subsist on (and satisfy themselves with) what’s available in their immediate surroundings, for society to scale, for agency to flourish, for prosperity to take root, and thus for us to live in the world we live in, we should perhaps pause to appreciate the proper and appropriate value of property rights? Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * TecC 10 [https://ashstuart.substack.com/p/tecc-10-seeds-of-civilization-the-first-great-bargain-sowing-time-reaping-change] - A more detailed account connected to the potential origin of property rights * TecC 47 [https://ashstuart.substack.com/p/tecc47-giving-ideas-shape-crystallizing-inventiveness] - On the origins of intellectual property This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com [https://ashstuart.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

The Story of Money: Understanding Scarcity

Last time, I concluded on the suggestion that economics is a lot more ubiquitous than we tend to think. Let’s dig deeper into the fundamental question of why we even need economics at all. Let’s in fact take this forward from where we last left off on one particular point. Back in Episode 009 [https://ashstuart.substack.com/p//ecfin009-the-story-of-money-what-is-opportunity-cost] discussing opportunity cost, we were faced with a few dilemmas, such as which of the two full-time job offers to take, or even something as mundane as whether to go out for the evening or stay in. That’s when the idea of scarcity came to the fore. The Specter of Scarcity The fact of the matter is quite simple: almost everything - every resource we consume, is scarce, in other words, in finite supply. This in itself is not a revelation to us. We are all aware that the natural resources on our planet are finite (even if perhaps as a species we should’ve recognized this sooner?) Land is scarce, our skills are finite, our attention is limited. We are aware perhaps more than anything else that time is scarce: how many of us have wished we had more than 24 hours in a day? But scarcity cuts through other dimensions of reality as well. You could say that the traffic lights are a response to scarcity - streams of vehicles cutting across a perpendicular thoroughfare cannot all drive on at the same time. So we are forced to allocate. Striking Deals Scarcity forces choice. And choice reveals values. Let’s think about this for a moment. If we could have any amount of anything at any moment at no cost whatsoever, in some sense you’d never need to bother to choose anything, you’d just have everything. But because we don’t live in such a universe, we have to pick. And as we saw in Episode 003 [https://ashstuart.substack.com/p//ecfin003-the-story-of-money-the-enigma-of-price], price is a signal that gives us information of the relative affordability of the different choices we are confronted with, representing the underlying reality of their availability in the system as a whole. And that connects to value - what we value more, how much we think a thing is worth, and thus whether the price on offer is viable for me or not. This throws up moral, even philosophical, questions: the choices I make in my spending reveal my values, could I have made better choices and thus led a life of better value? How do we define this whole ‘value’ thing in the myriad nuances of that word I’m using? But it also has practical ramifications. At the very least you don’t want to go broke, or have buyer’s remorse, or in general get a bad deal. Enough’s Enough? And then there is the question, if resources are scarce and technology or innovation is about reducing the scarcity of resources by means of improved production (my whole TecC series since early 2025 is dedicated to exploring this), assuming we do increase the availability of a certain resource: how much is enough? This is a thorny question, because, human needs and wants are infinite - as soon as a previous, projected yardstick of ‘enough’ is met, our wants expand, we want more. So in fact this is not just a puzzle in the physical realm, but also a bit of a quandary in the psychological. Consider for example, the phenomenon of artificial scarcity, taking as an example diamonds. Sidestepping the question of what diamonds are actually worth or why they tend to become best friends with some of us, are they even scarce in the first place? Given diamond is just carbon, if we devise a laboratory method of crafting the perfect diamond completely indistinguishable from the ‘real thing’ how would the dynamics shift? (Also, maybe they already have done lab stuff, don’t quote me on this, this is just a thought experiment.) Still, and leaving the glitter aside, while not perfect, economics is humanity’s best known attempt to handle the specter of scarcity. Given the pace of technological progress, there is a chance that many more elements will sooner or later escape the straitjacket of scarcity but in our current reality we cannot escape it -- and I’ve looked into this exciting prospect in my futurist research, but until then, we’ll have to use economics for those elements -- and until then, ironically annoyingly enough for the siren seductress Scarcity, I’ll have a fair bit to write about all this! Article written by Ash Stuart Images, video, voice narration and some footnotes generated by AI Nothing in this presentation constitutes as advice - financial, investment or other Further Reading & Reference * A Study of Innovation from a Technocentric Perspective [https://ashstuart.substack.com/t/tecc] This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com [https://ashstuart.substack.com?utm_medium=podcast&utm_campaign=CTA_1]