An extract from the book Entropy Demystified: Potential Order, Life and Money, written in 2000 by Valery Chalidze.https://web.archive.org/web/20181101233633/http://www.worksofvalerychalidze.com/uploads/1/0/2/8/102863812/entropy.pdfCHAPTER 11: Mystery of Money (p.172-175)
Why Is Money Valuable?
Interestingly enough, the peculiar procedure of eco- nomic measurement is opposed to the methods of meas- urement in science. Indeed measurement in science is based on the impartiality of the measuring technician. Measuring by money is actually based on the bias of eve- ryone involved. What is more, in science units of meas- urement are presumably stable, yet money as a standard of economic measurement is constantly changing value.
Before I discuss the instability of money, the following question should be answered: why money generally re- tains value despite many reasons for value variations, why we somehow expect money to be stable despite the knowledge that it is not?
The utility of a certain consumable commodity be it cattle or sheep skin when that commodity played the role of money was an understandable reason for that money to retain value. In the case of gold or paper money rarity, social convention or respect for the government which issued the money can be the reason behind the fact that such things can start playing the role of money but not yet the reason why that money will retain its value.
The actual reason for money to remain valuable is the fact that people want more of it and once they get it, they choose to hold it and not give it away easily. Once a cer- tain symbol like money is accepted by humans as the representation of order, it finds itself under the protec- tion of an innate drive to guard the acquired order and increase it if possible. The value of money is connected with the main quality of life itself—a desire to lower entropy and to safeguard the achieved reduction of entropy. In this sense holes in our pocket have the same signifi- cance from a life guarding point of view as holes in a cell’s membrane which lead to insufficient protection of a living cell from an orgy of outside entropy. Life is local order, life’s goal is to protect and to increase order. We are back to our discussion on the second law of thermo- dynamics: our struggle for low local entropy will be lost if we don’t protect the achieved order and money, which represents that order, must be held at least temporarily as a defense against us becoming an object with growing entropy.
There are needs which can be satisfied by giving away money, there are many temptations and traps set by those who want us to part with our money. Yet the desire of people to keep money and spend it mainly when neces- sary, in most cases prevails and thanks to that, and not thanks to government decrees, money loses its value only gradually and some times may even gain in value. This is the main reason for money to retain value and that rea- son comes from the physics of life itself. The social and economic question is how this reason holds against many factors which push the value of money down.
Indeed, reckless spending by people would ruin the monetary system in no time. We may say, that the influ- ence of life’s goal to guard life, to protect local order from destruction, gives us the ability to guard our money and this is a stronger element of our behavior than even many moral or even religious prescriptions. It is interest- ing how this desire to hold money (and property in gen- eral) survived throughout centuries despite many dis- senting moral teachings including one of the mightiest religions humankind ever knew—Christianity. Indeed, Christ’s rebellion against embryonic financial enterprise as he “poured out the changers’ money, and overthrew the tables...” (John 2:15) characterizes the early position of the Christian sect in Israel. Christ’s words: “sell all that thou hast, and distribute unto the poor, and thou shalt have treasure in heaven: and come, follow me.” (Luke 18:22) actually prescribed a life without money as money would lose value if given away on a massive scale.
This and many others’ dissenting moral systems were apparently produced as a protest against material ine- quality and until Marx and his followers did not have a basis in economic theory. As we saw, Marx’s approach was primarily energetic and did not properly take into account the organizational and informational components of the economy. One has to note though that even in an economy with a negligible low-entropic component the desire to hold money is also crucial for the economy. In such a stage of the economy money represents labor (en- ergy) to a bigger extent that in a developed economy and cautious spending of money represents the principle of work minimization. One may reasonably expect that the human ability to measure energy, order and p-order by money is higher when there is a simple connection be- tween the amount of money and the quantity of hours of work. Using money as a measuring device for higher and higher levels of p-order increases the possibility of erratic mistakes in measurement.
In any case, for money to be a measuring device there are the following rules:
1. everyone wants to get money
2. everyone holds it or exchanges it for goods or ser- vices in extent of the amount which corresponds with the desired value of those goods or services.
Rule one is not absolutely crucial as some people may choose not to play this measuring game at all and become hunters and gatherers in a forest or on the city streets. Rule two is crucial as giving up money for not deserving values certainly devaluates money.
Each person who participates in economic life is actu- ally a member of the giant jury which evaluates money and the economy’s produce every day. If I put $1000 in a bank it is not safe there simply because of FDIC insurance—that insurance will cover my dollars in numbers only, not in value. Actually my savings depends on the verdict of hundreds of millions of people to decide what that $1000 will worth tomorrow. My real insurance, as far as the value goes, is the hope that the value of my savings will be judged by a non-impartial jury because if I lose, then members of that jury will also lose the value of their money.
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Who is Valery Chalidze? Here is what he said about himself in 1997 on his personal website.https://web.archive.org/web/19970408154252/http://www.chalidze.com/works.htmValery Chalidze (1938- ) has long been active in the field of social problems and human rights as they pertain to the USSR and post-Soviet conditions, and was awarded a MacArthur Fellowship (1985-1990) for his human-rights work. He has authored a number of books on social problems in the Soviet Union, including To defend these rights and Criminal Russia (Random House).
Mr. Chalidze, Dr. Andrei Sakharov and Andrei Tverdokhlebov were the founders of the Moscow Human Rights Committee (1970-72).
From 1973 to 1982 Mr. Chalidze, together with Edward Kline, Pavel Litvinov and Peter Reddaway, edited and published The Chronicle Of Human Rights In the USSR.
With Leon Lipson, Sterling Professor Of Law at Yale University, he edited Papers On Socialist Law and later edited and published the Russian-language magazine, Internal Contradictions In the USSR.
Mr. Chalidze also established Chalidze Publications, which published over one hundred books in Russian devoted to human rights, theories of democracy, Soviet history and Soviet politics. In 1989 he was co-editor and publisher of The Federalist Papers in Russian.
Throughout all the years of his public activity, Mr. Chalidze was a proponent of human rights, democracy and the free market, and a strong opponent of so-called socio-economic rights and the expansion of other Marxist ideas. In 1994 he launched a magazine, The Rational Conservative, devoted to defending constitutionalism and the free market in the United States (four issues published).
In 1994 Valery Chalidze worked as Advisor-at-Large for the Russian edition of Encyclopedia Britannica.
Currently Mr. Chalidze continues to follow the development of the former Soviet Union, including through his work as Editor-in-Chief of the Central Asia Monitor. He also continues to write on a variety of topics, including:
The Entropy Of Social Life: The Physics Behind Morality, Law And Economics; and
Cold War Damage Assessment: Soviet Influence On American Life.
With his wife, attorney Lisa Chalidze, Valery developed and maintains the project Law For Kids, serving as Director of Law For Kids International.
Chalidze has authored a number of books (see below) and numerous articles in both the American and the Russian press, and in professional journals. Some of these works are reproduced in other parts of this Web page (see contents above).
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For fun, Chalidze designs gardens, jewelry and Web pages.
Building houses and landscaping on his 435-acre property on Lake Champlain is Chalidze's way to cope with the need for physical exercise
(see Real Estate: Lake Property For Sale
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In science, Mr. Chalidze worked in the field of polymer physics (USSR, 1966-1971).
In 1985-86 he published two short books devoted to his concept of the linguistics brain code. In Brain Code And Paleolinguistics he showed how the code in question affects the distribution of consonants in language, and presented a hypothesis of thestadial development of language with an increase in the number of consonsonants: from eight (as in Hawaian) to twelve (as in Finnish) to twenty-one (as in the majority of contemporary languages). This corresponds to the number of digits of the brain code (from three to five). Because the prevailing approach to the brain is that it is an analogous device, Chalidze's work in this field is not widely accepted and is rather iconoclastic.
In 1989 Mr. Chalidze completed Hierarchical Instinct and Human Evolution , in which he contends that the hierarchical instinct of humans is the primary vehicle of civilized development. In this work he discusses the influence of human biology in general on social life. Valery Chalidze presents an iconoclastic concept of social conflicts from an evolutionary perspective. The author also discusses the role of hierarchical instinct in human behavior and the anthropology of law and religion, as well as the evolutionary significance of homosexuality in human society.
This line of work continues now in his Entropy Of Social Life (book in progress). In this work Chalidze analyzes how physical laws shape both our instincts and our social behavior.
In 1990-1995 Chalidze formulated the principles of his vortex theory of matter, which explores overlooked possibilities of classical physics to describe sub-atomic particles. Without undermining the obvious successes of contemporary theoretical physics, Chalidze's goal is to demonstrate that we can do without certain controversial philosophccal approaches of quantum physics.
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The bibliography of his book Entropy Demystified: Potential Order, Life and Money: https://web.archive.org/web/20010404233838/http://www.chalidze.com/entropy.htmIs there a link between the work of Ilia Prigogine on dissipative structures which relates to systems that maintain their order and structure through continuous processes of energy and matter exchange with their environment and Bitcoin POW? The connection between Prigogine's work and Bitcoin can be explored from the perspective of thermodynamics and energy consumption.
Johan D. Fast, Entropy.
Goldstein, Martin Ingre, The Refrigerator And the Universe, 1993, p. 168.
Kenneth D. Bailey. Social Entropy Theory, 1990, p. 53-65.
Maxwell's article "Diffusion" written for Encyclopedia Britannica. The Kind of Motion We Call Heat, 1976, p. 592.
"How subjective is entropy?" Kynnet Denbigh in Maxwell's Demon. Entropy Information Computing. Harvey S. Leff and Andrew F. Rex, ed.
Claude E. Shannon, The Mathematical Theory of Communication.
Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process, 1971, p. 281.
Rifkin, Jeremy. Entropy: Into the Greenhouse World, 1989, p. 281.
Peter A. Corning and Stephen Jey Kline, Syst. Res., p. 15, 273-275, 1998.
Rick Telander, "Viewpoint: Wasting Away At Health Clubs: Fitness fanatics should find better uses for their energy," Sports Illustrated, 06-04-1990, p. 6.
Kestenbaum, David, Physics: Gentle Force of Entropy Bridges Disciplines., Science, 03-20-1998
Report to the Librarian. Stephen Jay Gould, The Sciences, Nov.-Dec. 1995.
Erwin Schorödinger, What Is Life?
See Ilya Prigogine, Introduction to Thermodynamics of Irreversible Processe;
Nicolis, G. and Prigogine, I. Self-organization in Nonequilibrium Systems.
Arthur Schopenhauer, The World As Will and Representation.
Ilya Prigogine, "Unity of Physical laws and Levels of Description" in Interpretations of Life and Mind, Marjorie Green, ed. 1971, p.12.
Elizabeth Pennisi, Molecular Evolution: How the Genome Readies Itself for Evolution., Science, 08-21-1998.
Herbert A. Simon, "Theories of Bounded Rationality" in Models Bounded Rationality, MIT Press 1982, vol. 2, p. 408.
Rakesh Sarin. "What Next for Generalized Utility Theory" in Utility Theories: Measurements and Applications, Ward Edwards, ed., 1992, p. 144.
Ronald Howard. "In Praise of the Old Time Religion", Ibid, p.30.
Natural Value by Friedrich Wieser, translated by Christian A. Malloch. English Edition, 1893.
John Keynes. General theory, General Theory of Employment, Interest and Money.
Sheryl Wudunn "Zen Banking: Some Interest Rates in Japan Drop Below Zero", New York Times, November 7, 1998.
Milton Friedman, Unemployment Versus Inflation?: An Evaluation of the Phillips Curve.
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Valery Nikolaevich ChalidzeHis Soviet citizenship was revoked on December 13, 1972 following a trip to the United States for a conference on human rights. Obtained American citizenship in 1979.
November 25, 1938, Moscow, Russia - January 3, 2018 Benson, Vermont, United States
https://en.wikipedia.org/wiki/Valery_ChalidzeSome links:
- Valery Chalidze also offered to create personal websites in 1997.
https://web.archive.org/web/19970412100033/http://www.chalidze.com/samples.htm- In memory of Valery Chalidze by his friend physicist, writer and former Soviet dissident Pavel Litvinov
https://www.golosameriki.com/a/chalidze-litvinov-memoirs/4194520.html- Inflation As Society's Self-Defense by Valery Chalidze, 1994
https://web.archive.org/web/20000819033825/http://members.aol.com/chalidze/usa.html- Hierarchical Instinct and Human Evolution. Socio-biological approach by Valery Chalidze, 1989
https://web.archive.org/web/20181030125118/http://www.worksofvalerychalidze.com/h8203i8203erar8203c8203hichal-instinct-and-human-evolution.html- Exegi monumentum(“I erected a monument”) - site created in 2018 in homage
https://web.archive.org/web/20181101233226/http://www.worksofvalerychalidze.com/---------------------
Long life Valery Chalidze
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