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Research Note

The Purpose of the Coin
is what it Buys?
Richard Veryard
March 2010

Document Status
Work in progress. Comments welcome.

This research note explores the “eternal coin” concept from a systems


Long Finance initiative
The aim of the Long Finance Institute is 'to improve society's understanding and
use of finance over the long-term'. The research project proposals range from
theory versus practice or fiscal versus monetary to sustainability versus
The Long Finance initiative is linked to the Long Now project.

Eternal Coin
The iconic project for Long Finance is the Eternal Coin, with the objective of
starting a global debate about society's values over the long-term.

In his paper "In search of the eternal coin - a long finance view of history", Dr
Malcolm Cooper has written a history of the eternal coin. The eternal coin is an
imaginary construct (Cooper calls it a thought experiment), so it's a curious kind
of history, retelling the past through the lens of an imagined future.
Cooper singles out a number of historical vignettes, which display different
elements of a system of value. Cooper’s vignettes can be grouped into four types
of economic system, and the coin plays a significantly different role in each.

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Preliminary Analysis

Factors of production
Classical economics identified three factors of production: land, labour and
capital. For economists, “land” includes not only the surface of the earth but all
natural resources; “labour” is defined as the ability to work, and “capital” includes
all manner of tools and equipment. Modern introductory economics texts typically
add a fourth factor of production, sometimes called enterprise. The exact
classification varies in different sources: for example, knowledge (including so-
called intellectual property) is sometimes classified under labour, sometimes
under capital (where it is referred to as human capital), and sometimes under
enterprise. For the purposes of this paper, we merely note that there are many
factors of production, which can be classified in different ways.
All the factors of production are scarce, although in different ways and in different
proportions at different times. The production of wealth requires all the factors of
production, but at different times in history, under different economic systems,
one or other factor of production may be perceived as dominant, and this
perceived dominance has created space at various times for radicals to argue that
some other factor of production is undervalued and to demand a realignment of
wealth with a different set of values – for example, Karl Marx spoke up for labour,
while James Burnham spoke up for management.
A great deal of economic wealth can be directly linked to the factors of production
– so a person or organization can extract an income (via the production of goods
and services) from the utilization of land or knowledge or other capital, or from
the exercise of labour and enterprise. However, not all economic wealth is so
linked. Some wealth can be held in an unproductive form, such as piles of
precious metals, works of art or large stone monuments. These have little or no
value as factors of production, and are held either for non-economic reasons
(social or spiritual benefit, patronage of the arts, showing off one’s wealth, or
whatever) or as “investments” – because they have a price that is thought likely
to increase (or, in the case of gold, less likely to decrease). Although the
production and trading of these monuments and works of art is an economic
activity in its own right, and the existence and availability of these artefacts may
increase general well-being (i.e. not just for those possessing them, but also for
those able to “enjoy” them, whatever that means), it is not clear how these
artefacts should be treated in a general theory of wealth and value.

Four types of trust
In their book on Trust, Ward and Smith identify four types of trust.
Authority Trust Trust is guaranteed by reference to some authority, and is
typically configured hierarchically.
Commodity Trust is supplied as a product or service. It carries a price and
Trust expected service levels.
Network (Web) Trust is conferred by the collective action of a distributed
Trust network. The internet is trusted to do certain things because
there is no single point of failure. Competitive markets are
trusted to set fair prices.
Relationship Trust is inherent in an authentic and committed engagement
(Authentic) with business partners.

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Four Types of Economic System
If we put together the multiple factors of production with the four types of trust,
we can identify four types of economic system.
Autocratic Based on This is exemplified by the ancient empires of
control of land Egypt, Mesopotamia and China (“Ozymandias”),
and labour and by the Feudal systems of Northern Europe
The ancients believed that material wealth
accumulated in this world could be carried into
the next world. Mediaeval kings and barons
donated substantial proportions of their material
wealth to the Church, in the belief that this would
produce favours in the next world.
Commodity Based on The Guild system and the Industrial Revolution
Production exploitation of established workshops and factories for the
land, labour and production of commodities. Economic activity
capital starts to be focused on the production of
commodities by means of commodities (Sraffa),
rather than the production of monuments by
means of an agricultural surplus. An important
transition point is the Confederate system, in
which the coinage is explicitly linked to cotton
Trading Based on The Roman Empire is the first economic trading
Network exchange of system identified by Cooper in which coinage is
commodities widely used for the purpose of trade. This system
is echoed by the trading systems of the late
middle ages. Globalization gradually increased,
from the emergence of banking via the invention
of the telegraph to the emergence of the
The point here is that wealth increasingly comes
from the activity of trading itself, rather than any
particular goods and services being traded.
Cooperative Based on Over the past two hundred years, there have
Society mutual aid and been various romantic and utopian ideas of an
common wealth alternative economy, ranging from Kropotkin to
the Common Wealth party (influenced by James
Alternatively, we might look at a romanticized
notion of primitive man (such as American
Indians) living at one with nature.

These are not mutually exclusive, and have clearly coexisted at various times in
history. For example, in the middle ages, a feudal rural economy coexisted for
many centuries with a trading urban economy. And the industrial revolution took
many centuries to emerge.1

Four Types of Economic Token
The role of currency differs enormously in these four systems.

I follow Lewis Mumford in seeing the origins of the industrial revolution much earlier than
the conventional account.

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In an autocratic system, coins do not play a central role, and some ancient
systems may not have used coins at all. In mediaeval feudal systems, coins were
used at the margins for purchasing minor luxuries, but the primary production of
wealth was not based on cash, and wealth is not expressed in monetary terms.
Wealth is measured in terms of the quantity of land, or the number of animals and
slaves (in other words, direct factors of production).
In a commodity system, cash serves as a proxy asset, either for acquiring
commodities or for acquiring capital. Money starts to be used as a measure of
wealth, often expressed in terms of annual income rather than absolute
possession. Marx used the term commodity fetishism to refer to a perspective
in which social relationships are transformed into apparently objective
relationships between commodities or money.
In a trading system, it is the flow of money rather than its static possession that is
the sign of wealth. (We may remember that the English word “currency” comes
from the Latin word meaning “to flow”.) Donald Trump begins his autobiography
with the following words “I don’t do it for the money. I’ve got enough, much more
money than I’ll ever need. I do it to do it. Deals are my art form.” 2
Finally, in a cooperative society, conventional money may be downplayed in
importance, partially replaced by barter, LETS and other mechanisms for sharing
wealth, and supported by a rich set of social relationships.


Land ownership
Although Dr Cooper mentions other factors of production in passing, his main
emphasis is on land and knowledge. He asserts that land provides the strongest
continuity over time, and calls for in-depth research on the value of land.
We may note that in England and some other countries, detailed and
comprehensive historical records of land ownership are available, and the
ownership of land by certain institutions and families can be traced back hundreds
of years. So the perceived historical importance of land over other factors of
production could be merely a consequence of the easy availability of historical
However, these historical data refer to the property-law notion of land (land
registry), as opposed to the economic notion of land (factor of production), and it
is important to recognize the difference between these two notions. From an
economic perspective, we should think about the value of land as a factor of
production, and not merely as a property asset.
There is also a complicated relationship between land and buildings. Buildings
should be regarded as capital, and the ownership of the buildings may be
separate from the ownership of the land on which they sit. In his detailed survey
of How Buildings Learn, Stewart Brand has shown how the outlines of buildings
may have greater longevity than the buildings themselves.

If we understand “land” in the economic sense to include natural resources, the
depletion of natural resources clearly counts as a loss of land value. Population
growth potentially increases the supply of labour, while threatening to decrease
the capacity of the earth’s resources to support the human population and the
natural world.

Trump, the Art of the Deal. Quoted by John Kay in Obliquity, p 30.

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The question of sustainability is therefore fundamentally an economic question –
about the management of scarce resources. Over time, different things will
become differentially scarce, and this is an obvious issue for Long Finance and the
Eternal Coin.
But this implies that the term “Eternal Coin” is not strictly correct. The word
“eternal” means timeless or outside time. If we are looking for a currency that
changes dynamically with the changing balance of demand and scarcity, then the
correct word would be Sempiternal or Everlasting Coin – a coin that lasts for ever
because it is always-in-time.

Distribution and Fragmentation
As Dr Cooper rightly points out, wealth is more widely distributed today than in
many previous epochs, and may continue to spread more evenly – especially to
the growing middle class populations of once-poor countries like China and India.
Distribution of wealth has a number of consequences, some of which may have
negative side-effects, especially in economic systems dominated by commodity
production and trading.
One of the key problems is governance, especially with fragmentation and
indirectness of corporate ownership. It is increasingly difficult for large modern
corporations to make long-term investments, when there is such pressure on
executives to maintain a stock-exchange notion of “shareholder value”.
As Dr Cooper asks “Is increasing participation driving market’s much-lamented
short-termism?” This may certainly be a factor. Furthermore, there is a popular
belief that mergers and acquisitions can produce shareholder value, when the
prevailing evidence is that they generally don’t. So short-termism leads to
industry consolidation which leads to even larger corporations with even less
ability to take the long view.
The answer would appear to be that breaking up large corporations might help to
rebalance ownership with governance, and restore some shareholder value in the
process. (So maybe breaking up Standard Oil didn’t do much harm in the long
run.) Mediaeval monasteries often split off separate organizations which in time
became wealthier than the parent organization, and the history of the modern
corporation occasionally shows a similar pattern (RacalVodafone, ICIZeneca).

Positive thinking
There is clearly a link between money and confidence, and there is a popular
association between prosperity and positive thinking. Keynes talked about animal
spirits. “Even apart from the instability due to speculation, there is the instability
due to the characteristic of human nature that a large proportion of our positive
activities depend on spontaneous optimism rather than mathematical
expectations, whether moral or hedonistic or economic. Most, probably, of our
decisions to do something positive, the full consequences of which will be drawn
out over many days to come, can only be taken as the result of animal spirits - a
spontaneous urge to action rather than inaction, and not as the outcome of a
weighted average of quantitative benefits multiplied by quantitative
When we looked at the early history of autocratic systems, we noted the
relationship between material wealth and spiritual wealth. In the modern age
many people still believe in a relationship between material wealth and spiritual
wealth, and the same techniques of positive thinking are popularly supposed to
provide both material and spiritual benefits. Positive thinking is therefore a form
of wealth in its own right.

John M Keynes, The General Theory of Employment, Interest and Money, London:
Macmillan, 1936, pp. 161-162

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We may think that positive thinking (Keynes’s animal spirits) is an unreliable form
of wealth. In commodity and network economies, bubbles sooner or later burst.
But maybe a more socially grounded communitarian or even spiritual form of
positive thinking is more sustainable?

Information and Knowledge
There are several possible attitudes towards information and knowledge, and
these mirror to some extent our attitudes towards money. Dr Cooper likes the
idea of permanent knowledge – “an accumulation of a process of serial
commoditization”. In contrast to this idea, thinkers such as Max Boisot have
suggested models of permanently developing knowledge cycles. Boisot argues
that a political economy of information coincides with a theory of cultural

This leads to the conclusion that what is to be protected is not the knowledge but
the permanent capacity to produce new knowledge, which is a form of
intelligence, especially thriving in certain cultures. So there is an important link
between culture and wealth, which will come as no surprise to anthropologists.

The creation of an eternal or sempiternal coin is not merely an economic act but a
political one, because the form of the coin presupposes some choice of economic
system, which is ultimately a political choice. Some readers will be attracted to a
pure market solution, while others may be attracted to a communitarian solution,
and this choice cannot be resolved by economic reasoning alone, let alone
historical parallels. The job of historical analysis or systems analysis is to expose
these choices and their implications.

Notes and References
Max Boisot, Information and Organizations
Stewart Brand, How Buildings Learn
Malcolm Cooper, “In Search of The Eternal Coin: A Long Finance view of history”
Long Finance Eternal Brevity, 1-02010.
Jon Elster, Making Sense of Marx.
John Kay, Obliquity
John M Keynes, The General Theory of Employment, Interest and Money, London:
Macmillan, 01936

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Lewis Mumford, Technics and Civilization
Piero Sraffa, Production of Commodities by Means of Commodities, 01960.
Aidan Ward & John Smith, Trust and Mistrust. John Wiley, 02003.

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