[This is a lightly edited version of a column that appeared in Forbes Online, November 30, 2013.]
Keynes sneered at it. Preachers damn it. Bitcoin dreams of transcending it. But free men inevitably choose it. Gold.
Whenever men have had a free, uncoerced choice of the medium of exchange, gold has won the competition, along with its sister element, silver.
Why? Only in recent times has gold had any utilitarian value. The Ancient Egyptians couldn’t use it computers, but they prized it nonetheless, as did the faraway Aztecs and the Chinese. Men in every place and time have valued gold.
Why? Of what use is gold? You can’t eat it.
No, and you can’t eat a Rembrandt either. A Chopin Ballade is not something you can eat, drink, or ride in.
It may surprise the spiritualists who damn gold to hear this, but gold, like music and painting, is a spiritual value. Gold is a value because it is radiantly beautiful. It is the esthetic pleasure gold brings that makes men esteem it.
Other of gold’s inherent attributes fit it to be the money commodity, but let’s pause to answer the great unanswered question: what is beauty?
Beauty is intelligibility–a sensory level version of intellectual intelligibility. What looks beautiful or sounds beautiful is what features an intelligible pattern formed out of pure, simple elements.
Why the pleasure in pattern-recognition? Men’s lives depend upon their minds. The essential mental work that is required is integration: finding the one in the many, the theme behind the variations, the principle behind the concretes. But transforming a bewildering plurality into a clearly understood unity often means going through a difficult, doubt-ridden process. So, there is a definite delight in the easy, doubt-free microcosm provided by sensory pattern-recognition.
I’m generalizing here from what Ayn Rand wrote about why music moves us emotionally:
“Music offers man the singular opportunity to reenact, on the adult level, the primary process of his method of cognition: the automatic integration of sense data into an intelligible, meaningful entity. To a conceptual consciousness, it is a unique form of rest and reward.”
Beauty has been called “unity in variety.” The beautiful is that which features clear elements made into a clear, consistent whole.
The clear elements can be pure musical tones, or it can be shining pieces of gold. The pattern is supplied by fashioning musical tones into a melody or pieces of gold into jewelry, or into gold leaf to make the pattern it coats glisten. Gold nuggets are only the means; the end is a lustrous, intelligible esthetic object.
The other aspect of gold is its unique purity–purity both in its color and in its incorruptibility. In a world that features decay along with growth, degeneration along with too-rare improvement, gold’s imperishable, radiant luster offers the experience of purity, of unfailing reliability, and of stainless consistency. Gold remains gold; it does not tarnish or rust.
Thus, gold is not “a barbarous relic” (Keynes) or “filthy lucre” (preachers) but an objective esthetic value, a value rooted in the nature of how our minds work and in the need for incorruptible moral integrity. Why are wedding bands made of gold? Because gold is the symbol of remaining pure and true.
Gold jewelry is just as objective a value as utilitarian goods, such as bread or automobiles. But those goods provide value by being consumed–by being used up. You eat bread and it is gone. You drive a car and it wears out. Gold is almost unique in being an Unconsummable Consumable. Like Aristotle’s Unmoved Mover, gold provides value without being itself affected.
The oft-heard sneer, “You can’t eat gold” expresses a cynical materialism. Both artistic beauty and sensory beauty have their source in the nature of man as a conceptual being, a being who must use concepts and reasoning to survive and prosper. Animals cannot respond to artworks, or to the beauty of a brilliant sunset, or to the radiant, patterned purity of gold jewelry.
The objection “You can’t eat gold” confesses a mind-body dichotomy. In fact, material value requires spiritual value, and vice-versa. For man, “value” always involves a spiritual component. Even to value food, a man has to want to live–which takes an inner resolve to fight for his own happiness.
Gold is the ultimate expression of mind-body integration. It is denigrated as “crassly material” because it is beautiful–i.e., because gold is a spiritual value.
“You can’t eat gold” turns things upside down: gold is extra valuable because you can’t use it up. Gold as an Unconsummable Consumable does not have to be replenished. The gold jewelry of Ancient Egypt retains its value, bringing renewed pleasure to museum visitors daily. Because gold is, like a Rembrandt painting, an object of contemplation, it is used without being used up.
All this is why gold has monetary value. Because gold is of imperishable, objective value, it can serve as a store of value. And given that base (which bitcoin lacks), gold’s other inherent properties make it uniquely suited to serve as a medium of exchange. Unlike salt, gold has a high unit value. Unlike iron, gold does not rust. Unlike diamonds, gold can be easily divided into very small pieces without losing value. Unlike a computer chip, gold is homogeneous. And because it is ductile and malleable, gold can easily be fashioned into jewelry and gold leaf.
Salt and cigarettes have served as money, but their value rests upon their ultimately being consumed, which destroys them in the process. Gold can be used as money without ever being used up, without needing to be re-produced.
You don’t have to eat gold to get objective value from it. Beauty, though not material, is a rational, objective value, because its sensory beauty provides a spiritual pleasure.
Gold has esthetic value and–as men’s free choices demonstrate–monetary value. That is the power and the glory of gold.