The last blog, The Fundamental Utility of Intelligence presented how our need for essential resources helps generate our Intellectual and Network capacities. We established that to better secure the essential resources, we need to build our Intellectual and Network abilities.
With multiple and comprehensive skills, we can produce a variety of resources and possibly with better quality. Consequently, exchanging an excess essential resource, for example a loaf of bread, for a combination of other essential resources (e.g. water and winter clothes) and more intelligence (lessons in how to make winter jackets) should produce a long-term return in the form of intellectual abilities that can produce more, better, and variety of the essential resources in the future.
Alternatively, exchanging our resources for equivalent other essential resources only has us sustain or possibly grow marginally, having us trapped in need for constant performance – essentially, leaving us in a constant rat race. Every mistake becomes very costly.
The Rise of Intellectual and Networking Capacities
The expansion of our essential resources, which would bring us to having plenty for ourselves and plenty to exchange for our other needs, requires growing our Intellectual capacity (IC).
The growth in IC also expands the potential of our Network Capacity (NC) as our above-average IC will become a useful tool for others in their pursuit of resources for themselves and their desire to grow their individual IC. For example, our skills in making quality winter clothes becomes an interest to also others exposed to cold during the winter months. We then make reciprocal connections with any person who needs winter clothes and possesses any of the other essential resources that we need. This expands our NC.
The Gift of Money
With greater expansion of IC and NC, the production and/or exchange of a single essential resource for another becomes much stronger, yet lacks efficiency. Obtaining more of the essential resources raises other issues such as security, spoil, and storage, and relying on others creates further uncertainties.
Our finite individual abilities call for lasting outcomes when exploiting our advantages. We would want to exchange our IC and excess resources for something more fungible than another essential resource. We would prefer something that won’t get spoiled if stored for a longer period, something that does not require a lot of storage place, or raise concerns of being snatched if not extensively protected. Essentially, we would prefer to exchange our capacities and excess resources for something elastic and durable.
Money - the Financial Capacity (FC) gives us flexibility to address our needs faster, without constant attempt for resource exchange. It also provides longevity with an opportunity to store our resources for a longer period of time without spoiling it (less the inflation). In sum, the FC emulates and complements the essential resources, but does not supplement them. It mirrors essential resources. We can either have a large amount of water, food, or shelter – or have adequate amount of those and have enough money or other fungible Capital that can easily be converted or turned into the essential resources when in need of them.
We want FC because it’s fungible and easily convertible into any of the essential resources and exchangeable for access to other capacities we seek expeditiously. Instead of looking to find a perfect barter, resource-for-resource exchange, now we have flexibility in our action.
Building and Protecting our Capacities
Scarcity of resources assures that there would always be someone challenging our advantages by either producing more resources (no longer needing ours), or producing for a lesser value (no longer others needing ours) or producing better quality resources for the same value (others preferring the competitors’ resources). With that in mind, exchanging a resource for money and then not investing a portion of that FC into more IC (e.g. new skills) or NC, increases the chances of bringing an end to our resources. Consequently, knowing how to produce more resources for lesser or better quality for the same value is an IC advantage that one ought to always invest in to ensure healthy substinance and growth. This is the thinking that drives innovation and entrepreneurship… More in the next blog.