# Against Money Maximalism

To free-market advocates, money acts as a general transferable utility, allowing for optimal cooperation. In any situation where conflict destroys value, the parties are better off negotiating a way to split the gains of cooperation.

To free market critics, the market is a rampaging [Moloch](https://www.lesswrong.com/w/moloch) who destroys human value in pursuit of its own alien goals.

I think there are several reasons why the eutopic[^cqb1lyaa1ae] vision of the free-market advocates doesn't quite work out.

Our culture (or perhaps some quirk of human psychology) forbids us from paying for some of the things we most value. For example, when watching a movie with friends, or going to a restaurant, it would be absurd for the most lonely person to directly pay their friends for their company.

Writ large, this means there's no economic incentive for many of the most valued human experiences. You can't earn money just for being a good human. [What you *can* get paid for is not even necessarily net-positive](https://namelessvirtue.com/2025/11/05/getting-paid-%e2%89%a0-producing-value/).

The market produces what it can make money producing. It produces lifetimes spent on careers. It produces consumable media. It'll produce these things to the detriment of things that aren't worth money.

We've only given the gods of the marketplace permission to optimize some portions of human values.

My hope in this essay is to talk about some of these limitations in more detail. I don't aim to provide solutions.

I'm not necessarily arguing against capitalism here -- rather, I'm arguing against some specific tenets of a prevalent capitalist ideology.

GDP Maximalism
==============

One point of inspiration for this post was Martin Sustrik's post [The Dutch are Working Four Days a Week](https://www.lesswrong.com/posts/2MK3ynj9qSmcH637J/the-dutch-are-working-four-days-a-week). In the post, Sustrik wrote:

> Interestingly, this is one of the issues where libertarians and progress studies people, who usually get along well, would disagree. Libertarians would say that if you can afford it, by all means, work just one day a week. Progress studies people would point out that GDP growth decreased by, say, 1% over 100 years will leave people in the resulting economy almost three times poorer.

I commented on that post:

> I think this model is mistaken, and overly worships GDP as a measure of value. You're defining non-job value-production out of existence. For example, if someone stays at home and does dishes, laundry, and raises children, this doesn't count. If instead a nanny and a maid are hired, this counts for GDP. If someone contributes to Wikipedia in their spare time, this doesn't count. If they're paid to write crappy ad-copy instead, this counts for GDP. Writing a video game counts if you sell it, but doesn't count if you give it away for free. Etc.
> 
> The libertarian view seems deeply superior here, because it trusts people's own sense of what is valuable, rather than accepting a numerical proxy.

GDP [is far from a perfect measure of what is valuable](https://en.wikipedia.org/wiki/Gross_domestic_product#Limitations_and_criticisms), and I think it is fair to say that its imperfections are specifically relevant to Sustrik's reasoning. Less GDP growth does not necessarily translate to an overall poorer economy.[^56qrcpta10r] The value of time you aren't paid for is far from zero. The optimal work-life balance is not necessarily 100% work.

Notice that Sustrik is departing from the eutopic libertarian view by holding on to a particular number as a measure of value. This is a major theme of the present essay. Capitalism might have its own problems, but I think these are made significantly worse by the simplistic ways we humans relate to it. When humans measure something, it all-too-easily becomes a target.

Profit Motive
=============

A business is, at least naively, a multi-party bargain (between owners/investors, employees, customers, and other business partners). From this perspective, the goal of the business should be to find the most positive trade it can between these parties, and then split the gains from this trade equitably, so that everybody is happy and has gotten a relatively [fair](https://en.wikipedia.org/wiki/Cooperative_bargaining) bargain.

In practice, however, *profit* is the proverbial "bottom line" -- there's some legal pressure in this direction ("fiduciary duty"), plus a whole lot of cultural momentum. 

In contrast to the bargaining-centric approach, which treats all the different parties symmetrically, the profit-centric approach treats employee compensation as *expenses* and owner compensation as *dividends*, with the connotation that the first should be minimized as the second should be maximized.

This arrangement is theoretically justified in economics by [Holmström's theorem](https://en.wikipedia.org/wiki/Holmstr%C3%B6m%27s_theorem), which says that you can't balance the budget while compensating everyone in a way which aligns their incentives. Essentially: if you tried to run a company based on fair bargains, there'd be some incentive for employees to slack off. I recall reading an econ paper (I haven't re-located it yet) which shows that you can align incentives by allowing one special person who isn't incentive-aligned, who siphons off money in a way that aligns the incentives of everyone else. The paper included an example: the special money-sink person can take all the money unless everyone performs at or above expectations, in which case the money is distributed equally.

That, then, is one possible justification of "profit": it is the special money-sink that helps align everyone's incentives.

This deserves more analysis than I have time for at the moment, but I'm skeptical. I doubt profit-oriented setups are incentive-aligning employees in practice. 

In theory, I can imagine a bunch of profit-motivated entities as each pushing for their individual side to get a good bargain, resulting in an overall fair bargain. However, it seems to me like in practice, profit motive leads to neglect of other types of value -- in particular, employee and customer well-being.

From what I've heard about corporations making deals with each other, they're often pretty desperate to make the deals not feel transactional -- to make it about "family" or "partnership" or "human connection". (They also want to characterize the competition as just ruthlessly profit-maximizing, telling what stories they can to discourage signing a contract with a bad actor like that.) This could just be talk, but it could also be seen as an admission that the profit motive shouldn't be everything. However, not-purely-profit concerns are kept fuzzy, ambiguous. Fuzzy concerns cannot be optimized well.

This requires more research, but my impression is that large companies systematically under-pay workers, even from a profit perspective. Reducing employee pay (or failing to increase it) can be a profit win in the short-term, but will increase employee turnover, which means higher training costs and lower employee efficiency in the longer term ([The Payoffs of Higher Pay](https://nataliaemanuel.github.io/ne_website/EH_payoffs_of_higher_pay.pdf), Emanuel & Harrington). My impression is that profit-centric accounting creates a bias towards neglecting these longer-term impacts. Similar remarks apply to customer relations.

I don't have a fleshed-out alternative, and it seems worth mentioning that when companies introduce some weird new accounting scheme, it is usually a cover-up. So, I wouldn't even take less-profit-motivated accounting as a good sign, typically. ([WeWork is an example of this](https://www.goingconcern.com/wework-adjusted-ebitda-non-gaap/).) However, it does seem to me like there should be a better way of accounting than the profit-centric approach.

More practically, I think it is possible to do accounting within the framework of profit while remembering that there are other sorts of value.

Recently, some people have been calling this option "dead money".

Living Money / Dead Money
=========================

[Anna Salamon](https://www.lesswrong.com/posts/xtuk9wkuSP6H7CcE2/ayn-rand-s-model-of-living-money-and-an-upside-of-burnout) and [Vaniver](https://vaniver.substack.com/p/living-money-dead-money-and-the-divine) have been writing about Ayn Rand's distinction between *living money* and *dead money*. Anna Salamon introduces Rand's model more-or-less uncritically:

> *Living money: * Sometimes an entrepreneur sees a new path to produce real value and makes a bet, spending their savings to set up a factory/research lab/etc. that has a real shot at later making things people want (even though others can't see this yet, and so wouldn't yet want in unless paid in advance).  Such an entrepreneur’s money is “living” in the sense that it is part of a homeostatic dance that spends and replenishes, sustains itself over time, and creates more life/value.
> 
> *Dead money: *Other times, a person spends down their savings (and thereby gets people to do things those people don’t independently see value in) while taking no interest in the complex and often not-yet-known-to-us processes by which value is created and destroyed.  For example, Rand’s fiction depicts characters who inherit large sums of money without any corresponding virtue.  Sometimes these characters say they want to “help people,” but “help people” is for them something of a [detached symbol](https://www.lesswrong.com/s/5uZQHpecjn7955faL); e.g. one such character who inherits a bank preferentially gives bank loans to people who’re pitiable but unlikely to repay the money (“to help people”) until the bank they are running goes bust and loses the entrusted savings of many

To me, this is a variation of the profit-motive mistake. It is a subtle way of saying that spending money on something that doesn't make you more money is a mistake. More bluntly: it misses the idea that anything other than money can be of value.

If money were utility, the whole economy would be a [zero-sum game](https://www.lesswrong.com/posts/D8ds9idKWbwzCseCh/zero-sum-is-a-misnomer). Trade wouldn't make sense. Ayn Rand's perspective (as I understand it) really is missing something.

Vaniver gives a related critique:

> One way you can think about this is by taking the metaphor as literally as possible. Living money is money which reproduces more of itself; dead money is money which does not replace itself. And this isn’t just how the libertarians view it; Marx, when discussing capital, describes a very similar situation.
> 
> But you might wonder about your own life and your own spending. When you buy food, that gives you energy to do more work; maybe that’s living money that pays for itself. But when you spend money on a movie, does *that* pay for itself? Or is that dead money?  
>   
> \[...\]  
>   
> This is, in my view, where the [divine spark](https://en.wikipedia.org/wiki/Divine_spark) comes in. As resources flow thru the economy from sources to sinks, it matters what the sink is. A ship that’s sunk to the bottom of the ocean by accident or deliberate violence is a cost that we should regret; better to have the ship than the wreck. But the same amount of resources spent on creating a movie that then people watch and enjoy having watched—is that a cost that we wish hadn’t happened? I think not; I think it’s one of the things that makes life worth living. Not because more money exchanged hands, not because GDP was higher, but because the people enjoyed having watched it. Making the same movie and burying it (or it being too low quality to enjoy!) represents a real loss.
> 
> Rand’s theory of living money isn’t [Moloch](https://slatestarcodex.com/2014/07/30/meditations-on-moloch/); she doesn’t want Bostrom’s Disneyland without children. The point of money is for people of good will and honor to communicate with each other about what they want and how things get made, not to be the beast which consumes everything that can be consumed.

Vaniver is charitable towards Rand here, but I don't think "living money, plus dead money with or without the divine spark" is a great way to frame things. I don't want to call it "dead money" unless I agree with the derogatory connotation, which I don't.

In [Judgements: Merging Prediction & Evidence](https://www.lesswrong.com/posts/3hs6MniiEssfL8rPz/judgements-merging-prediction-and-evidence#Collector_Investor_Continuum) I used the terms collector vs investor. An *investor* is using money primarily to get more money. This is Rand's live money. A *collector* is using money primarily to purchase other sorts of value. This could mean collecting postage stamps, or traveling the world, or donating to charity.

[^cqb1lyaa1ae]: "Utopia" translates literally to "no place"; however, through historical happenstance, it has come to mean "good place". Fortunately, there is a close word, "Eutopia", which translates as "good place". 

[^56qrcpta10r]: Note that I'm saying both that GDP isn't the ultimate measure of human value, so GDP-increasing moves aren't necessarily good moves, and that GDP isn't a perfect measure of the economic productivity of an economy, so that even if we only cared about GDP in the long-run, it could be better to accept lower GDP in the short-run to enable the production of important non-monetized / under-monetized goods (such as childcare, wikipedia entries, open-source software, etc) which could accelerate GDP growth in the long run.