Rock Climbing

How Can Money Help us to Be a Better Climber?

Or Why Experimentation is the Motor of Social Change – The Example of Renewable Energies

I am progressively wrapping my mind around the research I did last year, regarding the fundamental demographic sustainability on the grounds of available food and energy . An interesting question pops up: how can we, as a civilization, learn to optimize our food and energy base? Learning means experimentation: when a child learns to ride a bicycle on just two wheels, the process of forming that new skill is a series of experiments, progressively more and more successful.

What if we, the mankind, were a child who is just beginning to know how to steady that bike called ‘civilisation’? What if we saw our present civilisation as one of those bold rock climbers from the mind-bending metaphor that Arnold Toynbee coined up in his ‘Study of History’ ? Can we learn, through experimentation, how to be a better climber, how not to fall asleep, and not to fall down the metaphorical cliff?

What if some of the global, social changes we can observe right now were manifestations of accelerated experimentation that our species is conducting?


We are globally shifting towards renewable energies, which the readers can observe by comparing the trend observable in the final consumption of energy per capita with what is happening to the share of renewable energies in that consumption. The change in our energy base is commonly associated with the growing urbanization, which seems to be perfectly plausible, yet there is another phenomenon, which I have been paying a lot attention to, those last months: the growing monetization of the global economy.

There is consistently more and more money supplied per unit of real output in the global economy, and since 2009, we have a broad new world of FinTech utilities, including cryptocurrencies. The phenomenon of monetization in our social life is frequently deplored as something deeply negative (see, for example, The Moneyless Manifesto by Mark Boyle).


What if changed our view on the function of monetary systems and, instead of seeing money as something to appropriate and hoard, we perceived it as an elaborate system of communication in the very complex social reality?

The idea is not completely new. By the end of the 18th century, when Adam Smith was putting forth his ideas on political economy in “An Inquiry Into The Nature And Causes of The Wealth of Nations”, continental Europe (mostly France) hosted a heated debate on the social role of money.

Some social thinkers, as for example, Isaac de Pinto, firmly stated that if we want quick social and economic change, we need to increase the volume of financial markets, as money is very much an autonomous social force. The debate was vivid enough to be life-threatening, and forced de Pinto to publish his work in Holland, as his ideas did not please much the very influential Marquis de Mirabeau.

The commonly established idea about money is that we use it when we know what to do. Still, quite a substantial body of economic research suggests that most of the times we are not that certain about the economic outcome of our actions. John Nash used to call ‘fence-sitting’ the behavior of those who should be actively involved in the change at hand yet perceive such great a risk in any next move that they prefer to stay put.

They fail to develop the so-called ‘dominant strategies’, which, in turn, results in a collective failure to develop a new, viable social structure. Herbert Simon went even further and claimed that most of the times most economic agents do not really know what they do and they are not really in a position to change it.

In my own research, I am progressively coming to the conclusion that in the presence of quick economic change, entrepreneurs accumulate greater cash balances in order to provide for the uncertain outcomes of accelerated depreciation in the established technologies.


Taking a more distant scientific position, a convincing piece of historical research published by Turchin et al. claims that the formation of social institutions crucial for successful paradigm shifts in our history is neither simple nor painless.

When paradigms are shifting, we need something that Turchin et al. label ‘ultra-socialization’, going far beyond the simple game of costs and immediate benefits. Now, I am framing a general hypothesis, as some kind of an intellectual provocation: the increasing monetization of the global economy manifests our global, species-wide, increasingly intense experimentation with new social structures, appropriate for the new energy base.

What can this experimentation possibly consist in? The research I considered strongly suggests that – as in any other field of social activity – there are some structures that work well in the deployment of renewable energies and some others that just don’t.

An interesting technical paper, published by the World Bank, entitled Mini-Grids and Arrival of the Main Grid : Lessons from Cambodia, Sri Lanka, and Indonesia , states that we can fundamentally distinguish three typical, social structures regarding electricity: (1) completely off-grid, (2) gathered around a mini-grid, and, finally, (3) firmly structured together with a big, fat, main grid.

Many local communities are experimenting with the exact spatial configuration of these three patterns. Experimentation means going back and forth on many alternative solutions, and if we want to go back and forth really quickly, significant monetary balances can be highly useful to grease the necessary transitions.

Other papers and reports come to corroborate the claim that among all the things governments could wish – and subsidise – regarding renewable energies, only some economic schemes are really workable in the long run (see for example:  Adapting to Higher Energy Costs : Public Perspectives and Responses to Rising Energy Costs in Europe and Central Asia or The Energy Subsidy Reform Assessment Framework : Toward Evidence-Based Energy Subsidy Reforms ).

Furthermore, whatever the pious wishes of the government in place, and whatever regulations are being introduced, the viability of any power system boils down to a simple equation, based on two variables, namely:

(1) the actually viable price of electricity; and

(2) control over the capital engaged into the power system in question (ownership of assets, participation in ownership, derivative rights of possession, creditor’s claims etc.).

Once again, experimenting with prices, and with the ownership of assets requires a much larger monetary mass to finance the corresponding transactions, as we need to go through many experiments before landing the optimal institutional structure.

You can conduct a simple experiment in order to know how uncertainty and quick change are impacting monetary balances.

Take any economic decision – buying a house, changing your job, going for a trip around the world – and nail down two alternative scenarios. In the first one, you do your thing in one go: you do a lot of online research, you take your time to ponder the available options, and then you finance what you have to finance in just a few, extremely well targeted transactions.

In the second scenario, you experiment with each available option, kind of  ‘I buy just to see what happens, and then I sell if I don’t exactly like what happens’, in as many transactions as needed to test all the relevant points. You will see that the second pattern is several times more money-consuming: you need a much greater supply of money to finance the same passage from initial state A to the intended state B.


Question: being such a smart species, having Tesla cars, da Vinci paintings, and Faberge eggs, couldn’t we adopt the first way, without all that costly experimentation?

Well, here comes, once again, the Nobel-prized theory of bounded rationality by Herbert Simon . If we want to reduce the amount of experimentation necessary for achieving a social change, we need a body of knowledge to tap into.

Logically, that body of knowledge must come from other people, only there are no other people on this planet except our species. We have no external body of knowledge to use. Anything we possibly come up with, we invent by trial and error. And to do that, we need money, a lot of it.

Or to think of it another way: the growing monetisation of the global economy opens the door to experimentation.

Hence the explosion in the number of startups. Many are destined to fail, perhaps most of them, but that is the expected cost of trial and error – the only way to go forward and innovate.



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