Cannabis: the Commodity for ‘Sounds Money’ in a Truly Free Society?

Most libertarians endorse returning to what is known as ‘Sound Money’. That is, honest money based on the real value of a commodity and not on the fiat of government. In this post I mean to challenge, with a certain about of tongue in cheek, the gold standard as the commodity we should rely on, offering instead a certain ‘illegal’ substance which is almost as popular with libertarians as the gold standard itself. In doing so I hope to raise an interesting problem with the gold standard in the hopes that someone wiser than I might provide an answer?

Economics 101 reminds us that to back a currency a commodity needs to be portable, divisible, durable and in constant demand at a stable market price. Whilst Nozick reminds us that in a free society a means of exchange will arise spontaneously as traders converge on more marketable goods, preferring commodities they know to be more generally demanded. Hence gold and other precious metals have traditionally been favoured

However, mining for precious metals is not something that we can all feasibly do ourselves. At the very least it requires capital investment, machinery and an accessible supply of the ore. In a gold economy individuals are left with little choice but to work for a wage in gold, with the price and supply determined by forces beyond their understanding and the same would be true of oil and any cash crop. The question is would we really establish the free society we hope for by returning to the gold standard tomorrow?

In deciding which currency I would choose, perhaps even create, in a free society, I would argue for one final criteria for our commodity. That as many people as possible be able to participate in its creation and distribution as is feasibly possible. The commodity I suggest: Cannabis.

In addition to the perpetual demand for the recreational drug, the cannabis plant produces medicinal and industrial oils, fibers for rope, cloth and other material applications and it can be cultivated on a large scale. In its most valuable form, the recreational and medicinal drug is portable, divisible, and durable and would stabilise in price once released from the clandestine economy.

But the best bit, unlike any other valuable substance I am aware of, pretty much anybody can grow their own plant! Not sure if your job is paying you enough? Grow your own cannabis. Take it to the bank and deposit it in your account in exchange for notes (made of hemp fibers of course) and if you think the bank isn’t giving you a fair exchange rate then take it to a local buyer or just sell it yourself. What better way to control the exchange rate and the value of our currency than to have it so perfectly linked to micro-market control.

Of course this post is written with a measure of irony and published on the first of April. I realise that people have expanded the alleged uses of marijuana to a whole new level in recent decades and that we are still a long way from ending prohibition, let alone returning to sound, honest money.

But, all jokes aside, the question I want to ask here is this; Is a currency backed by a commodity which very few people can create really ideal for a free society, and if not, how might we remedy the problem? Setting aside any public health concerns over the viability of marijuana as a substance, WHY wouldn’t this work? And of course, any thoughts on other comical yet genuine benefits of Marijuana money would be much appreciated.

Thanks for reading,