Background
What follows will be a caricature of the development of civilization - block by block, with increasing layers of abstraction. Consider how the primary colors are combined to make the secondary colors - in like manner, flour + water + yeast results in bread. it seems that certain concepts we take for granted can be broken down into their core components such as land, labor, market, currency, banking, etc. What is banking other than storage of currency? What is currency other than an advanced form of trade? What is that which is being exchanged other than a product of the land and labor? In some cases, concepts can be abstracted (or rolled up) upon themselves. For example, a farmer may bring his goods to the market to trade, but eventually he find it works better for him to focus on being a farmer and leave the selling of his goods to someone with a friendlier personality, better equipped to sell. This person, the merchant, makes nothing, but can't make a living without the underlying support provided by someone laboring on the land to give the merchant something to sell. Let's start --
The Land
Let's say we landed on this planet one day, with no prior government. What might happen? There is plenty of land for everyone to make a small garden and support themselves and their families. Can anyone actually own the natural resources ("the land") since none have labored to create or make the land besides G-d? If I understand, even remotely, some aspects of many Native American's way of thinking, prior to the arrival of the "pale ghost faces", the land belongs to all of us, collectively, and in reality, we are merely borrowing it for the duration of our sojourn.
At this point no one "owns" the land and the weather is great. What follows is a quick explanation of the development of civilization. It uses a system of "equations" to describe how things like a market might come into existence.
The Farm(s)
Production or Improvements
Land X Labor = Production or Improvements The product of the land and labor may include crops, oil, cheese, etc. Once we have production from the land, the farmers and cheese makers may want to trade with one another. This would arise out a diversity in the land's potential for farming or dairying.
Technology
Production + Loss + Labor = Technology As winter comes each season, eventually one develops methods to improve the efficiency of the operation.
Surplus
Production + Technology = Surplus (Production) The efficiency of the production process continues such that a surplus is produced.
Trade
Surplus (Production) + Lack or Loss = Trade The Surplus may be traded with one's neighbors. Transportation may be challenging.
Storage
Production + Surplus = Storage After having winters for a couple times, some would get tired of running out of food in the winter and would save it up. The body does this in the form of fat, but in the physical world this might manifest as a grain bin or similar.
Loan
Surplus + Storage + Loss = Loan
Depending on how the Laws of nature treat the farmer, there could be diversity in Storage or Loss. Some farmers may begin to accumulate a large surplus and others may suffer loss. The result is that one eventually gains an advantage over the other. At this time, if there is no desire to share the fruits of one's labor then it is likely either conflict will emerge or loans of seed for production will emerge. The likelihood of conflict may be determined by how easy to farm the land is, how much space there is to expand into, whether there are wild animals or humans present, and the other things. The loan of seeds by the one with a surplus may include an expectation of a portion of the crops to the one the seeds are loaned to. The loan could start here on a small scale, but the larger scale probably can't happen until a corresponding level of security or governance is developed.
Town
Farm + Loss (Security Threats or Incidents) = Town If farms are ransacked by Raiders, then there may be a movement towards perimeter defenses -the establishment of towns to promote common defense.
Towns
The Town(s) A town being established would require several core components, but there would need to be a draw of some kind - to cause people to coalesce. It could be religion, security, or convenience. A town would have a market and perhaps defense.
Market
(Production X Labor) + (Distance and/or Religion) = Market Eventually a few folks would realize that have a place that is within reach of everyone where goods can be traded. It may be that one individual sets up a nice shaded open air hut and charges a fee to use it. There'd have to be something to draw everyone to this location - perhaps religious festivals or a matter of convenience. Once established the possibility of trading partners would be its own draw. At this time, trade is probably executed by bartering, or using grain, or maybe whatever local metals or crystals can be harvested.
Weapons
(Production or Storage) + Loss (Security Threats or Incidents) + Labor = Weapons (Technology) Metal may become valuable for making weapons and become desired. A government backed by the weapons may enforce internal rules agreed to by the people in the town.
Security
Weapons + Defense = Security
Violence
Weapons + (Offense or Dispute) = Violence
Arms
Soldiers + Loss = Arms (Technology)
Currency
Market + Loss = Currency Somewhere along the way someone also realized that trading chickens for barrels of oil at the market wasn't working so well - costing valuable time for planting. Someone says: "Why not trade everything in grain, instead of trading cows directly for yams?" The currency may be spices, grain, precious stones, or metals.
Dispute Resolution
Violence + Currency = Dispute Resolution
Merchant
Market X Labor = Merchant Some may be able to recognize goods that are under priced and also happen to hate farming - why do back breaking work when you can just offer to act as a middleman for their brothers and sisters - merchandising is born. The merchant can't really exist without the market.
Banking (Loans)
Currency + Storage + Loss + Records (Technology) = Loan (Banking) The banker figures out that he can make money by renting out the gold and silver itself. At first, he may try to just loan out the gold and silver and just ask that his debtors would quickly repay the loan. But, the banker may find that as hardships arise - some may be unable to pay back the original amount. So he must find a way to make up the difference - this is called usury or interest. Records is a type of technology born out of a loss of a loan repayment or two.
Banking (Deposits)
Loss + Storage + Security + Improvements + (Loans Outstanding or Reputation) + Records = Deposit Banking Eventually, there are some who are more successful than others at farming or mercantilism and such individuals would desire to place their labors in storage for safekeeping. The bankers may simply charge a fee to use their secure storage.
Banking Fractional
(Deposit (Banking) + Loan (Banking)) X Labor = Fractional Banking Once the Bankers figure out that they can use other people's money to give out more loans at interest or for usury. Then are now renting the currency and may begin to rapidly acquire a surplus of currency, so long as they manage their risks and don't do high risk loans.
Economy
Production + Market + Banking = Economy At this point, the only government needed is perhaps a small council of elders to deal with the people who get a little too excited from time to time. It probably doesn't cost much.
Insurance
(Currency + Loss) X Labor = Insurance Some would eventually prefer to avoid unexpected loss - this could be crop failures, loss of limbs for farming, 'accidents', and so forth. Thus, insurance is born once someone figures out how to make more gold and silver by offering protection against loss. Perhaps it is too early for insurance, regardless everything needed for a basic economy is now in place.
Derivative Financial Instruments
In the same way that the abstraction of currency lead to banking, eventually derivative financial instruments would evolve to a point that they may obscure the source of the wealth, the land.
Military, Force
Security + Loss = Military (Technology) Just as the bankers began to accumulate currency, so too did the soldiers begin to accumulate ... force and ever advancing technology. The Barracks is a type of Banking for soldiers and the Armory a type of Bank for weapons.
Government
Town + Loss = Government and Taxes The same problems that can affect The Farm can affect The Town, but on a grander scale, so governments are born - evolving out of agreements to use the strength of a group to provide protection from inner (thieves) and outer threats (raiders) and with them agreements to fund the paychecks for the soldiers.
The government provides security to allow the Town community to profit from farming, mercantilism, banking, and insurance without concern for Raiders. Everyone is to have a "fair" share of the land, divided equally among all the brothers and sisters of town, but not everyone is a farmer. Since Town may now exist longer than its denizens it needs to have a way of passing its resources on to the next generation, while doing so fairly. All those who consent to the fair agreement become Citizens. In exchange for the protection, the Citizens agree to a method of funding the soldiers and various record keepers.
Funding
A way to fund the government and armies it commands would need to be found. This could include some sort of fee or eventually taxes. There are a variety of Taxation Methods to consider, but the people would want something that is relatively fair for all.
The Fair Kingdom
Depending on the taxation and banking systems used, at this point, everything is mostly balanced and fair access and everyone has to work for their keep.
The Biased Kingdom
As time draws on there will be some diversity in the threats, technological advances, and perhaps consequently soldiers that are bored or even underemployed. Meanwhile, the Banker likely continues to make money so long as he is conservative in his loans. He would hedge his bets, try to obtain collateral, etc. and still obtains a fee for his deposits. During years of poor production there may be a run on the Bank in the form of everyone withdrawing their deposits. This would destroy a fractional bank. At this point, fractional banking might be either banned by the government which as sufficient force, or the Bank would move to protect itself and might hire its own soldiers to prevent its own death. This may damage its reputation, but the people would also have little choice since the Bank has their currency.
Either way, there is the emergence of unchecked power - in the form of threat of force, currency stores, and the natural favoritism that will be shown for some professions built on top of other professions.
- City = Banking | Military
- Town = Market | Security | Bakery
- Farm = Farming | Mining
The Bankers may begin to accumulate currency and if there is no accountability they may begin to become drunk on such power. The most skilled and respected among the soldiers may take the lead of the group of soldiers, ultimately having little accountability other than to those who pay the soldiers.
Culture + Economy + Military + Government = ?
Depending on how balanced the above equation and the culture it can result in peace and prosperity for generations or hell on earth. In most cases on earth, it seems to have given risen to Kings who eventually consolidate power from small kingdoms into larger kingdoms. The position of King may have at first been selected to guard the people, but after generations or exposure to too much power, the Kings may eventually become drunk on the power. So long as there is accountability, such as people themselves being sufficiently organized, informed, and armed, they can always use their superior numbers to act as a check, but these events seem to be rare due to specialization. Farmers are perhaps more peaceful than the soldiers accustomed to the ways of war and killing. Eventually no longer does the king serve the people, rather he believes the people are there to serve him.
The King that Demands Servitude
No one would dare challenge the king, because the group is locked into this strange perspective that he is somehow more than a man. Through threat, intimidation, and rewards, the king has somehow convinced numerous others to go along with his program. He has his agents and enforcers, some of whom he pays quite well to hang onto their gold and silver stashes. He pits different factions against one another - dividing their combine power - so that they remain weak and unable to oppose him. Like the Migram experiments, where scientists measured the willingness of study participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience, people will do all sorts of things without thinking it through. He teaches his children, princes and princesses, the same program an they improve upon it, and so it has been for a long long time. The King represents a consolidation of power - it can happen on larger or smaller scale.
Eventually, some folks would say enough of this and try to find a way back to a way where we could all reasonably get along with one another and handle our differences peacefully, for the most part.
Founding of the Republic
Some of us would flee the Kingdoms of Insanity and begin to study history and how governments have failed and succeeded in order to find a better way. One among us, John Adams, even remarked: "The science of government it is my duty to study, more than all other sciences; the arts of legislation and administration and negotiation ought to take the place of, indeed exclude, in a manner, all other arts. I must study politics and war, that our sons may have liberty to study mathematics and philosophy. Our sons ought to study mathematics and philosophy, geography, natural history and naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain." - John Adams in Letter to Abigail Adams (12 May 1780)
Some of us, like John Adams, would eventually realize that none of us can be trusted with too much power any more, and mutter something about all men being created equal. We'd craft a system to keep everyone honest, which would be an improvement from previous systems. We'd design a system that itself could not be easily corrupted - accounting for the weaknesses and transient nature of factions, the fickleness of the people themselves, all the while giving them the ability to make changes, but not without a great amount of debate towards answers that give everyone a shot. We'd put in protections to make sure this system stays in tact. Among these would be that the system itself would protect those who might speak against it.
These rules for the system itself, the Government, would be called the Constitution. It would would lay out the roles and responsibilities for the Federal government, the state governments that were joining to form a new Republic, called the United States, and the people. The Constitution delegated certain functions previously performed by the State governments to the Federal government. These are known as the enumerated powers which included a specific set of powers such as making war, treaties, delivering mail between the existing States, etc. The basic idea was that Federal government would take care of matters in between states or outside the states.
The Federal government would have three main branches that would be pit against each other - dividing it, so that no one branch ever becomes too powerful. In addition, since the government was formed from the people and their state governments, they would retain all of their previous rights, except what was specifically delegated via the Constitution. Some would say that one day the government would try to take rights from the people that created it, just as the king had done previously. So additional protections would be put in - a Bill of Rights, which would explicitly indicate that the rest of the powers not granted to the Federal government would remain with the states or the people. Freedom of the press, speech, religion, common law courts, and the right to bear arms would be included to keep the Federal government in check.
Cracks in the System
But, there would be holes in the system, and the crafty among us would attempt to exploit them. Some of the exploits would be for some good, but not without a cost. Why? The same rationale used to allow something you like, can be used to disallow what you don't like. We are beginning to see the culmination of this in various state courts with the banning of the Ten Commandments on land assigned to the government. People claiming to worship various deities are presently trying to use the system to erect their own religious symbolism on land assigned to the government - perhaps one day there might be a ten commandments of Satan erected.
Sadly, what has happened is that using the same or similar cracks, many have figured out that they can make more gold and silver by paying people to write rules into the system for them. Just imagine what would happen to the price of alcohol if someone were to ban it? Someone would surely profit by this? And someone would surely use the resulting crime wave to JUSTIFY more power? Perhaps rich exploiters, wishing to avoid competition, would buy up politicians and have them sell messages to the people, saying something like: "the bankers have oppressed you - we must take their wealth from them, they have too much power - we will tax the labors of those who bring in more gold and silver each year" Yet, do these exploiters make "income" or do their assets simply gain in value, in most cases, even being taxed at significantly reduced rates, if any? Do the people realize that the very noose they attempted to put around the exploiters neck has been put around their OWN foot and staked into the ground?
In some systems, we might try to account for the fact that the banker doesn't have to 'work' as hard as the blue collar laborers. We might do this by taking his 'labor' and giving it back to the community. But, eventually, this same system would become corrupted and would be used to allow the bankers to hold onto their stashes, all the while keeping anyone else from ever rivaling them. We'd do this by increasing the percentage of money taken from people's labor, based upon how much they made. This would help to keep those with wealth small. We'd sell this system to those who had forgotten their way, as a method to give them their 'fair' share.
This would continue and, eventually, maybe the exploiters would figure out a way to swap out the gold and silver for paper! If it were possible, perhaps they would try to use leaves from a tree, but the people wouldn't have any of that - given the inflation, but the people would accept money made from trees and reeds so long as it had something printed on it. This means that the federal government can now print as much money as it wants within certain limits - yet, it can't do so too quickly or it might kill the proverbial golden goose. Maybe such exploiters would also establish central banks from which it can make money off the whole system. Perhaps there are benefits to using paper money, but at the same time - it is after all, paper.
We now have the basics of an economy setup, and while it is a caricature, our government. Over time the government would have become corrupted in many areas and the common man would no longer understand it. It would be time for him to relearn and thus there is the Constitution for the Common Man.