The most common objection to the creation of a market in types of S&N Capital is a belief that it is not possible to measure and assign units to them, thereby enabling them to become tradeable goods. We believe this objection is false.
As obvious as existing measurement systems, such as length and weight and air pressure, appear to be today, they were not always so commonplace or obvious. This is because measurements are not what we think they are.
Consider two individuals who both have two pieces of wood each. They might count the pieces and agree that they are four in number. However, that would not justify the conclusion that they each have “an equal measure” of wood. This is because pieces of wood typically vary across a number of dimensions, including density, color, smell, circumference and length. If the two individuals want to assess just one dimension, such as length, they must must first create an abstraction in the form of an agreed unit length. That requires “intersubjective agreement” that the unit will occupy a fixed amount of extension along one axis of space. This is precisely the case for a widely accepted unit of length today: the metre.
This may seem strange to those who have only known a universally accepted measurement of length. Length in many parts of the world is measured in meters, or other metric equivalents. But there was a time in history when measurement was far less precise than we experience today. Weight was “heavy” and “light”, temperature was “hot” and “cold”, and distance was “near” and “far”. The problem with such terms is that their meaning is relative to each person’s experience. For example, a strong person will think “light” what a weaker person will deem to be “heavy”. Indeed, the abstraction of “temperature” is a relatively recent occurrence. The fact that “hot” and “cold” were part of a single continuum was not always obvious. In the past they were seen as distinctly different (unrelated) states. The idea that you could measure temperature from hot to cold in a single scale was quite revolutionary at the time.
Today, standard units of measurement are so commonplace as to be taken for granted. Yet the depth of thinking, and then the social, political and philosophical negotiations, required to bring each of these standards into being are formidable. Yet there is a relatively consistent pattern when it comes to moving from subjective qualitative measures to standard units of measurement.
First comes the recognition of a need. For example, Mesopotamian traders needed measures of weight for trade, steam engine engineers needed to measure air pressure accurately and potters and bakers needed to measure temperature accurately.
This is often followed by a wide range of crude, and often even deceptive, qualitative and quantitative measures, such as “a handful”, a “generous portion” or “the king’s foot”. But then often comes scientific assessment, which builds upon a philosophical framework for how to understand measurement. Eventually, over decades and sometimes centuries, a social, scientific and philosophical consensus emerges for a new measure.
All the physical measurement standards we take for granted today followed a similar pattern. The emergence of agreed standards of measure has taken place over thousands of years; one measure at a time. And the emergence of every new standard of measure (not least of time itself) heralded a huge explosion in trade and innovation.