In a previous article, we showed the impossibility a competing social status system by the price mechanism. However, even if it explains the top-down functioning of the Cathedral, it does not explain why individuals would adopt and engage privately in left-wing behaviour, nor why some behaviours gain an exponential influence. In this article, we will explain it by examining the formation of prices, the concept of money, and then explore its social consequences, without needing the concept of the Cathedral.

The usual pricing mechanism follows an equilibrium theory: offer and supply adjust to match the price. To explain the exponential behaviour of the prices of particular commodities, we shall turn to Antal E. Fekete:

Menger observed that the market quotes not one but two prices: a higher ask price and a lower bid price (understood as unit prices). He placed the bid/asked spread, the difference between the two, right in the center of his analysis. We follow his insight and observe that as ever larger quantities of a commodity are offered for sale, the bid/asked spread widens. The market-maker takes a greater risk in buying or selling unusually large amounts. To work off a greatly expanded inventory, or to replenish a greatly reduced one, is time-consuming. In the meantime the price could change unfavorably for him. The market-maker compensates for his risks by quoting a wider spread. The behavior of the bid/asked spread is fundamental for the determination of salability.

There are two prices. Therefore, we can axiomatically posit that in any transaction, buyers like sellers will want to minimise the spread. Let us suppose we want to buy eggs with one belt. The eggs-against-belt market may not be liquid, and the spread would be high. Instead, we would exchange our belt against money, then buy eggs with it. Whether the intermediary currency is priced too low or too high does not matter; only the spread counts. As both buyers and sellers converge on a commodity, the phenomenon becomes exponential.

Therefore, the spread at the lowest quantity is not that important. Instead, what makes money is that, as ever-larger quantities are supplied, the spread remains small. That property is called salability.

Market-makers choose the spread based on the ease of replenishing their stock, which is measured by the stock-to-flow ratio. The higher, the more secure. Indeed: the lower the stock relatively to the flow, the more is consumed on production; indicating a lesser availability.

This can empirically be shown to be a linear relationship between the logarithms of the stock-to-flow ratio and market capitalisation:

Once their most pressing needs are satisfied, market actors try to accumulate the commodity with the slowest declining marginal utility, which is the one with the highest stock-to-flow ratio if we consider transactional utility.

Since the marginal utility of money is virtually constant, the lease rate limits its demand. For gold, it is defined as the LIBOR minus the Offered Forward Rate. Gold is indeed an interest-earning asset, allowing us to calculate its value.

This is the mechanism behind monetarisation. It requires no institution and people flock to the highest stock-to-flow ratio commodity, absent State intervention.

In addition, it makes dynamics measurable. Applied to the social status market, one would be able to predict social trends, such as when the USSR elite defected because of the gravitational pull of the Western social status system.

Now, let us find its social counterpart. What set of behaviours would be people flock to, without institutional coordination?

1. It would be a universalist protocol, allowing transactions with anybody.
2. It should be useless. Indeed, the more useful it is, the faster its marginal utility would decline (e.g. if gold could be profitably eaten).
3. It should be costly in order to maximise the stock-to-flow ratio.

Bitcoin has a mechanism named "halving", whereby after a given number of blocks, the effort required to generate the same amount of currency doubles. This forces an always higher ratio. There would be a similar mechanism for that universalist protocol, requiring an ever-greater sacrifice to generate the same amount of social reputation, leading to ideological acceleration.

Are there exits from this ? Let us study historical cases.

• Two currencies coexisted for most of history. One with the highest salability (marketability in large), the other with the highest hoardability (marketability in small): cattle/salt or gold/silver until the end of the twentieth century. Chemical advances made it possible to manipulate gold as efficiently as silver, leading to monometallism. Similarly, technological advances (the printing press, mass media, social networks) make it easier to engage in small-scale leftist behaviours, leading to a monoideology by which any other behaviour is valued. And because of the aforementioned axiom, any social transaction would bring us closer to the leftist singularity.
• An institution can take control of the social money press, usually a party. It would define who is trusted and who is not. However, the same mechanics often happen inside the institution.
• The flow of social rewards decreases until it becomes negative. The behaviour is destructive, destroying the social stock. The stock-to-flow ratio decreases until people find another social currency with a higher ratio, only postponing the singularity.

By analogy with Bitcoin, so far, the only escape hatch would be an anonymous and provable right-wing social protocol.

• Next: Aristocracy and mediocracy