understanding money
T. Dave Hudson
> The problem is that understanding money as a medium of exchange is
> insufficient to understand what money is -- the point is not that the
> goods one can exchange have a monetary value, but that they have an
> intrinsic value. Since money has no intrinsic value, money buying
> money gives no understanding of money.
There is no such thing as intrinsic value. But if you mean
use-value, the uses to which a good may be put for obtaining
further values, even paper money has that. (Remember the
joke beginning by asking for toilet paper and ending up
asking for change for a ten?) It just doesn't have uses as
normally valuable as, say, those of gold or silver.
Money, which is simply a common medium of exchange, is not a
measure of value. It is used as a measure because
calculation is easy and because the expectations of future
trade that are based on past trade are fairly reliable. To
fully understand money, you must understand the basics of
exchange. To say that understanding exchange gives no
understanding of money is to say that understanding money
gives no understanding of money. (And the implicit is even
more eloquent.)
David Hudson
Frank Adams
>> The problem is that understanding money as a medium of exchange is
>> insufficient to understand what money is -- the point is not that the
>> goods one can exchange have a monetary value, but that they have an
>> intrinsic value. Since money has no intrinsic value, money buying
>> money gives no understanding of money.
>
>There is no such thing as intrinsic value. But if you mean
>use-value, the uses to which a good may be put for obtaining
>further values, even paper money has that. (Remember the
>joke beginning by asking for toilet paper and ending up
>asking for change for a ten?) It just doesn't have uses as
>normally valuable as, say, those of gold or silver.
A point well taken. But there is another form of money: money in the
form of electronically encoded information -- your bank balance, for
example. This is money in pure form, and it has *no* intrinsic value.
(And what I mean by intrinsic value is what you prefer to call use-value.)
>Money, which is simply a common medium of exchange, is not a
>measure of value. It is used as a measure because
>calculation is easy and because the expectations of future
>trade that are based on past trade are fairly reliable.
If money is used as a measure of value, it is a measure of value. What
else would it mean for something to be a measure of value?
>To fully understand money, you must understand the basics of
>exchange. To say that understanding exchange gives no
>understanding of money is to say that understanding money
>gives no understanding of money. (And the implicit is even
>more eloquent.)
The claim is that understanding the exchange of money solely for other
money does not give an understanding of money. You are attacking a
strawman.
Frank Adams ihpn4!philabs!pwa-b!mmintl!franka
Multimate International 52 Oakland Ave North E. Hartford, CT 06108
T. Dave Hudson
>> measure of value. It is used as a measure because
>> calculation is easy and because the expectations of future
>> trade that are based on past trade are fairly reliable.
> If money is used as a measure of value, it is a measure of value. What
> else would it mean for something to be a measure of value?
It is used as a measure of values, not of value. What money
"measures" is constrained by individual valuation, but is
not a measure of that valuation. Individual valuation is
preferential; it is a choice among alternatives. Money
measures what may be expected in future trade. The things
for which money is traded have value. Thus what money does
(when it is reliable) is provide a means of assessing what
values must be given up in order to have other values, *only
insofar as values may be obtained by means of a market*.
Money simplifies the complex process of assessing what is
possible. (Incidentally, money is a fallout of property
rights. It loses its magic where ownership and trade of the
means of production are completely forbidden. Its
objectivity is the consequence of the objectivity of
property rights.)
>> To fully understand money, you must understand the basics of
>> exchange. To say that understanding exchange gives no
>> understanding of money is to say that understanding money
>> gives no understanding of money. (And the implicit is even
>> more eloquent.)
> The claim is that understanding the exchange of money solely for other
> money does not give an understanding of money.
Understanding the exchange of one kind of money for another
kind of money requires understanding what an exchange is,
and furthermore requires knowing what indirect exchange is.
An understanding of indirect exchange implies an
understanding of money. Only if you qualify the
understanding by its incompleteness can you support the
absurdity that is your claim.
David Hudson
sh...@teldata.uucp
> ... (Incidentally, money is a fallout of property
> rights. It loses its magic where ownership and trade of the
> means of production are completely forbidden. Its
> objectivity is the consequence of the objectivity of
> property rights.)
Is this theoretical or can you give an example of such an
instance or place? What substitutes for money? Barter?
In Poland when mistrust of the currency was rising the
people fell back to barter and used liquor and cigarettes
(things *of* value) as the medium of exchange.
--
Warren N. Shadwick
... ihnp4!uw-beaver!tikal!shad
Frank Adams
>>> measure of value. It is used as a measure because
>>> calculation is easy and because the expectations of future
>>> trade that are based on past trade are fairly reliable.
>
>> If money is used as a measure of value, it is a measure of value. What
>> else would it mean for something to be a measure of value?
>
>It is used as a measure of values, not of value. What money
>"measures" is constrained by individual valuation, but is
>not a measure of that valuation. Individual valuation is
>preferential; it is a choice among alternatives. Money
>measures what may be expected in future trade. The things
>for which money is traded have value. Thus what money does
>(when it is reliable) is provide a means of assessing what
>values must be given up in order to have other values, *only
>insofar as values may be obtained by means of a market*.
>Money simplifies the complex process of assessing what is
>possible. (Incidentally, money is a fallout of property
>rights. It loses its magic where ownership and trade of the
>means of production are completely forbidden. Its
>objectivity is the consequence of the objectivity of
>property rights.)
You are arguing that "measure of value" means "measure of absolute,
intrinsic value". But we have agreed that there is no such thing.
What I mean by "measure of value" is essentially what you mean
by "measure of values".
I do not accept that individual value `is' preference among alternatives;
i.e. that a person's complete preference list constitutes a complete
explication of his values. I believe a utility function is closer to
the true nature of individual value. I will agree that it is very
difficult to determine what a person's utility function is; but then
it is difficult to determine an individual's complete preference list,
too.
>> The claim is that understanding the exchange of money solely for other
>> money does not give an understanding of money.
>
>Understanding the exchange of one kind of money for another
>kind of money requires understanding what an exchange is,
>and furthermore requires knowing what indirect exchange is.
>An understanding of indirect exchange implies an
>understanding of money. Only if you qualify the
>understanding by its incompleteness can you support the
>absurdity that is your claim.
You have jumped into a philosophical exchange about the nature of
understanding, and I believe your objection was based on a misunder-
standing of what was being said. Perhaps a better statement of what I
was saying in the sentence quoted above would be acheived by substituting
the word "knowledge" for the first occurance of the word "understanding".
I'm not sure exactly what you mean by "indirect exchange", but I am
reasonably certain that understanding it was *not* part of my condition.
T. Dave Hudson
went to check an error I'd made in mailing. Sorry if this
is a reposting.)
>> ... (Incidentally, money is a fallout of property
>> rights. It loses its magic where ownership and trade of the
>> means of production are completely forbidden. Its
>> objectivity is the consequence of the objectivity of
>> property rights.)
> Is this theoretical or can you give an example of such an
> instance or place? What substitutes for money? Barter?
> In Poland when mistrust of the currency was rising the
> people fell back to barter and used liquor and cigarettes
> (things *of* value) as the medium of exchange.
Firstly, Poland is not an autarky (not "autarchy"; look them
up). It is still connected by money to privately owned
means of production.
Secondly, I don't regard something as forbidden if it is
only half-heartedly forbidden. So the black market in
Poland, just as the black market in the U.S., could save
Poland from the worst consequences of what is only
explicitly forbidden. Of course, investment would still be
crippled; an autarky would crumble. That is probably why
there is no historical example of a pure, large, suicidal
autarky to offer you; most people would resort to
pragmatism, and perhaps small, workable autarky, when faced
with their destruction. It is claimed by some that an
effect of Diocletian's edict upon the Roman Empire was
feudalism before Rome's collapse. Close enough?
Thirdly, and not surprisingly, cigarettes can be money.
(Silver lining in a dark cloud? Sorry about that.) The
fact that they are not officially sanctioned as money
vitiates their beneficence but does not destroy it. Barter
can progress from direct exchange, in which a good is traded
for because it is valued, to indirect exchange, in which a
good is traded for because it can be traded for something
that is valued. (By virtue of that use, and conditional on
that, it acquires additional value, and therefore possibly
greater price.)
Lastly, to the extent that people have the power to thwart a
government's violation of political rights, they are the law
and the government, and they can establish legal rights.
But it takes a long haul to get there. (If I remember
correctly, the song was in counterpoint to "Summertime" in
the unabridged *Porgy and Bess*. If so, it offered a
lyrical counterpoint as well.)
David Hudson