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Artificial social convention. The emergence and evolution of money. There are two concepts of the origin of money
There are several concepts on the issue of the origin of money, but the main ones are rationalistic and evolutionary. The first concept, which arose during the time of Aristotle, prevailed until the end of the 18th century and explained the origin of money as the result of an agreement between people. Some modern economists interpret money in a similar way. Thus, P. Samuelson views money as an artificial social convention. J. Galbraith believes that assigning monetary functions to precious metals and other objects is the product of an agreement between people.
The most consistent supporter of the second concept of the origin of money was K. Marx, who defined money as a product of the development of exchange and commodity production. According to this concept, before the advent of money, there was barter and various forms of value. Economics identifies four forms of value:
1) simple, single or random;
2) full or expanded;
3) universal;
4) monetary.
With a simple form of value, an individual commodity A, which is in a relative form, is opposed by only one random commodity - the equivalent B; with the expanded form of value, commodity A, which is in the relative form of value, is opposed by many equivalent goods - B, C, D, D, with the general form of value, all goods that are in the relative form of value are opposed by one equivalent commodity, but here the role of the universal the equivalent is provided by various goods (livestock, furs, fish, grain, etc.); in the monetary form of value, all goods in the relative form of value are opposed by a universal equivalent, the social role of which is firmly fused with the use value of precious metals - gold or silver.
The transition from one form of value to another occurred gradually, as social division deepened and the isolation of commodity producers increased. The development of forms of value is both the development of the exchange process and the process of the emergence of money. Moreover, money arises as a product of the spontaneous development of commodity production and exchange.
Before the advent of money, there was barter - the direct exchange of one product for another. For example, a farmer exchanges 150 kg of grain for one sheep belonging to a herder. In barter exchange, the number of market participants is limited. With an increase in market participants and the number of economic entities, barter encounters serious difficulties. When a variety of goods enter the market in large quantities, several intermediate transactions must be carried out to acquire the desired product. The appearance of money solves this difficulty. The owner of the product exchanges it for money, which he then spends on purchasing the desired product.
Money is a special commodity that serves as a universal equivalent. They express the costs of social labor embodied in goods, and on this basis ensure their exchangeability. Like all goods, money has value and use value. The value of gold lies in the fact that a large amount of socially necessary labor is spent on its extraction. Gold is one of the most labor-intensive metals to mine. The use value of gold as a monetary commodity is bifurcated. On the one hand, it has ordinary use value - it is used for technical purposes, the manufacture of luxury goods, dental prosthetics, etc. On the other hand, gold has universal use value, i.e. is an object of universal need in the process of exchange.
Money is an absolutely liquid medium of exchange, i.e. a product that has the greatest marketability. Money is one of the most significant components in the economic life of society. They arose at a certain stage in the development of the economic life of society, but not as a product of an agreement between people or any legislative act of the state, but as a result of economic relations, the natural economic life of people.
Gold plays the role of money because it has a number of advantages compared to other goods: divisibility, storability, qualitative homogeneity, portability (high cost for a small volume), its relative rarity in nature.
Money performs a number of functions in which its essence is manifested. Money serves: 1) as a measure of value; 2) means of exchange; 3) a means of creating treasures; 4) means of payment; 5) world money.
1) Measure of value. This is the main function of money. It is determined by the very essence of money, which is the universal equivalent. All other functions of money are determined by its function as a measure of value and are associated with it. The function of money as a measure of value means that the value of all goods is expressed in money; they serve as the universal embodiment and measure of commodity values.
However, it is not money that makes goods comparable. The basis for the commensurability of goods is the abstract socially necessary labor contained in them. The peculiarity of the function of money as a measure of value is that this function is performed by ideal money, i.e. mentally represented, and not actually in the hands of commodity owners. Money can measure the value of all other goods only because they themselves are goods and themselves have value.
The value of different goods is most often expressed in different quantities of gold. To compare these quantities of gold with each other, i.e. to compare the prices of goods, this or that amount of gold is taken as a unit of measurement. A certain quantity of a monetary commodity accepted in a given country as a monetary unit is called the price scale. Different countries have different price scales. Each monetary unit is divided into multiples (for example, a mark - into 100 pfennigs, a ruble - into 100 kopecks, a dollar - into 100 cents, a pound sterling - into 100 pence, etc.).
The concepts of “measure of value” and “scale of prices” should be strictly distinguished. There are significant differences between them. First, as a measure of value, gold relates to other goods, expresses and measures their value. As a price scale, a certain amount of gold is taken per unit. And these units (marks, rubles, dollars, etc.) measure any amount of gold, expressing the price of a product. Secondly, the measure of value is the social function of gold: behind the expression of the value of goods in gold, there is hidden the reduction of all types of concrete labor to abstract labor. On the contrary, the price scale performs a purely technical function: with its help, the ratio of one quantity of gold to another, taken as a unit, is determined. Thirdly, as a measure of value, money functions spontaneously, regardless of state power, and the scale of prices is established by the state by law and can be changed.
The functioning of money as a measure of value is associated with the formation of prices. Price is a manifestation of the law of value, i.e. the cost of the goods is the basis of the price. Price is the monetary expression of value, i.e. monetary expression of labor embodied in a product. When supply and demand are equal, the price of a product depends on the cost of the product and the cost of gold. Prices will go down if the value of a commodity goes down or the price of gold goes up. Prices will increase if the cost of a commodity increases or the value of gold decreases. Consequently, the prices of commodities are measured on an average in direct proportion to their value and in inverse proportion to the value of money. This is where the law of value works.
2) Money as a means of circulation. With the advent of money, significant changes occur in the process of exchange of goods. The direct exchange of goods for goods is replaced by the process of circulation of goods through money. This process is carried out in the form of two metamorphoses: 1) transformation of goods into money, i.e. sales, and 2) the reverse transformation of money into goods, i.e. purchased If, before the advent of money, exchange is carried out according to the formula T - T1 (one product was exchanged for another product), then with the help of money the exchange takes on the following form: T - D; or T - D - T1. With such an exchange, real, i.e. cash.
In commodity circulation (i.e., the exchange of goods using money), the transaction does not end with the transformation of goods into money. The money received for a product must be converted into another product, i.e. the act T - D must be supplemented by the act D - T. Two acts of commodity circulation (sale and purchase) are united, but at the same time they are independent, because they are separated from one another in space and time. This means that the continuity of the circulation process may be disrupted if the act of selling one product is not followed by the purchase of another product.
In connection with the function of money as a medium of exchange, the possibility of breaking the acts of sale and purchase arises. This means the further development of the contradictions of the commodity economy, as well as the possibility of a crisis.
The circulation of money has its own characteristics: a) money does not return to its starting point, but is constantly moving away from it; b) money constantly remains in the sphere of circulation, while goods, after their sale, usually leave the sphere of circulation and pass into the sphere of consumption.
The amount of money needed for commodity circulation depends on many factors. However, the most important role is played by two of them: a) the sum of the prices of goods sold; b) speed of circulation of money. Each coin can change hands several times over a certain period of time. Therefore, over a certain period of time, one coin can realize the price of not one, but several goods. The faster money turns around, the less money is required for circulation.
The law of monetary circulation states: the amount of money required for circulation is equal to the sum of the prices of goods divided by the number of turnover of monetary units of the same name. This can be expressed by the following formula:
where CD is the amount of money in circulation; SP - the sum of prices of goods to be sold; O is the average number of revolutions of a monetary unit.
In economic theory, the “equation of exchange” proposed by the American economist I. Fisher in his work “The Purchasing Power of Money” has received wide recognition. The equation of exchange, or "Fisher's equation" as it is sometimes called, is as follows:
where M is the value of the money supply in circulation; V is the average velocity of circulation of the monetary unit; P - price level; Q is the real volume of the national product.
Circulated money supply PQ/V;
Velocity of currency circulation PQ/M,
Average price level MV/Q;
Monetary value of the national product MV/P.
The Fisher equation shows the dependence of the price level on the money supply. From the equation MV=PQ it is clear that an increase in the indicator M (with V and Q remaining unchanged) must be accompanied by an increase in P. This formula allows us to consider the phenomenon of inflation as a first approximation.
At first, money acted as a means of circulation in the form of weighted metal ingots. Later they began to make coins from gold. A coin is a plate of metal, usually round in shape, the weight and purity of which are certified by the state (ruler, monarch, etc.). The first coins were made in the 12th century. BC in China. In Rus', coinage began in Kyiv in the 10th century. ad.
Since money in the circulation function is in constant motion and performs this function fleetingly (comes and goes), its role can also be performed by inferior money (for example, silver and copper), which are representatives of gold. This role can also be played by paper money, which are signs of gold and act as a means of circulation. Paper money first appeared in China in the 12th century, and in Russia in 1796. Currently, they function in all countries of the globe. The amount of paper money in circulation must correspond to the amount of gold required for circulation. In this case, paper money will circulate at the value of the amount of gold that is indicated on it. Excessive issue of paper money leads to its depreciation, i.e. inflation.
3) Money as a means of saving (formation of treasures) is the third function of money. In order to buy the desired product before the sale of its product, the commodity producer must have a certain amount of money accumulated as a result of previous sales. In this case, money is saved, i.e. their withdrawal from the sphere of circulation for a certain time. In such a situation, money seems to “petrify” and turn into treasures. You can store money in the form of treasures in unlimited quantities. In addition, fulfilling the role of a universal equivalent, they always provide the opportunity to purchase necessary goods. If the function of a measure of value is full-fledged (albeit ideal) money, and the function of a medium of circulation is real (albeit inferior) money, then the function of creating treasures can only be performed by full-fledged and only real money.
4) Money as a means of payment. Items may not always be sold for cash. This is due to the fact that by the time one commodity owner appears on the market with his goods, other commodity producers may not yet have cash, because the production time of different goods is not the same. In this case, there is a need to buy and sell goods on credit, i.e. with deferred payment. The seller becomes a creditor, and the buyer becomes a debtor. The transfer of goods from the seller to the buyer takes place here without the simultaneous transfer of money from the buyer to the seller.
The buyer, in exchange for the goods received, issues the seller a promissory note - a bill of exchange, under which he undertakes to pay the cost of the goods within a certain period. Acting as a means of repaying a debt obligation, money in this case performs the function of a means of payment. They perform this function when repaying other monetary obligations (for example, when returning cash loans, paying rent for land, paying taxes, etc.). Thus, money acts as a means of payment if its movement is not directly opposed by the movement of goods.
Taking into account the function of money as a means of payment, it is possible to clarify the law that determines the amount of money needed for circulation. It can be expressed by the following formula:
where CD is the amount of money needed for circulation; SP - the sum of prices of goods and services; K - the sum of prices of goods sold on credit; P - payments for which payment is due; B - mutually extinguishing payments; O - the average number of revolutions of the same monetary units.
The function of money as a means of payment increases the possibility of crisis phenomena. This is due to the fact that in the interval between the purchase of goods on credit and payment for them, a phenomenon unforeseen by the borrower may occur, such as a drop in prices for his goods. It may also happen that the sale of these goods will take longer than the borrower expected. In both cases, by the time the debt obligation expires, the borrower will not have the amount of money needed to repay this obligation, i.e. his insolvency is discovered. And since many commodity owners buy goods from each other on credit, the insolvency of one causes the insolvency of another, a third, etc.
5) Money as a function of world money. In circulation between different countries, money acts as world money. The material prerequisite for this function is the expansion of commodity exchange beyond national borders. On the world market, money sheds all its “national uniforms” (coins, paper and credit money) and appears in the form of precious metals. In world circulation, money functions primarily as a universal means of payment and a universal means of purchase, and the function of a means of payment predominates, since world trade is a large wholesale trade. Here goods are sold and a loan or, conversely, the buyer advances money to pay for the goods.
World money also acts as the universal embodiment of social wealth (when moving gold from one country to another outside of purchase and sale transactions. For example, during subsidies, indemnities, cash loans, etc. transactions). Wealth in the form of the universal equivalent of gold can easily migrate from one country to another. In addition, every country needs a supply of gold for its international payments. Therefore, within individual countries, money in the form of treasure is the reserve fund of world money. They also perform this role in the conditions of paper money circulation.
Currently, the currencies of the largest countries in the world (American dollar, British pound sterling, German mark, Japanese yen, etc.) act as world money. These are the so-called reserve currencies intended for foreign economic and domestic transactions.
Note that some economists use other approaches to defining the functions of money. Thus, K. McConnell and S. Brew in the textbook “Economics” identify only three functions of money: a medium of exchange, a measure of value, and a store of value.
E. Dolan in the book “Money, Banking and Monetary Policy” also identifies only three functions of money: medium of exchange (money used to purchase goods and services, as well as to pay debts); measure of value (a monetary unit used to measure and compare the costs of goods and services); store of value (an asset held after the sale of goods and services that provides future purchasing power).
Studying the origin, essence and functions of money is the most important condition for understanding the internal mechanism of the modern evolution of money and its effective use in a market economy. In a market economy, the role of money increases significantly both in the process of pricing, regulation of commodity and money circulation, and in income management and the development of foreign economic relations. In a market economy, money facilitates the allocation of resources. People choose products and services through the placement of their resources, which are expressed in money.
The use of money provides significant savings in social wealth, which society would be forced to squander as part of natural exchange. Therefore, we can say that money creates the wealth of a nation. The more perfect the monetary system, the faster the growth of social wealth.
Money experts suggest that in the future, modern paper money will give way to so-called electronic money.
In modern conditions, emissions are increasing in many countries, which exceed the actual needs of turnover. This leads to inflation - overflowing the sphere of circulation with banknotes in excess of the real needs of the national economy and to their depreciation. During inflation, paper money depreciates in value in relation to gold, goods and foreign currencies, resulting in the first case - an increase in the market price of gold in paper money; in the second - rising prices of goods; in the third - a fall in the exchange rate of the national currency in relation to foreign monetary units.
Theories of money. There are various theories of money. One of them is metallic. This theory identifies money with precious metals. According to its supporters (mercantilists), gold and silver are money by nature, due to their natural properties. They recognize for money only the functions of a measure of value, treasure and world money, which are performed by precious metals.
Nominalistic theory considers money to be signs of value, conventional units of account. The most comprehensive nominalistic theory of money is presented by the German economist G.F. Knapp in his book “The State Theory of Money.” This book put forward the so-called state theory of money, according to which money was considered as a product of state power and legal relations. Paper money, in his opinion, is a legal means of payment. Their purchasing power is determined by the state.
The quantity theory of money comes down to the fact that the value of money is inversely related to its quantity, i.e. the more money, the less its value. Proponents of this theory claim that before appearing on the market, money has no value, and goods have no price. And only here this or that ratio of the mass of gold and goods determines their value and price.
The theory of "regulated currency" is a combination of the main provisions of the nominalistic and quantity theories of money. Its representative JM Keynes praises paper money, seeing its advantage in the fact that the amount of money in circulation can be determined by the state. In regulating the amount of money in circulation, J. M. Keynes sees a means of normalizing the level of commodity prices, wages, and eliminating unemployment.
If in the 19th century The main issues in monetary theory were the nature of money, its functions, the choice of price scale and the structure of the monetary system, but now the main issues were the role of money in reproduction, the mechanism of influence of the money supply on economic growth and government policy in the field of monetary policy. If in the 19th century scientists were primarily concerned with the qualitative aspects of monetary theory, then in the 20th century. - mainly quantitative relationships.
Conditionality of money
Conditionality of money
The emergence and then the development of money circulation at the beginning of new capitalist relations led to some changes in the activities of banks. Having in their hands both deposits from individuals and their debt obligations, banks have the opportunity to make mutual settlements. Making these mutual settlements initially within the funds of one client, banks then, on instructions from their clients, began to carry out these mutual settlements between clients, increasing the records of funds from one client while simultaneously decreasing the records of funds from another client, instructing the bank to carry out this operation. This is how mutual settlements arose, which were carried out initially within one bank, and then these processes began to be carried out between banks. Thanks to this, any bank client could, having deposited a certain amount of money in the bank, in addition to receiving interest on his deposit, give instructions to the bank to make this or that payment, using his bank deposit for this. This phenomenon marked the beginning of the emergence of conventional monetary exchange, when in fact the exchange took place simply by changing entries in bank books, without using physical money as an exchange intermediary.
Performing an intermediary function (the function of a medium of exchange) as it was before, money may not have any real value, since, other things being equal, or rather, with the exchange value of the money itself remaining unchanged, they do not have any influence on the final result of the exchange. Based precisely on this property of money, banks began to issue first credit notes, and then simply paper money, the printing of which, in comparison with their declared value, has scanty costs.
Seeing such an amazing property of paper money, the state quickly put its paw on their issue - emission. Today, in each state, issuance is carried out by a strictly limited number of banks under state control or simply one state bank. But the state, instead of strict control over emissions, is not averse to taking advantage of the magical properties of paper money, using it to cover the state budget deficit or other financial shortcomings of its administration.
And, as many people know from history, when the state showed interest in issuing paper money, seeing great prospects in it for itself, and not for commercial banks, it simply legislatively abolished the mandatory exchange of issued paper money for gold, thereby removing in fact, there are no restrictions on their release.
Let's give a small schematic example. Suppose that in a certain state the entire monthly trade turnover is 1000,000,000 money, the state already has 1000,000,000 paper money in circulation, and let the money turnover be 1 month. Then we get an excellent picture for the economy in terms of Goods = Money. All other things being equal, inflation is impossible in this situation, prices are stable. But in order to cover its deficit, the state issues additional banknotes in the amount of 100,000,000 money. What will happen, of course, other things being equal? In fact, money will depreciate by 10% (100,000,000/1000,000,000*100%), but in practice prices will simply rise by the same 10%. And this means that the state, through trade (exchange), will shift the burden of the state budget onto its entire population, i.e. you and me.
Thus, the essence of the convention of exchange (and, therefore, money) in our time lies in four main points.
The first convention of money- this is that today money reserves are expressed in the form of simple records of certain numbers in banks, completely divorced from real money, subject to the same weaknesses as just paper money, that is, elementary depreciation.
Conditionality of money second– these are the very carriers of the expression of money, i.e. just a piece of paper approved by law, which itself has a paltry cost. And, which can be devalued extremely quickly, at the request of the state, for example, precisely due to the actual lack of intrinsic value.
AND condition of money third, now the state simply manages all the monetary capabilities of each of us, having the ability at any time to depreciate money to any level, to exchange one money for another. Therefore, any accumulation of such money, in fact, loses all meaning. The state itself prefers to keep its savings either in gold or in the hard currencies of other states.
The fourth condition is the dependence of the state’s internal currency on its exchange rate in other currencies, which can fluctuate and change (but more often for the worse). And besides, if a state uses someone else’s currency for external payments, then it actually pays a “currency” tax to the state whose currency it uses.
If paper money had the ability to perform the function of long-term accumulation, then states would not have experienced inflationary shocks in their history, and therefore, crises that were either created artificially or due to ignorance of the laws of paper (notional) money. Since in this case, part of the money would simply go out of circulation into savings until better times, as was the case during the period of the end of the primitive system, slavery and feudalism.
From the above it follows that conventional money cannot be carriers of long-term savings, which natural money was. Of the functions of natural money, paper money performs more or less only an intermediary function, since the function of the universal equivalent of paper money is also greatly impaired and unstable. These same weaknesses also apply to bank records in accounts, which lose their value just like paper money. In addition, bank accounts can simply be frozen or, despite all the supposed security, simply stolen by changing, for example, the numbers in electronic banking documents (precedents have already taken place). Therefore, conventional money is only good for short-term use, and for long-term accumulation it is better not to use conventional money; for this case, as before the advent of paper money, it is preferable to use precious metals (former natural money), precious stones, long-term property, land rights, works of art, etc.
It is thanks to a certain convention of paper money, as an intermediary between producer and consumer, that exchange acquires a similar convention. As discussed earlier, the greater the time difference between the primary and secondary exchanges, the less benefit the parties to the intermediary exchange will receive.
Let's say someone received a salary of 10,000 rubles on January 15, when the price of potatoes was 10 rubles per 1 kilogram, and, therefore, this person could purchase it with his received salary of 1000 kg or 1 ton. But this person used this salary only on February 15, when the price of potatoes had already increased and became 11 rubles per 1 kg. And this means that our unlucky citizen will be able to buy only 909 kg of these potatoes, instead of 1000. Alas, this is exactly how paper (notional) money has a bad effect on intermediary exchange.
Since most of us spend our wages gradually, and not all at once, in conditions of even slight inflation, each of us loses quite significantly every month just in this process. Not to mention those cases when wages that are required to be paid in January are paid in June without any indexation.
Today, paper money is increasingly disappearing from circulation, replacing electronic money on electronic cards issued by banks, and also increasingly moving into electronic accounts of Internet monetary systems. The conditionality of money and its instability is becoming catastrophic. The financial security of each state and the entire planet is extremely weak and can collapse at any moment, precisely because of the conditionality and insecurity of money.
Most likely, the evolution of money and economic security will give rise to a new form of money in the near future. Otherwise, humanity may suffer a financial end of the world, after which the entire world economy will return in its development to the level of the middle development of the primitive system.
We all come into contact with money every day, but which of us can clearly answer the question: what is money? Difficulties await not only ordinary people, but also economists who, by the way, have been trying to understand “monetary” issues for more than a century.
Concept, origin and types of money.
Throughout the history of money, many definitions have been given to it.
Here are just a few examples :
· money is an artificial social convention (P. Samuelson);
· money is nothing more than a commodity, similar to all goods (A. Smith);
· money is nothing more than a machine for quickly and conveniently doing something that would have been done without it, although not so quickly and conveniently (J. Miles);
· money serves only as a measure by which exchange is made (D. Ricardo);
· money is a commodity that is a universal equivalent for all other goods (K. Marx);
· money is a bridge thrown across a river, on different banks of which there are sellers and buyers, supply and demand, price and wages;
Currently, money is most often referred to as the most liquid universal equivalent, which facilitates the exchange of goods and services, as well as the accumulation of wealth.
But the opinions of economists differ not only on the essence of money: there is no single point of view on its origin. Today the most popular are two concepts: rationalistic and evolutionary.
Aristotle proposed the rationalist theory in one of his works.. It dominated until the mid-19th century. Aristotle explained the origin of money as an agreement between people: Realizing the inconvenience of direct exchange, people invented money and secured their invention with a special law. But laws are subject to people, and they can change them at any time, and, consequently, make money useless.
An alternative theory - rationalistic - was developed by Karl Marx. She says that money did not appear by the will of people, but in the process of evolution, as a result, special items emerged from the total mass of goods and took on monetary functions.
However, none of these concepts provides a comprehensive answer to the question of what money is. Let's try to figure out why.
The fact is that at different historical stages of the development of society different types of money were used.
For example, the first major division of labor and the separation of pastoral tribes led to the use of livestock as money. During the period of the second division of labor, crafts were separated from agriculture, and metals began to play the role of universal equivalent. At first it was iron, copper and tin, later – gold and silver. For a long time, metal money retained its commercial form and took the form of shovels, hoes, spearheads, shields, vases, jewelry, etc.
Later, coins appeared and became widely used; with their appearance, the stage of money formation ended. Over time, gold began to play a leading role among metals. This happened due to its special qualities: strength, wear resistance, compactness, ease of movement, divisibility, aesthetic appeal, etc.
The main feature of commodity and metal money was that they had their own (internal) value. This determined their name - full-fledged money. This money is not subject to depreciation and does not depend on the market conditions in which it circulates.
However, by the mid-20th century, gold currency began to show more disadvantages than advantages. This led to the replacement of gold money with paper banknotes. The main reason for this replacement is the sharp increase in market demand for money and the limited global gold reserves. In addition, gold circulation is an expensive pleasure - large costs are required for the extraction and processing of gold.
Initially, paper banknotes were tied to gold, that is, they could be exchanged for gold and back at any time. But gradually gold lost its monetary functions and completely went out of circulation. This was formalized by an agreement between IMF member countries at the Jamaica Monetary Conference in 1976, and the process of gold losing its monetary functions was called demonetization.
Thus, full-fledged money was replaced by inferior money. The purchasing power of such money exceeds the cost of the material from which it is made and requires government support.
On the one hand, Marx was right when speaking about the evolutionary development of money, but Aristotle, who emphasized the role of the state and its laws in the organization of monetary circulation, cannot be denied the rightness.
In addition to dividing into full-fledged and incomplete, money is divided into cash and non-cash. Both have official status, the same monetary unit and are required to be accepted throughout the state. The difference is that cash is material (banknotes and coins), while non-cash money takes the form of entries in bank accounts. Cash payments are virtually anonymous, they are difficult to track and determine their volumes, while non-cash funds move through bank accounts belonging to specific individuals and legal entities.
The development of non-cash payments increases the reliability and transparency of money circulation and allows the state to control it more effectively.
With the development of information technology, new payment instruments, as well as new types of money, began to appear. For example, electronic money. This money is not a generally accepted means of payment on the territory of the state and is used for settlements in specific electronic systems. It is difficult to classify them as cash or non-cash: in terms of the degree of anonymity they are closer to cash (information about the holders and the transactions they carry out is closed and carefully protected), but at the same time they do not have a material embodiment, therefore they cannot be classified as cash means.
Functions of money and their role.
Now let's try to determine the functions of money. Although there is no consensus here, economists most often consider five monetary functions.
The main function of money is as a measure of value. Money measures the value of all goods; money serves as an intermediary in determining prices.
The following two functions are similar at first glance: money as a means of circulation and money as a means of payment. But in the first case, money is an intermediary in the exchange of goods (money and goods here move towards each other), and in the second, it completes the settlement process (the movement of money occurs separately from the movement of goods).
For example, When purchasing goods for cash in a store or market, we use money as a medium of exchange, exchanging it for goods. But when purchasing goods on credit or, conversely, making an advance payment for goods, we use money as a means of payment, and here the movement of money and goods does not coincide in time.
Fourth function– the function of a store of value – is associated with money preserving its purchasing power for making expenses in the future. Full-fledged money performs this function due to the fact that it has an internal value that persists over time. Defective money (paper banknotes) are more vulnerable in this situation, because the attractiveness of their accumulation remains only as long as the owners of the money are confident that they will maintain their purchasing power. The faster money depreciates, the less attractive it is as a means of accumulation, so the regulatory role of the state and, in particular, its anti-inflationary policy acquires special importance.
Fifth function- This is a function of world money. It concerns the servicing of international transactions with money. Previously, the function of world money was performed by gold, now - by the currencies of the most developed countries of the world, called freely convertible currencies (US dollar, pound sterling, euro, etc.).
Based on the functions of money, we can talk about its role in the economy.
Money allows people to mutually exchange the products of their labor. Without money, humanity would be forced to exchange goods using natural exchange, in which one thing is exchanged for another without monetary payment. Such an exchange will occur only if the interests of the owners of the goods coincide, and specific proportions for the exchange of one product for another are established (in pieces, kilograms, etc.).
Money facilitates exchange and helps establish economic ties not only between specific people, but also between entire spheres and sectors of the economy.
Thanks to money, funds are redistributed from those who have a temporary surplus of funds to those who experience a temporary shortage. Banks and other credit institutions attract funds from legal entities and individuals, at the expense of which they then provide loans to enterprises, for example, for the purchase of raw materials, new equipment, expansion of space, etc., as well as to the population for consumer needs.
Finally, the stability of the state and its successful development largely depend on the efficiency of money circulation. The state budget is formed from tax revenues, which is then redistributed between industries, enterprises, organizations, and the population.
With its mysterious action, money and its origin have always excited people's thoughts. Money arose so long ago that even today this process gives rise to numerous traditions and legends, and also gives rise to many unresolved issues in economics and politics, theory and practice of organizing the functioning of the monetary sector. Numerous attempts throughout the entire period from the emergence of economic theory to the present day to give a comprehensive answer to all mysterious questions can be divided into two theoretical directions: the rationalistic concept of the origin of money and the evolutionary one.
Followers of the rationalistic concept explained the appearance of money as a consequence of an agreement, an agreement between people in order to simplify and facilitate the procedure for the exchange of goods. Its theoretical justification was made by Aristotle (IV century BC) in his work “Nicomachean Ethics”. He wrote: “Everything that participates in the exchange must be inserted in some way... by general agreement, a coin appeared... That’s why its name is that it does not exist in nature, but by agreement.” To carry out an exchange, “there must be a certain unit (of measurement), and (based) on convention.”
In subsequent historical eras, the rationalistic concept of the origin of money was legally enshrined in the norms of ancient and medieval law. The minting of coins in honor of the coming to power of the crowned person was proclaimed by Roman law that the money and its value were decreed by the emperor. The idea of money as a product of agreement (“ration” - reason) prevailed until the end of the 18th century, when significant achievements of archaeological science debunked its postulates. At the same time, a subjective psychological approach to the interpretation of the origin of money from the standpoint of a rationalistic concept takes place in some works of modern economists. In particular, P. Samuelson’s textbook “Economics” states that money is an artificial social convention. Another Nobel Prize laureate, the American scientist J. Galbraith, views money as the result of an agreement between people to consolidate the monetary function in precious metals.
However, the agreement between people is too weightless to become the basis for the emergence and functioning of money. The false statement that “a coin does not exist in nature, but was established by people, therefore they have the power to change it or withdraw it from circulation” was used by representatives of the school of mercantilism not only to object to the commodity nature of the origin of money, but also to justify the lack of connection between money and precious metals. At the same time, scientific discoveries gradually accumulated significant material assets, which made it possible to discard unscientific concepts of the origin of money and develop an evolutionary concept.
Consistent supporters evolutionary concepts the origin of money was the founders of classical political economy A. Smith and D. Ricardo, K. Marx and other scientists: They proved that the leading prerequisites for the formation of commodity-money relations and their carriers (money) were the processes of raising the productivity of social labor to the level of creating a surplus product , which became the subject of exchange between producers. The subsequent deepening of the social division of labor and the development of multi-level specialization of production and human social activity expanded the scale of social exchange and shaped the historical process of the evolutionary development of money in the following forms:
a) simple, single or random form of value;
b) full or expanded form of value;
c) the general form of value;
d) monetary form of value.
Let us note that each of these forms consistently reflects the process of the emergence and growth of the role of money and its interaction with the properties of the highest degree of development of commodity production and exchange. In particular, already the first simple, singular or random form of value, which arose simultaneously with the emergence of exchange, laid down the fundamental relations of commodity production, in which goods objectively oppose money. The content of the exchange at that time can be mathematically represented as follows:
X goods A = B goods IN .
Here the exchange, covering the qualitative and quantitative aspects of the products exchanged, shows that the product A is in the active relative form of value, is a bearer of use value and expresses its value in a commodity IN. Product IN appears in the passive equivalent form of value, the main task of which is to reflect the value of the product A. Already from the first exchange of goods IN as an equivalent, it acted as a prototype of the monetary function, the role of which had not yet been assigned to any product.
Relative and equivalent forms of value are mutually exclusive and mutually exclusive. At the same time, they are poles and expressions of the same expression of value.
Moreover, the relative form of value means that it is a product of labor, reflects its consumed value, which is the result of a specific form of labor and constitutes an expression of the private labor of the producer. In exchange, the owner of this product seeks a commodity that would measure its value and ensure social recognition as a commodity. This implies the special properties of the equivalent form of value:
a) the consumed value of an equivalent product in exchange becomes the material for expressing the value of other use value exchanged for it;
b) concrete labor expended on the production of an equivalent product acts as a form of manifestation of abstract labor;
c) private labor, embodied in an equivalent product, acts as a form of expression for its opposite - social labor.
With the expansion of the scale of development of social production and the deepening of the social division of labor, all products of labor in the exchange process were concentrated in the relative form of value and actually constituted the aggregate properties of the commodity mass, and the assessment of the social value of the commodity mass and the determination of the amount of abstract labor embodied in it began to be measured at first quite sufficiently Attractive goods that served a monetary function were also common.
The following processes of the evolutionary development of production and improvement of the social division of labor gradually increased the number of goods exchanged and created the need for regularity of exchange and determination of meeting places for commodity producers, that is, the emergence of a market, which, in general, led to the emergence of the next, more advanced form of value - full or expanded. On its basis, the exchange was carried out in a continuous sequential chain of all goods brought to the market:
xA = yB = zC= nS = kG etc.
In this form of exchange, the remains of which survived until the 20th century. in certain African tribes of the Lake Chad region, the value of a product was expressed by the cost of several equivalents. This made it possible to more accurately measure the value of the exchanged commodity, but meant that the equivalent form of value was incomplete. The deepening of the social division of labor created more and more new types of goods, which increased the equivalent range and complicated the process of exchange of goods by the need for direct sequential exchange for each of the intermediaries involved in the market. Moreover, the absence of one of the intermediary goods made the exchange operation for the desired product impossible.
To simplify and facilitate exchange, commodity producers began to resort to the use of third goods, which are most often found on the market as intermediaries. As a result of the development of this process, the value of an ordinary product began to be expressed in the nutritional value of a certain attractive intermediary product, which within the local market turned into a general equivalent. This is how it arose general form cost.
The general form of value meant that each commodity producer had the opportunity to sell his commodity or exchange it for another using a commodity of general equivalent based on the relations of such exchange:
The general form of value created the conditions for the exchange of any commodity for another using a commodity of universal equivalent. Let's say
Ha = kG = nS or conclusions = kg= zC etc.
Based on the development of the general form of value, local markets gradually emerged, in which the value of ordinary goods began to be expressed in the living value of the dominant intermediary goods (fur, animal skin, dried fish, salt, etc.), and the direct exchange of goods grew into their circulation, which simplified, facilitated and accelerated the exchange of goods and stimulated the growth of production volumes.
The expansion of exchange beyond local markets necessitated a transition from an equivalent product to the emergence and development of monetary forms cost. In it:
In the monetary form of value, the consumed value of the equivalent product no longer matters. Therefore, at the highest stage of development of commodity production and world trade, the role of the universal equivalent was firmly assigned to gold. As a universal equivalent, gold is most suitable for performing social functions. It has such properties of a universal equivalent as homogeneity, divisibility, portability, limited nature and high cost, capable of long-term storage.
With the advent of money, the process of development of forms of value was completed. Money made it possible to measure the value of all other goods, and through it the products of the private labor of producers received public recognition. The commodity world is divided into goods, which are in a relative form of value, and money as a universal equivalent. At the same time, gold as a monetary material was always in an equivalent form of value, the concrete work spent on its production was the direct embodiment of abstract universal labor, and the private labor spent on its production was the direct embodiment of social labor. The following processes of growth of social production and exchange led to the appearance in the role of money of paper signs of value and credit money and other monetary forms that can function in parallel with or without a monetary commodity. Regardless of its form, money performs the social function of a universal equivalent, therefore it is used every day for personal and public consumption.
Consideration of the evolutionary concept of the origin of money shows that:
a) money stood out from the commodity mass as carriers of specific social relations;
b) the process of the formation of money covers a long period of development and deepening of the social division of labor and specialization of production and social activity. This is why money cannot be abolished by decree or the process of extinction destroyed. On the contrary, they improve their content and forms of existence;
c) without touching the economic essence of money, the state is able to determine denominations, the order of their issue and other elements of monetary policy. With the onset of demonetization of gold, the role of the state in the control and regulation of the monetary sphere increases significantly, but this does not mean that it produces money. And in modern conditions, money creates the money market; their circulation and quantitative mass are determined by objective laws that the state must take into account.
On the issue of the origin of money in economics, there are two concepts - rationalistic and evolutionary.
The rationalist concept explains the origin of money by the establishment of special agreements between people who were convinced that special instruments were needed for the movement of commodity values.
This approach was first put forward by Aristotle. He wrote: “Everything involved in an exchange must be comparable in some way. To carry out an exchange, there must be some kind of unit (measurement), and one based on convention.” These ideas found legislative embodiment in ancient society. One of the dogmas of Roman law is that the emperor specifies the value of money.
A subjective psychological approach to the question of the origin of money is characteristic of most foreign economists. Thus, in one of the most popular textbooks on the theory of money and banking, money is defined as “a very specific type of economic good or rare commodity,” and this product, according to the authors of the textbook, was “established by members of society.”
In the textbook “Money, Banking and Monetary Policy,” edited by Ed. J. Dolan widely studies the role of money, but there is no scientific definition of it. Money is presented as a certain means (having various, non-permanent forms) of payment for goods and services, a means of changing value and a means of storing value.
The textbook “Economics” by C. R. McConnell gives the following definition of money: “...money is what money does. Everything that performs the functions of money is money.” Once again, money is presented as “one of our greatest inventions.”
American economist L. Samuelson defines money as an artificial social convention. J. K. Gambreit believes that “the assignment of monetary functions to precious metals and other objects is a product of agreement between people.” Thus, representatives of the rationalistic concept view money as a product of an agreement between people, an instrument, a means of exchanging commodity values.
“One of the most amazing paradoxes of theoretical studies of money in the West is that they lack a strictly scientific, unambiguous and consistent explanation of the very fact of the existence of money in a capitalist economy, the reasons for its introduction into economic circulation.”
The evolutionary concept of the origin of money proves that money appeared against the will of people as a result of the long development of exchange, when a special commodity emerged from the commodity world, acting as money.
This theory was first put forward by K. Marx, whose merit in the development of the theory of money is that he proved its commodity origin. Marx K. wrote that the mystery of money will disappear if “the origin of this monetary form is shown, i.e. to trace the development of the expression of value, which lies in the value relation of goods, from the simplest, barely noticeable image up to the dazzling monetary form.”
Before the advent of money, there was an exchange in kind. The exchange of individual products of labor between primitive communities was random. The emergence of commodity exchange was associated with the first major division of labor - between pastoral and agricultural tribes. On the basis of the second major division of labor - the separation of crafts from agriculture - commodity production and regular exchange between owners arose. As a result of the development of commodity exchange, a special commodity emerged from all goods - money.
Thus, the need for money was determined by the development of productive forces and production relations.
The development of the former contributed to the creation of material goods in excess of the volume consumed by the community and, thanks to this, the possibility of exchanging the surplus, and the latter – to the property isolation of the owners of the goods produced. Conducting exchange transactions required compliance with their equivalence based on production costs and the interests of the parties. Money became such a medium of exchange.
The emergence of money is due to the contradictions of goods that appear during exchange: between use and exchange value, between concrete and abstract labor, between the private and social nature of labor.
The form of resolving the contradictions of the commodity was the spontaneous separation of money from the commodity mass - a special commodity that plays the role of a universal equivalent. Money resolves the contradictions of the commodity due to the features of the equivalent form of value, namely:
- the use value of an equivalent product serves as a form of manifestation of its opposite - the value of the product;
- concrete labor contained in an equivalent product serves as a form of manifestation of its opposite - abstract labor;
- private labor expended on the production of an equivalent product serves as a form of manifestation of its opposite - directly social labor.
The development of exchange goes through a long process of changing the following forms of value:
- simple or casual;
- full or expanded;
- universal;
- monetary.
In the course of the development of commodity production, random exchange becomes regular. The simple form of value becomes full, or expanded, in which the value of a product is expressed in a whole series of commodity values: X of commodity A by Y of commodity B, by Z of commodity C, etc. This form of expressing value may not have a complete expression, which complicates the exchange.
With the growth of commodity production, the most frequently exchanged commodity becomes a means of mutual exchange of all other goods for each other.
A transition is taking place from the expanded to the general form of value, in which the exchange process was mediated by a general value equivalent, but its role was not firmly assigned to one commodity. Among the commodity money were food products (wine, grain, salt, tobacco), tools (axes, knives, pots, millstones), jewelry (bird feathers, polished balls, bracelets, rings).
Gradually, the role of the universal equivalent is monopolized by a certain commodity, which becomes money. The role of money shifts to metals, first in the form of ingots of various shapes, and from the 9th century. BC. - in the form of minted coins.
Initially, the role of money was played by copper, bronze, and silver. Over time, it was discovered that silver and gold have many properties that make them suitable commodities for use as money: uniformity, divisibility and connectability, durability, recognition, and they concentrate a lot of value in a small volume. Therefore, gold and silver became the dominant type of commodity serving as money, especially since the Industrial Revolution of the 18th century.
As a result of the merging of the equivalent form of value with the natural form of precious metals, the commodity world was divided into goods and money.
