Nevertheless it is clear that the choice of the precious metals by law and convention, even if made in consequence of their peculiar adaptability for monetary purposes, presupposes the pragmatic origin of money, and selection of those metals, and that presupposition is unhistorical. Thus the observations do not apply to them as commodities evolving into a role as money, but to commodities which were already money. Ridgeway speculated that this was about what would fit in the palm of your hand. Think, indeed, of the peculiar difficulties obstructing the immediate barter of goods in those cases, where supply and demand do not quantatively coincide. Compulsory sales, on the other hand, in consequence of the economic disadvantage which they commonly involve, force themselves upon the attention of the parties implicated in unmistakable fashion.
It was but one of a number of processes. Since money touches every aspect of economics, this indefiniteness has spread to other aspects of the science, leading to basic moral and political questions as the proper monetary role of government and of institutions such as the Federal Reserve System. And the failure to turn it adequately to account in explaining the phenomena of trade, constitutes not only as such a lamentable breach in our science, but also one of the essential causes of the backward state of monetary theory. It must not be supposed that the form of coin, or document, employed as current-money, constitutes. It is a primary tool of the Austrian school.
See Chapters 1-3 of The Lost Science of Money. No accident, nor the consequence of state compulsion, nor voluntary convention of traders effected this. By The Origins of Money we mean the value of money, the role of prices and finally that chicken and egg question: which came first the state or the money. Every economic subject bringing less saleable wares to market, to acquire goods of another sort, has thenceforth a stronger interest in converting what he has in the first instance into the wares which have become money. As Schmitz correctly states, money is a social institution my emphasis and as such derives mainly from the needs of social interaction government, taxation, dispute resolution, religious offerings, etc. Talk about a religious cult of gold explains nothing except, perhaps, a part of the high non-monetary demand that gold has always enjoyed.
The historian is more modest. Nor do even the theorists above mentioned honestly face the problem that is to be solved, to wit, the explaining how it has come to pass that certain commodities the precious metals at certain stages of culture should be promoted amongst the mass of all other commodities, and accepted as the generally acknowledged media of exchange. But cattle was already there as a money unit. This short work is an insightful look into the history and value of money for any student or professional economist. As the price of a commodity is the average cost of production, it includes the fact that a tiny proportion of commodities may be found, although finding goods is hardly typical of modern manufacturing processes.
Point number 2 furthermore should have referred to the trading power rather than purchasing power, as he is discussing a pre-monetary situation. Other factors than the spread would have an influence on the evolution of a money commodity. Then, in 1975, having studied moonrocks and close-up pictures of the moon, scientists proposed what has come to be regarded as the most probable of the theories of formation, planetesimalimpact or giant impact theory. When money is involved, Plato believes that it is human nature for even the most virtuous leader to lack the will to resist the temptation. This development was materially helped forward by the ratio of exchange between the precious metals and other commodities undergoing smaller fluctuations, more or less, than that existing between most other goods, a stability which is due to the peculiar circumstances attending the production, consumption, and exchange of the precious metals, and is thus connected with the so-called intrinsic grounds determining their exchange value.
This was a deviation from classical and neoclassical economic thought. As production takes time then producers have no certainty on the supply or demand for their product. Thus while it can be helpful on some aspects of money, it may not help much with the origin question. This becomes clear when Menger makes no mention of places or times, in support of his thesis, even generally. That message was that money evolved by private sector agents attempting to reduce transaction costs by using, first indirect barter, then commodity money, and finally paper claims on commodity moneys.
Some important reasons tha In The Origins of Money 1892 , Carl Menger, known as the founder of the Austrian School of Economics, takes up the question on how money - a medium of exchange - came to being, and why people wouldn't rather just stick to barter. Nevertheless it is clear that the choice of the precious metals by law and convention, even if made in consequence of their peculiar adaptability for monetary purposes, presupposes the pragmatic origin of money, and selection of those metals, and that presupposition is unhistorical. Other commodities can only find a sale at economic prices in smaller quantities, commensurate with the gradual growth of an effective demand, fetching a relatively reduced price in the case of a greater supply. Menger mostra o quão furada é a teoria que diz que um item X tem um valor definido objetivamente, fruto de uma simples observação, compre um quadro em uma feira e tente vendê-lo naquele mesmo momento. Are we to refer its commercial currency and its value in trade to the same causes conditioning those of other goods, or are they the distinct product of convention and authority? Again, account must be taken of the quantitative factor in the saleableness of commodities. To gain the same command over what the market affords, he must first convert his exchangeable goods into money. These difficulties would have proved absolutely insurmountable obstacles to the progress of traffic, and at the same time to the production of goods not commanding a regular sale, had there not lain a remedy in the very nature of things, to wit, the different degrees of saleableness Absatzfahigkeit of commodities.
London: on behalf of Royal Economic Society by Macmillan, 1924, p. But this is neither the only, nor the primary mode in which money has taken its origin. A repeated corollary was that the intervention of the state was not essential. It is only in the first instance a limited number of economic subjects who will recognize the advantage in such procedure, an advantage which, in and by itself, is independent of the general recognition of a commodity as a medium of exchange, inasmuch as such an exchange, always and under all circumstances, brings the economic unit a good deal nearer to his goal, to the acquisition of useful things of which he really stands in need. Individuals decide what the most marketable good is for use as a medium of exchange. Athlone Press and University of London, London.