Money: Another brief interruption
So that concludes the discussion of social technologies for exchange, which make such a part of many opportunity sets people and firms choose from: markets, contracts, and firms beng spotlighted.
Before passing on to talk about mutual gains from trade, I wanted to mention another social technology for exchange-- money, which stuff is defined by the characteristics of being a store of value*, a medium of exchange**, and a unit of account***. (So exchange tokens possess moneyness rather than absolutely being or not being money.)
Quite often people have told me that they think the world would be a better and more humane place without money. A world without money would certainly by necessity be a much more *personal* world than one with money-- but that doesn't cut ust one way.
Consider being a person who wants a bottle of aspirin and has a young calf to exchange. They need to find someone who has aspirin and wants a calf, and then there's almost surely an issue of how to make change.
In this situation the ability to exchange requires an immense amount of social information, and information requires research and storage-- it has an opportunity cost.
Even when it comes to exchange via personal bargaining and contracting, using money makes for tremendous convenience. And it is very important as a tool for facilitating markets, which are so relatively frictionless for the things best exchanged via markets.
When it comes to exchange, convenience and depersonalization go hand in hand, and money makes for both. There are pluses and minuses to that. But in my view, most of the time, more pluses.
* It holds its value-in-exchange reasonably well across time.
** People will nearly always accept it in exchange for goods, services, or assets.
*** People talk in terms of this stuff when talking prices or value.
Facebook posts incorporated:
Money: Another brief interruption
Before passing on to talk about mutual gains from trade, I wanted to mention another social technology for exchange-- money, which stuff is defined by the characteristics of being a store of value*, a medium of exchange**, and a unit of account***. (So exchange tokens possess moneyness rather than absolutely being or not being money.)
Quite often people have told me that they think the world would be a better and more humane place without money. A world without money would certainly by necessity be a much more *personal* world than one with money-- but that doesn't cut ust one way.
Consider being a person who wants a bottle of aspirin and has a young calf to exchange. They need to find someone who has aspirin and wants a calf, and then there's almost surely an issue of how to make change.
In this situation the ability to exchange requires an immense amount of social information, and information requires research and storage-- it has an opportunity cost.
Even when it comes to exchange via personal bargaining and contracting, using money makes for tremendous convenience. And it is very important as a tool for facilitating markets, which are so relatively frictionless for the things best exchanged via markets.
When it comes to exchange, convenience and depersonalization go hand in hand, and money makes for both. There are pluses and minuses to that. But in my view, most of the time, more pluses.
* It holds its value-in-exchange reasonably well across time.
** People will nearly always accept it in exchange for goods, services, or assets.
*** People talk in terms of this stuff when talking prices or value.
Facebook posts incorporated:
Money: Another brief interruption