The evolution of money
The paper describes the stages of the evolution of money, the relationship of the main properties and functions of money.
It precedes the following work devoted to a generalized analysis of the established model of capitalism.
The main stages of the history of the development of monetary circulation
The origin of money is inextricably linked with the emergence and development of the social division of labor.
Their origin dates back to the time of 7-8 thousand years BC, when primitive tribes had the first surplus of products that could be offered for exchange for other goods they needed.
In the history of money, it is customary to distinguish four stages.
At the first stage, the function of money was performed by ordinary goods.
The second stage was the era of metal money, during which there was a gradual consolidation of the role of the universal universal equivalent of value for gold.
The third stage is the era of paper, so called maternity money The fourth current stage, which began with the rejection of the gold security of maternity money, is the era of ideal money.
Commodity money
At the first stage, the role of money was assigned to ordinary goods, which society spontaneously recognized as a standard of circulation.
Their generally recognized use value gave them the opportunity to perform the functions of a single measure of value and a means of exchange.
The role of money went to the product that was in relative abundance, had a long preservation and for which there was a steady demand.
In different countries, at different times, livestock, salt, grain, olive oil, cotton fabrics, fur, copper bracelets, horses and even dried fish served as money.
For example, in the XV century, the following price list was valid in Iceland:
* for a horseshoe – 1 dried fish * for a pair of women's shoes – 3 fish * for a barrel of wine – 100 fish * for a barrel of butter – 120 fish.
The role of money was assigned to a specific product through a spontaneous and informal social agreement, therefore, there was a deep meaning in the fact that the first money was the carriers of ordinary use value.
Such a monetary unit did not require warranty coverage or legal support, it itself was the carrier of the security of the equivalent value contained in it.
It was essential for the seller that the money had a real use value, since in case of any difficulties in conducting exchange operations, it could be used for personal consumption.
The main content of the first stage of the evolution of money was spontaneously revealed, a measurable property common to all exchanged goods – the presence of their use value.
This made it possible to significantly simplify and speed up the exchange by allocating goods that have a generally recognized use value, and then using them as intermediaries in the exchange.
Value is the ability of quantitative correlation inherent in goods in an equivalent exchange, which is manifested exclusively in exchange processes when goods are compared with each other.
The discovery of the possibility to endow certain entities (at that time – goods) with the functions of a carrier of a universal measure of use value and a means of payment was the second most important result of the first stage.
From that moment on, the subsequent evolution of money was reduced to the evolution of the form of the carrier of the above functions.
The Era of Metal Money
With the development of crafts, in particular metal smelting, the role of intermediaries in exchange shifted from goods to metal ingots.
Initially, copper, bronze, and iron were used in this capacity.
The new exchange equivalents gradually stabilized in value content, expanded the scope of application and eventually received universal recognition, turning into genuine money in their modern sense.
Over time, the role of the universal equivalent of value was assigned to precious metals.
In the era of metal money, the state began to legislatively regulate money circulation and determine the weight amount of metal in a monetary unit, for example, the English pound sterling really was a pound of silver.
The following changes can be attributed to the main content of the second stage:
1. A formal legal component appeared in the social contract on money, the content and execution of which was determined and guaranteed by the state.
2. Gradually, the functions of the carrier of the universal measure of value passed from goods to metal ingots, which initially had a real use value, and subsequently to gold – a material entity with an insignificant real use value.
The introduction of gold money meant a truly revolutionary refusal to provide money with the use value contained directly in them, which led to a number of parallel processes in the public consciousness: * the concept of value was separated from the specific use value and abstracted into the category of ideal value * public consciousness turned gold into a carrier of speculative ideal value * an unspoken social agreement recognized the ideal value introduced into gold as a single measure of use value, which became the first and most significant step towards the gradual transformation of money into an absolutely ideal entity.
3. The appearance of money from precious metals made it possible to realize with their help the most important function of long term accumulation.
4. The classical formula of commodity exchange has been established – "commodity money commodity".
5. Having become a universally recognized measure of value on a global scale, gold allowed us to take the first and main step towards the globalization of monetary circulation.
A formal legal component appeared in the social contract on money, the content and execution of which was determined and guaranteed by the state.
Gradually, the functions of the carrier of the universal measure of value passed from goods to metal ingots, which initially had a real use value, and subsequently to gold – a material entity with an insignificant real use value.
The introduction of gold money meant a truly revolutionary refusal to provide money with the use value contained directly in them, which led to a number of parallel processes taking place in the public consciousness:- the concept of value was separated from the concrete use value and abstracted into the category of ideal value public consciousness turned gold into a carrier of speculative ideal value - an unspoken social agreement recognized the ideal value introduced into gold as a single measure of use value, which was the first and most significant step towards the gradual transformation of money into an absolutely ideal entity.
The appearance of money from precious metals made it possible to realize with their help the most important function of long term accumulation.
The classical formula of commodity exchange has been established – "commodity money commodity".Having become a universally recognized measure of value on a global scale, gold allowed us to take the first and main step towards the globalization of monetary circulation.
About the ideal essence of money
The transformation of money that occurred during the second stage is associated with tectonic shifts in the public consciousness.
It is most convenient to realize their content and depth by looking at yourself from the outside, for example, at the planet Pluck, number 215 in the Tentura, the galaxy Kin Dza Dza in the spiral.
In the Patsakov and Chatlan civilizations, matches, as well as gold among earthlings, are the carrier of the ideal value exclusively introduced into them by the public consciousness, while their use value is close to zero.
Nevertheless, you can exchange matches for any real use value, just like gold on Earth.
That is, any artifact that meets the following conditions can become a carrier of the ideal value: long term preservation and rarity in order to avoid devaluation.
The choice is up to the Civilization.
By the way, just like gold on Earth, matches on the Pluck are very rare and perfectly preserved in hot desert conditions.
The sublimation of the ideal value and its transfer to material carriers was an objective necessity from the point of view of the requirements imposed on exchange equivalents.
The continuous development of productive forces, changing consumption standards and the rapid aging of artifacts made it impossible to maintain a stable level of value and significance of the use value contained in them for a long time.
In addition, its universality is limited by regional differences in consumption standards.
On the contrary, gold and matches have proved that by influencing the public consciousness, it is possible to bring an ideal value into an abstract material entity and then maintain it universally recognized and stable, and it is much easier and more convenient to do this with them than with a specific use value.
The ability to stabilize the ideal value introduced into gold money made it possible to fully realize the accumulation function with their help.
The mastered ability to give insignificant material objects a stable and universally recognized ideal value and significance manifested itself in an absolute form when introducing into the public consciousness the standards of perception of such artifacts as the Malevich square, a number of exhibits from the Solomon Guggenheim Museum of Modern Art and others like them.
The Malevich square can be considered as a model problem for creating universally recognized and significant ideal images in the public consciousness, the solution of which gives an answer to the question what is more important – the significance of the prototype or the intensity of the information and emotional field that supports the formation of its ideal image.
Such artifacts cannot be denied the ideal value, significance and value they have acquired, as, indeed, gold.
As for their museum viewing, from an aesthetic, emotional and other points of view, it does not differ in any way from the contemplation of large nuggets of gold, sometimes very large ones.
Of all the metals, gold was a unique and the most perfect candidate for ideal value carriers, which was facilitated by the property of being preserved in an aggressive oxygen atmosphere, the rarity and difficulty of extraction, which naturally ensured long term preservation and limited the emission of the ideal value introduced into gold, allowing it to avoid devaluation.
The latter task was not without failures: history knows examples when the reduction in the cost of gold production caused a "price revolution".
So, in the 16th, 17th and the first half of the 18th century the discovery of rich sources or deposits with relatively easy extraction periodically made gold more affordable, leading to the depreciation of money in European countries and a significant increase in prices for all goods.
The step that the public consciousness of earthlings, patsaks and Chatlans made, creating an ideal value at the second stage of the evolution of money, was forced and ultimately correct.
It was not without costs, of course: as a result, people fight for metal, patsaks and chatlans - for matches.
But absolute harmony is unattainable, and the need to optimize the exchange processes required.
The era of maternity money
The third stage of the evolution of money began with the appearance of their paper carriers.
The first facts of the use of paper money are attributed to ancient Chinese merchants: gradually, receipts for accepting goods for storage, paying taxes or issuing a loan began to act as additional means of exchange.
This expanded trading opportunities, but at the same time there were often difficulties with exchanging paper duplicates for metal coins.
The increased use of paper surrogates and the convenience of making payments with their participation led to the appearance of paper money, which was originally legally established paper symbols of metal money.
Paper money issued by the state is called maternity money.
Decree money – paper signs introduced as money by a decree of the authorized authorities, usually a government decree prescribing their mandatory acceptance as payment for goods and services throughout the country.
The state acted as a guarantor of their exchange for hard currency coins made of precious metals.
In Russia, the issue of paper money banknotes first began in 1769.
The value content of the nominal unit of maternity money cannot be arbitrary, rather it is derived, since paper money acquires its value and confirms it in the process of circulation, serving the commodity exchange.
Their value content states the real situation, rather than determines it, and depends on the capabilities of the economy, the financial policy of the issuer and the place that the monetary unit has taken in internal and external exchange operations.
The introduction of paper money was the next step in the evolution of money into an absolutely ideal entity.
With their introduction, the carrier of a single measure of use value was no longer a material entity endowed with this quality – gold, but a sign denoting it – a symbol on paper.
The appearance of non – cash money marked an additional small step in this direction the rejection of the material carrier of the sign of ideal value.
The main task of the issuer of paper money, given the ease of issue, was to ensure confidence in the new "more ideal" money.
Their introduction was accompanied by the provision of a legally fixed possibility of exchange for silver or gold at a pre fixed exchange rate.
The issue of gold collateral for issued paper money has always been very acute, and any violation of the possibility of gold collateral undermined confidence in them.
The fact that gold continued to fulfill the task of providing ideal money, remained the only material component in the ideal essence of money.
The era of absolutely Perfect Money
At the third stage of evolution, money began to be divided into "bad" and "good".
The role of "bad" money was assigned to banknotes that replaced gold in circulation.
According to Thomas Graham's law, bad money in circulation displaces good money.
The law says that more stable money disappears from circulation, the value of which increases or has the potential to increase in relation to bad ones.
They just hide at home or in bank safes.
As a result, in the perception of economic entities, paper money has become a means of circulation, and gold has become a means of accumulation.
This significantly limited the financial resource base of banks, preventing the use of savings of economic entities accepted for deposit storage: additional efforts, time and resources were required to convert money from one form to another, it was also necessary to assume part of the conversion risks, sharing them with the state.
Since the task of providing gold for paper money ultimately lay with the state, it was it that acted as the ultimate consolidated holder of conversion risks.
However, the possibility of non fulfillment of their obligations negatively affected the stability of banks.
As the volume of issued money and savings grew, the fulfillment of the state's obligations became problematic, which gave significant instability to the entire system of monetary circulation.
In order for the maternity money to acquire the status of the "best" and become the only possible means of not only circulation, but also accumulation, it was necessary to tear them away from the gold security.
The process was started during the Great Depression the restriction of the free circulation of gold by the American government, continued during the Second World War the accumulation of the world's main gold reserves in US vaults, and after it giving the US dollar, based on the gold reserves created during the war and the power of the American economy, the status of a reserve currency – a single measure of value and a means of ensuring the main world currencies, and ended with the announcement on August 15, 1971.
The rejection of the gold security of the dollar marked the completion of the evolution of money into an absolutely ideal entity – an immaterial equivalent of the products of human labor, embodied exclusively in the public consciousness.
All the money in the world has turned into pure ideal entities derived from the basic ideal entity – the US dollar.
The society was led to the adoption of an inversion – now it is not gold that guarantees the value of the nominal unit of maternity money, but the value of gold is measured in maternity money that does not have any guaranteed material security.
The factor that guarantees the provision of maternity money has become a public agreement that recognizes it as a reliable equivalent of use value, which reflects the economic and propaganda capabilities of the issuer, its financial policy and military power, the ability to force other elites to accept the agreement and force them to follow in the wake of their policy.
In general, the project was implemented brilliantly and, of course, lies in the general direction of the evolution of money.
There was, of course, rudeness and hand twisting on the part of the leading elite of the project, but such actions always accompany any process of radical change.
The fourth stage in the history of money has begun – the evolution of absolutely ideal money, which a person will still have to learn how to handle, and there are many pitfalls waiting for him here.
On the one hand, the canceled gold standard imposed significant restrictions on the volume of issues, limiting the infrastructural possibilities of monetary circulation to serve the growing economy.
On the other hand, it acted as a serious natural limiter of manipulations with the volumes of the issue of ideal value.
Unfortunately, the mechanism that replaces this limiter has not yet been built either legally or procedurally, which makes the global monetary system extremely vulnerable and susceptible to manipulation.
With the abolition of the gold standard, money lost the ability to perform a cumulative function.
It is psychologically difficult to perceive as a treasure an absolutely ideal entity that depends solely on universal reflection, subject to manipulation, even with a large number of zeros at the end.
At the moment, for lack of a better one, the functions of the bearer of the properties of the treasure have been returned to rare and unique artifacts, but, unfortunately, they have limited liquidity and safety.
The ability of money to serve as a means of accumulation has been reduced to an operational function – short term consolidation of value.
Finally, it was the ideal essence of money that eventually led to the current crisis.
The general direction of social evolution
The evolution of money from a material entity to an ideal one is a reflection of another fundamental social process – the constant increase in the role and importance of the ideal sphere in the life of society in comparison with the material one.
The evolution of money clearly demonstrates the possibilities of influencing public consciousness, the stability of ideal entities, the degree of their influence on social processes, people's life and behavior.
The main properties and functions of money
The properties acquired by money are the product of an informal social agreement reached as a result of the evolution of social consciousness.
The agreement gives them universal recognition as a carrier of ideal value.
In practical acts of exchange, the subjects of the agreement reflect the unit of ideal value as a single measure of the use value of any goods and a generally recognized means of payment.
Payment is the transfer of some equivalent of the cost covering the arising obligation.
The essence of money as a universal means of payment manifests itself in an absolute form when they service payments outside the sphere of commodity exchange: taxes, social payments, loan repayment, charity, fines, bribes, etc.
The universal recognition of money as a means of payment provided them with a unique liquidity – an absolute ability to exchange, thereby turning, within the framework of the formula "commodity money commodity" into its perfect working body a means of circulation, which enormously accelerated exchange and reduced and that is its costs.
The differentiation of participants in exchange acts into sellers and buyers, which determines their situational inequality, stems from the difference in the level of liquidity of the compared equivalents: in exchange acts, the role of the buyer goes to the one whose equivalent, from the point of view of public recognition, has higher liquidity.
It's almost always money.
