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In economics, there are two concepts of the origin of money: rationalistic and evolutionary. The presence of different points of view regarding the origin of money indicates the complexity and even a certain mystery (as many economists have written about) of this economic category.

Rationalistic concept proceeds from the fact that money arose as a result of a certain rational agreement between people, in connection with the need to allocate a special tool for servicing the sphere of commodity circulation and increasing the efficiency of its functioning. A specific monetary form arises when people realize its necessity and organizationally ensure its introduction into economic circulation.

The rationalistic concept explains the emergence of money by agreement between people who are convinced that special tools are needed to move values ​​in exchange.

Representatives of the rationalist concept (Aristotle, C.R. McConnell, S.L. Brue) consider money as a product of an agreement between people, an instrument of technical exchange.

Evolutionary concept emphasizes the objective nature of the emergence of money. Money stands out from the general mass of commodities, since it is most suitable for fulfilling the functional role of a money commodity. This or that commodity becomes money only within the limits of a certain social form of commodity production and circulation. Only on this basis does money become an effective tool for controlling the movement of goods.

The evolutionary concept proves that money arose not as a result of the expression of the will of people, but as a result of a long development of exchange, when a special commodity was isolated from a huge amount of goods, which played the role of money.

Indeed, the development of exchange goes through a long way of changing the following forms:

  • Simplified (random) form of exchangewhen products were directly exchanged one for another. The formula for such an exchange is “Product – Product”.
  • Full (expanded) form of exchange, that is, the allocation in the process of development of exchange of special goods that performed the functions of equivalents. They were the most common products of local markets (livestock, furs, metals, etc.). The essence of this form lies in the fact that a certain product can be equated with many equivalent products. The formula for such an exchange:
    Commodity exchange formula
  • General form of exchange… The peculiarity of the general form lies in the fact that the role of the universal equivalent was not assigned to one commodity, but at different times it was performed by various commodities. The exchange formula began to wear a modern commodity-money form: “Commodity – Money – Commodity”.
  • Monetary form of exchange… The further development of commodity production and the emergence of international trade consolidated the role of an equivalent for metals (primarily for gold and silver), which began to perform the functions of a universal equivalent and turned into money. Exchange formula: “Product – Money – Product”.

The emergence of gold money, as shown by A. Smith and K. Marx, occurs in the process of the evolution of commodity exchange and forms of ownership. The monetary form of ownership is the final final form of the commodity world. However, if the emergence of gold money was mainly a spontaneous objective process, then the emergence of paper money could not occur without the conscious rational activity of the relevant state structures.

The origin of money is closely related to the allocation of gold from the mass of goods, which begins to play the role and functions of a money product. However, the history of money circulation has shown that the role of gold as money has passed. In modern conditions, gold and silver as real, full-value money no longer function. Their place was taken by paper, credit money, which has no value of its own. The emergence of such money became possible only on the basis of a certain social agreement – a state guarantee regarding their usefulness.

The loss of a monetary unit of gold content, the absence of its real material substance make money an economic (social) convention, which is supported only by agreement between people.

“For all civilized peoples, money has become a common instrument of trade, thanks to which various kinds of goods are sold and bought or exchanged for each other” (A. Smith). “Money – like money, not as a commodity – is needed not by itself, but for the sake of those things that can be bought with it” (P. Samuelson).

So, money can be defined as a general commodity equivalent, reflecting the value of all goods and acting as an intermediary in exchange.

Money has a number of essential characteristics that distinguish it from ordinary goods. First, money is not able to directly satisfy any physical or spiritual needs of a person, but only indirectly – through their alienation for the purchase of ordinary goods or services. Secondly, having the ability to exchange for any value, money turns into an abstract carrier of value, into absolute liquidity as an abstract value or wealth (in this capacity, money is able to transfer value not only in space, but also in time).

The question of the mechanism of the evolution of money, about where and where “goes” and how money “changes” as an economic category, is also relevant for modern science.

The emergence of money was a natural objective economic process, thanks to which an effective accelerator of the movement of commodity mass, an instrument for reliable assessment of economic information, arose.

Post Author: Rachel Reinbauer

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