According to Aristotle, cash should have the next properties:
Durability
Portability
Divisibility
Intrinsic worth
Intrinsic Monetary Value
So Aristotle regarded intrinsic worth — the change worth cash would all the time have even with out being cash — as a property with out which cash grew to become inconceivable, or a minimum of unsound. However, not solely his thought of sound cash was improper because it was additionally the reverse of the reality: intrinsic worth is exactly what makes cash unsound. To perceive why, allow us to start by defining cash within the least controversial means potential:
Money is something accepted as fee for items and companies and compensation of money owed.
Then, allow us to discover the totally different meanings that cash being “accepted as payment for goods and services and repayment of debts” has to patrons or debt redeemers and sellers or collectors:
To sellers and collectors, it means their accepting the cash respectively of patrons and debt redeemers.
To patrons and debt redeemers, it means the acceptance of their cash respectively by sellers and collectors.
Finally, allow us to discover that any patrons or debt redeemers ignoring the acceptance of their cash respectively by sellers and collectors can be the identical as the shortage of that acceptance. Money should already be recognized even by merely potential patrons and debtors to be “accepted as payment for goods and services and repayment of debts”: it have to be socially somewhat than individually accepted as cash. Then, we are able to full its definition:
Money is something accepted as fee for items and companies and compensation of money owed, so long as already recognized even by merely potential patrons and debtors to be so.
From Aristotle to Adam Smith to Marx to Milton Friedman, now we have by no means made such a distinction between accepting cash and realizing about its acceptance by others. Instead, by assuming that financial acceptance doesn’t require its personal social consciousness, now we have lengthy been sharing the false perception on individually somewhat than socially accepted cash.
While, regardless of acceptance relying on analysis, the ensuing absence of any precise (socially accepted) type of cash makes financial analysis pointless, whether or not by sellers, patrons, collectors, or debt redeemers. This potential absence of any analysis of cash then reduces its required change worth to an intrinsic property of the financial object itself, therefore to only one other preexisting cause for its acceptance as cash — Aristotle’s “intrinsic” financial worth.
So requiring cash to have an intrinsic worth outcomes from complicated between individually and socially accepted cash: precise financial worth requires now not particular person however as an alternative already social (reciprocally conscious) acceptance of its personal illustration by an object, being thus by no means intrinsic to that object.
Indeed, financial historical past overwhelmingly exhibits that something could be cash, whether or not being in any other case worthwhile or not. So whoever advocates “intrinsic value” as a way of “restoring” financial soundness should both utterly abandon that concept or discover one thing else to “back” it — apart from the requirement for cash to have such an extrinsic financial worth.
Beyond Aristotle
Additionally, since Aristotle, cash has conceptually acquired a myriad of latest required properties, like transmissibility, fungibility, or shortage.
Transmissibility
The thought of cash being transmissible was alien to Aristotle. This is as a result of cash was to him only a bodily object, one thing often moveable however hardly transmissible. Today, cash is usually a quantity electronically or optically recorded, one thing each moveable and electronically or optically transmissible.
Fungibility
Unlike transmissibility, fungibility was not alien to Aristotle, regardless of absent from his required financial properties. It solely implies that cash should not range qualitatively, however solely quantitatively.
Scarcity
Scarcity was additionally not alien to Aristotle, regardless of absent from his required financial properties. It solely implies that cash have to be onerous sufficient to search out or produce for stopping the financial unit from dropping worth too quickly, if ever.
Relative Monetary Requirements
Finally, there are historic examples of cash partially missing not solely transmissibility, but additionally every single one in all Aristotle’s three first required financial properties (sturdiness, portability, and divisibility), and even fungibility — as in sea shells or feathers — and shortage — as in financial institution notes. Indeed:
All these properties are quantifiable.
Money should have solely a minimal of sturdiness, portability, divisibility, transmissibility, fungibility, and shortage, variable in keeping with social improvement — and generally negligible, just like the transmissibility of sheer gold.
The quantitatively variable nature of these properties makes them relative financial necessities. Other such necessities embody making theft or counterfeiting tough and storage simple, none of which talked about by Aristotle.
Absolute Monetary Requirement
There is just one absolute financial requirement: cash have to be publicly personal.
Public Privacy
This requirement was not alien to Aristotle, regardless of absent from his required financial properties. It solely implies that financial worth have to be personal whereas its representing object have to be public. A bodily object can solely partially meet this requirement because it can not itself distinguish financial worth from its then-physical illustration, which makes any such object privately public — along with falsely making its financial worth intrinsic to it.[1] Only at present, with public-key cryptography, can Bitcoin-like cash be publicly personal with out being privately public, by representing financial worth as a personal key then metarepresenting it because the corresponding public key — to turn into what in my ebook Representational Monetary Identity I name a metarepresented cash, or metamoney.
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Intrinsic financial worth is what Marx known as commodity “Fetishism.”
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