- Capitalism and Alternatives -

They are worth whatever someone else will give for them.

Posted by: Flynn on July 08, 1999 at 17:16:58:

In Reply to: Not right neither... posted by Red Deathy on July 08, 1999 at 14:14:18:

: Who, though, sets gold as the standard? If I have a lump of Gold, and a Lump of silver, what are each worth-

They are worth whatever someone else will give for them. If you have a lump of gold, and I have some bread, we don't need some authority to tell us whether we should trade. Not anymore than two 10-year olds with baseball cards need their Moms to tell them.

: this can only be determined by reference to a third term (say bread).

Nonsense. It's determined by the personal valuation of each participant.

: Further, without a state, what is to stop me forging money- even gold can be forged for teh unwary.

Easy -- consequences of trust. Why do you think that people used to spot check coins by biting them?

: Further, there is a limitted quantity of Gold, much less than actually could be used in circulation (hence why we are off a gold standard).

It doesn't have to be gold. In prisons, cigarettes evolved into a medium of exchange. No one had to coordinate that. The Warden never said "you prisoners will trade using cigarettes as a standard."

: You cannot have money without a guaranteeing authority, else it becomes meaningless- or more exactly, a return to barter.

All money has *ever* been, in economic terms, is a coordinating mechanism for barter. It's a measurement tool. The measure has *always* been determined by the market.

Even with fiat money, can you tell me what a dollar is worth? It's worth what you can buy for it. The dollar itself is fundamentally useless. It's only the opportunity for exchange that gives it value.

: The point of money is its universiality- it can buy anything (if you have enough of it)- without universal money we cannot have wages, for example, and without some authority deciding what the universal currency is, we cannot have one (I pay my workers in silver, because thats cheaper for me, or I pay them in cotton even...).

The point of money is that it gives a measurement coordinator between heterogenous goods and services. It provides an expression mechanism for market participants, so that it's possible to determine how many loaves of bread one is giving up in order to buy a steak.

: Markets cannot exist without authority to gaurantee them...

Which is why they spring up in any environment without authority, eh? History is always debatable, so why don't we point to a prison? Or a school?

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