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Commodity money is to be distinguished from representative money, which is a certificate or token which can be exchanged for the underlying commodity, but only by a formal process. A key feature of commodity money is that the value is directly perceived by its users, who recognize the utility or beauty of the tokens as goods in themselves.
Many items have been used as commodity money such as naturally scarce precious metals, conch shells, barley, beads, etc., as well as many other things that are thought of as having value. Commodity money value comes from the commodity out of which it is made. The commodity itself constitutes the money, and the money is the commodity. [32]
Karl Marx described price as the money-name for the labour realised in a commodity. [3] A commodity value is dependent on its utility. [4] Because money becomes valuable not due to its substance, that is, its commodity value, but rather because of its performance, currencies tend to become token. [5]
Because fiat money has "no intrinsic value," when two parties use the same fiat money then the person purchasing the product or service can focus on the time price and ignore the monetary price. [24] For example, if a person makes $5.00 an hour and wants to buy a product that costs $20.00 then the time price will be 4 hours and the actual price ...
For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation. [1] [2] The law was named in 1857 by economist Henry Dunning Macleod after Sir Thomas Gresham (1519–1579), an English financier during the Tudor ...
In the reified perception of the political economists and the vulgar Marxists, products have value because they are expressible in money-prices, but Marx argues [202] that in reality it is just the other way round: because commodities have value, i.e. because they are all products with an average current replacement cost of social labour, [203 ...
These priced goods are also treated as commodities, e.g. human labour-power, works of art and natural resources ("earth itself is an instrument of labour"), [25] even though they may not be produced specifically for the market, or be non-reproducible goods. Marx's analysis of the commodity is intended to help solve the problem of what ...
The alternative to a commodity money system is fiat money which is defined by a central bank and government law as legal tender even if it has no intrinsic value. Originally fiat money was paper currency or base metal coinage, but in modern economies it mainly exists as data such as bank balances and records of credit or debit card purchases, [3] and the fraction that exists as notes and coins ...