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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.
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 ...
Under Gresham's law, "good money" is money that shows little difference between its nominal value (the face value of the coin) and its commodity value (the value of the metal of which it is made, often precious metals, such as gold or silver). [4] The price spread between face value and commodity value when it is minted is called seigniorage.
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 ...
To realize a sale, a commodity must have a use value for someone, so that they purchase the commodity and complete the cycle M–C–M'. Capitalism, which is interested in value (money as wealth), must create use value. The capitalist has no control over whether or not the value contained in the product is realized through the market mechanism.
Here are the differences between market orders and limit orders, and when to use each one. Market order vs. limit order. The distinction between a market order and a limit order is fairly ...
In metallist economic theory, the value of the currency derives from the market value of the commodity upon which it is based independent of its monetary role. Carl Menger (1840–1921) theorized that money came about when buyers and sellers in a market agreed on a common commodity as a medium of exchange in order to reduce the costs of barter ...
In the marketplace, where commodities are sold, "use value" is not helpful in facilitating the sale of commodities. Accordingly, in addition to having use value, commodities must have an "exchange value"—a value that could be expressed in the market. [22] Prior to Marx, many economists debated as to what elements made up exchange value.