The Value of MoneyAnderson, Benjamin M. (Benjamin McAlester)
General
The Value of Money
Anderson, Benjamin M. (Benjamin McAlester)
Money
In the diagram above, something of what is to follow is anticipated,
since the cause of value is indicated. Wheat is shown to be exerting
an influence on milk, and milk exerts an influence on wheat. The
comparative strength of these two influences determines the ratio of
exchange between them. But these two influences are not ultimate. The
ratio of exchange is a relation, a _reciprocal_ relation. It works both
ways. But behind this relativity, this scheme of relations between
values, there lie two values which are absolute. These values rest in
the pull exerted on wheat and on milk by the human factor which is
fundamental, which in our diagram we have called the "social mind."
Values lie behind ratios of exchange, and causally determine them. The
important thing for present purposes is merely to note that value is
prior to exchange relations, that it is an absolute quantity, and not,
as many economists have put it, purely relative. The ratio of exchange
is relative, but there must be absolutes behind relations.
A _price_ is merely one particular kind of ratio of exchange, namely, a
ratio of exchange in which one of the terms is the value of the money
unit.[6] In modern life, prices are the chief form of ratio of exchange,
but it is important for some purposes to remember that they are not the
only form.
Values may simultaneously rise and fall. There may be an increase or
decrease in the sum total of values. Ratios of exchange cannot all rise
or fall. A rise in the ratio of the value of wheat to the value of milk
means a fall in the ratio of the value of milk to the value of wheat.
Both may have fallen in absolute value, but both cannot simultaneously
rise or fall with reference to one another. This is the truism regarding
ratios of exchange which many economists have inaccurately applied to
value itself in the doctrine that there cannot be a simultaneous rise or
fall of values. There can be a simultaneous rise or fall of values, but
not a simultaneous rise or fall of ratios of exchange.
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