Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy — John Stuart Mill — John Shaqi
Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy
John Stuart Mill · en
Having proceeded thus far in ascertaining the general laws of Value,
without introducing the idea of Money (except occasionally for
illustration), it is time that we should now superadd that idea, and
consider in what manner the principles of the mutual interchange of
commodities are affected by the use of what is termed a Medium of
Exchange.
As Professor Jevons(220) has pointed out, money performs three
distinct services, capable of being separated by the mind, and
worthy of separate definition and explanation:
1. A Common Measure, or Common Denominator, of Value.
2. A Medium of Exchange.
3. A Standard of Value.
F. A. Walker,(221) however, says: “Money is the medium of
exchange. Whatever performs this function, does this work, is
money, no matter what it is made of.... That which does the
money-work is the money-thing.”
(1.) [If we had no money] the first and most obvious [inconvenience] would
be the want of a _common measure for values_ of different sorts. If a
tailor had only coats, and wanted to buy bread or a horse, it would be
very troublesome to ascertain how much bread he ought to obtain for a
coat, or how many coats he should give for a horse. The calculation must
be recommenced on different data every time he bartered his coats for a
different kind of article, and there could be no current price or regular
quotations of value. As it is much easier to compare different lengths by
expressing them in a common language of feet and inches, so it is much
easier to compare values by means of a common language of [dollars and
cents].
The need of a common denominator of values (an excellent term,
introduced by Storch), to whose terms the values of all other
commodities may be reduced, and so compared, is as great as that
the inhabitants of the different States of the United States
should have a common language as a means by which ideas could be
communicated to the whole nation. A man may have a horse, whose
value he wishes to compare in some common term with the value of
his house, although he might not wish to sell either. A valuation
by the State for taxation could not exist but for this common
denominator, or register, of value.
(2.) The second function is that of a medium of exchange. The
distinction between this function and the common denominator of
value is that the latter measures value, the former transfers
value. The man owning the horse, after having measured its value
by comparison with a given thing, may now wish to exchange it for
other things. This discloses the need of another quality in money.