Functional approach to determining the essence of money. Modern and traditional understanding of the essence of money
Money is one of the greatest inventions of mankind, has a long history of development and has a huge impact on the market economy: economic entities in market conditions constantly operate with cost and monetary categories, using them as a general indicator of the rationality of the actions of firms and households. An excursion into the history of the forms and types of money allows us to conclude that there has been a radical change in the form of money and, as a result, the emergence of money substitutes. However, does the diversity of forms and types of money existing today and developing in the future change its essence as an economic category? It would seem a simple question: what is money? But it still remains open. Many generations of economists have tried and are trying to uncover the essence of “familiar strangers.” But there is still no definition of the essence of money that is unequivocally recognized by all economists.
From a philosophical point of view, the essence of money is the internal content of an object, in this case money, expressed in the unity of all the diverse and contradictory forms of its existence. Consequently, the forms of existence of money can be diverse and contradictory, but their essence (internal content) must remain unchanged, otherwise we will be talking about the essence of another concept, which cannot be called money.
3.2. The debatability of the issue of the essence of money, approaches to its definition
Turning today to the question of the essence of money, we can, in the most general form, highlight the following approaches described in modern economic literature:
- the essence of money is revealed in accordance with the history of its origin (commodity origin);
- the essence of money is determined through the functions that it performs. What is important in this approach is the functions that they can perform and, accordingly, the role that money plays in modern economy;
- the essence of money is determined through a number of general properties that characterize its internal content, regardless of the variety of forms and types.
First approach: revealing the essence of money in accordance with its commodity origin
The first approach is characteristic of Marxist and its derivative movements. economic thought. Emphasizing the commodity origin of money, K. Marx noted that with a closed subsistence farming all necessary products were produced and consumed within one's own household, there was no need to exchange goods and money was not needed as a medium of exchange.
As it expands economic activity as a result of the specialization of production and the division of labor, when a closed household was no longer able to produce all the products itself, a natural barter economy arose. Goods were exchanged for goods. Historically, the development of commodity exchange occurred through a change in value: from simple or random to the full or expanded form of value and then to the general and monetary form of value. In the Marxist definition of money, it is of paramount importance that money is a special kind of commodity, the purpose of which is to serve as a universal equivalent for other goods. K. Marx in his writings formulated the essence of money many times, remaining in the position that “a special commodity, thus representing the adequate existence of the exchange value of all goods, or the exchange value of goods as a special specific commodity, is money.” This definition of money is undoubtedly applicable for real (full-value) money, but cannot express the essence of modern forms and types of money, which are inferior.
In the 70s of the twentieth century, a discussion arose among domestic economists on the nature and functions of modern credit money. The idea of “representative power” (“representative value”) appeared modern money, i.e. credit money, not exchangeable for gold, are representatives of real, full-fledged money, the functions of which are still performed by gold. More than 30 years later, we understand the importance of that discussion for the development of the theory of money, but at the same time, the emergence of new forms and types of money indicates that money is increasingly “severed” from its commodity, material nature.
The second (functional) approach to revealing the essence of money
The second according to our classification and the most common in the West approach to determining the essence of money is functional approach to the essence of money. It is characterized by an attitude towards money as an instrument spontaneously created (more precisely, selected among many alternatives) by the market economy to solve the problems of the commodity economy. Only those instruments that were able to best perform the functions dictated by the market were able to remain as money in the economy. Thus, the essence of money is determined by the functions it performs.
However, it should be noted that the “internal” content of money cannot be reduced only to the functions it performs, since in this case the properties of money remain in the shadows.
Some pragmatism in the approach to the essence of money, when it is not so much the content of this category that is important, but the essence as such, the role that money plays in the economy, leads many economists to a simplified definition of money, which we find in modern specialized literature.
Perhaps for this reason, many foreign economists do not attach much importance to the formulation of the concept of modern money, simplifying it and defining it as a “social phenomenon” (L. Harris), “an artificial social convention” (P. Samuelson), “a temporary container of purchasing power” (M . Friedman), “everything that is usually accepted in payment for goods and services or in reimbursement of debts” (F. Mishkin), “a very specific type of economic good or rare good” (R.L. Miller, D.D. Van Hoose ), “a standard item used for the exchange of goods and services,” “money is what money does” (K.R. McConnell, S.L. Brew), etc.
Third approach: essential properties of money
In the third approach, we will try to explain the essence of money by identifying a number of general properties that characterize its internal content, regardless of all the variety of forms and types of a given object, based on the fact that “the content, being the defining aspect of the whole, represents the unity of all the constituent elements of the object, its properties, internal processes, connections, contradictions, trends, and form is a way of existence and expression of content."
First of all, we note that money expresses certain relations of production. This is not only a commodity, a thing, an obligation, but also a set of economic relations between people in the process of social production and the movement of the social product from production to consumption. The basis of production relations is property relations, therefore, the socio-economic content of money, which expresses production relations, changes depending on the method of production. Therefore, we can say that the social essence of money, for example, in the conditions of feudalism, a planned-distributive (socialist) economy, a capitalist (market) or transitional economy market economy will be different while maintaining the essence of money as such.
The emergence of money is associated with commodity production and is quite high level development of commodity exchange. Initially, as already noted, money acts as a special socially recognized good - a universal equivalent of the value of all other goods. Moreover, money is a special kind of commodity that has intrinsic value and through which the value of all other goods is measured, as a result of which commodity exchange is transformed into commodity-money exchange.
As we see, money appears initially at the exchange stage. Then they begin to serve the entire reproductive process, gradually becoming a reproductive category.
Thus, money is a reproduction category that characterizes the totality of economic relations.
The reproductive nature of money is already manifested in the fact that money, acting in an equivalent form of value, has the following features:
- private labor contained in an equivalent commodity is a form of manifestation social labor, contained in a commodity that is in the relative form of value;
- concrete labor contained in an equivalent commodity is a form of manifestation of abstract labor contained in a commodity appearing in the relative form of value;
- The use value of a commodity is a form of manifestation of the value contained in the commodity, which is in the relative form of value.
With the development of commodity production, it is money that begins to connect all market subjects into a single reproduction process. The versatile use of money and its influence on the development of society are largely based on the fact that products are produced by market entities not for their own consumption, but for other consumers to whom they are sold for money. In other words, manufactured products take the form of goods, and commodity-money relations develop between participants in the processes of production and sale of goods. Based cash flows in the sphere of financial and monetary relations there is a flow of resources and capital, and overall macroeconomic equilibrium is achieved. Money serves as a means of controlling and regulating the production and distribution of goods and services. These relations can be not only commodity-money, but also monetary, financial, settlement, express certain economic relations within a national or international economy.
Modern money outwardly appears as a set of certain obligations: a banknote - as an obligation central bank, non-cash money - as an obligation commercial bank etc. These obligations are governed by the relevant regulations. Is it possible on this basis, adhering to the logic of the nominalistic theory of money, to say that modern money, in essence, is not an economic, but a legal category? Modern money as a set of obligation relations characterizes a very significant, but only one side of the problem, namely the credit nature of modern money (of course, if it is issued on a credit basis). Another side of the problem of money, including in its modern forms, is the ability of money to represent the movement of the value of goods and services at the micro- and macroeconomic levels, within a single national economy and in the world economy as a whole.
As we already said in chapters 1 and 2, money has gone through a long history of changing its forms and types. What properties must money have in order to be recognized as money, how does money differ from money surrogates, substitutes, “almost” money or quasi-money?
An interesting remark on this matter was given by F.A. Hayek: "The popular idea that there is a clear line of demarcation between money and non-money - and the law usually tries to make such a distinction - is in fact false when it comes to causal relationships in the monetary sphere. What we find here is rather a continuum in which objects with different degrees of liquidity and with different (fluctuating independently of each other) values gradually transform into each other as they function as money.” And he further notes: “The thesis that there is one, clearly defined thing called “money”, which can be easily distinguished from other things, is a legal fiction.”
General properties of money
Let's try to highlight the general properties of money, regardless of their forms and types.
Let's start with the fact that money is a kind of asset of society, i.e. something that has its own value. The asset of any economic entity (individual, firm, state) is tangible and intangible wealth belonging to the owner in its various forms (this can be inventory, raw materials, real estate, securities etc.). In this capacity, money also appears to be a certain economic good, part of wealth in the form of cash and non-cash Money.
In addition, money is a highly liquid asset, and the liquidity of monetary assets is higher than the liquidity of all other assets (even such financial assets like stocks and corporate bonds). Money, as the most liquid asset, allows you to pay off obligations without any transformations by simply transferring banknotes or by making entries in accounts. It is not without reason that liquidity and money are often equated. Although it should be noted that cash has absolute liquidity, the liquidity of non-cash money is lower than cash, since it depends, among other things, on the liquidity of the bank in which the account is opened.
Presenting money as a specific liquid asset involves considering the characteristics of demand for this asset on the part of owners and recipients of income, which will be discussed below.
So, what is common to various forms and types of money in all historical periods of their evolution is the property of money to be an asset of high liquidity. But there are also a number of common properties that distinguish money from any other liquid assets. Let's look at some of them.
Money as a highly liquid asset has a certain fixed face value, in contrast, for example, to the nominal value of financial assets as sum of money, formally indicated, for example, on a security.
Money, as the most liquid asset with a fixed nominal value, must be characterized by universality. Money appears in the form of universal direct exchangeability for all other goods. As a result, all goods participating in circulation find their final consumer. Universality is the property of unhindered fulfillment of obligations in relation to all entities offering goods and services on the market. Thus, money must have universal acceptance.
The universality of money is ensured:
- legislatively. Relevant regulations (constitution, law on monetary system etc.) is determined by legal means of payment on the territory of a state or group of states united in a monetary union. Yes, in the Constitution Russian Federation(Article 75) it is noted that monetary unit in the Russian Federation is the Russian ruble. The introduction and issue of other money in the Russian Federation is not allowed;
- public trust in money. The usefulness of money as an economic good remains even when it decreases purchasing power, if the predictability of changes in the value of money and their ability to perform their functions in the future remain. If public confidence in money declines, then no regulations will not force people to save in the form of monetary assets. People will prefer less liquid but more reliable assets (for example, they will buy gold or land).
Money must be characterized by homogeneity - standardization (interchangeability). This property is inherent in money, as a rule, due to its uniformity and lack of individual characteristics. As a universal means, they allow free exchange for any good. "Fungibility facilitates transactions: it allows you to organize the ownership of values in non-cash form holdings in current accounts, transfers between which are carried out by simple transfer."
Money must be divisible in order for it to perform its functions in transactions involving different amounts.
Money must be transportable (i.e., easy to transport), recognizable and storeable without losing its value, and must also be portable (i.e., high value per unit weight). We can say that the transition from one form of money to another, a change in types of money is associated with a person’s desire to make money more convenient for use in economic circulation, to reduce transaction costs when carrying out various types of economic transactions.
An important property of money is its protection from counterfeiting, which makes it easier for the state to combat counterfeiting. The possibility of counterfeiting cash, or "hacking" in relation to non-cash payment instruments or electronic money, leads to the appearance of counterfeit money, which violates the stability money circulation and causes people to mistrust money. Therefore, today not only are the security features of the banknotes themselves being improved, but large-scale campaigns are also being carried out to familiarize people with the security features of newly issued banknotes of various denominations (for example, when issuing a new 100-dollar or 20-dollar bill in the USA, euro bills, a new 5000-ruble banknotes in Russia). The latest banking technologies are also becoming more complex, and when implementing them, special attention is paid to protecting banking systems from burglary.
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Turning today to the question of the essence of money, we can, in the most general form, distinguish the following three approaches described in modern economic literature.
The first approach is characteristic of Marxist and its derivative directions of economic thought.
As economic activity expanded as a result of specialization of production and division of labor, when a closed household was no longer able to produce all the products itself, a natural barter economy arose. Goods were exchanged for goods. Historically, the development of commodity exchange occurred through a change in value: from simple or random to the full or expanded form of value and then to the general and monetary form of value.
In the Marxist definition of money, it is of paramount importance that money is a special kind of commodity, the purpose of which is to serve as a universal equivalent for other goods.
The second approach to our classification and the most common in the West to determine the essence of money is the functional approach to the essence of money. It is characterized by an attitude towards money as an instrument spontaneously created (more precisely, selected among many alternatives) by the market economy to solve the problems of the commodity economy. Only those instruments that turned out to be capable of best performing the functions dictated by the market were able to survive as money in the economy. Thus, the essence of money is determined by the functions it performs.
However, it must be noted that the “internal” content of money cannot be reduced only to the Functions it performs, since in this case the properties of money remain in the shadows.
Some pragmatism in the approach to the essence of money, when it is not so much the content of this category that is important, but the essence as such, the role that money plays in the economy, leads many economists to a simplified definition of money, which we find in modern specialized literature.
In the third approach, we will try to explain the essence of money by identifying a number of general properties that characterize its internal content, regardless of the variety of forms and types of a given object, based on the fact that the content, being the defining aspect of the whole, represents the unity of all the constituent elements of the object, its properties , internal processes, connections, contradictions, trends, and form is a way of existence and expression of content.
First of all, we note that money expresses certain relations of production. This is not only a product, a thing, an obligation, but also a set of economic relations between people in the process of social production and the movement of the social product from production to consumption.
The necessity and prerequisites for the emergence and use of money.
With the development of society, even in ancient times, communities could not manage entirely on subsistence farms and exchanged missing goods from other communities and tribes using barter. But the interests of the participants did not always coincide, so gradually some particularly popular and valuable goods, for which any product could be exchanged (salt, darts, grain, leather, etc.) - the first primitive money.
However, such goods were inconvenient as money: some of them were poorly divided, spoiled, were bulky, etc. Therefore, these goods gradually replaced convenient money made from metals as money. Metal money had its own value, equal to the value of the metal from which it was made. Therefore, the value of any product or service could be related to the value of the coin, i.e. the requirement of equivalence was met.
The immediate prerequisites for the emergence of money include:
The transition from subsistence farming to the production of goods and the exchange of goods
Property separation of goods producers
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Types of money |
Shapes of money |
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Commodity money is real goods that act as a regional equivalent, the purchasing power of which is based on their commodity value. |
Animalistic (livestock, fur) Silty (stones, metals, salt) Vegetable (grain, tobacco) |
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Full-value money is a type of money that represents banknotes whose purchasing power is directly or indirectly based on the value of a precious metal, such as gold or silver. |
bars; coins; |
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Bad money |
Treasury notes, banknotes, billon coin |
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Quasi-money |
According to the methodology of the International Monetary Fund, these are funds held on time and savings deposits in commercial banks. In modern conditions, quasi-money is the main component of the money supply, its most dynamically increasing part. |
Structure and forms of modern money. Electronic money.
Modern types of money can be divided into two main types - cash and non-cash. Cash consists of bills and coins that are used to carry out various transactions. A feature of non-cash money is that transactions with it are carried out in credit institutions using entries in accounts belonging to participants in settlement transactions. In such operations, cash turnover is replaced by credit operations.
Recently, so-called electronic money has become increasingly popular among Internet users - these are monetary obligations of the issuer in electronic form, which are on an electronic medium at the user’s disposal. Such monetary obligations meet the following three criteria:
Recorded and stored on electronic media.
Issued by the issuer upon receipt of funds from other persons in an amount not less than the issued monetary value.
Accepted as a means of payment by other (other than the issuer) organizations.
One should also distinguish between electronic fiat money and electronic non-fiat money. Electronic fiat money is expressed in one of the state currencies and is a type of monetary unit of the payment system of one of the states. The state laws oblige all citizens to accept fiat money for payment. Accordingly, the issue, circulation and redemption of electronic fiat money occurs according to the rules of national legislation, central banks or other government regulators. Electronic non-fiat money is an electronic unit of value for non-state payment systems. Accordingly, the issue, circulation and redemption (exchange for fiat money) of electronic non-fiat money occur according to the rules of non-state payment systems.
4. Money as an economic category. Approaches to determining the essence of money.
There are 3 approaches:
Characteristic of Marxist economic thought. As production activity expanded, a natural barter economy emerged as a result of specialization of production and division of labor. Goods were exchanged for goods. Money is a special kind of commodity, the purpose of which is to serve as a universal equivalent for other goods.
Functional approach. It is characterized by an attitude towards money as a tool selected among other alternatives for solving the problems of the commodity economy. Thus, the essence of money is determined by the functions it performs.
First of all, we note that money expresses certain relations of production. This is not only a commodity, a thing, an obligation, but also a set of economic relations between people in the process of social production and the movement of the social product from production to consumption14. The basis of production relations is property relations, therefore, the socio-economic content of money, which expresses production relations, changes depending on the method of production. Thus, money is a reproduction category that characterizes the totality of economic relations.
Functions of money: concept, approaches to their definition.
There are many approaches to defining money. Money can be defined as a special commodity that serves as a universal equivalent. This formulation remains relevant for a long time, although in modern economic literature there are other formulations that usually indicate their individual functions or properties.
Money is metal and/or paper signs that are a measure of value during purchase and sale and act as a universal equivalent, that is, expressing the value of all other goods and exchangeable for any of them.
Money performs the following five functions:
measure of value,
means of circulation
instrument of payment,
means of accumulation and savings,
world money.
Money in the sphere of international economic turnover.
The deepening of the international division of labor, the expansion of foreign economic, political, and cultural ties between states necessitate the use of money in the international market. The functioning of money in international circulation and ensuring the universal equivalence of exchange is associated with the performance by money of the function of world money.
The function of world money, representing a manifestation of the essence of money in the sphere of international economic turnover, is collective, essentially derived from the national functions of money. World money mediates various forms of international exchange of goods and services and acts as a universal means of purchasing. Used to pay off international debt obligations arising, for example, in connection with the sale of goods on credit or to balance the balance of payments, they play the role of a universal means of payment. When creating and replenishing the country's gold and foreign exchange reserves, money is used as a means of universal materialization of social wealth. World money is an international standard of value and participates in the formation of world prices. But to implement the function of world money, the necessary conditions are the equal quality of the monetary product and convertibility.
Despite the use of national freely convertible currencies (US dollars, British pounds sterling, Japanese yen, etc.), as well as collective currencies (SDR, euro, etc.) in foreign economic turnover, they cannot fully ensure the implementation of the function of world money. Only gold is best able to perform this function. The instability of the economic situation forces central banks of states to increase the accumulation of gold resources, and gold continues to be used as a reserve medium and world money.
The role of money in the economy.
Money is a good that functions as a means of measuring the value of other goods (universal equivalent) or as a means of making payments in exchange (medium of exchange). Money is those goods that have perfect liquidity. Money is an economic category in which relationships between people are manifested and with the help of which they are built. The purpose of money is to save transaction costs of market interactions.
First of all, with their help, savings are achieved in the costs of choosing the assortment and quantity of goods purchased, the time and place of the transaction, as well as counterparties to the transaction. In a barter economy, these costs would be so great that they would block the implementation of almost any act of exchange, the division of labor would be minimal, and many activities would simply not arise. Otherwise, an economy would be created in which, for example, an economist who wanted to get a haircut would have to find a hairdresser who wanted to listen to a lecture on economics. Or, say, an actor wanting to have a new coat made would have to find a tailor interested in his film roles, etc. Money eliminates the need for such a paired match of the wishes of potential partners and allows for a flexible choice of the place and time of transactions, the quality and quantity of goods exchanged, transaction partners, etc.
Monetary system: concept, elements.
The monetary system is a form of organization of monetary circulation in the country established by the state. The monetary system is formed historically and secured by state laws.
The following general elements of the monetary system are distinguished:
Name of the monetary unit and its parts;
Types of government banknotes that have legal tender force;
Price scale;
Exchange rate;
The procedure for cash and non-cash issue and circulation of banknotes;
Regulation of non-cash money circulation;
Rules for the import and export of national currency, organization of international payments;
State body that carries out monetary and foreign exchange regulation.
The name of the monetary unit and its parts arises historically. The state consolidates (changes) this name by legislative acts.
| " |
Turning today to the question of the essence of money, we can, in the most general form, highlight the following approaches described in modern economic literature; 1)
the essence of money is revealed in accordance with the history of its origin (commodity origin); 2)
the essence of money is determined through the functions that it performs.
With this approach, revealing the essence of money is not of great importance - what is important is the functions that it can perform, and accordingly the role that money plays in the modern economy; 3)
the essence of money is determined through a number of general properties that characterize its internal content, regardless of the variety of forms and types.
FIRST APPROACH:
DISCLOSURE OF THE ESSENCE OF MONEY
ACCORDING TO THEIR COMMERCIAL ORIGIN
The first approach is characteristic of Marxist and its derivative directions of economic thought. Emphasizing the commodity origin of money, K. Marx noted that in a closed natural economy, all necessary products were produced and consumed within one’s own household, there was no need for the exchange of goods and money was not needed as a means of exchange.
As economic activity expanded as a result of specialization of production and division of labor, when a closed household was no longer able to produce all the products itself, a natural barter economy arose. Goods were exchanged for goods. Historically, the development of commodity exchange occurred through a change in value: from simple or random to the full or expanded form of value and then to the general and monetary form of value. In the Marxist definition of money, it is of paramount importance that money is a special kind of commodity, the purpose of which is to serve as a universal equivalent for other goods. K. Marx in his writings formulated the essence of money many times, remaining in the position that “a special commodity, thus representing the adequate existence of the exchange value of all goods, or the exchange value of goods as a special specific commodity, is money”12. This definition of money is undoubtedly applicable for real (full-value) money, but cannot express the essence of modern forms and types of money, which are inferior.
In the 70s of the 20th century, a discussion arose among domestic economists on the nature and functions of modern credit money. The idea of “representative power” (“representative value”) of modern money appeared, i.e. credit money, not exchangeable for gold, are representatives of real, full-fledged money, the functions of which are still performed by gold. More than 30 years later, we understand the importance of that discussion for the development of the theory of money, but at the same time, the emergence of new forms and types of money indicates that money is increasingly “severed” from its commodity nature.
SECOND (FUNCTIONAL) APPROACH TO DISCOVERING THE ESSENCE OF MONEY
The second according to our classification and the most common in the West approach to determining the essence of money is the functional approach to the essence of money. It is characterized by an attitude towards money as an instrument spontaneously created (more precisely, selected among many alternatives) by the market economy to solve the problems of the commodity economy.
Only those instruments that were able to best perform the functions dictated by the market were able to remain as money in the economy. Thus, the essence of money is determined by the functions it performs.
However, it should be noted that the “internal” content of money cannot be reduced only to the functions it performs, since in this case the properties of money remain in the shadows.
Some pragmatism in the approach to the essence of money, when it is not so much the content of this category that is important, but the essence as such, the role that money plays in the economy, leads many economists to a simplified definition of money, which we find in modern specialized literature.
Perhaps for this reason, many foreign economists do not attach much importance to the formulation of the concept of modern money, simplifying it and defining it as a “social phenomenon” (L. Harris), “an artificial social convention” (P. Samuelson), “a temporary container of purchasing power” ( M. Friedman), “everything that is usually accepted in payment for goods and services or in reimbursement of debts” (F. Mishkin), “a very specific type of economic good or rare good” (P.A. Miller, D.L. Van Hoose), “a standard item used for the exchange of goods and services”, “money is what money does” (K.P. McConnell, S.L. Brew), etc.
THIRD APPROACH:
ESSENTIAL PROPERTIES OF MONEY
properties, internal processes, connections, contradictions, trends, and form
is a way of existing and expressing content”13.
First of all, we note that money expresses certain relations of production. This is not only a commodity, a thing, an obligation, but also a set of economic relations between people in the process of social production and the movement of the social product from production to consumption14. The basis of production relations is property relations, therefore, the socio-economic content of money, which expresses production relations, changes depending on the method of production. Therefore, we can say that the social essence of money, for example, under the conditions of feudalism, a planned-distributive (socialist) economy, a capitalist (market) or transition to a market economy, will be different while maintaining the essence of money as such15.
The emergence of money is associated with commodity production and a fairly high level of development of commodity exchange. Initially, as already noted, money acts as a special socially recognized good - a universal equivalent of the value of all other goods. Moreover, money is a special kind of commodity that has intrinsic value and through which the value of all other goods is measured, as a result of which commodity exchange is transformed into commodity-money exchange,
As we see, money appears initially at the exchange stage. Then they begin to serve the entire reproductive process, gradually becoming a reproductive category.
Thus, money is a reproduction category that characterizes the totality of economic relations.
The reproductive nature of money is already manifested in the fact that money, acting in an equivalent form of value, has the following features:
private labor contained in an equivalent commodity is a form of manifestation of social labor contained in a commodity located in the relative form of value; ?
concrete labor contained in an equivalent product is the form of manifestation of abstract labor contained in a product appearing in the relative form of value; ?
The use value of a commodity is a form of manifestation of the value contained in the commodity, which is in the relative form of value.
With the development of commodity production, it is money that begins to connect all market subjects into a single reproduction process. The versatile use of money and its influence on the development of society are largely based on the fact that products are produced by market entities not for their own consumption, but for other consumers to whom they are sold for money. In other words, manufactured products take the form of goods, and between the participants in the processes of production and sale of goods there are commodity-money relationship. Based on cash flows in the sphere of financial and monetary relations, a flow of resources and capital occurs, and overall macroeconomic balance is achieved. Money serves as a means of controlling and regulating the production and distribution of goods and services. These relations can be not only commodity-money, but also monetary, financial, settlement, and express certain economic relations within the framework of the national or international economy.
Modern money outwardly appears as a set of certain obligations: a banknote - as an obligation of a central bank, non-cash money - as an obligation of a commercial bank, etc. These obligations are regulated by relevant regulations. Is it possible on this basis, adhering to the logic of the nominalistic theory of money, to say that modern money, in fact, is not an economic, but a legal category? Modern money as a set of obligation relations characterizes a very significant, but only one side of the problem, namely the credit nature of modern money (of course, if it is issued on a credit basis). The other side of the problem of money, including in its modern forms, is the ability of money to represent the movement of the value of goods and services at the micro- and macroeconomic levels, within a single national economy and in the world economy as a whole.
As we already said in chapters 1 and 2, money has gone through a long history of changing its forms and types. What properties must money have in order to be recognized as money, how does money differ from money surrogates, substitutes, “almost” money or quasi-money?
An interesting remark on this matter was given by F.A. Hayek: “The popular idea that there is a clear line of demarcation between money and non-money—and the law generally attempts to make such a distinction—is in fact false when it comes to monetary cause and effect. What we find here is rather a continuum in which objects with different degrees of liquidity and with different (fluctuating independently of each other) values gradually transform into each other as they function as money.”16 And further he notes: “Thesis
the existence of one, clearly defined thing called “money”, which can be easily distinguished from other things, is a legal fiction.”17
GENERAL PROPERTIES OF MONEY
Let's try to highlight the general properties of money, regardless of their forms and types. Let's start with the fact that money is a kind of asset of society, i.e. something that has its own value. The asset of any economic entity (individual, firm, state) is a material property belonging to the owner
and intangible wealth in its various forms (this can be inventories, raw materials, real estate, securities, etc.). In this capacity, money also appears to be a certain economic good, part of wealth in the form of cash and non-cash funds.
In addition, money is a highly liquid asset18, and the liquidity of monetary assets is higher than the liquidity of all other assets (even financial assets such as stocks and corporate bonds). Money, as the most liquid asset, allows you to pay off obligations without any transformations by simply transferring banknotes or by making entries in accounts. It is not without reason that liquidity and money are often equated. Although it should be noted that cash has absolute liquidity, the liquidity of non-cash money is lower than cash, since it also depends on the liquidity of the bank in which the account is opened.
Presenting money as a specific liquid asset involves considering the characteristics of demand for this asset on the part of owners and recipients of income, which will be discussed in Chapter 3.
So, what is common to various forms and types of money in all historical periods of their evolution is the property of money to be an asset of high liquidity. But there are a number of other general properties (which we mentioned in Chapters 1 and 2) that distinguish money from any other liquid asset. Let's look at some of these properties.
Money as a highly liquid asset has a certain fixed nominal value19, in contrast, for example, to the nominal value of financial assets as an amount of money formally indicated, for example, on a security.
Money, as the most liquid asset with a fixed nominal value, must be characterized by universality. Money appears in the form of universal direct exchangeability for all other goods. As a result, all goods participating in circulation find their final consumer. Universality is the property of unhindered fulfillment of obligations in relation to all entities offering goods and services on the market. Thus, money must have universal acceptance.
The universality of money is ensured by: ?
legislatively. The relevant regulations (constitution, law on the monetary system, etc.) determine legal tender on the territory of a state or group of states united in a monetary union. Thus, the Constitution of the Russian Federation (Article 75) notes that the monetary unit in the Russian Federation is the ruble. The introduction and issue of other money in the Russian Federation is not allowed; ?
public trust in money. The usefulness of money as an economic good is preserved even if its purchasing power decreases, if the predictability of the value of money and its ability to perform its functions in the future remain. If public confidence in money declines, then no regulations will force people to save in the form of monetary assets. People will prefer less liquid but more reliable assets (for example, they will buy gold or land).
Money should be characterized by homogeneity - staidarization (interchangeability). This property is inherent in money, as a rule, due to its uniformity and lack of individual characteristics. As a universal means, they allow free exchange for any good. “Fungibility facilitates transactions: it allows you to organize the ownership of valuables in the non-cash form of holdings on current accounts, transfers between which are carried out by simple transfer”20.