The Emergence Of Money In Commodity Exchange, Or Money As Monopolist Of The Ability To Buy
Money's emergence in commodity exchange remains a unresolved issue within economic theory. Current general equilibrium models, drawing on Menger, offer an explanation that rests on the economic advantages of a universally accepted means of exchange that is established through â€˜social customâ€™. This is problematic because it does not fully explain moneyâ€™s unique ability to buy, and leaves out of account the social foundations of the customary practices required for moneyâ€™s emergence. An alternative explanation is given here, drawing on Marxâ€™s theory of value but involving a thorough reworking of it. Money is shown to be the monopolist of the ability to buy. 'Social custom' plays a vital role in its emergence, but has determinants that are consistent with the social underpinnings of markets.
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