"Sui Generis” In 1912, in The Theory of Money and Credit [TMC], Ludwig von Mises argued that money is neither a producer good nor a consumer good, but a special type of good, which, following Karl Knies, he called media of exchange goods. Nowadays, some Austrians refer to money as a
I thoroughly enjoyed this - thank you! I can imagine Ayn Rand admonishing us to define concepts carefully, especially new ones.
I see money as conceptually different from typical goods.
It is money’s evolution that makes us easily conflate it with consumer or producer goods, because during that evolution, we necessarily adopted existing goods to use for exchanges. So it’s easy to categorize money with such goods. E.g., Peter Schiff refers to gold as having “intrinsic” value…he is referring to its value in industry, jewelry, and rarities. But that’s value from gold’s separate and distinct function as a consumer/producer good. If gold literally stopped being valued for exchange, it would lose that value component, and revert to only its value in industry, etc. That should give pause to gold holders; gold would lose the portion of its value that served as money…likely a big part of today’s value.
The very minute a thing is used as a medium, not as a direct good, it belongs under the concept of money, at least for purposes of that particular transaction. The trading parties are using it for no reason other than to facilitate other (future) trades.
“Medium” is an excellent adjective for money. Air is the medium for sound. It is essential for the transaction between the guitar and the ear. But conceptually air is separate from either. We would never think of air itself as a sound-maker or sound-receiver. So it is with money; its value arises from its service as a medium.
The term is also attractive in its suggestion of motion. Money helps “move the goods”. For present use or saved for future use, its value comes from the expectation that it will streamline a trade. Except for the rare miser, we all want money only for what it can be “moved out of our hands” for in an exchange, now or later. That use, as a medium alone, gives rise to its value.
Bitcoin makes the issue much more black and white – and gets us much closer to meeting the conceptual distinctions. It did not arise from having value as a previous consumer/producer good. It was “birthed” as a medium for exchange. Should the day arrive it loses exchange-medium functionality, it loses all value (though the ledger entries may gain historical, museum-like value).
I thoroughly enjoyed this - thank you! I can imagine Ayn Rand admonishing us to define concepts carefully, especially new ones.
I see money as conceptually different from typical goods.
It is money’s evolution that makes us easily conflate it with consumer or producer goods, because during that evolution, we necessarily adopted existing goods to use for exchanges. So it’s easy to categorize money with such goods. E.g., Peter Schiff refers to gold as having “intrinsic” value…he is referring to its value in industry, jewelry, and rarities. But that’s value from gold’s separate and distinct function as a consumer/producer good. If gold literally stopped being valued for exchange, it would lose that value component, and revert to only its value in industry, etc. That should give pause to gold holders; gold would lose the portion of its value that served as money…likely a big part of today’s value.
The very minute a thing is used as a medium, not as a direct good, it belongs under the concept of money, at least for purposes of that particular transaction. The trading parties are using it for no reason other than to facilitate other (future) trades.
“Medium” is an excellent adjective for money. Air is the medium for sound. It is essential for the transaction between the guitar and the ear. But conceptually air is separate from either. We would never think of air itself as a sound-maker or sound-receiver. So it is with money; its value arises from its service as a medium.
The term is also attractive in its suggestion of motion. Money helps “move the goods”. For present use or saved for future use, its value comes from the expectation that it will streamline a trade. Except for the rare miser, we all want money only for what it can be “moved out of our hands” for in an exchange, now or later. That use, as a medium alone, gives rise to its value.
Bitcoin makes the issue much more black and white – and gets us much closer to meeting the conceptual distinctions. It did not arise from having value as a previous consumer/producer good. It was “birthed” as a medium for exchange. Should the day arrive it loses exchange-medium functionality, it loses all value (though the ledger entries may gain historical, museum-like value).