Money in a Capitalist Economy
The idea that dominated all ancient (mercantilist) theories from the fifteenth century until the eighteenth century was that money is the ideal form of wealth, or (the mistress of wealth), an idea based on the firm belief in the dominance of monetary wealth - or in broader terms, precious metals over... All forms and types of wealth.
The policy of countries at that time was moving towards increasing the money supply in the country. It is true that there were several mercantilist theories, but they all had one basic goal in mind, which was to increase the country’s coin reserve. In order to achieve this, governments were interested in encouraging the export of goods. And limit imports.
But this principle did not last long, when its error quickly became apparent until it disappeared and no longer appeared except in the campaign of the opinions of traditional economists. The reality is that money - even gold and silver - is not a thing in itself, it is only a medium of exchange from a social perspective, and this function is a medium of exchange that can It must be practiced completely, even if the money is of a type that has no real value in itself, such as paper money or that has no physical support.
But if we do not look at the issue from its social point of view and look at it from its individual point of view, then it is self-evident to note that whoever possesses money can obtain in exchange for it in the market any commodity he wants at any time he wants, thanks to the functions that give money high purchasing power over other types of money. Goods and other wealth, but the confusion between the individual role played by money and the social role is what led some traditional economists, especially the mercantilists, to give money a priority position over all other wealth, so that it became (the master of wealth), but if it is taken into account that money has no direct benefit in itself, And whoever possesses them cannot obtain the goods he wants unless these goods are actually found in the market and at the required time. We find that there must be goods in the market whose supply is capable at every moment of meeting the demand resulting from the use of money. If they are not present, These goods are on the market, and if the instrument of production is not organized so that it can meet the need of demand when demand increases, then this demand will exceed supply and consequently prices will rise to the extent that the rise in prices leads to the exclusion of a section of buyers, those who are less used to buying or Who have less money.
Thus, the individual aspect with regard to money should not obscure the social aspect. When a mismatch is generated in the development of these two aspects with each other in a harmonious manner, that is, when individuals possess an amount of money that gives them purchasing power greater than what is offered for sale, this purchasing power weakens and these individuals lose part of it. From the benefit of the money in their possession. To form a clear idea that money is not a thing from the individual point of view if it is not accompanied by a parallel production of goods from the social point of view, it is sufficient to imagine an economy in which money assets are hoarded by individuals without their corresponding goods and services for the purpose of selling. In such circumstances, if individuals want to They use their money to obtain goods and services, and the supply that is supposed to meet their demand is protected, and the money loses its purchasing power and has absolutely no benefit from the individual point of view.
We conclude from the above that when we seek to determine the status of money and its importance in the capitalist economy, we must avoid falling into the mistake that the mercantilists and others made in the past. If we start from the functions of money that we have explained, we notice the benefit of our study of monetary phenomena, because money facilitates exchange of all kinds. aspects, the function of money related to preserving the value of money is an indispensable function to enable the exchange-based economy to develop and grow.
In fact, the capitalist economy is based on individuals’ ownership of the tools of production, and production is an automatic production that takes place through market forces and the price system, which plays a vital role in distributing productive forces. In other words, the market and price movements are the basis for coordination in the capitalist economy, and in this economy there is no The importance of money lies only in its being a medium of exchange. Rather, it is involved in market transactions in the form of prices. For every demand for a good or service, there is a corresponding supply of money, and vice versa.
We know that prices are formed in the capitalist system when a balance occurs between the quantity supplied and the quantity demanded. Since every supply of money must be matched by a demand for the commodity and vice versa, it is necessary that the quantity of money in circulation be sufficient in relation to needs, but not more than them. So that the general level of prices does not fluctuate due to the fluctuation in the quantity of money circulation.
That is, prices should not rise due to a surplus in the amount of money in circulation, or prices should not decrease due to a scarcity of money exchanged. In order for the general level of prices to remain constant and stable, a balance must remain between the quantity of money in circulation and the quantity of goods exchanged, and the quantity of money must be in line with needs and with the quantity of products offered. Otherwise, the level of prices will be exposed to bad shocks, as will the general level of prices, i.e. purchasing power.Money in a capitalist economy
The idea that dominated all ancient (mercantilist) theories from the fifteenth century until the eighteenth century was that money is the ideal form of wealth, or (the mistress of wealth), an idea based on the firm belief in the dominance of monetary wealth - or in broader terms, precious metals over... All forms and types of wealth.
The policy of countries at that time was moving towards increasing the money supply in the country. It is true that there were several mercantilist theories, but they all had one basic goal in mind, which was to increase the country’s coin reserve. In order to achieve this, governments were interested in encouraging the export of goods. And limit imports.
But this principle did not last long, when its error quickly became apparent until it disappeared and no longer appeared except in the campaign of the opinions of traditional economists. The reality is that money - even gold and silver - is not a thing in itself, it is only a medium of exchange from a social perspective, and this function is a medium of exchange that can It must be practiced completely, even if the money is of a type that has no real value in itself, such as paper money or that has no physical support.
But if we do not look at the issue from its social point of view and look at it from its individual point of view, then it is self-evident to note that whoever possesses money can obtain in exchange for it in the market any commodity he wants at any time he wants, thanks to the functions that give money high purchasing power over other types of money. Goods and other wealth, but the confusion between the individual role played by money and the social role is what led some traditional economists, especially the mercantilists, to give money a priority position over all other wealth, so that it became (the master of wealth), but if it is taken into account that money has no direct benefit in itself, And whoever possesses them cannot obtain the goods he wants unless these goods are actually found in the market and at the required time. We find that there must be goods in the market whose supply is capable at every moment of meeting the demand resulting from the use of money. If they are not present, These goods are on the market, and if the instrument of production is not organized so that it can meet the need of demand when demand increases, then this demand will exceed supply and consequently prices will rise to the extent that the rise in prices leads to the exclusion of a section of buyers, those who are less used to buying or Who have less money.
Thus, the individual aspect with regard to money should not obscure the social aspect. When a mismatch is generated in the development of these two aspects with each other in a harmonious manner, that is, when individuals possess an amount of money that gives them purchasing power greater than what is offered for sale, this purchasing power weakens and these individuals lose part of it. From the benefit of the money in their possession. To form a clear idea that money is not a thing from the individual point of view if it is not accompanied by a parallel production of goods from the social point of view, it is sufficient to imagine an economy in which money assets are hoarded by individuals without their corresponding goods and services for the purpose of selling. In such circumstances, if individuals want to They use their money to obtain goods and services, and the supply that is supposed to meet their demand is protected, and the money loses its purchasing power and has absolutely no benefit from the individual point of view.
We conclude from the above that when we seek to determine the status of money and its importance in the capitalist economy, we must avoid falling into the mistake that the mercantilists and others made in the past. If we start from the functions of money that we have explained, we notice the benefit of our study of monetary phenomena, because money facilitates exchange of all kinds. aspects, the function of money related to preserving the value of money is an indispensable function to enable the exchange-based economy to develop and grow.
In fact, the capitalist economy is based on individuals’ ownership of the tools of production, and production is an automatic production that takes place through market forces and the price system, which plays a vital role in distributing productive forces. In other words, the market and price movements are the basis for coordination in the capitalist economy, and in this economy there is no The importance of money lies only in its being a medium of exchange. Rather, it is involved in market transactions in the form of prices. For every demand for a good or service, there is a corresponding supply of money, and vice versa.
We know that prices are formed in the capitalist system when a balance occurs between the quantity supplied and the quantity demanded. Since every supply of money must be matched by a demand for the commodity and vice versa, it is necessary that the quantity of money in circulation be sufficient in relation to needs, but not more than them. So that the general level of prices does not fluctuate due to the fluctuation in the quantity of money circulation.
That is, prices should not rise due to a surplus in the amount of money in circulation, or prices should not decrease due to a scarcity of money exchanged. In order for the general level of prices to remain constant and stable, a balance must remain between the quantity of money in circulation and the quantity of goods exchanged, and the quantity of money must be in line with needs and with the quantity of products offered. Otherwise, the level of prices will be exposed to bad shocks, as will the general level of prices, i.e. purchasing power.
