The peculiarity of this form of the cost is that the role of the common equivalent of one good didn’t fix yet.
The fourth stage is the money form of value. The role of the common equivalent played gold (this stage was the most longstanding).
Further the search of the most convenient commodity money began which was accompanied by the refusal of nontransportable, wearing and variegated money. The money arena the ingots of copper, bronze then silver and gold enter. As such metal ingots lost the function of the good itself and became only the exchangeable equivalent it is allowable to argue that in their form the money appear in the sense that we used to understand this word today. Gradually the gold became the basic money stuff and was used for the different denomination coins strikes.
The way of the gold turning into the common equivalent – money was long and difficult. Actually we can suppose that eventually it happened to the middle of the XIXth century. Till this moment the money functions along with the gold performed the other precious metals, for example silver. The English monetary unit – pounds sterling – was the weighty pound of silver before.
How can we explain the fact that the gold precisely distinguished from the huge world of goods in the form of specific commodity – money? The gold has the range of unique features:
– homogeneous (the question is about the social value and social labor standard incorporated in the good, i.e. such equivalent should be absolutely homogeneous material);
– chemically inert (it doesn’t rust and remains unchanged almost forever in any environmental conditions);
– portable (there is a plenty large enough cost in relative little volume);
– divisible (any quantity of gold could be easily divided onto the smaller parts).
Strictly speaking theoretically we can distinguish some other materials and metals which also can satisfy the mentioned above conditions: silver, diamonds, platinum, etc.
However the objective process of the economic affairs development distinguished gold precisely. Silver couldn’t compete with gold because of its enough incidence in the earth crust, diamonds are unhomogeneous and couldn’t be divided, platinum found to be scorned by the Spaniards who called it «platina» and simply considered it the waste product of the gold mines.
With the gold usage situation the humanity faced the fact that this metal looses any other distinctive features except quantity. This particular relates this metal with the cost i.e. it looses all the differences between the heterogeneous types of labor. The gold represents itself in the form of «clot» that lacks substance of labor and quantity of socially needed time spent on the concrete good production.
But it should be noted that the gold in itself is not money but the money are gold. Thus we emphasize that the transformation of gold into money is not the natural but objectively social process which takes a lot of time.
With the money form of value appearance the goods receive a specific form of its cost existence in term of price (moreover it is a certain quantity of gold on which the good could be exchanged).
The transition from the subsistence to commercial farming and the exchange equivalence compliance determined the necessity of money appearance without which the mass exchange of goods based on the production specialization and the commodity producers’ material insulation is impossible.
The necessity of money appearance and usage is proved by the numerous and unsuccessful attempts to get away without them. This is borne out by Robert Owen’s idea bankruptcy in 1832 who tried to exchange the goods without money by means of goods evaluation on the basis of work time expenditures with usage of «labor bons». The Russian experience was either unsuccessful when in 1918 and 1921 the attempt of product exchange on the basis of natural coefficients was applied.
In about the XIIth century B.C.E. in China and in the VIIth century B.C.E. in the Mediterranean States – Lydia and Aegina – the metal coins appeared which were similar by weight, size and alloy composition.
The evolution of money didn’t stop on this. We can distinguish the next stages of the cost’s forms development: the stage of transition to paper and credit money and then their phasing-out from the turnover as a result of what the electronic money appear.
Besides the mentioned above points of view the other metal and nominal theories (nominalism) in economics regarding money and their nature were expressed.
The metal theory identifies money with precious metals. The theory proves that money should certainly have an inmost value in order to perform its functions. The most significant followers of this theory were the mercantilists who considered that gold and silver are the money by their nature and in virtue of their natural features. This approach reflected the situation truly in whole for the systems with the full-bodied (commodity) money.
The nominalism identifies money by the symbols of value (signs), conventional payment units. The most important is not the metal content of money but their symbolism (nominal). First of all money are considered as the product of state power and legal relations when their purchasing power is determined by the State. In whole the nominal theory of money reflects the true nature of money in the modern economic systems.
There are a lot of approaches of money determination. For example they could be rendered as a special good which plays role of a universal equivalent. This description remains actual for the long term though in the modem economic literature we can meet the other descriptions which usually indicate the other separate functions or peculiarities of money.
Money – metal and/or paper are the standards of value during the purchase and sale deal which play role of a universal equivalent, i.e. they express the value of all of the goods and are exchanged on any of them. (Shorter Economics Dictionary / under the editorship of A.N. Azriliyan – M., 2000).
Paul A. Samuelson writes that the flow of money is the source of life power, money provide the measuring rod of value. Besides money act as a medium of exchange and as standard unit of value or account. (Paul A. Samuelson «Economics» – M., 1992 – T. 1., – p. 40, p. 47).
According to the evolutional theory we can give the following description of money: Money are the historically developing economic category which expresses the definite economic relations between people in the process of production and distribution.
The essence of money consists of their features:
The universal immediate exchangeability – the possibility to exchange money onto any items of value.
The independent form of exchanged value which is not connected directly with realization of goods. The most significant cases of money usage in this form are credit accommodation, loan indebtedness redemption, financing of various manufacturing and nonmanufacturing costs, etc.
The materialization of the universal labor time is that labor spent on the goods production creates their value which could be changed by means of money.
1.1.2. The functions of money
The generation of money and their usage led to the great consequences. Money generation allowed to overcome the narrow bounds of mutual exchange of separate producers by means of goods and to create conditions for market generation in the operations of which many owners of different goods can take part. It provided the further development of production and improvement of its effectiveness.
The fact of money usage has a considerable importance because thanks to which appeared an opportunity to separate a nonrecurrent process of the goods’ mutual exchange (G-G) on two asynchronically implemented processes:
– the first consists of the good sale (G-M);
– the second consists of the required good purchase in another time and in another place (M-G).
Whereby the usage of money is not implied as a representative in the goods exchange processes.