Money And Business
Long before invention of using money, business used to take place as usual though abit cumbersome as compared to today. The way business used to be done was for sure based on a win -win situation by ensuring that the exchange of commodities was aimed at the optimum gain to the parties involved. Before people started using money as medium of exchange, things like precious stones/metals, beads, barley, shells, skin, gold, silver were some of the valued methods of exchanging commodities. It has been asserted that problems associated with barter trade provoked the use of other means of trading. It could be for example difficult when a fruit farmer needed to exchange goods with a rice farmer since the fruiting and maturing stage may occur at different time of the year, thus becoming cumbersome and at times unreliable and time consuming.
The mergers assertion on origin of money is based on the great difficulty that was involved with barter trade that gave birth to middle men who could accumulate goods that people required to trade them later thus at a profit.
Menger’s theory of t origin of money as medium of exchange is an evolutionary enlightenment of impulsive progression in which direct trade via barter transform into circuitous buying and selling with an institutionally recognized mode of exchange. He explains how money as universal medium is an institutional structure that is as a result of a impulsive social progression relying on the industrial and economizing events of persons. Human deeds begin a discovery development that result in t creation of the organization of money that no one of the actors anticipated. The composite result of individuals’ economizing behavior is made known by Menger to be major establishment of a by and large conventional means of exchange in spite of the fact that no one planned to create money through engaging in circuitous exchange.
The mergers assertion that people will only trade in what they intend to consume is really a contradict to what he ascertained earlier that there existed middle men who stocked goods that they thought were on demand, thus some inconsistency noted. Htre is also lack of clear definition /explanation of what the nature of money is and purpose it serves. It is not very explicit to understand his point of understanding on this issue. Another arising issue is that merger tries to deduce theoretically on how the market origin of money came into be, without the institutional beginnings. It is evident that Merger excerpted his writing from earlier work of William Ridgeway.
His theory lacks proper explanation of origin of money as he merely mentions that the human action of centralizing the exchange of goods brought about the middle men who could exchange them at a profit and as result many people started venturing in the field.
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