Commodity-Orientation To Money

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Brett Scott:

"There is a generalised tendency in society to have a commodity orientation to money, in which units of money, regardless of what type, are seen as some kind of substance (or a 'fictitious substance' that emulates a real substance). Even when people know that the money is not a commodity, they still often superimpose a mental model of 'commodity money' over it, seeking out its commodity elements, and using commodity-like imagery and language to represent it.

So what it that mental model?

We can identify three main elements, all of which can be contrasted to the competing paradigm of credit money, in which the body of the token is not particularly relevant.

  • Commodity money is imagined to be ‘money from something’ (it is produced through labour), while credit money is ‘money from nothing’ (it takes the form of redeemable accounting records of promises, which can be printed on anything)
  • Commodity money only increases (once it is made it is out there for good, until it disintegrates or gets lost), while credit money expands and contracts (it gets issued and redeemed)
  • Commodity money is ‘one-sided’ (it is imagined to be a self-contained object in the world), while credit money is ‘two-sided’ (we might hold it, but it only has power insofar as there is an issuer on the other side)."