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A Quick Note on Monetary Theory

By Una Ada, January 12, 2019

I’ve as of yet done little research and study on economics; in college I was well more preoccupied with physics and computer science and in my own time I’ve simply neglected it. I find this necessary to remedy, simply as a person who lives in, as they say, a society and as someone whose interests lately tend toward socioeconomics; to that end I will soon after completed a few currently in progress works be embarking on a sort of journey into various theories both orthodox and heterodox, Marxian and literally anything non-Marxian to bolster my own knowledge on the subject. Before this, however, I would like to make a quick note on my current conceptions of money, what I’ve come to believe from my study of other oft intersecting fields.

Money is, of course, fake. Fake in the sense that it is not only socially constructed but it is constructed by a level further abstracted from simple civil and agreed upon necessity, it is constructed by organizations with whom trust has been placed to manage the distribution of goods and resources (i.e. the economy), for simplicity and due to a lack of further articulated ideas this organization will simply be conflated with government for the time being.

The purpose of this construct is management as was stated to be a task trusted in government. For efficiency the management of goods is done thru managing an abstraction of the goods, that is to say that rather than tracking some $N$ types of goods at both origin and destination a mediator is created such that any given good is given an equivalent “value” as a number of this singular “currency” (as it is then called based on it’s fundamental property of circulating throughout the economy). Keeping in the trend of asserting names, this evaluation of a good to currency is then called “price.” Under such a system the distribution of some good $A$ from some party $P_1$ to another $P_2$ is determined (specifically the maximum amount of good $A$ allowed to be transferred) by the evaluation of $A$: $V(A)$, the quantity of $A$ held by $P_1$: $A_{P1}$, and the amount of currency held by $P_2$: $V_{P1}$. This is as opposed to a system wherein the distribution would be determined by the quantity $A_{P1}$ and a deficit of the good $A$ determined by $P_2$: $P_2(A)-A_{P2}$, where $P_2(A)$ is the quantity of good $A$ determined as necessary to hold by party $P_2$. That is to say that the ability to acquire good $A$ is determined by current holdings of the currency, let’s call it $C$, rather than by need (or simply want).

This is a quick pass at an explanation, it may also apply to services (in fact, it may necessarily apply to services as the alternative would form a lack of explanation as to the manner by which currency $C$ is acquired by workers) or other concepts that do not fall under the definition of “good,” that which the idea of evaluation for currency does apply to would be by definition what is often referred to as “commodities.” The creation of more complex social constructs and the subsequent inclusion of these construct in the process of evaluation may form a basis of an explanation of the evolution of “capitalism,” or something I have taken to calling an “ideology of universal monetization” wherein all concepts accessible to humanity are operationalized as such. Again, this is merely my thoughts and not yet a concrete theory/analysis.

I will refer back to this quick note at some later point after studying economy and monetary theory to a sufficient extent so as to be able to both judge my own growth and to determine the extend to which I become trapped in the paradigms of those authors whose works I read.