reply to post by Lord Jules
Not so fast.
Your opening argument is dead on. Money is only valuable because we confer value on it. But the same is true of absolutely anything – even true
love. Nothing in the world is valuable in and of itself, but anything can have a value assigned to it. That is why so many things – stone axes,
bronze ingots, cowrie shells, cows, gold, paper and energy flowing through wires, to give only a few examples – all can be and have been used as
, Karl Marx proposed a 'labour theory of value', in which everything was supposed to be valued by how much labour it took to produce
it. This included the labour involved in upstream processes like mining the raw materials and transporting them to the factory. It's a nice idea and
seems to lead to a fairer world, but in practice it just doesn't work, because people couldn't care less how much labour it took to make something,
they value goods according to their desirability and availability.
Oddly enough, Marx's labour theory of value is uncritically embraced by gold-standard enthusiasts and other believers in intrinsic value. Such folk
believe that things have a real, computable (though possibly variable) value based on their scarcity and the difficulty of producing them. The fallacy
of this is easily demonstrated. Gold is scarce and expensive to extract, but that it not what gives it value; its value is what makes it worth
extracting. Where does the value come from? Its scarcity? But there is far more gold already in the world than is needed for any practical purpose. It
is certainly in great demand as jewellery and as an investment, but there is no world jewellery shortage as far as I know, and the investment value of
gold or anything else must depend finally on its notional value – the amount people are willing to pay for it.
So your principal argument is sound and watertight, but does not prove that money has no value.
Indeed, it is clear at first glance that the statement is a fallacy. Money obviously does
have value. That's why people spend their precious
time and strength earning it, why they beg, borrow and steal it, why they daydream of having a billion or even a million (small change these days)
dollars. Your suggestion that money can have negative value because it attracts muggers is wrong; obviously your money has value to the mugger, or he
wouldn't bother to mug you. Besides, our liabilities are always valuable to us in some way; we would not carry them if they weren't.
You are also incorrect when you say that people really only want what money can buy. In a coldly rational world this would perhaps be true, but not in
the human world of hopes and fears and desires. Money, whose fungibility makes it a container for all our desires, has come to be desired in and of
itself. From Topol singing 'If I Were A Rich Man' in Fiddler on the Roof
to the matrimonial advertisements in Indian newspapers that specify
the sum that will be given away as dowry along with the bride, money itself has the power to make men's mouths water.
The question of how it obtains the value it has is a very interesting one. The obvious answer, that it is valued for what it can buy, is merely
circular, since what money can buy is valued in terms of money. Communists and mercantilists have both tried to break this circle and failed. The
trouble seems to be that we can't work out on what basis the value of money is computed until we have established what money actually is. Have you
ever asked yourself that
question? It is very hard to answer.
What's stopping someone from giving value to a rock?
A rock? You mean like the Ka'aba, or Michaelangelo's David, or the silver mountain of Potosi?
edit on 2/5/12 by Astyanax because: of some loose change.