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CALIFORNIA

I

THE PECUNIARY ORGANIZATION OF SOCIETY

Introduction

Within the complicated structure of modern industrial society the institution of money is of supreme importance. Indeed, it is indispensable to the system of co-operative enterprise by means of which the wealth of the world is nowadays produced. Moreover, the more highly specialized the productive process becomes, the more important is the rôle assumed by money; though it should not be understood from this that money was unimportant before the industrial revolution and among the more primitive forms of organization. Practically speaking, from the very beginning of the division of labor and the exchange of commodities it has been of the greatest significance a conditioning factor at every step in the evolution of industry.

In beginning the study of money, therefore, it is necessary to consider first the various services or functions that it performs in connection with the everyday process of procuring the means of livelihood. These are set forth in the selected readings below under Section A, "The Nature and Functions of Money." It is important to bear in mind when studying these selections that the writers have a special point of view. They are endeavoring to analyze the working of economic forces, as the physicist analyzes the working of physical forces; and from this standpoint it appears to them unnecessary to attach any particular importance to the popular views on the subject of money and the influence that these exert in directing the daily activities of mankind. For the purpose in hand they need merely look upon economic society as a great and complicated structure or mechanism and endeavor to ascertain and describe the part that money plays in such a system. Thus viewed, money is found to be an agent that is performing several functions that are quite as important as, though perhaps less obvious than, those performed by railways or manufacturing establishments.

Section B, "Money, Capital, and Wealth," portrays the confusion of mind that has always existed on the subject of money. The fact

that the values of all other commodities are stated in terms of money, and that it constitutes a general fund of purchasing power-a veritable key to things desired-has always resulted in a very general misunderstanding of its real importance and significance. By many people money has almost been regarded as an end in itself, rather than as merely the means to an end; and by still more it has been deemed at least a very superior form of wealth, a plentiful or scanty supply of which renders a nation rich or poor, powerful or impotent. The results of these confused ideas on the subject are shown in following chapters. It need merely be said here that the exciting, even bitter, monetary controversies that have for centuries almost continuously commanded the attention of mankind center very largely around this popular misconception of the nature and functions of

money.

The selections under Section C, "The Rôle of Money in Industrial Society," are written from an angle or point of view somewhat different from that taken in the selections under Section A. While not denying that money performs the functions first enumerated, these writers are not content to let the analysis stop at that point. Rather, they use these underlying functions of money, that is, as a medium of exchange, common denominator of values, etc., as a starting-point for a broader analysis of the dominant place that money occupies in directing the ordinary everyday business of the world. Since money constitutes a fund of general purchasing power, it serves as the basis of all business undertakings and, either directly or indirectly, as a measure of practically all the affairs of life. By it we express the relative value or worth of all commodities whatsoever; we use it as a convenient measure of services of every kind; indeed, it is frequently charged that we measure human worth and achievement in terms of dollars and cents. We reckon national, as well as individual, wealth in money, and even say that the wealth of the nation is one hundred twenty billions of dollars, as though it actually consisted of so much coined metal or printed paper money.

This universal measuring of things in terms of dollars and cents has placed money in a position of unique importance in the industrial system. The desire to make money appears to be the mainspring of human effort and the basis of business organization. Price becomes the great controlling and directing force in economic affairs, the very center of the economic structure of society.

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