Thursday, August 8, 2013


While following a trail of references relating to the notion of 'lexical' ordering for preferences or values, I came upon a reference to a passage in Aristotle's Nichomachean Ethics which makes an argument about the function of money that is relevant (in a somewhat distant and historical way) to my topic. The passage is the following:
"So money acts as a measure which, by making things commensurable, renders it possible to make them equal. Without exchange there could be no association, without equality there could be no exchange, without commensurability there could be no equality. Strictly speaking no doubt things so widely different can never become commensurable. Still in demand we have a common measure which will be found to work pretty well. Some one standard there must be, and it must be accepted by a general agreement or understanding. Such a standard has the effect of making all things commensurable, since they all can be measured by money." (Book five, Chapter Five, translated by J.A.K. Thomson.)
This passage follows reflections on the requirements for exchanges "according to the right proportion", where Aristotle points out, among other things, that there's no point in trading the same types of things for each other ("Two doctors cannot associate for the purpose of exchanging what they have to give, but a doctor and a farmer can..."). We trade precisely because means and wants differ:
"Where there is not an original equality between them it has to be created. This implies that all products exchanged must somehow be commensurable."
He reasons that money mediates this process, but that the "one standard by which all commodities are to be measured" is demand.

Aristotle's point is, of course, not one about cognitive processing. That said, it's not hard to see how one could use his reflections as a template for an argument about the processes of choosing between different goods.

If there's a historically older statement of an argument for a common currency I'd be very interested to hear about it.

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