Principles Of Political Economy
- Автор: Mill John Stuart
- Год: 2022
- Язык: английский
- Год: Strelbytskyy Multimedia Publishing
- Жанр: Политика
Электронная книга - «Principles Of Political Economy». Краткое содержание книги:
Beside discussing descriptive issues such as which nations tended to benefit more in a system of trade based on comparative advantage (Mill's answer: those with more elastic demands for other countries' goods), the work also discussed normative issues such as ideal systems of political economy, critiquing proposed systems such as communism and socialism.
Along with A System of Logic, Principles of Political Economy established Mill's reputation as a leading public intellectual. Mill's sympathetic attitude in this work and in other essays toward contemporary socialism, particularly Fourierism, earned him esteem from the working class as one of their intellectual champions.
The credit given to any one by those with whom he deals does not depend on the quantity of bank-notes or coin in circulation at the time, but on their opinion of his solvency. If any consideration of a more general character enters into their calculation, it is only in a time of pressure on the loan market, when they are not certain of being themselves able to obtain the credit on which they have been accustomed to rely; and even then, what they look to is the general state of the loan market, and not (preconceived theory apart) the amount of bank-notes. So far, as to the willingness to give credit. And the willingness of a dealer to use his credit depends on his expectations of gain, that is, on his opinion of the probable future price of his commodity; an opinion grounded either on the rise or fall already going on, or on his prospective judgment respecting the supply and the rate of consumption. When a dealer extends his purchases beyond his immediate means of payment, engaging to pay at a specified time, he does so in the expectation either that the transaction will have terminated favorably before that time arrives, or that he shall then be in possession of sufficient funds from the proceeds of his other transactions. The fulfillment of these expectations depends upon prices, but not specially upon the amount of bank-notes. It is obvious, however, that prices do not depend on money, but on purchases. Money left with a banker, and not drawn against, or drawn against for other purposes than buying commodities, has no effect on prices, any more than credit which is not used. Credit which is used to purchase commodities affects prices in the same manner as money. Money and credit are thus exactly on a par in their effect on prices.
It is often seen, in our large cities, that money is very plentiful, but no one seems to wish its use (that is, no one with safe securities). Inability to find investments and to find industries in which the rate of profit is satisfactory—all of which depends on the business character and activity of the people—will prevent credit from being used, no matter how many bank-notes, or greenbacks, or how much gold there is in the country. It is impossible to make people invest, simply by increasing the number of counters by which commodities are exchanged against each other; that is, by increasing the money. The reason why more credit is wanted is because men see that increased production is possible of a kind that will find other commodities ready to be offered (i.e., demand) in exchange for that production. Normal credit, therefore, on a healthy basis, increases and slackens with the activity or dullness of trade. Speculation, or the wild extension of credit, on the other hand, is apt to be begotten by a plethora of money, which has induced low rates for loans, and moves with the uncertain waves of popular impression. By normal credit we mean that the wealth represented by the credit is really at the disposal of the borrowers; in a crisis, the quantity of wealth supposed to be represented by credit is very much greater than that at the disposal of the lenders.[246]
§ 6. What is essential to the idea of Money?
There has been a great amount of discussion and argument on the question whether several of these forms of credit, and in particular whether bank-notes, ought to be considered as money. It seems to be an essential part of the idea of money that it be legal tender. An inconvertible paper which is legal tender is universally admitted to be money; in the French language the phrase papier-monnaie actually means inconvertibility, convertible notes being merely billets à porteur. An instrument which would be deprived of all value by the insolvency of a corporation can not be money in any sense in which money is opposed to credit. It either is not money, or it is money and credit too.
It would seem, from all study of the essentials of money (Book III, Chapter IV), that the necessary part of the idea of money is that it should have value in itself. No one parts with valuable commodities for a medium of exchange which does not possess value; and we have seen that Legislatures can not control the natural value of even the precious metals by giving them legal-tender power. Much less could it be done for paper money. Paper, therefore, may, as an instrument of credit, be a substitute for money; but, in accordance with the above test, it can not properly be considered as money in the full sense. Of course, paper money, checks, etc., perform some of the functions of money equally well with the precious metals. F. A. Walker holds that anything is money which performs money-work; but he excludes checks from his catalogue of things which may serve as money. It is practically of little importance, however, what we include under money, so long as its functions are well understood; it is merely a question of nomenclature, and need not disturb us.
Chapter X. Of An Inconvertible Paper Currency.
§ 1. What determines the value of an inconvertible paper money?
After experience had shown that pieces of paper, of no intrinsic value, by merely bearing upon them the written profession of being equivalent to a certain number of francs, dollars, or pounds, could be made to circulate as such, and to produce all the benefit to the issuers which could have been produced by the coins which they purported to represent, governments began to think that it would be a happy device if they could appropriate to themselves this benefit, free from the condition to which individuals issuing such paper substitutes for money were subject, of giving, when required, for the sign, the thing signified. They determined to try whether they could not emancipate themselves from this unpleasant obligation, and make a piece of paper issued by them pass for a pound, by merely calling it a pound, and consenting to receive it in payment of the taxes.
In the case supposed, the functions of money are performed by a thing which derives its power of performing them solely from convention; but convention is quite sufficient to confer the power; since nothing more is needful to make a person accept anything as money, and even at any arbitrary value, than the persuasion that it will be taken from him on the same terms by others. The only question is, what determines the value of such a currency, since it can not be, as in the case of gold and silver (or paper exchangeable for them at pleasure), the cost of production.
We have seen, however, that even in the case of metallic currency, the immediate agency in determining its value is its quantity. If the quantity, instead of depending on the ordinary mercantile motives of profit and loss, could be arbitrarily fixed by authority, the value would depend on the fiat of that authority, not on cost of production. The quantity of a paper currency not convertible into the metals at the option of the holder can be arbitrarily fixed, especially if the issuer is the sovereign power of the state. The value, therefore, of such a currency is entirely arbitrary.
The value of paper money is, of course, primarily and mainly dependent on the quantity issued. The general level of value depends on the quantity; but we also find that deviations from this general level, in the direction of further depreciation than could be due to quantity alone, is caused by any event which shakes the confidence of any one that he may get the existing value for his paper. The “convention” by which real value (the essential idea of money) was associated with this paper in the minds of all is thereby broken. Fiat money—that is, a piece of paper, not containing a promise to pay a dollar, but a simple declaration that this is a dollar—therefore, separates the paper from any connection with value. And yet we see that fiat money has some, although a fluctuating, value at certain times: if the State receives it for taxes, if it is a legal acquittal of obligations, then, to that extent, a certain quantity of it is given a value equal to the wealth represented by the taxes, or the debts. Jevons remarks on this point[247] that, if “the quantity of notes issued was kept within such moderate limits that any one wishing to realize the metallic value of the notes could find some one wanting to pay taxes, and therefore willing to give coin for notes,” stability of value might be secured. If there is more in circulation than performs these functions, it will depreciate in the proportion of the quantity to the extent of the uses assigned to it; so that the relation of quantity to uses is the only thing which can give value to fiat money, but beyond a certain point in the issues other forces than mere quantity begin to affect the value. Although the paper is not even a promise to pay value, the form of expression on its face, or the term used as its designation, generally tends, under the force of convention and habit, to give a popular value to paper.
246
See Cherbuliez, vol. i, p. 299.
247
“Money and the Mechanism of Exchange,” p. 232.