Capitalism, Division of Labor and Money

Capitalism incentivizes profit seeking, meaning profit margins are eyed vigilantly. Any sector or niche is vulnerable to attracting entrepreneurs that set to work on making themselves richer, unintentionally shrinking said margins in the process. This profit seeking is conducted by utilizing money, as money leaves the entrepreneur through costs and reaches the entrepreneur through revenues. The entrepreneur, as a way to maximize profits, has chosen to specialize and is thus part of the massive, decentralized collaboration we call Division of Labor. As a participant, he must make use of money — the fragile glue that binds the whole construction together…

The sick, wounded man that was Rome settled in Constantinople under Constantine the Great and was soon to thrive again under better money. One chapter of Money Dethroned details the monetary progression of that empire; the centuries passed and the pure gold coinage of Constantine became an ever more ancient relic. And so it was after having escorted a Greek princess married to Öz Beg Khan, to the Byzantine Empire’s capital, that 14th century traveler Ibn Battúta first mentioned the decadent state of the money used there:

When it became clear to the Turks who were in the khátún’s [the…

One chapter of Money Dethroned details the emergence of copper money in Ancient China, and the many difficulties the Emperors there had with counterfeiting, or unlawful money production. Although, as we now know, many medieval travelers observed the paper money of Mongol China, perhaps little did the very same travelers know of the metallic monies used there before the Song dynasty’s lucrative invention.

Unruly Beginnings

The destructive monetary system of the 14th century Mongol rule of China was not random, and not only connected to a long-running streak of authoritarianism in the area. It was in fact, in some ways a faulty…

One chapter of Money Dethroned details Spanish copper money, and the way it was abused by the state in the 17th century. It is an interesting example of the tinkering of face values, leaving regular Spaniards financially ruined in the process without shrinking or debasing the actual physical coinage.

Habsburg Wars

A period where many nations experienced monetary inflation, while operating mostly on gold and silver, was the 16th century. Spain, having reached the New World in 1492 A.D., could finally reap significant rewards from this military investment in the West: large scale confiscation and production of precious metals. This new silver…

The third chapter of Money Dethroned details the use of livestock as money. It was arguably the most common standard in use before metallic monies, and has therefore contributed considerably to everything from the shape of early metallic coinage, to money-related etymology.

Remnants of a Nomad Past

The medieval traveler Ibn Battúta visited multiple towns north of the Byzantine Empire. He went to the Genoese city of Kaffa, in what today is Crimea, by enduring severe storms that almost capsized the ship. Curiously, it appears Battúta and his company were unused to the loud ringing of church bells, because as the predominantly Christian city suddenly…

This is the fourth and last part of the series in which I summarize Carl Menger’s ‘Principles of Economics’. It captures the sixth, seventh and eight chapter of the book, and builds the theoretical framework around the commodity and of money. For previous summaries, see here, here and here.

Chapter VI — Use Value and Exchange Value

1. The Nature of Use Value and Exchange Value

When people become more aware of their economic interests and begin to exchange goods for goods, a situation develops where possession of economic goods gives the possessors the power to obtain goods of other kinds by means of exchange. …

This is the third part of the series in which I summarize Carl Menger’s ‘Principles of Economics’. It captures the fourth and fifth chapter of the book, and builds the theoretical framework around the exchange of goods and the price of goods. For a summary of chapter one, two and three, see here and here.

Chapter IV — The Theory of Exchange

1. The Foundations of Economic Exchange

Menger starts out by establishing that exchange for economizing individuals is not an end in itself. There are obviously not many occurrences of trade where producers of the same good exchange units of that good with each other, just for the sake of it.

This is the second part of the series in which I summarize Carl Menger’s ‘Principles of Economics’. It captures the important third chapter of the book, and builds the theoretic framework around the value of different goods. For a summary of chapter one and two, see this article.

Chapter III — The Theory of Value

1. The Nature and Origin of Value

If the requirements for a good over a specific time period are greater than the quantity available for that same time period, and if men seek to satisfy their needs for it as completely as possible, they will feel compelled to engage in the activity earlier described as economizing. Their subjective perceptions…

This is the first part of a new series in which I try to summarize Carl Menger’s ‘Principles of Economics’. The goal is to make the important work slightly more digestible for segments of people with perhaps less time on their hands, but not necessarily less will to learn about economics. This first part captures the first two chapters in the book, and builds the theoretic framework of the economic and non-economic good, requirements, property, and of wealth.

Chapter I — The General Theory of the Good

1. The General Theory of the Good

Menger starts with listing four prerequisites that simultaneously must be present if a thing is to become a good, or in other…

Russians and the Infinite Inflation Bug?

As has been described in previous articles, the Soviet Union had since earlier a contract to exclusively supply De Beers with their Siberian diamonds in exchange for money and good industrial-grade counterparts. This equation changed in the 70’s, and it started with an ever growing supply of uncut stones reaching the De Beers London facilities. Upon inquiring how the Soviets managed to have such an incredible output from just a few ‘pipes’, the Soviet representatives first argued that the carat content in their ore was extremely high — in fact higher than any pipe mine in the history of diamond…

Emil Sandstedt

Bitcoin. Austrian Economics. Monetary History.

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