We've already had a number of postings on this subject, but misconceptions about money are so widespread that it bears repeating, albeit in different words. Since we're dealing with a definition, the first place we go is to a dictionary, Webster's Seventh New Collegiate Dictionary, to be precise, which defines "money" as "Something generally accepted as a medium of exchange, a measure of value, or a means of payment."
The first thing we see is that the primary definition doesn't mention currency, whether paper bank notes or coin. That comes later. The primary definition hints at this, of course, by specifying that money is "something generally accepted," but doesn't actually come out and say this. Since most people seem to define "money" solely in terms of currency and demand deposits, we need something more precise. We will therefore go to a law dictionary, Black's Law Dictionary, the 1951 edition, since that is the one we have in the office.
We expect lawyers to hedge a little, and Black's Law Dictionary is no exception. After restating the definition we found in Webster's, the qualifications begin, the most significant of which appears to be, "'Money' has no technical meaning, but is of ambiguous import, and may be interpreted having regard to all surrounding circumstances under which it is used. 'Money' is often and popularly used as equivalent to 'property.' 'Money' means wealth reckoned in terms of money; capital considered as a cash asset: specifically such wealth or capital dealt in as a commodity to be loaned, invested, or the like; wealth considered as a cash asset. . . . In its more comprehensive and general sense, it means wealth, — the representative of commodities of all kinds, of lands, and of everything that can be transferred in commerce. . . . A general, indefinite term for the measure and representative of value."
We're starting to get a good picture here. Obviously, if we restrict the meaning of "money" to coin, currency, and demand deposits, we're going to leave out a significant part of what "money" consists. To put the final pieces of the puzzle together, let's take a look at how Jean-Baptiste Say viewed money. In his Letters to Malthus (1821), Say commented,
All those who, since Adam Smith, have turned their attention to Political Economy, agree that in reality we do not buy articles of consumption with money, the circulating medium with which we pay for them. We must in the first instance have bought this money itself by the sale of our produce.In light of this, we come to a somewhat startling conclusion. "Money" is not mere currency, or coin, or demand deposits. "Money" is production; it is anything of value, all wealth that has been produced, anything that can be used in exchange. The fears so often expressed about there not being enough money, or the banks being able to control the entire money supply, and so on, are groundless when we realize what money really is: production. The solution to a mismanaged money supply, then, is not to mismanage it further, but to open up democratic access to the means of acquiring and possessing private, productive property, so that everyone — with or without the help of a bank — can make his or her own money.
To a proprietor of a mine, the silver money is a produce with which he buys what he has occasion for. To all those through whose hands this silver afterwards passes, it is only the price of the produce which they themselves have raised by means of their property in land, their capitals, or their industry. In selling them they in the first place exchange them for money, and afterwards they exchange the money for articles of consumption. It is therefore really and absolutely with their produce that they make their purchases: therefore it is impossible for them to purchase any articles whatever, to a greater amount than those they have produced, either by themselves or through the means of their capital or their land.
