Before the invention of coins, the role of money was played by objects that had a certain value in the eyes of those who were ready to exchange the goods produced for them. Such items became an intermediary between manufacturers. Gradually, pieces of metals became such intermediaries, which became a universal means of accumulation and circulation.
The rationalistic origin of money
The proponents of this theory are Paul Samuelson and John C. Gelbraith. They believe that money came from an agreement between people. That is, at a certain stage, human society decided to assign monetary functions to precious metals.
Evolutionary origin of money
This approach presupposes a transition to money for objective reasons, including: division of labor, property isolation of producers, economic growth, the need to observe a fair equivalent of exchange.
To understand why money was invented, it is worth considering their main functions.
Functions of money
The measure of value. This is the main function of money; it is the universal equivalent of the cost of a service or a product produced. To compare different goods, it is enough to bring their value to the same monetary units - a single scale.
Means of circulation. Money greatly facilitates settlements between manufacturers - with the advent of coins, and then banknotes, the exchange of goods became much easier. If before buying and selling certainly coincided in time, now, thanks to the emergence of an intermediary - money, there is no need to exchange goods for goods at once and interrupt the production process.
A means of accumulation. As the equivalent of any commodity, money can accumulate to create savings. There is no need to create storage facilities for goods, it is enough to put their equivalent in a bank or a money box. It is money that allows a person to create wealth. Cash reserves smooth out the unevenness of economic life, which leads to stability.
Instrument of payment. Money can bring money, the work of credit organizations is based on this. This feature allows you to borrow without having to pay off here and now by giving a promissory note.
So, money allows you to trade and exchange, exchange your labor for any commodity, receiving a fair remuneration. They allow you to compare the value of different things. Also, money allows you to create a certain stock and, finally, allows you to take the goods without entering all of its value at once. That is why their appearance has become an objective necessity at a certain stage in the development of society.
