The term "price" thus also has a double meaning. It meant, in ordinary language, the amount of physical money paid for a physical thing, as the price of a pair of shoes or a bushel of wheat. But it means, in the legal economics of the courts, the "consideration," that is, the service which the owner of the money rendered to the owner of the shoes by alienating his ownership of money in consideration of the service rendered by alienation of the ownership of the shoes. Each owner alienates his ownership, and each owner acquires another ownership. Prices are paid, not for physical objects, but for ownership of those objects.
This is a hard saying, and not ordinary language. For example, I buy a pair of shoes for five dollars. I physically transfer five dollars, and the merchant physically hands me the shoes. The price of the shoes is five dollars in actual money. This is so-called common sense." But it is much more important that I go away with the ownership of the shoes, and the merchant goes to the bank with the ownership of the money and transfers its ownership to the bank. There has been the alienation and acquisition of two ownerships. Critical economists have declared that ours is an "acquisitive" economy and not a "producing economy." It is both. It is also an "alienation economy." We acquire ownership of money by alienating ownership of things that are produced.
When the merchant sells his shoes to me in exchange for a bank check, which is approximately nine-tenths of modern money, he does not get merely a piece of paper, he gets lawful ownership of a debt owed by my banker to me as a depositor, and I transfer to the merchant my ownership of that much of my deposits at the bank. That banker's debt, owed to me and now owed to the merchant, was, strangely enough, also considered to be a "commodity" like the wheat or shoes, simply because it also could be bought and sold.
This remarkable fact by which a debt becomes a "commodity," like wheat or shoes, is an invention of the lawyers and courts, beginning only as late as the seventeenth century in England, but continuing to the present day by new additions under the general name "negotiability," and the debt owned by the creditor of the bank is a "negotiable instrument," not wheat or shoes. It serves as money, or general purchasing power, and modern "money" is mainly negotiable debts owed by bankers. The barter economy knew nothing of such a "commodity" as bankers' debts, but the early economists treated these negotiable instruments as if they were wheat and shoes, although they were not the products of labor, but were the products of sovereignty.
There was another kind of commodity, the "precious metals," which were a product of labor, like shoes and wheat. The early economists carried their formula of a barter economy over to the exchange value of the precious metals, gold or silver, which were also commodities. But there is a difference between "bullion" and "coin." Bullion is a commodity, but coin is lawful money, made so by sovereigns as the means of paying debts, both the compulsory debts of taxes owed to the sovereign and the voluntary debts owed to individuals whose payment was also compulsorily enforced by the courts. Coin and bullion were eventually made equivalent in value by "free and unlimited" coinage, whereby the owner of bullion could convert it into lawful money without expense to himself but at the expense of the government. Silver was "demonetized" in some countries and not in others, which meant that silver was reduced to a commodity and could not be converted, without expense or in unlimited quantities, into lawful money that would pay debts enforced by sovereignty. Finally, gold itself is substantially demonetized in all countries by withdrawing from individuals the privilege of "free and unlimited coinage." Governments become even the sole and monopolistic owners of gold bullion, and do not bother to coin it. The American government owns more than half of the world's supply, which it locks up underground and issues "certificates" of ownership, which are themselves legal tender. Governments buy and sell gold bullion at prices stated in terms of something else. That "something else," strangely enough, is not metallic money, and is not paper money nor even bank checks. It is a "money of account," meaning, thereby, a "unit of account" on the books, the dollar, or the franc, established by law as legal tender in payment of debts. It measures the amount of metallic bullion as well as the amount of paper money, of bank debts, and of all debts and the monetary value of all commodities. This unit of account is maintained by custom and law, in the language of weight of gold or silver coin, although the metal itself has long since been taken out of circulation.
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