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The term for this understanding of money is "Labour Theory of Money": https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Labor_th

The term for this understanding of money is "Labour Theory of Money": https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Labor_theory_of_value Of course I agree with the intuitive appeal in the understanding, hence why I called it outmoded. There are better understandings which explain more of the nature of money. Namely the Labour Theory of Money ignores the vast importance of assets (capital). You'll notice the similarities to our system of economy "Capitalism". This makes sense when you consider it was Karl Marc, proponent of Labour Theory of Value, who coined the term "Capitalism". Thus the Labour Theory of Value breaks down when introducing the idea that things (capital) can also contribute value. We buy tractors for our farms and in fact look for ways to reduce the labour costs of making this! Now in 2019 it is easy to imagine a robotic machine which mines the resources it requires and produces a widget. Yet none of us would be surprised if the robot demanded more than 0$ despite the lack of human time invested in each widget.

benj111 7y ago
I didn't ignore capital, it just circles back round to "Money is deferred human labor". If I work for you for an hour and get paid, I can either use that to pay for something else, or save it. If I save it, that's capital. I can use that capital to pay someone to build a machine, that machine multiplies my productivity, lowering costs for you, whilst I still get higher pay. You seem to implicitly accept this "We buy tractors for our farms and in fact look for ways to reduce the labour costs of making this!" Now, as a model, it becomes less useful as you become more and more divorced from that original labour, so I'm not surprised that economists and central banks are moving away from it, but in the context of whether to buy an Atari emulator, or build one, it's more than adequate.

benj111 7y ago

I didn't ignore capital, it just circles back round to "Money is deferred human labor". If I work for you for an hour and get paid, I can either use that to pay for something else, or save it. If I save it, that's capital. I can use that capital to pay someone to build a machine, that machine multiplies my productivity, lowering costs for you, whilst I still get higher pay. You seem to implicitly accept this "We buy tractors for our farms and in fact look for ways to reduce the labour costs of making this!" Now, as a model, it becomes less useful as you become more and more divorced from that original labour, so I'm not surprised that economists and central banks are moving away from it, but in the context of whether to buy an Atari emulator, or build one, it's more than adequate.