Money: their Essence. Functions of Money

Human thought has been more occupied with the problems of money, the organization of monetary circulation, than with all other economic problems. From ancient times to the present day, economists, philosophers, lawyers have been and are engaged in the theory of money. And now discussions continue about the functions and nature of money, their role in the development of the economy, the implementation of economic laws. The increased interest in the science of money is explained by the fact that the emerging disproportions in the reproduction process of social production in any country manifest themselves most quickly and most strongly in the sphere of money circulation, causing serious socio-economic consequences.

Money has been around for a very long time. Historical monuments testify that money functioned already 4-6 thousand years ago. They arose spontaneously as a result of the development of commodity production and commodity circulation. The development of commodity exchange led to the fact that a specific commodity stood out from the mass of all other commodities, which was assigned the social function of a universal equivalent.

The essence of money as a universal equivalent is manifested in the fact that with the help of money the value of any commodity is determined and the exchange of one commodity for another is ensured. Possessing the property of general direct exchangeability for all other commodities, money resolves the contradictions contained in the commodity and becomes an independent economic category.

Studies of the history of the emergence of money in different countries show that the process of fixing the function of a universal equivalent for a commodity, which is currently allocated to this role by commodity circulation, is very long. So, before the advent of money among different peoples, different goods acted as a universal equivalent: livestock, furs, etc. Ultimately, the function of the universal equivalent passed to precious metals - gold, silver. Compared to other equivalents, gold and silver have numerous advantages: high intrinsic value, homogeneity of the material, which made it possible to divide them into any parts, and preservation from damage. Thus, fixing the function of a universal equivalent for any one product was the result of natural selection, which was based on the physical properties of the product, the natural conditions of the country, its geographical and historical position, and traditions. This is how money came about.

With the advent of money, economic relations in society became more complicated. The natural exchange between producers of goods was replaced by two independent acts: 1) T-D - the sale of goods for money; 2) D-T - the purchase of goods for money. In a market economy, the first act turned out to be especially difficult - the sale of goods for money, since the buyer occupies a predominant position in the market. By acquiring or rejecting a product, he controls the quantity, quality and assortment of goods with the help of money on behalf of society. Goods that do not meet the requirements of buyers either remain unsold or are sold at reduced prices. Producers bear corresponding losses. Obeying the laws of the market, manufacturers are forced to reduce the production of unnecessary goods, improve their quality and diversify the range. In this, first of all, the active role of money in the organization of social production is manifested.

The main functions of money, which determine their social purpose, are the functions of a measure of value and a means of circulation. As a measure of value, money serves to express the value of all commodities. The price is based on the value of the goods, i.e. the value of the costs of socially necessary labor associated with its production and sale. In different markets of the country and even in the same market, but at different times of the day or year, prices for the same goods may be different. Relatively high prices, other things being equal, indicate unsatisfied demand for the product. Price reduction means overproduction of goods. Competition forces producers not only to improve quality, diversify the range, but also reduce production costs. Industries that ensure the release of new, necessary and economical goods for society at low production and sales costs are the most profitable. Free capital rushes into these sectors, investments increase, which leads to an increase in production in some sectors of the national economy and a reduction in others.

In addition to these functions - a measure of value and a means of circulation - money as a universal equivalent, as commodity-money relations developed, acquired other functions: treasures and means of accumulation, means of payment and world money. In the function of world money, they are manifested in the relationship between countries or economic entities - legal entities and individuals located in different countries.

The function of money as a treasure was performed only by full-fledged and real money - gold and silver. Money in the function of treasure acted as a regulator of their quantity in the sphere of circulation. With a decrease in the demand for money, full-fledged gold and silver money went out of circulation and settled with legal entities and individuals in the form of a treasure. When there was a need for additional funds, the money supply automatically increased - treasures turned into cash. In the first third of the XX century. gold has been demonetized. Gold money was forced out of internal circulation by credit and paper money. However, the world market for bullion metal has developed and is functioning.

Operations with gold in this market do not have any restrictions. They are governed by the laws of supply and demand. The capacity of the world bullion market is constantly increasing. The gold reserves of the states are concentrated either in the central banks of issue, or directly in the hands of the state: in the ministry of finance, in the treasury. The gold reserve as part of the gold and foreign exchange reserves is used by the state to regulate the circulation of money in the country, repay international debt. This is the so-called strategic reserve.

With the completion of the circulation of valuable - gold and silver - money, their place is taken by credit and paper money, which perform the function of money as a means of accumulation. Monetary savings in the country include the monetary savings of citizens (both in the form of cash and in bank accounts) and the savings of enterprises and organizations.

Thus, money in the function of a means of accumulation is a necessary condition for the development of credit relations. Monetary savings are accumulated by banks, the state and directed to the further development of production, covering government spending. Thanks to credit, an acceleration of the turnover of funds in the national economy is achieved, money circulation is strengthened, and distribution costs in the country are reduced.

The predominant part of the money turnover is served by money as a means of payment. In contrast to the function of a medium of circulation, money in the function of a means of payment carries out a relatively independent movement before or after the movement of goods. Money in this function forms the basis for the development of financial and credit relations, the organization of cashless payments.

The full realization of the possibilities of the economic impact of money on the development of a market economy requires certain conditions. First of all, the money circulation in the country must be stable, i.e. money must maintain or increase its purchasing power and foreign exchange rate. Otherwise, they can hinder the development of social production and cause socio-economic tension in the country.