By Richard M. Ebeling – Re-Blogged From Savvy Street
Money is not a creation of the State. A widely used and generally accepted medium of exchange emerges spontaneously.
Carl Menger (1840-1921), the founder of the Austrian School in the 1870s, explained in his Principles of Economics (1871) and his monograph on “Money” (1892), that money is not a creation of the State.
A widely used and generally accepted medium of exchange emerges “spontaneously”—that is, without intentional government plan or design—out of the interactions of multitudes of people over a long period of time, as they attempt to successfully consummate potentially mutually advantageous exchanges. For example, Sam has product “A” and Bob has product “B”. Sam would be happy to trade some amount of his product “A” for some quantity of Bob’s product “B”. But Bob, on the other hand, does not want any of Sam’s “A”, due to either having no use for it or already having enough of “A” for his own purposes.