The Choice of the Standard

The concept goes back, however, at least as far as Aristotle: What money does for us is to act as a guarantee of exchange in the future: that if it is not needed now, it will take place if the need arises; because the bearer of money must be able to obtain what he wants. Of course money is affected in the same way as other commodities, because its purchasing power varies; nevertheless, it tends to be more constant. That is why everything must have its money value fixed, because then there will always be exchange, and if exchange, association. So there must be some one standard, and that on an agreed basis, which is why money is so called, because this makes all products commensurable, since they can all be measured in terms of money. (Nichomachean) Ethics, Book V, 1133b10–b25 Following Aristotle, we also say that ‘there must be some one standard’, serving as a unit of account and standard of deferred payment, to act as the essential building block of the emerging GFS. We also follow Aristotle in his broad, humane, ethical idea of the concept. Significantly, Aristotle places these remarks on money in the context of a discussion of justice and proportional reciprocity as the basis of fair exchange.