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In Politics Book 1:9[1] (c.350 B.C.) the Greek philosopher Aristotle contemplated on the nature of money. He considered that every object has two uses, the first being the original purpose for which the object was designed, and the second possibility is to conceive of the object as an item to sell or barter.[2] The assignment of monetary value to an otherwise insignificant object such as a coin or promissory note arises as people and their trading associate evolve a psychological capacity to place trust in each other and in external authority within barter exchange.[3][4] With barter, an individual possessing any surplus of value, such as a measure of grain or a quantity of livestock could directly exchange that for something perceived to have similar or greater value or utility, such as a clay pot or a tool. The capacity to carry out barter transactions is limited in that it depends on a coincidence of wants. The seller of food grain has to find the buyer who wants to buy grain and who also could offer in return something the seller wants to buy. There is no agreed standard measure into which both seller and buyer could exchange commodities according to their relative value of all the various goods and services offered by other potential barter partners. |
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