The role and essence of money in different ways of organizing the economy

Syrchyn Oleksandr
PhD in Economics, Associate Professor, Department of Banking, Odessa National Economic University, Ukraine, e-mail: aleks_syrchin@ukr.net, ORCID ID: https://orcid.org/0000-0002-7206-4439

Cite this article:

Syrchyn, О. (2021). The role and essence of money in different ways of organizing the economy [Rol ta sutnist hroshei u riznykh sposobakh orhanizatsii ekonomiky], Socio-economic research bulletin; Vìsnik socìal’no-ekonomìčnih doslìdžen’ (ISSN 2313-4569), Odessa National Economic University, Odessa, No. 3-4 (78-79), pp. 122–131.

Abstract

The subject of the study is the role and essence of money in organization of the modern economy. The aim of this article is to consider the role and essence of money from the standpoint of accumulated scientific knowledge within the framework of various directions of the money theory. The methodological basis of the study is a systematic approach that considers society as a whole, and the economy as part of social life. It is substantiated that the sphere of demand (consumption) has no restrictions, and the sphere of production is limited in its capabilities. For the organization of a limited sphere of production, as the coordination of the actions of specialized workers, a certain method of management is required. A scientific and practical approach to understanding the role and essence of money in modern conditions is proposed. As a result of the study, it is shown that there are three ways to organize the economy: subsistence economy, planned-monopoly economy and market economy. The modern economy is determined as a mixed one, where three ways of organizing it are mixed in different proportions (in an individual proportion for each country in the world). It has been proven that money fully fulfills its role (functions as an integral element of systemic structure of the economy) only within the framework of a market economy, since they have two characteristics of a commodity and are themselves specialized commodity. In this context, the definition of money is proposed as a special commodity that reflects the total social demand – effective demand. The consequence of proposed approach was selection of a number of money attributes, such as: informational and symbolic nature of money; trust in the information symbol as a basis for existence of money; the ability of money as information to arise and be destroyed, etc. The practical value of proposed approach lies in the possibility of forming a monetary policy adequate to the real economy.

Keywords

consumption; production; economy; money; inflation; deflation; money-credit policy.

JEL classification: E400; E500; DOI: https://doi.org/10.33987/vsed.3-4(78-79).2021.122-131

UD classification: 336.74

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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