Nominal Price
Table of Contents
Nominal price is based on the common medium and measure of exchangable value, based on effective demand.
It is the start of formal supereconomic activity.
This medium can be classified into two:
- Money
Money comes from Moneta which is:
- where coins were minted in the Roman Republic
- also the root of the word mint
Therefore, money really represents coin.
Paper money is therefore paper coin.
- According to Adam Smith, the word ‘cash’ came from the French inventing cash accounts which were based in paper bank notes instead of coin.
- This allowed trade to flourish while adding volatility as proven in the Mississippi scheme.
Currency is a kind of money that is made as the standard within the system that uses it.
- Its main mechanism is its legality.
Cryptocurrency is a kind of digital currency that is standard with the system or network that uses it.
- It can gain more widespread usage through cryptoexchanges
- Non-Money
Many countries use non-money media such as spices and grains for trade.
Nominal price is exchangeable value denoted as a numerical object.
- In a money-system this number-object manifests as money
- In a moneyless system it manifests as points or strings or any system of notation, which then represents the commodity used as standard measure
Chapter 3 of the Introduction gave an example of Adam wanting to buy a cake for his wife’s birthday. The total worth of the cake to his mind comes from:
- his love for his wife
- the practice of giving a cake during birthdays
- the cake’s usefulness to his wife
This worth then forms its exchangeable value. Let us assume that it is $20.
This exchangeable value is thus the numerical version or “nominal price” of his abstract desire for the cake. This represents the amount of money, goods, or services that Adam is willing to give for the cake.
- The more he desires the cake, the higher its nominal price will be
- The less he desires the cake, the lower its nominal price
Of course the $20 is does not an accurately convey the feeling of love for his wife.
- It is just a corrupted and objectified version that is used to harmonize with the nominal values set by other people
- It strips away information in order to simplify into one quantitative information
Nominal Price is Based on Lack, Rarity, or Scarcity
The previous chapter explained that a rare item is usually more desired than one that is very common.
- Rare and scarce items therefore have a high nominal price.
- Common items have a low nominal price.
A common mistake would be to confuse nominal price with use value which is arbitrary to the self alone. Nominal price takes into account the conditions of the society or environment since it is exchangeable
Nominal Price therefore exposes what is lacking so that it can drive action to be addressed.