Are my 10 euros equal to your 10 euros?
I was moving out from Sweden, so I began selling my stuff, among which a set of weights. I set the price at 15 $.
After posting my announce on facebook, a man immediately messaged me and told me that within an hour he would have arrived at my place. This was a big deal for him and he didn’t want to miss it.
He came as promised. An old guy, poorly dressed and very enthusiastic to buy my weights set. He even brought a box made appositely for storing weights!
Probably retired, he tried to make some bargains out of it, by asking a lower price. I kept saying no as some other people texted me for the weights.
He wanted to pay me with a mobile method (swish here in Sweden), but unluckily I didn’t own any swish account. So I asked if he had some cash. He didn’t have enough with him, so he asked me to take what he had at the moment while he was going to withdraw some other in a nearby ATM. In such a way he wanted to be assured that I wasn’t going to give away the weights to someone else.
He really wanted this deal!
“Hold on!”.
He remembers that he has some euros in cash (a different currency from the one used in Sweden, the swedish krowns). By adding that up it turned out to be the required amount. At first he was also going to give me some more as he didn’t know the conversion rate (and he didn’t bother to check: he wanted to seal this great deal). But I corrected him and gave him back the extra amount he wasn’t aware of.
Finally he wished me a nice day. He was a good person. I could easily feel his enthusiasm.
By thinking back to it, it was “just” 15 bucks. For me it’s not much, I earn them in 1 hour of work or less.
For this guy, instead, those 15 bucks weren’t the same 15 bucks for me. For him those were worth much more. Those were going to provide him a tool he has passion for. Probably it took him much more work to earn those 15 bucks.
People trade their time for money, which is used to facilitate the exchange of goods and services (i.e. our time).
But when applying this exchange we can see that money is not this objective anymore.
In order to exchange a good, these weights, for example, I am required to sacrifice 1 hour of my time working, while someone else might be required to sacrifice a different amount of time, like (probably) this old man. A friend of mine, for example, would need to exchange 2 hours and a half of her time for this same item.
In the extreme cases, someone else might buy a bouse with 1 year worth of their time spent working, while someone else might be required to spend 20 years for the same house.
Mine 10 euros should be the same 10 euros as yours, right?
But. If we think to the trade behind the money, this logic doesn’t hold. Thus the subjective nature of money.
Is money an efficient method to trade our services and goods for those of others’ ?
A lot of years ago, when money didn’t exist, no one would swap a good that required 3 months of their time, for another good that is produced with 1 month of work.
With money now these unequal exchanges occur daily.
(Still, 1 hour of work is not the same for every type of job. Some jobs might be more stressful than others. )
Money has a double face: the nominal value, that everyone recognizes as the same. On the other side there is the work required to acquire such nominal value. We just see the nominal value.
Money adds an extra layer in the trade process.
With this layer we forget the real value behind the exchanges.
For this man it was totally worth this exchange.