In “The theory of Money and Credit”, Mises divides goods into three categories: consumption goods, production goods, and media of exchange. Money is not a consumption good (people generally don’t throw it away). Mises says that money is not a production good, because increasing or decreasing the total stock of production goods improves or worsens mankind’s lot, where as such changes in the total stock of money have no such effect. Therefore Mises created the third category for money.
But suppose I spend my money on gold ingots and hide them under my mattress. The ingots are not a consumption good - they don’t decay and won’t be consumed. The ingots are not currently a common media of exchange, and decreasing the total stock of gold ingots in the world would be bad for mankind (i.e. fewer choices for circuit boards, jewelry, dental fillings, etc.).
Would the ingots be considered a production good then? Because, ultimately, I’d trade them off and they would be used, say, as a component in jewelry?
i’d say that it depends on for what purpose you’ve bought the ingot. If for the sake of melting it down and crafting a necklace, then it’s a capital good. If you want to use it as a house decoration, then it’s a consumer good (with extreme durability lets say). If your plan was to keep it and exchange it for goods and services at some point in future, then it’s a medium of exchange.
consumption doesnt mean ‘throw it away’, you probably now this ( i hope), im just sayin’
Mises is wrong that money is not a production good. production goods contribute in the process of producing consumer goods. ask any capitalist or entrepeneur whether they ever used money in order to generate either further production goods or consumer goods…
Walter Block and William Barnett have a paper out specifically on Money as Capital Good. Money has the special quality of turning things that are not yours to use into things that are, like how transport turns iron ore that is far from your smelting cauldron (if thats what you use!) into iron ore that is close to it.
what it all comes down to is that a material object does not have goods quality until someone thinks it does. now the person either thinks of it as a consumption good or a production good; by which i mean, a person uses means to achieve his ends; if the person has the ingot as an end, then it fits the definition of consumer good, if the person has the ingot as a means to a further end, then by definition it is a production good.
as an outside party to the ‘plans’ of this person; you an I may never know for sure which it was to them. But it certainly had one of those two places in their plans. (means,ends)
“Mises is wrong that money is not a production good. production goods contribute in the process of producing consumer goods.”
Really? Money does not seem to produce anything, unless you, say, make origami decorations by folding dollar bills. Are you saying that money is a production good because the trading of it helps the production process?
So if I trade my baseball cards for my neighbor’s flour, and then make a cake, the baseball cards would be a production good in making the cake?