Importance of Money:
Money is one of the most basic inventions of mankind “Each and every branch of knowledge has its basic discovery. In mechanics, it is the wheel, in science fire, in politics the vote. Likewise in economics, in the complete commercial side of Man’s social existence, money is the necessary invention on which all the rest is based (By Crowther).
Money is obligatory in an economy whether it is socialistic or capitalistic. Price mechanism plays a crucial role in capitalism. Production, distribution and consumption are persuaded to a big extent by prices, and prices are evaluated in money. Even a socialist economy, where the price system does not play therefore significant role as under capitalism, can’t do without money. For a while, the socialists conversed of ending the money that is, abolishing money itself, since they considered money as an invention of the capitalists to repress the working class. However later on they found that even beneath a system of planning, economic accounting would be not possible without the aid of money.
In early phases of civilization, different people employed various things as money. Cattle, shells, tobacco, wheat, salt, tea, knives, leather, animals like sheep, horses and oxen and metals such as lead, iron, tin and copper have been employed as money. Steadily precious metals like gold and silver substituted other metals like copper, iron, and bronze as money. And now paper is employed as money. We might explain one more form of money, that is, bank deposits that go from person to person by means of cheques.
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