Does anyone know of any work (either by an Austrian or non Austrian) that attempts to derive the value of money in terms of amount of some produce or an amount of hours worked. Perhaps something along the lines of, if there are X dollars in total in the society and (other things defined...) then on average each dollar will buy Y hours labour.
As an illustration, here is my own formulation: Imagine a very simple society in which there is only one commodity: sandwiches. Everyone in the land grows the ingredients for their sandwiches in their gardens. Often they will exchange sandwiches with their neighbours just for variety. There is no money in this society only barter. But then one day the king of the land says "I've just invented something I'm going to call money. It consists of metal coins called shekels. I will give everyone in the land 1000 shekels and from now on bartering is banned. All exchanges must be via the medium of exchanging shekels. What's more, nobody is allowed to eat their own sandwiches." The question now is: how many shekels will a sandwich cost? It may well be that on day one, people will not have a clue and all sorts of silly prices may get paid... but presumably over time the price will gravitate towards a certain value. What will that value be?
What Went Wrong with Economics
Lilburne:Furthermore, while human actors do concern themselves with quantities, the subjective valuations of those quantities are ever in flux, so any function you set up, at best, can only represent a single complex of value scales only in existence for a fleeting moment in time.
I would indeed expect my sandwich model to come to a state of equilibrium which I'm fully aware does not correspond to real life. But I am also aware that this is a weakness in the model which I plan to fix in future more sophisticated versions. I can model the "insect tracking" (as discussed elsewhere) phenomena combined with "loans for speculation" which I would hope would result in a model that displayed booms and busts.
Lilburne:Your eternal function is a chimera, because algebraic functions require constants, and there are no constant ratios in human action.
The model would indeed contain a few constants and, very importantly, a large amount of variables (in the computer programming sense of the word).
There are "constants" in human action. The strength of gravity, the number of hours in a day are (to a good approximation) constant and these have strong effects on human action. Less precisely, the number of hours people choose to sleep does not vary all that much, 6-9 hours per day covers almost everyone. The number of calories people try to consume (as a function of their body weight) is also not particularly variable. Things that are fairly constant in real life can be modeled as fairly constant in a computer. Things that are very variable in real life can be modeled as very variable in a computer.
nirgrahamUK:a generic un-owned abstract unit of the currency? or a particular unit of the currency owned by someone in particular?
The former.
I.e. I take an average price of goods form a survey of shop windows (all simulated on computer of course).