Wednesday, March 26, 2003

Metal Pieces

I have been trying to teach my students that not every word mean what they think it means, especially in economics, but many of my students find this inconceivable. The latest illustration in 102 is the concept of money. As luck would have it, I have finally gotten around to reading the second book of the Wealth of Nations. Lo and behold, Adam Smith himself offers us an explanation of the "ambiguity of language", as Smith puts it.

When we talk of any particular sum of money, we sometimes mean nothing but the metal pieces of which it is composed; and sometimes we include in our meaning some obscure reference to the goods which can be had in exchange for it, or to the power of purchasing which the possession of it conveys. [Smith's Wealth of Nations Book II Chapter 2 Paragraph 16].

He goes on for a bit, though as usual the rest of Smith's explanation does more to confuse the reader than to elucidate the material. So when should I spring this on my unsuspecting students?