Review of Last Year’s Discussions – Background of the Topic – Subject Analysis: 1. Money – Aspect One: The Ten Stages of Money – Aspect Two: Definition of Money – Aspect Three: Classifications of Money – Aspect Four: Analysis of the Nature of Money

Review of Last Year’s Discussions

The subject of our discussions on Tuesdays and Wednesdays is the depreciation of money and the examination of its jurisprudential implications. Last year, over the course of 42 sessions, we addressed some preliminary aspects of this topic. I will begin by briefly reviewing last year’s discussions, which may take one or two sessions. Since those discussions serve as a foundation for this year’s topics, and the conclusions reached therein form the basis for subsequent issues, we will conduct a concise and rapid review of last year’s discussions.

Background of the Topic

The first matter examined was whether the chosen topic is a newly emerged issue or one that has been discussed in the past. We proposed three possibilities in this regard:

1. The issue has existed since ancient times and is not considered a new or emerging matter.
2. The issue is entirely a newly emerged matter, with no historical precedent.
3. The issue was discussed in a rudimentary form in the past, but due to new circumstances and developments in various fields, it has evolved from its earlier simplicity into a more complex matter with certain distinctions.

We accepted the third possibility. We substantiated this with historical and narrational evidence, noting that while some consider inflation a new issue tied to the modern concept of money, it has existed in the past, albeit in a less complex form. Inflation differs from price increases; those who argue that inflation did not exist in the past typically point out that price increases existed, but not inflation. There is a distinction between inflation and price increases: inflation refers to a general rise in price levels, or in other words, a decrease in the value of money, whereas a price increase pertains to the rise in the price of a specific commodity or item. We proved, through historical and narrational evidence, that this issue was indeed present in the past. However, one topic that requires further discussion is inflation itself, which we will address in greater detail during the subject analysis. There are differing views on inflation: some define it as the percentage change in the average price of goods, while others describe it as an increase in the rate of price growth for all goods. Various definitions of inflation have been proposed, which we will outline. In summary, inflation is distinctly different from price increases. Narrations also serve as evidence supporting the existence of inflation in the history of economic transactions, confirmed with examples from both Islamic history and Western history.

Subject Analysis

The next matter we addressed, under the title of subject analysis, continued until the end of the year. One of the most significant challenges is the lack of precise understanding of the topic and its evolution and transformations, particularly in this specific case.

1. Money The first topic we examined from various perspectives was money. There are one or two other topics we will address this year, God willing, before delving into the main discussion. Regarding money, we have covered several points thus far.

Aspect One: The Ten Stages of Money

In the first aspect, we discussed the evolution of money and the stages it has undergone from its inception to the present. We outlined ten stages, describing what money was initially, how it evolved over time, and what it has become today.

Aspect Two: Definition of Money

The second aspect concerning money was its definition—what money fundamentally means and how it is defined. We noted that definitions of money can be categorized into four groups: some define money from a legal perspective, stating that money is what the law recognizes as such. Others define money based on its inherent functions and roles. Some identify money by citing its examples. Finally, others define money based on its role as a medium of exchange and its general acceptability. The preferred and accepted definition, in our view, is that money is something that possesses exchange value and is generally desired, aligning with the fourth category mentioned. Other definitions were also examined, and their shortcomings were discussed.

Aspect Three: Classifications of Money

The third aspect of money pertains to its classifications. We stated that money can be classified in various ways based on different criteria: One classification is based on the evolutionary progression of money. We noted that money, based on its historical development, can be divided into types such as commodity money, metallic money, paper money, electronic money, and other forms. The second classification is based on whether money has intrinsic value. Money, in this regard, is divided into real money and fiat money. Real money has both intrinsic value and exchange value, though its intrinsic value is separated from its exchange value, with only the latter being considered, as seen in dirhams and dinars made of gold and silver. Gold and silver have intrinsic value, but in dirhams and dinars, their exchange value supersedes their intrinsic value. Fiat money, on the other hand, has only exchange value and no intrinsic value; some describe its intrinsic value as being embedded in its exchange value. The value of fiat money depends on its credibility, and if that credibility is lost, it has no value or utility. The third classification is based on the issuer of money. We noted that sometimes money is issued by a central government, while at other times it is issued by non-governmental financial or banking institutions, which circulate it. These two types also have various subtypes. We also discussed the classifications of money in the Islamic era, particularly those related to its evolutionary progression. We briefly applied these classifications to the Islamic period, from its beginning to the present, covering metallic money and its phases in the Islamic era, real money in the Islamic period, fiat money in the Islamic period, and cash and debt money in the Islamic period.

Aspect Four: Analysis of the Nature of Money

The fourth aspect, distinct from the first (definition), pertains to the nature of money. We analyzed the nature of money and the various opinions on this matter. Defining a thing often involves describing its name or concept, even if the definition is essential, specifying its genus and differentia. However, analyzing the nature of something involves delving deeper into its essence, functions, and impacts beyond what a definition provides. Thus, the fourth aspect of the subject analysis of money concerns the analysis of its nature. We noted that there are three major theories regarding the nature of money: one holds that the essence of money is purchasing power, referred to as the purchasing power theory. Another posits that the essence of money lies in the numbers or figures inscribed on it, known as the nominal value theory. The third theory, supported by some scholars, is that money is a document or voucher for goods, representing a specific quantity of goods with a defined value, often termed a warehouse voucher or goods document. These three theories have proponents among Islamic scholars and Shia jurists. For instance, Martyr Sadr supports the purchasing power theory, many jurists adhere to the nominal value theory, and scholars like the late Martyr Beheshti and Martyr Motahhari believe that the essence of money is a goods document or warehouse voucher. These three main theories are based on certain views of economists and economic scholars, and their acceptance by jurists depends on the prevailing theory in each period. The differences between these theories and their implications are highly significant. The purchasing power theory, the nominal value theory, and their respective effects were discussed, and we highlighted some of the implications of each theory.

In continuation of this discussion, which is an extension of or related to the nature of money, we addressed whether money is considered property (māl). Whether money is property, a document of property, or essentially a commodity is a separate discussion. In this context, we explained the meaning of property in both linguistic and technical terms and reviewed the opinions of several jurists regarding property and its characteristics. Following Imam Khomeini, we concluded that property has two characteristics: it is desired by rational people, and they are willing to pay something in exchange for it. These two characteristics are clearly present in money. Thus, money is undoubtedly considered property, not a document. We also examined other characteristics proposed by some scholars. Some have reconciled the notions of money being a document and being property, arguing that money is both a document and property. We analyzed this view and found it subject to several objections.

Beyond the fact that the characteristics of property apply to money, the proprietary nature of money can also be proven through another approach: by considering its primary and inherent functions. We stated that money has three essential functions: it serves as a measure of value, a store of value, and a medium of exchange. These functions cannot be conceived without money being property. Thus, this is another way to establish that money is property. Consequently, we concluded that money is certainly property, and all arguments suggesting it is a document were scrutinized and found wanting, leading to the conclusion that money is indeed property.

Question: Professor: These are the implications and consequences of these theories, which we will examine later. If someone adopts the first theory, for instance, and believes that the essence of money is purchasing power—or with some additional nuance, as even among those who view money as purchasing power, there are differences—then, in matters such as settling debts, dowry, loans, khums, and all areas where this issue has an impact (as we mentioned early last year), the current market price should naturally be the criterion. However, those who adhere to the nominal value theory generally do not subscribe to this view. Some, in their writings and articles, have attempted to reconcile the nominal value theory with the necessity of paying debts and similar obligations at current market prices. This is one approach some have taken, adhering to the nominal value theory while also arguing that, based on this analysis, the current price should be the criterion. Similarly, those who view money as a goods document or warehouse voucher argue that if money represents the goods themselves, it affects payment; if it represents the nominal value of the goods, then what was received in the past should be repaid as is.

This roughly summarizes the 30 sessions of last year’s discussions. We began with preliminary discussions, then proceeded to the subject analysis of money. Since money has various dimensions and aspects, we addressed these aspects. Thus far, four aspects of money have been examined, and a few other important aspects remain, which, God willing, I will address in the next session before we move on to the main discussion. There is still some subject analysis left, after which we will begin the main topic.