What is a lack of common standard of value?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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I assume that you are talking about this with regard to money and its functions.

One of the functions of money is to provide a common standard of value.  Money allows us to measure the value of any good or service in a unit that is essentially unchanging in the short term.  This makes it easier for commerce to occur.

If we had no money, we would have no common standard of value.  In a barter economy, we have to decide the "price" of each thing relative to each other thing.  We have to decide, for example, how many bananas a pig is worth and how many pounds of rice it is worth and how many chickens it is worth.  This makes trade much more difficult than it is when we can simply state the worth of all these items in a currency.

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