Money as a Claim on Scarcity

Most people think of money as numbers in an account or bills in a wallet. That perspective falls short. Money is not a thing — it is a claim. More precisely, a claim on scarcity. Whoever holds money holds an abstract promissory note that society recognizes as an entitlement to draw upon scarce resources.

The idea is not new. It traces back to Carl Menger, who formulated the subjective theory of value, and to Ludwig von Mises, who understood money as a spontaneously evolved order. Yet it remains underexplored — particularly in an era when money supplies expand rapidly and the relationship between money and real value grows increasingly blurred.

Scarcity as the Foundation of Value

An object is valuable because it is scarce and someone wants it. The insight is both trivial and profound. Air is essential to life but, in most contexts, not scarce — so it carries no price. A rare painting is not essential to life but extremely scarce — so it commands a high one.

Money encodes these scarcity relationships. It is a coordination mechanism that allows billions of people to signal simultaneously what they want and what they are willing to give up. Every transaction is, at its core, an alignment of competing claims on scarce resources.

For my work on financial data systems, this insight is central. Valuing a company — as we do at AlleAktien — ultimately answers one question: how large a claim on future scarcity does this business represent?

Money Is Not a Store of Value — It Is a Promise

The popular notion of money as a "store of value" is misleading. A true store of value would maintain its purchasing power over time, and no fiat money system in history has achieved this permanently. Inflation erodes purchasing power, and what one euro can buy changes continuously.

Money is better understood as a promise with a variable redemption rate. Its purchasing power depends on how much money circulates in the system, how productive the economy is, and how much trust the institutions issuing the money command.

This understanding has concrete consequences for investors. Leaving money in a bank account does not store value — it quietly accepts that one's claim on scarcity will shrink. Investing is the attempt to preserve or enlarge that claim by converting it into productive assets.

The Three Layers of Money

Money operates on at least three layers simultaneously:

• Medium of exchange: It enables the trade of goods and services without requiring direct barter.
• Unit of account: It makes disparate goods comparable. Without a common unit of account, a complex economy would be impossible.
• Instrument of temporal coordination: It allows consumption to be deferred — and therefore allows investment. This third layer is the one most frequently overlooked.

When someone works today and does not spend the proceeds immediately, they shift their claim on scarcity into the future. This is the mechanism that makes capital formation possible in the first place. Without this temporal dimension, no economy could grow beyond its daily subsistence needs.

Why Inflation Is a Moral Problem

If money is a claim on scarcity, then uncontrolled expansion of the money supply dilutes that claim. The dilution falls hardest on those who hold their wealth in nominal terms: savers, retirees, and people on fixed incomes.

The beneficiaries are typically those with first access to the new money — an observation known as the Cantillon effect. Richard Cantillon described in the 18th century how the distributional impact of new money depends on where it first enters the economy.

This does not mean every form of inflation is objectionable. Moderate, predictable inflation can serve as an economic lubricant. The crucial distinction is between predictable and unexpected. Unexpected inflation is a form of expropriation, because it violates existing contracts and expectations.

Money and the Question of Justice

The philosophy of money inevitably touches questions of justice. If money is a claim on scarcity, then the question of who holds how much of it is a question about the distribution of scarce resources. This explains why debates about wealth inequality are conducted with such intensity — they concern not abstract numbers but real claims on real goods.

My own position is pragmatic: wealth created through genuine value creation — through products people voluntarily buy, through systems that democratize information — is legitimate. The work on Eulerpool rests on precisely this conviction: financial data should be accessible to everyone, not only to institutional investors.

Money in the Digital Future

Digitalization changes the form of money, not its essence. Whether euro, dollar, or a central bank digital currency, the fundamental dynamic remains: money is a claim on scarcity whose value depends on trust and productivity.

What changes is speed and transparency. Digital systems make it possible to track money flows in real time, reduce transaction costs, and broaden access to financial services. They do not, however, alter the fundamental equation: the quantity of claims must bear a meaningful relationship to the quantity of real goods.

For investors, the central task remains unchanged: convert claims on scarcity into assets that create real value over time — companies that make products people need, systems that increase efficiency, technologies that solve genuine problems.

FAQ

What does "money as a claim on scarcity" mean in concrete terms? It means that money has no intrinsic value but derives its worth from the ability to be exchanged for scarce goods and services. Money is a socially recognized claim on limited resources. The more money in the system, the smaller this claim per unit — which we experience as inflation.

Why is this perspective relevant for investors? Because it clarifies that money in a bank account is not "safe" but loses purchasing power every year. Investing is the attempt to preserve one's claim on scarcity by converting money into productive assets — businesses that produce real goods and whose value increases over time.

How does the Cantillon Effect relate to this theory? The Cantillon Effect describes that new money creation does not affect all market participants equally. Those who first access the new money can still buy at old prices, while prices for everyone else have already risen. This demonstrates that the dilution of claims on scarcity is distributed unequally.