We can not validly study economy without relying upon both a landmark and an exchange reference measure, in the same way that in all science, the considered landmark and measure units should be defined before any study.
As a reference and time units as well as length units are necessary to the establishment of the laws of physics, no advanced study can be conducted without previously defining the economic reference frame and the associated measure unit.
An economic zone or a monetary zone is the base frame of the economic study. What characterizes it?
The space where the monetary agreement is manifest
Time, that is to say, the average life span of individuals who live and die in it.
Individual or collective (entrepreneurial) production of goods and services
The exchange of goods and services between individuals or groups of individuals.
Individuals or groups of individuals are inevitably brought to exchange, even if it is only information, education, or even more generally bonds. What therefore fundamentally characterizes the economic zone is all the individuals who compose it. The economy exists everywhere and at all times as soon as individuals produce and exchange goods and services, and that regardless of the nature of these goods and services. On the other hand, we cannot define an economic zone empty of individuals. Therefore it is indeed the individual who constitutes the only common and fundamental value of any valid economic frame.
But to go further, this set of individuals evolves in time with births and deaths, immigration and emigration. Therefore the economic zone can be seen as a discretized space-time in constant creation/destruction where each temporary point represents an individual with a limited life span.
Thus it is a spatiotemporal model in continuous, non-static, discreet transformation, where each space-time point is created at a determined date (birth of an individual) and has a limited duration which, on average, matches the life span which we will denote “ls” in the considered economic zone.
Furthermore and this is the fundamental definition of Relativity in economics, any individual has a personal and unique vision of the value of all things and no individual or groups of individuals from an economic zone is able to impose onto others a particular vision of what is value or what is not.
An economic zone is said to be pseudo-isolated when, for a given time duration, we can consider that it lives independently or quasi-independently from its exterior. It could be the case of economies on islands that are still autonomous, where the livelihoods of individuals is ensured by a sufficient food production (which is also quite relative, see for example the case study of some ascetics), but also the case of a topologically complex group of individuals in a non-connected, transnational, even transcontinental space. As long as it shows autonomy, we can consider it as a pseudo-isolated economic zone, able to self-manage its flow of production and exchanges, at least on a small period of time.
When there is exchange of goods and/or services, we talk about value exchange. X exchanges with Y a value Vx = Vy = Px × Cx = Py × Cy, where “Px” represents the price in the common measure unit (called the common currency) of X’s production “Cx”.
This definition of value is perfectly relative to the observer who measures it, so if X considers that Vx = Vy, it is possible that Y considers Vy >> Vx, and be perfectly fine. Furthermore, Z who observed this exchange may very well judge according to his own referential that neither Vx nor Vy have any value at all.
Let’s remember here how much men have fundamentally not agreed throughout their history on respective values of their goods. Therefore equality of exchange values is not an economic criterion that is independent of the observer, which is also seen through actions of donations or taxation without anything in return, and which are therefore non-symmetrical, where equality of exchange values is not respected according to the point of view.
The need to measure value universally pushes individuals to agree on a common measure of exchange, which they call money. A defined money give thus a common measure of value to all things in the same unit, for a given observation landmark, which allows easier comparisons.
Money thus acts not only as an exchange tool between individuals of the economic zone, but it also becomes the only value that is independent from the observation landmark.
This being said, many different definitions of money exist historically and locally, which are based on radically different types of exchanges, and which are often not known by those who accept to use it.
Those cases of ignorance of the nature of the money that is used most of the time under pressure, are a violation of the basic contractual law in economy, which supposes the acceptance of involved parties of the proposed exchange type.
We can without hesitation declare that imposing the use of a non contractual money (not subject to a voluntary acceptance) is an act opposite to the Human Rights to manage one’s life on an economic part as well as a violation of the constitutional principles of liberty and equality.
And thus at a minimum in a real democracy, the official money can really be acceptable only if it is subject to a democratic elaboration of its definition, as in its validation, its acceptation, its modification and it abandonment.