Fungibility
Categories: Economics | International relations
Fungibility is the degree to which all instances of a given commodity are considered interchangeable.
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Fungibility in economics and finance
An example of the use of fungibility in economics is gold, which is often said to be fungible. This means that one gram of gold is equivalent to any other gram of gold. There is no qualitative difference between one example of the commodity and another. Wool on the other hand is less fungible. One bale of wool is not necessarily qualitatively equivalent to another bale of wool. In discussions about the characteristics of money the term often refers to qualitative equivalence with regards to market value. So one gram of gold is worth as much as any other gram of gold while the value of wool bales varies due to differences in quality.
In finance, fungibility refers to the ability of one security to be easily converted into another related security. For instance, stocks are often listed on several stock exchanges, and a fungible stock would allow you to exchange the shares purchased on one exchange for shares on another. Not all securities are fungible in this way, but those that are somewhat more liquid and protected from volatility on one particular exchange.
Fungibility in international relations
In international relations, the term fungibility is usually applied to the power of states. International relations theorists who believe that power is fungible see different types of power as reinforcing each other. For example, if power is fungible, then a state can translate its economic power into military power, and vice versa. A major debate in international relations is the degree of fungibility between hard power and soft power.
Fungibility in science
In Does God Play Dice? The New Mathematics of Chaos, the mathematician Ian Stewart argues that fungibility applies to science as well. The example he uses is that subatomic particle theory is fungible when studying molecules "provided it led to the same general feature of a replicable molecule."
Another example is the concept of mass, either gravitational or inertial mass. Mass is fungible in all observationally consistent theories of gravitation. All compositions of matter fall identically in vacuum, including binding energies.
Medical debt
Regarding Medical Debt, fungibility refers to the conversion of medical debt into a different kind of debt, such as credit card debt, thus masking the debt's underlying cause. For instance, an individual might pay for his or her Emergency Room visit on a credit card, and therefore convert health care-generated debt into credit card debt. The fungibility of medical debt is oftentimes more insidious, however. In many cases, individuals are forced to pay steep health plan deductibles as well as out-of-pocket co-payments to receive care. These high medical costs drive many people to delay paying other bills, like mortgage or utility payments, which cause them to incur debt.de: Fungibilität