The invaluable Cory Doctorow looks at the origin and meaning of money.
I've written about this earlier, but (unsurprisingly) Doctorow's account is both clearer and more engaging.
The short version is that what we were all taught in elementary school, that money began when people found that barter was too inconvenient, is a lie.
There is no archeological or historical evidence of this ever happening.
Chartalism, on the other hand, posits that money was created by the central government to support its infrastructure, particularly a professional military.
In this system, the government demands taxes from the farmers using an token of value (money) using the threat of violence, who have to get this token from the soldiers who are paid.
In a remarkably shot period of time, money permeates the society.
We do have evidence, both archeological and historical, of this happening, as recently as the last century, where the British enforced a "Hut Tax", where people under British colonial rule were forced into a money economy by being required to pay a tax to prevent their homes from being burnt down.
They would have to work for the British to get the money that they would pay to the British to keep their homes intact.
When you look at money this way, that money is an artifact of the needs of a government and ability of said government to use violence to pursue its interests, you end up with a very different view of money, one from which we get Modern Monetary Theory. (MMT)
The big change is that governments, at least those with their own currencies, are not currency users, they are currency issuers, and they create demand for this currency by using the power of the state.
It better represents the history, and better describes and predicts current and future events, than does the conventional monetary theory of Milton Friedman or Alan Greenspan.
MMT is associated with the left, because it tends to be more friendly to some level of deficit spending, but it is not necessarily so.
In any case, read Mr. Doctorow. It is a clear and refreshingly brief explanation of all of this.
3 comments :
The comments here are a lie.
There is archaeological evidence of creating standard weight exchanges for precious metals prior to the introduction of coins by Lydia. That introduction had to do more with foreign trade, and standardizing weights and measures.
Considering that there were scads of large empires all the way back to the bronze ages, the argument that coinage was done just to finance armies is nonsense.Following that reason Thutmose III, the Assyrians, would have had coinage.
In addition, most taxation was in kind in the ancient world. Particularly that of peasants. And that was done by standardize weight -- we have documentary evidence of this sort of standardization going back to Summer.
Even in the Roman Empire -- the most heavily monetized economy in the Ancient Western world -- most taxes were in kind.
Barter remained accepted.
The argument is not that money completely replaced barter, it hasn't even today, but that it was the application of state violence, and not the inconveniences of barter that created money.
And before money that state violence wasn't there? That will surprise Ashur baniPol.
And if by money we don't mean just coinage but standardize exchange vetted by external authority, we have evidence of that prior to the Bronze Age collapse.
And we've lots of archaeology on the subject.
Another thing you miss is the prevalence of private issued money, too.
What really made it useful was not local barter, but long term exchange networks.
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