Conflict reigns over the history and origins of money

By | July 29, 2018

Bruce Bower writes:

Wherever you go, money talks. And it has for a long time.

Sadly, though, money has been mum about its origins. For such a central element of our lives, money’s ancient roots and the reasons for its invention are unclear.

As cryptocurrencies such as Bitcoin multiply into a flock of digital apparitions, researchers are still battling over how and where money came to be. And some draw fascinating parallels between the latest, buzzworthy cryptocurrencies, which require only a virtual wallet, and a type of money developed by one Micronesian island community that wouldn’t fit in anyone’s wallet, pocket or purse.

When it comes to money’s origins, though, conflict reigns. Economists have held one view of money’s origins for hundreds of years. But a growing number of anthropologists and archaeologists, holding a revisionist view, say that economists’
standard story is bankrupt.

Economists and revisionists alike agree that an object defined as money works in four ways: First, it serves as a means for exchanging goods and services. Currency enables payment of debts. It represents a general measure of value, making it possible to calculate prices of all sorts of items. And, finally, money can be stored as a wealth reserve.

From there, the two groups split. Mainstream economists assume that bartering of goods and services inspired money’s invention. Anthropologists and archaeologists contend that early states invented currency as a means of debt payment.

“Much academic work assumes that [monetary systems] arose in nation-states within the last 200 to 400 years,” says sociocultural anthropologist Daniel Souleles of Copenhagen Business School in Frederiksberg. But financialized transactions and debt show up in lots of places much further back in time.

Recent research from the Americas adds new questions to the debate. These investigations suggest that money independently appeared for different reasons and assumed different tangible forms in many parts of the world, starting thousands of years ago. [Continue reading…]

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