One unit depth
The Origin and Importance of Money
This paper is based on lectures and papers that we have had in the past few weeks. The main aim is to try to unpack the origin of money from an anthropological point of view. As much money has become an important commodity in our daily transactions, there is no clear theory that explains how it came about especially as far as human culture is concerned. Many of the theories about the origin and importance of money are proposed by economists who argue that money involved out of barter trade because human beings by nature want to keep track of transactions as well exchange goods and services.
In the two readings by Pryror (1977) and Graeber 2011), the two authors try to evaluate the origin of money and its importance in a society. The two authors argue that in order to understand how human beings stated using money, a social and historical perspective should be adopted even though this argument may be changed on the ground that it’s impossible to accurately trace historical events up to several thousands of years back. All the same, they still carry out an informed historical analysis so as to reveal the origin and role of money in the society. In both cases the authors, also try to challenge that idea that the origin of money is directly linked to the origin of coins. They go ahead to propose that money originated in two ways. First of all, out of the traditional compensation systems that instituted fines for wrong doings or as a way of settling debts.
The debts and fines were paid according to the complex structural disbursement systems that were in place at that time. The government system of the day went ahead to include other fines, levies and taxes that the citizenry were mandated to pay depending on the situation. As Graeber (2011) notes in many primitive economies money was used for a variety of reasons. For instance, to arrange for marriages, establish the paternity of children, head off feuds, console mourners at funerals, seek forgiveness in the case of crimes, negotiate treaties as well as acquire flowers. According to him, in those days, money wasn’t really used to transact the business of buying and selling but rather to help define the structure of social relations.
The other potential origin of money that is advanced by the two authors is that the history of money is also inked to the ancient Mesopotamian paces and temples which managed to institute some well-established internal structures for the purposes of internal accounting. Since the temples and paces were pubic institutions, they then set an example of accountability they had an established genera unit of account as well as a store of value which initially was for internal accounting purposes only. On this basis, the two authors argue that money evolved out of such pubic institutions as a standardised weight, far from the practice of payment of fines or debts.
Graeber provides the example of Egypt where he argues that money evolved out the need for the elite farmers to maintain accounts for agricultural crops and resultant surpluses, and again money served as a means of payment as well as medium of exchange. The two authors serve to define money as a social debt relationship in their analysis. They also aimed at establishing the role of public institutions in the origin of money. Last but not least, their arguments indicate that in many cases money was a pre-market phenomena, representing an initial abstract unit of account and means of payment, and much later as a generalised medium of exchange.
According to Graeber, money has always existed. He challenges the idea that money came after barter trade became cumbersome. To illustrate this, he gives an example; “When much of Europe «reverted to barter» after the collapse of the Roman Empire, and then again after the Carolingian Empire likewise fell apart, this seems to be what happened. People continued keeping accounts in the old imperial currency, even if they were no longer using coins. Similarly, the Pukhtun men who like to swap bicycles for donkeys are hardly unfamiliar with the use of money. Money has existed in that part of the world for thousands of years. They just prefer direct exchange between equals-in this case, because they consider it manlier”
In his lectures professor Schmid tries to challenge the common view of economists who argue that may have originated out of the frustrations that arose out of exchanging goods and services. The economists argue that the historical trajectory of the origin of money started with barter trade then the invention of money in form of coins or other special tokens , an finally the development of debt and credit. In his lecture Schimid tries to broaden the argument around the reasons that led to the evolution of money. His first argument is that money originated out of the inefficiency of barter trade he notes that, barter trade was facing lots of challenges such as the uncertainty of getting a match of the goods one wanted in exchange of his.
Moreover, measuring the value of commodities was as a challenge. He goes ahead to argue that money also originated out of the need to pay debts, give gifts and pay tribute. There was the need for authorities to tax people so as to maintain law and order in the society. Both the readings and the guest lectures pit out to the fact that money originated out of the need to pay debts and the failure of barter trade The arguments provided in the readings as we as the lectures point to the fact that the historical and social perspective is key in explaining the origin of money. In both cases the authors are moving the conversation away from the economist’s idea that the origin of money is directly linked to the origin of coins. They provide inheriting examples to illustrate that money was not always in form of coins, and the money has always been in existence even before barter trade came into existence.
If there was a third week to this unit, I would recommend Keith Harth who is a professor of Economic Anthropology at the London School of Economics. He has taught in many universities in the world including the Cambridge University where he was the Director of African Studies Centre. I believe he will even help take the debate on the origins of money further by delving into the future of money. He has as written some articles that try to explain the relationship between the origin of money and banking I believe it would interest us to understand how banks have influenced the evolution of money and what this means for the future. It will be as important to understand the relationship between the spread of markets and the spread of money. Basically professor Kath will be instrumental in connecting the past and the present dynamics of money. There is need to understand how the social and economic dynamics are shaping the meaning and role of money in the world today.
David Graeber, «The Myth of Barter” in, Debt: The First 5,000 Years. Brooklyn: Melville House. 2011, pp. 21-41
Pryor, Frederic «The Origins of Money,” Journal of Money, Credit and Banking. Vol. 9, No.3. (Aug. 1977), pp.391-409