Very interesting article on the evolution of money from David Graeber, an anthropologist. Apparently economists since Adam Smith have been telling a story that before money there was “barter”. You’d have a cow and somebody else had arrowheads and, having failed to invent money, you’d work out a direct trade.
Problem is, anthropologists have been looking for such a system for two hundred years and there just isn’t one. Individual barters exist, of course, but no barter systems (with the exception of protocols that have emerged in societies where money was already invented but is temporarily unavailable, such as prison).
Instead there’s a plethora of exchange systems, all tied inextricably to the rest of society. Often the basis is generalized reciprocity. You want those arrowheads, you praise them, and the other guy gives them to you. He loudly declaims any desire for recompense, but of course you both know that you owe him one. At a later point you have a cow and he needs one and you give it to him. It all works out because you are part of a tiny community, know each other, and any injustices will cause trouble.
Also see this post, where he describes some protocols for trade between different primitive communities, where a trade involves the whole communities, threats of war, and wife-swapping. Homo oeconomus, the purely rational trade envisioned by Smith, need not apply.
Where did money come from? In the Middle East, at least, Graeber suggests two major sources for the idea of a unit of value:
- The accounting systems of large non-state enterprises– namely, temple complexes. These were complex institutions which had land, farmers, workshops… they started reckoning things in silver and grain just to keep track of things. Note that money existed as a means of valuation long before it existed as a unit of exchange.
- Legal systems. In particular, there was a desire to establish set valuations for things that were damaged: physical goods, lives, body parts, even one’s honor. He notes that medieval Welsh law codes included precise valuations for all the things found in a home, from cooking utensils to floorboards, at a time when no markets existed where these things could be bought. You wanted these valuations not to buy the things, but to get recompense if someone destroyed them.
Anyway, much food for thought for conworlders, especially if you have a stage of development before the invention of markets.