Re: [OPE] Chartalist theory of money

From: Dave Zachariah <>
Date: Wed Jun 10 2009 - 04:19:47 EDT


Could you give a reference to a recent book on "primitive money" so that I
could look up some of the evidence and arguments?

you wrote:

I do not argue that the state theory of money is completely wrong.

You have not argued perhaps, but you have certainly asserted it:

There is not a shred of historical evidence that it was the state which
originally invented money.

back in March.

So, the "commodity theory of money" has a certain validity in certain
historical epochs in which exchange was indeed facilitated by one or several
money commodities.

One immediate problem with the kauri shell-theory (or any other variation)
is who produced kauri shells, and how did these producers trade them? The
story presented on the webpage that you linked says:

"To find the origin of money is not easy. The change developed from barter,
“I give you three sheep and you give me a cow”, which was exceedingly
cumbersome. Gradually people realized that some things are more valuable
than others and at the same time currency is a more compact method. It
didn’t matter if they were stones, feather, shells and later on precious
metals …"

But this is a myth, going back at least to the times of Adam Smith, that is
demolished in Innes's paper. Petty producers within a society found ways to
record and settle debt as a means of facilitating commodity exchange. I
think there is a significant body of evidence that the establishment of a
universal equivalent was an act of state power.

But in fact if Marx is read carefully, I think it is clear that he never
claims that the money-commodity describes the essence of money, nor that the
forms that money can take, are fixed once and for all. His main claim is
only that the appearance of money is "the necessary consequence and outcome
of the development of the exchange process", once it has overcome important
obstacles and restrictions on trade - but this says nothing yet about the
role which states may, or may not play, in facilitating this process.

This is of course a separate albeit interesting question, in the domain of
the history of economic thought. However, I think Marx's presentation in
Vol. 1 does not really uncover the process but ultimately rests on the same
myth as above. Somewhere a universal equivalent has to be established he
argues but how this occurs and how the exchange process could proceed before
this was established is not historically accurate in my view.

//Dave Z

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Received on Wed Jun 10 04:23:37 2009

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