Re: [OPE] Chartalist theory of money

From: Paul Bullock <>
Date: Wed Jun 10 2009 - 06:07:37 EDT

Dave Z,

I guess you must have read the chapter on money and its continuation in the Grundrisse. The subject has so much been written about .. there were even competitions in the nineteenth century for essays on the subject. Thus 'The Standard of Value' 'Prize Essay, Institute of Bankers in Scotland, Session 1886-7 by Edwin G Galletly, British Linen Bank, Edinburgh. ( Reprinted in 'The Banking World' a book published at the time, as usual no date..). Naturally Shell currencies are well treated. All these monies developed in intercommunal trade, but with a prexisting sense of cultural similarity. The thing is that all these 'primitive' monies existed centuries after the Roman Moneta.... the logical development of modern money has a parallel with historical development, but no absolute coexistence, as Marx often pointed out. What would be more interesting would be to study the periodic reemergence of local currencies eg chiemgauer,urstromtaler, landmark, kirschblute etc... that are contemporary. How is the modern ongoimng crisis of capitalism being responded to spontaneously in local communities?

Paul B.
  ----- Original Message -----
  From: Dave Zachariah
  To: Outline on Political Economy mailing list
  Sent: Wednesday, June 10, 2009 9:19 AM
  Subject: Re: [OPE] Chartalist theory of money


  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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