An Archaeologist Proposed A New Theory On The Origin Of Money
At some point, humans went from bartering goods to exchanging shiny coins and paper bills. The concept of money has evolved to keep up with human needs. But where did the story of money begin, and how did it get to run the world?
There are two theories for the origin of money: the commodity theory and the chartalist theory. The first proposes that money was created to facilitate internal trade between members of a community.
It’s based on the idea that trading one good for another that you desire is inefficient because the trading partner may not have the goods you want, or they might not want the goods you’re offering. However, money solves this issue.
In recent years, the commodity theory has come under scrutiny as studies have shown that pure barter systems were rare and most traditional societies used exchange networks.
The chartalist theory argues that money was established by the state to facilitate taxation, tribute collection, and the funding of wars. But this theory doesn’t really fit when looking at pre-state societies that did not tax or collect tributes.
A new study has proposed a third theory that may better explain the origin of money in pre-state societies. It is called the “Trade Money Theory,” developed by archaeologist Dr. Mikael Fauvelle.
It suggests that money was used to solve the problem of long-distance exchange networks that could not rely on familiar, trust-based relationships of delayed reciprocity instead of internal barter problems.
“I focused on shell beads in Western North America and Bronze Money in Europe as these are two well-documented case studies with considerable evidence for widespread trade and monetary economies predating the development of ancient states,” said Dr. Fauvelle.
Many Indigenous societies in Western North America used shell beads as money for thousands of years before European arrival.
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According to European explorers and colonists, the shell beads were used for both long-distance trade and everyday transactions. They were utilized long before any state society was established.
Evidence shows that trade networks were used by travelers crossing the entire expanse, not just middlemen. These trade networks stretched from the Pacific Coast to the Mississippi River, sometimes requiring thousands of miles of travel.
The routes spanned several regions with different cultures, languages, and politics, so traders would need to trade with items of shared value, like shell bead money.
In Bronze Age Europe, bronze and copper ingots likely served as objects of standardized value. Evidence of artifacts has revealed that traders and travelers moved across the whole of Europe.
During this time, bronze and copper could only be sourced from a few areas, including the Alps, the British Isles, and the Mediterranean, which meant trade with faraway regions was necessary.
Simple barter systems could not be relied upon to acquire such resources, so bronze ingots, rings, and axes were used as a form of money.
Eventually, these money systems made their way into internal economic systems, driving internal trade, tribute payments, and taxation.
“The use of money would have greatly increased the efficiency of long-distance exchange systems and would have likely led to increased levels of inter-regional interaction,” said Dr. Fauvelle.
“This, in turn, could have funneled more wealth into the hands of regional elites. This is indeed what we see in ancient California with the formation of chiefdoms on the region’s islands and coasts.”
The study was published in the Journal of Archaeological Method and Theory.
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