“Numismatists believe that the earliest coins were produced at Lydia (now Western Turkey) in the mid-seventh century BC. The coins were made of electrum, a naturally occurring alloy of gold and silver. They had a design on one side and were of uniform weight but had a highly variable proportion of gold. In an influential article Cook (1958) argued that these coins were introduced to pay mercenaries, a thesis modified by Kraay (1964) who suggested that governments minted coins to pay mercenaries only in order to create a medium for the payment of taxes …”One can also read the interesting review article by Peacock (2006), who concludes:
Redish (1992), quoted in C. A. E. Goodhart, “Two Concepts of Money: Implications for the Analysis of Optimal Currency Areas,” in S. A. Bell and E. J. Nell (eds), The State, the Market, and the Euro: Chartalism versus Metallism in the Theory of Money, Edward Elgar, Cheltenham. p. 7.
“the state’s role in the development of coinage is undisputed … Coinage was not an endogenous development of the economic sphere, as Menger held, nor was it created merely in order to facilitate trade which had existed thousands of years before money and was in no need of facilitation” (Peacock 2006: 642).The reason that coinage became a widely-accepted medium of exchange and unit of account was that the state demanded its issued coin back for payment of taxes and other payments to the state, such as harbour dues and fines. This process is what monetized the economy and encouraged the use of coinage as a medium of exchange.
BIBLIOGRAPHY
Cook, R.M. 1958. “Speculation on the Origins of Coinage,” Historia 7: 257–262.
Goodhart, C. A. E. 2003. “Two Concepts of Money: Implications for the Analysis of Optimal Currency Areas,” in S. A. Bell and E. J. Nell (eds), The State, the Market, and the Euro: Chartalism versus Metallism in the Theory of Money, Edward Elgar, Cheltenham. 1–25.
Kraay, C. M. 1964. “Hoards, Small Change and the Origin of Coinage,” Journal of Hellenic Studies 84: 76–91.
Peacock, M. S. 2006. “The Origins of Money in Ancient Greece: The Political Economy of Coinage and Exchange,” Cambridge Journal of Economics 30: 637–650.
Redish, A. 1992. “Coinage, development of,” in P. Newman, M. Milgate and J. Eatwell (eds), The New Palgrave Dictionary of Money and Finance, vol. 1, Macmillan, Basingstoke. 376–378.
FURTHER BIBLIOGRAPHY
For anyone interested in this subject, here is a longer list of the specialist literature.
Bresson, A. 2005. “Coinage and money supply in the Hellenistic Age,” in Z. H. Archibald, J. K. Davies and V. Gabrielsen (eds), Making, Moving and Managing. The New World of Ancient Economies, 323– 31 BC, Oxbow Books, Oxford. 44–72.
Cook, R.M. 1958. “Speculation on the Origins of Coinage,” Historia 7: 257–262.
Figueira, T. J. 2006. Review of Seaford 2004. Classical World 99.4: 467–468.
Goodhart, C. A. E. 2003. “Two Concepts of Money: Implications for the Analysis of Optimal Currency Areas,” in S. A. Bell and E. J. Nell (eds), The State, the Market, and the Euro: Chartalism versus Metallism in the Theory of Money, Edward Elgar, Cheltenham. 1–25.
Henry, J. 2004. “The Social Origins of Money,” in L. R. Wray (ed.), Credit and State Theories of Money, Edward Elgar, Cheltenham. 79–98.
Hudson, M. 2003. “The Creditary/Monetarist Debate in Historical Perspective,” in S. A. Bell and E. J. Nell (eds), The State, the Market, and the Euro: Chartalism versus Metallism in the Theory of Money, Edward Elgar, Cheltenham. 39–76.
Hudson, A. M. 2004. “The Archaeology of Money,” in L. R. Wray (ed.), Credit and State Theories of Money, Edward Elgar, Cheltenham. 99–127
Ingham, G. 2000. “‘Babylonian Madness’: on the Historical and Sociological Origins of Money,” in J. Smithin (ed.), What is Money?, Routledge, London and New York. 16–41.
Kraay, C. M. 1964. “Hoards, Small Change and the Origin of Coinage,” Journal of Hellenic Studies 84: 76–91.
Oliver, G. 2006. “Coinage,” in N. G. Wilson (ed.), Encyclopedia of Ancient Greece, Routledge, New York and London. 174–176.
Peacock, M. S. 2006. “The Origins of Money in Ancient Greece: The Political Economy of Coinage and Exchange,” Cambridge Journal of Economics 30: 637–650.
Seaford, R. 2004. Money and the Early Greek Mind: Homer, Philosophy, Tragedy, Cambridge University Press, Cambridge.
Schaps, D. M. 2007. Review of Seaford 2004. Classical Review n.s. 57: 10–12.
Schaps, D. M. 2003. Review of Georges Le Rider, La naissance de la monnaie: Pratiques monétaires de l’Orient ancient (Presses Universitaires de France, Paris, 2001), Bryn Mawr Classical Review 2003.12.13, http://bmcr.brynmawr.edu/2003/2003-12-13.html
Schaps, D. M. 2004. The Invention of Coinage and the Monetization of Ancient Greece, University of Michigan Press, Ann Arbor.
von Reden, S. 2002. “Money in the ancient economy: A survey of recent research,” Klio 84.1: 141–174.
Wray, L. R. 1998. Understanding Modern Money: The Key to Full Employment and Price Stability, Edward Elgar, Cheltenham, 1998.
Wray, L. R. 2003. “Money,” in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics, Edward Elgar, Cheltenham, UK and Northhampton, MA, USA. 261–265.
Forgive me but it seems to me you behave like a "true believer", using all that you can find just to "prove" already packed theories instead of creating a personal opinion. You spend more to attempt to confute than to expose.
ReplyDelete1. Human civilization didn't start in Ancient Greece - so the analysis is very narrowed and the history of the origin of money is a "little bit" more complex.
2. You just can't see a simple empyrical problem: if you find a minted coin you can say "oh that's what I was looking for", if you find scrap of golds or a piece of amber more easely you would say "what's that?".
3. From your statements, it seems that old city-states were something like small prototypes of the actual Denmark and "money" has been the result of a collective and democratic organization. On the contrary, there were slavery, castes and cities were run by very small political - military elites. From this point of view, tributes and the "first tax" to force people to use minted coins was no more no less than an act of seignorage.
4. "States" were often single or group of tyrants. No doubt that political power tried as soon as possible to gain from the redistributive effects of money. The monopoly of coercion goes step by step with the monopoly of money production, at least over the territory where the coercion could be enacted. Anyhow the role of "government" and the role of priests (that you did't mentioned) was without doubt significant in the ancient Greece, Rome, Egypt and so on.
5. The role of money as a medium of exchange (in the "megerian" sense of the term) prevailed in context of high anonymity: to pay mercenaries, to trade with foreigners, etc. In absence of an external or dominant force, the indirect exchange rely upon a medium that could be considered "neutral" from the parts i.e. that can't be manipulated at will and could be employed again in similar catallatict exchanges with other anonymous partner ("neutral" should not be intended in the neoclassical sense of the term).
6. Instead, the role of power was evident inside comunities with a low degree of anonymity with a more or less stable government. In such contexts money had also an important redistributive function: rulers could exploit to profit or to solve social conflicts between internal groups.
"Chartalist" explaination coud work in almost closed context: a city state, a group of city states well connected, etc. But fail to explain foreign trade and "anonymous" exchange like the silk road, the amber road, long maritime routes, etc.
Well, that may prove the origin of money by means of the state. Does it also prove that money can't (or didn't) ever emerge spontaneously from the barter economy?
ReplyDeleteIf the answer is yes, capitalism and the monetary economy are the product of state intervention, and would not have appeared in the absence of this intervention.
The book by Leslie Kurke might also be of interest--"Coins, Bodies, Games, and Gold." Randy Wray provides a review here (scroll down to "Money and Monetary Policy" section: http://cas.umkc.edu/economics/people/facultyPages/wray/papers/Research.aspx
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