The Abolition of Barter and the Creation of Currency

We are the beneficiaries of millenia of technological and social advances. Any invention such as the creation of money has a tremendous impact on human living.

The way I see it, at some point, a small kingdom somewhere issued the first decree requiring that all transactions use the king’s currency from the royal gold mines. People normally purchased goods with other goods, and now resources had to be first converted to gold or other exclusive currency. Barter is abandoned for money.

The obvious result of this is that $1 million becomes more attractive than 1 million cattle. But more subtly, universal currency commodifies human labor in a way not possible with trading goods. For an extreme example, the same $1 million could be used to hire an assassin, where perishable goods would be unlikely to persuade someone to kill. (Murder for jealousy, love, etc. would continue.)

This decree could only be enforced in the cities initially, not rural areas. Until the 20th Century, most of the human population lived without cash. Because most people raised their own chickens in the United States the 1950s, chicken companies originally sold chicken feed. By the 1970s, they sold chicken meat. By the 1990s, they sold pre-cooked, microwaveable cutlets. Two generations ago in rural India, my father’s family produced everything they needed at the family farm (chickens, wheat, bread), needing cash only for cooking oil. If New Delhi went bankrupt, and the rupee collapsed, almost nobody in rural India would be affected. Parts of Oregon or Nebraska are the same way today.

Universal currency also gets you iPods. One cannot give any quantity of goat’s milk for an iPod. Cash is the only thing that works. It wasn’t always this way. To gain luxury, we gave up the simple exchange of goods.

A book I’m reading discusses the four uses of these luxury goods, or  “prestige objects”. I thought it was a fine discussion of the essential capitalism. This is a manual for capitalism. Luxury goods exist to:

1) symbolize and display economic power;

2) convert perishable goods into more durable material forms;

3) to create inherently attractive and desirable objects that other people will want to acquire as both symbols of success and pleasurable objects; [if you can do this, you’re guaranteed rich]

4) to use in social or political transactions such as marriage payments or compensation or death payments

The Function of Prestige Goods according to Brian Hayden

(“Shamans, Sorcerers, and Saints: A Prehistory of Religion”, by Brian Hayden, p. 224)

Do any of these things, and you are on top of capitalist society.

Hayden discusses how this “prestige society” came to be, and endorses the anthropological thesis that feasts were used by agricultural societies to express wealth and buy rapport with the community. While he’s discussing natural resources (food) and not money, humans first began to accumulate and preserve their acquisitions in the Neolithic age. This habit of generosity trickled down to the lower-classes (as meat and fish became more plentiful with the domestication of animals and specialization of labor), and even the non-ruling class had a regular supply of food.

Money is an artificial commodity, more recent and fragile than we think.

By AFarooqui

I write about the dichotomies present in religion, gathered mostly from discussions with average Jews, Christians, Muslims and atheists.

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