5 ms·
The more interesting way to analyze history, rather than trying to evaluate the degree of barter, is to seek out the most saleable good which was in use at a gi
by nk1tz 7y ago
The more interesting way to analyze history, rather than trying to evaluate the degree of barter, is to seek out the most saleable good which was in use at a given place and time. Humans must solve the problem of "coincidence of wants" (ie. You raise chickens and I'm a woodworker - do we always need each other's goods?). Naturally, they begin to use the most saleable good available to their community as "money" for trade. The most saleable good (the most marketable and easy to sell) is usually the good available to them which scores highest on the following five properties (imagine a radar chart): Divisibility, Durability, Portability, Fungibility, Scarcity.
This way of thinking can provide a satisfying explanation of the emergence of gold as a global store of value.
For more reading: https://mises.org/library/origin-money-and-its-value https://mises.org/library/origin-money-and-its-value
- rmah 7y agoExcept that historically and worldwide, silver, copper alloys and even grain were far more commonly used as money (medium of trade, unit of account, store of value) than gold.
- nk1tz 7y agoThey scored higher for those times and places / were actually available.
- neaden 7y ago"Naturally, they begin to use the most saleable good available to their community as "money" for trade." Why do you assume this is natural? As the article talks about, there is no evidence of this happening vs things like a favor or prestige economy. Mises is an economist, not a historian.
- nk1tz 7y agoBecause from a first principles line of reasoning it makes the most sense to my brain. There is plenty of historical reading over at mises.org by various authors.
- neaden 7y agoSo what? It doesn't matter what makes sense to us, it matters what actually happened. Plenty of history makes no sense to me, but I would never just deny that it didn't happen for that reason.
- claudiawerner 7y agoIt's symptomatic of the economic way of thinking, in terms of game theory and systems that have emerged more or less out of nowhere. Explanation beyond the surface level of transfers of money is relegated to the work of economic historians. The way mainstream economics focuses on "shadow forms" (as Patrick Murray put it) purposefully excludes the supersensible movements below the forms of appearance of money, capital, labour, interest, rent, etc.
- mcguire 7y agoAre you saying that economics is, or should be interested in physical reality? That might be hard to model mathematically.
- 2038AD 7y ago> Why do you assume this is natural? "The most saleable good" in our economy is money. The majority of explicit trades for goods and services involve money. Of course, that is now and we need to explain how this happened. If I have a good another wants then I may accept something I don't directly want as payment. Of goods I indirectly value, I should value more the goods that are most saleable as they provide the shortest path to goods I directly value. Throughout this my valuations are based on expectations of others' future valuations. We can think of the path from regular good to money like a feedback loop. It's the economic bubble that doesn't burst (except when it does and we all switch to silver or furs). Of course it's much harder for the value of the anomalously valued good to crash in a real economy because of things like taxation (this is almost chartalism).
- yxhuvud 7y agoOr, you can just accept a debt as the indirect thing. Which works because you live in a small society where everyone trusts each other. Barter of goods is just inefficient in comparison.
- TeMPOraL 7y agoThat works within a community. What about inter-community trade?
- yxhuvud 7y agoThen you can of course barter, but where do you think most human interactions happened during that time? Inside small groups of people that trust each other or between different groups that doesn't?
- TeMPOraL 7y agoObviously the former, but I imagine the groups quickly split as the population grew, and met further groups as they expanded.
- 2038AD 7y ago
- neilwilson 7y agoThe coincidence of wants is likely a myth. Humans operate by doing each other favours. You'll find you intuitively know who you've done a favour for and who you owe a favour to. It's inherent to being humans and three year olds can do it - as science has discovered.(https://www.en.uni-muenchen.de/news/newsarchiv/2016/paulus_socialcapital.html https://www.en.uni-muenchen.de/news/newsarchiv/2016/paulus_s...) We all walk around with a favour ledger in our heads. Essentially "here's a chicken, you owe my a chicken's worth of something sometime". As groups get larger you end up taking tokens as an IOU aide-memoir. And to nail those who try to cheat. That then evolves into money. Token money. Tokens representing promises.
- gohbgl 7y agoWhen I was a child I used to trade Magic the Gathering cards with other people. I can assure you that the coincidence of wants is not a myth.
- danharaj 7y agoBy the time you were in the schoolyard you had already been inculcated in modern notions of property and exchange.
- gohbgl 7y agoThat does not take away from the fact that the double coincidence of wants is not a myth. A lot of card trades depended on both party having a card that the other party wanted when no monetary medium was used. I am not saying that this was always the case but it happened often.
- claudiawerner 7y agoThe realization that there is (a) a double coincidence of wants and (b) this can be solved with some sort of currency are absolutely questions already answered if not intuitively than explicitly by money in modern society, as are related concepts like debt and interest. When someone talks about the double coincidence of wants being a myth, they are not referring to the obvious fact that this is a problem money solves, but that this reason, alone or primarilty, is the reason money, as a world-historical concept, came to be in all societies.
- claudiawerner 7y ago>Humans must solve the problem of "coincidence of wants" (ie. You raise chickens and I'm a woodworker - do we always need each other's goods?). The fact that this must be solved in an exchange economy does not mean that it is the same as the genesis of money. Every historical economist has had a theory as to the genesis of money, from Smith, Ricardo and Marx to Mises. To say that money evolved as a solution to the problem of the coincidence of wants may not be correct. Solving the coincidence of wants may just be a side effect.
- einpoklum 7y agoThe article indicates that that problem did not really exist. If you don't have to barter, you don't need a mutual coincidence of wants. If economic activity is to a greater extent a group activity, than there's a community of wants. etc. If anything, the discreteness of wants is an engineered phenomenon, or at least the result of developments of different social orders with a different position of the individual.
- deleted 7y ago[deleted]
- closetohome 7y agoThis is what I kept thinking while reading the article. Currency always evolves, it just might not look like currency at first. As someone else said, wheat and copper were popular for a long time. I remember way back when Diablo 2 was big, in-game gold was essentially worthless as it was so common. So players started using bushels of a somewhat-rare and generally useful magic ring as currency.
- JackFr 7y ago> The most saleable good (the most marketable and easy to sell) is usually the good available to them which scores highest on the following five properties (imagine a radar chart): Divisibility, Durability, Portability, Fungibility, Scarcity. That's why you see certain agricultural products like grain and olive oil in the ancient Mediterranean serving in the role of currency prior to gold. While less durable than gold, these goods met all the other criteria and ultimately were useful as well. Gold comes on the seen when there is a significant economy-wide surplus of output.