The Origins Of Money
An article on the origins of money from the Satoshi Nakamoto Institute. Fascinating because it ties together insights from evolutionary biology, economics, and human nature to explain why even ancient societies needed some standardized medium of exchange, i.e., money.
Lots of interesting bits here:
Just the stone tool-kit of even early Paleolithic man that has survived for us to find was in some ways too complicated for brains of our size. Keeping track of favors involving them – who manufactured what quality of tool for whom, and therefore who owed whom what, and so on – would have been too difficult outside the boundaries of the clan.
The barter system was replaced by money very early in most societies:
Primitive money existed long before large scale trade networks. Money had an even earlier and more important use. Money greatly improved the workings of even small barter networks by greatly reducing the need for credit.
Our species benefited from trade, and therefore division of labour, while Neanderthals didn't:
The newcomers, H. sapiens sapiens, had the same size brain, weaker bones, and smaller muscles than the Neanderthals. Their hunting tools were more sophisticated, but in 35,000 B.P. they were basically the same tools – they were probably not even twice as effective, much less ten times more effective. The biggest difference may have been wealth transfers made more effective or even possible by collectibles. H. sapiens sapiens took pleasure from collecting shells, making jewelry out of them, showing them off, and trading them. H. sapiens neanderthalensis did not.
A common feature of hunter-gatherer societies that I wasn't aware of; small tribes who usually live separately congregate together at regular intervals to trade:
Like most hunter-gatherers, the !Kung spend most of the year in small, dispersed bands and a few weeks of the year in an aggregate with several other bands. Aggregation is like a fair with added features – trade is accomplished, alliances are cemented, partnerships strengthened, and marriages transacted. Preparation for aggregation is filled with the manufacture of tradeable items, partly utilitarian but mostly of a collectible nature. The exchange system, called by the !Kung hxaro, involves a substantial trade in beaded jewelry, including ostrich-shell pendants quite similar to those found in Africa 40,000 years ago.
What makes collectibles valuable:
For a particular commodity to be chosen as a valuable collectible, it would have had, relative to products less valuable as collectibles, at least the following desirable qualities:
1. More secure from accidental loss and theft. For most of history this meant carriable on the person and easy to hide.
2.Harder to forge its value. An important subset of these are products that are unforgeably costly, and therefore considered valuable, for reasons explained below.
3.This value was more accurately approximated by simple observations or measurements. These observations would have had more reliable integrity yet have been less expensive.