In Politics Book 1:9 (c.350 B.C.) the Greek philosopher Aristotle contemplated on the nature of money. He considered that every object has two uses, the first being the original purpose for which the object was designed, and the second possibility is to conceive of the object as an item to sell or barter. The assignment of monetary value to an otherwise insignificant object such as a coin or promissory note arises as people and their trading associate evolve a psychological capacity to place trust in each other and in external authority within barter exchange. With barter, an individual possessing any surplus of value, such as a measure of grain or a quantity of livestock could directly exchange that for something perceived to have similar or greater value or utility, such as a clay pot or a tool. The capacity to carry out barter transactions is limited in that it depends on a coincidence of wants. en.wikipedia.org/wiki/Coincidence_of_wants The seller of food grain has to find the buyer who wants to buy grain and who also could offer in return something the seller wants to buy. There is no agreed standard measure into which both seller and buyer could exchange commodities according to their relative value of all the various goods and services offered by other potential barter partners. In a gift economy, valuable goods and services are regularly given without any explicit agreement for immediate or future rewards (i.e. there is no formal quid pro quo). Ideally, simultaneous or recurring giving serves to circulate and redistribute valuables within the community. There are various social theories concerning gift economies. Some consider the gifts to be a form of reciprocal altruism. Another interpretation is that implicit I owe you debt and social status are awarded in return for the gifts. Consider for example, the sharing of food in some hunter-gatherer societies, where food-sharing is a safeguard against the failure of any individuals daily foraging. This custom may reflect altruism, it may be a form of informal insurance, or may bring with it social status or other benefits. Anatolian obsidian as a raw material for stone-age tools was distributed as early as 12,000 B.C., with organized trade occurring in the 9th millennium.(Cauvin;Chataigner 1998) In Sardinia, one of the four main sites for sourcing the material deposits of obsidian within the Mediterranean, trade in this was replaced in the 3rd millennium by trade in copper and silver. As early as 9000 BC both grain and cattle were used as money or as barter (Davies) (the first grain remains found, considered to be evidence of pre-agricultural practice date to 17,000 BC). The importance of grain with respect to the value of money is inherent in language where the term for a small quantity of gold was grain of gold. In the earliest instances of trade with money, the things with the greatest utility and reliability in terms of re-use and re-trading of these things (their marketability), determined the nature of the object or thing chosen to exchange. So as in agricultural societies, things needed for efficient and comfortable employment of energies for the production of cereals and the like were the most easy to transfer to monetary significance for direct exchange. As more of the basic conditions of the human existence were met to the satisfaction of human needs, so the division of labour increased to create new activities for the use of time to solve more advanced concerns. As peoples needs became more refined, so indirect exchange became more likely as the physical separation of skilled labourers (suppliers) from their prospective clients (demand) required the use of a medium common to all communities, to facilitate a wider market Aristotles opinion of the creation of money as a new thing in society is: When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use. The worship of Moneta is recorded by Livy with the temple built in the time of Rome 413 ; a temple consecrated to the same god was built in the earlier part of the fourth century (perhaps the same temple). The temple contained the mint of Rome for a period of four centuries Bartering has several problems, most notably that it requires a coincidence of wants. For example, if a wheat farmer needs what a fruit farmer produces, a direct swap is impossible as seasonal fruit would spoil before the grain harvest. A solution is to trade fruit for wheat indirectly through a third, intermediate, commodity: the fruit is exchanged for the intermediate commodity when the fruit ripens. If this intermediate commodity doesnt perish and is reliably in demand throughout the year (e.g. copper, gold, or wine) then it can be exchanged for wheat after the harvest. The function of the intermediate commodity as a store-of-value can be standardized into a widespread commodity money, reducing the coincidence of wants problem. By overcoming the limitations of simple barter, a commodity money makes the market in all other commodities more liquid. Many cultures around the world eventually developed the use of commodity money. Ancient China, Africa, and India used cowry shells. Trade in Japans feudal system was based on the koku – a unit of rice. The shekel was an ancient unit of weight and currency. The first usage of the term came from Mesopotamia circa 3000 BC and referred to a specific weight of barley, which related other values in a metric such as silver, bronze, copper etc. A barley/shekel was originally both a unit of currency and a unit of weight. Wherever trade is common, barter systems usually lead quite rapidly to several key goods being imbued with monetary properties. In the early British colony of New South Wales, rum emerged quite soon after settlement as the most monetary of goods. When a nation is without a currency it commonly adopts a foreign currency. In prisons where conventional money is prohibited, it is quite common for cigarettes to take on a monetary quality. Contrary to popular belief, precious metals have rarely been used outside of large societies. Gold, in particular, is sufficiently scarce that it has only been used as a currency for a few relatively brief periods in history.
Posted on: Sat, 04 Oct 2014 21:57:43 +0000
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