Just as it is possible to construct a theory of the emergence of money based on principles of agent preference and action, so too is it possible to build a theory of the state monopoly of money with such principles.
Both history and theory converge on the conclusion that money was by no means a creation of the state. Money arose as agents confronted difficulties associated with barter. Instead of bartering directly, agents began to accumulate some goods for the purpose of indirect exchange. Depending on time and place these goods have come to include shells, oats, cows, and the more commonly recognized silver and gold. As agents converged upon common goods for exchange, the commodities began to act as moneys: goods that act as 1) a medium of exchange, 2) a store of value, 3) a unit of account, and 4) a standard of deferred payment. The emergence of money allows for the beginning of specialization that is characteristic of a human economy. A more robust civilization can then be supported. It is at this point in our story where we left off last post.
Type of Learning Material:
Private / Unpublished