Dec

10

I can understand why Austrian school economists love sociological explanations for the origins of money. If, as von Mises presumes, capitalism is the a priori wiring of our species (like a kind of Chomskian embedded grammar), then money had to evolve out of the rational need for a medium of exchange. The difficulty is that there is absolutely no historical evidence for the notion that "money emerges as a consequence of economic actors being better off using a medium of exchange than engaging in direct barter"; and there is a great deal of evidence for the fact that money develops as the unit of account for the people with edge weapons who collect bribes aka taxes from people who do not have them.

People in authority needed money to buy things that they could not extort and to bribe the supporters who might otherwise become rivals. The negotiations between authority and the people who could not be wholly intimidated, who had some degree of personal freedom, were the beginnings of trade and money. The promises to pay and to obey made by the parties were the beginnings of credit.

The struggles ever since have been about the quality and quantity of money and credit and the limits, if any, on the monopoly authority has over the question of what will be the unit of account for taxes.


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  1. Reid Wientge on December 16, 2019 2:28 pm

    Speaking of the Austrian school I am working my way through “the Marginal Revolutionaries” by Janek Wasserman. It’s the history of the Austrian school and it’s contributions to economic theory, and it’s contribution to the war against Marxist/socialist theories.
    What could be dry and academic storytelling is entertaining and inspiring.
    Tragic that we have to fight the war over and over though so many battles have been won.
    Reid

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