WHAT IS PRIMITIVE MONEY? (Barter merges into primitive money and primitive money into modern money)
WHAT IS PRIMITIVE MONEY? (Barter merges into primitive money and primitive money into modern money)
I try to summarize the “Paul Einzig - Primitive Money” book with several samples and author’s statements on the primitive money.
The Definition Fetishworship in Monetary Theory
The fetishworship of a definition involves, according to Jevons, "the logical blunder of supposing that we may, by settling the meaning of a single word, avoid all the complex differences and various conditions of many things". As a general rule, monetary theorists deliberately confine their definition to one single aspect or very few aspects of money, in order to emphasize those aspects in accordance with their favourite theory.
The majority of definitions of money may be classed in two main categories: those which regard money as a commodity and those which regard it as an abstract unit. The former category of definitions is based on the function of money as a medium of exchange. Menger considers "money" to be virtually synonymous with "medium of exchange" and rules out any means of payment which does not play that part. Such a restricted use of the term would, of course, exclude all non-commercial means of payments. It was frequently resorted to until recently by monetary theorists of the metallist school who confined their definition to metallic money and treated paper money as a freak development or an emergency measure.
The more closely primitive communities are investigated, however, the more evident it must be that objects used solely for non-commercial payments perform a social function not dissimilar to that played in modern communities by objects used for commercial payments.
Primitive Money
The unit or an object conforming to a reasonable degree to some standard of uniformity, which is employed for reckoning or for making a large proportion of the payments customary in the community concerned, and which is accepted in payment largely with the intention of employing it for making payments.
Barter merges into primitive money and primitive money into modern money through barely perceptible shades of distinction.
The borderline between barter and primitive money
The borderline between primitive and modern money
The broad rule that coins, sealed ingots, notes and credit money are modern and everything else is primitive grossly over-simplifies the problem. For one thing, the transition between metals changing hands by weight and coins or sealed ingots is very gradual.
The most widely accepted list of requirements is that of Jevons, according to
whom money must have the following requirements, in the order of importance
given here:
1.Utility and Value.
2.Portability.
3.Indestructibility.
4.Homogeneity.
5. Divisibility.
6. Stability of Value.
7. Cognizability.
By its very nature primitive money cannot and is not expected to possess these requirements to anything like the extent to which modern money possesses them.
1.Utility and Value
There is no absolute need for primitive money to possess utility. While the overwhelming majority of primitive currencies can be used for other purposes, there are many instances for the monetary use of utterly useless objects.
2.Portability
It seems that primitive peoples attach less importance to a high degree of transportability than modern peoples, judging by their frequent choice of very heavy or bulky substances for monetary purposes. Commodity-currencies are also almost invariably bulky and not easy to transport over long distances, though they possess the required degree of portability for use within the confines of a small community. Many commodity-currencies are liable to deteriorate through being transported.
3.Indestructibility.
Indestructibility is not an essential requirement of primitive money any more than of modern money. Paper money is essentially destructible, and so are many kinds of primitive currencies. Indeed, some of the latter have a very limited degree of durability and are apt to deteriorate either by their very nature or through the wear and tear caused by their monetary use. While many of them are relatively durable, others such as grain and food products in general must be consumed within a more or less short period in order to avoid their total deterioration.
4.Homogeneity.
Homogeneity of money means that the money in use must consist of the same material and that the quality of that material must be uniform. This is an essential quality of modern money, but primitive money need not possess it to the same degree.
5. Divisibility.
All primitive currencies do not conform to the requirement of divisibility. Livestock currency lacks this quality almost completely even though communities which use it as a standard of value rather than a medium of exchange can reckon in fractions of cows.
6. Stability of Value.
The extent to which primitive currencies correspond to the requirements of stability of value varies widely. Force of tradition is apt to maintain the value of the unit in some communities over long periods.
7. Cognizability.
Most primitive currencies satisfy the requirement of cognizability to a considerable degree.
We have seen above that, generally speaking, primitive currency does not conform to the requirements of good money to anything like the extent modern money must. This in itself does not disqualify it from being regarded as a money even though it may not fulfil all monetary functions quite so satisfactorily. Above all, money has a requirement, without which even the full possession of all the above qualifications would not assure its monetary functions; and in possession of which any object or material may serve as a medium of exchange, though it may not correspond to any adequate degree to any of the recognized requirements. It is “its acceptability”.
Engin YILMAZ (
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