History of money2
Non-monetary exchange: barter and gift
Contrary to popular conception, there is no evidence of a society or economy that relied primarily on barter.
Instead, non-monetary societies operated largely along the principles of gift economics. When barter did in factoccur, it was usually between either complete strangers or would-be enemies.
With barter, an individual possessing a material object of value, such as a measure of grain, could directly exchangethat object for another object perceived to have equivalent value, such as a small animal, a clay pot or a tool. Thecapacity to carry out transactions is severely limited since it depends on a coincidence of wants. The seller of foodgrain has to find a buyer who wants to buy grain and who also could offer in return something the seller wants tobuy. There is no common medium of exchange into which both seller and buyer could convert their tradablecommodities. There is no standard which could be applied to measure the relative value of various goods andservices.In a gift economy, valuable goods and services are regularly given without any explicit agreement for immediate orfuture rewards (i.e. there is no formal
quid pro quo
Ideally, simultaneous or recurring giving serves to circulateand redistribute valuables within the community.There are various social theories concerning gift economies. Some consider the gifts to be a form of reciprocalaltruism. Another interpretation is that social status is awarded in return for the 'gifts'.
Consider for example, thesharing of food in some hunter-gatherer societies, where food-sharing is a safeguard against the failure of anyindividual's daily foraging. This custom may reflect altruism, it may be a form of informal insurance, or may bringwith it social status or other benefits.
The emergence of money
The Sumer civilization developed a large scale economy based on commodity money. The Babylonians and theirneighboring city states later developed the earliest system of economics as we think of it today, in terms of rules ondebt, legal contracts and law codes relating to business practices and private property.
Code of Hammurabi
), the best preserved ancient law code, was created ca. 1760 BC(middle chronology) in ancient Babylon. It was enacted by the sixth Babylonian king, Hammurabi. Earliercollections of laws include the codex of Ur-Nammu, king of Ur (ca. 2050 BC), the Codex of Eshnunna (ca. 1930BC) and the codex of Lipit-Ishtar of Isin (ca. 1870 BC).
These law codes formalized the role of money in civilsociety. They set amounts of interest on debt... fines for 'wrong doing'... and compensation in money for variousinfractions of formalized law.The Shekel referred to an ancient unit of weight and currency. The first usage of the term came from Mesopotamiacirca 3000 BC. and referred to a specific mass 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, just as the British Pound wasoriginally a unit denominating a one pound mass of silver.In cultures where metal working was unknown, shell or ivory jewelry were the most divisible, easily storable andtransportable, scarce, and hard to counterfeit objects that could be made. It is highly unlikely that there were formalmarkets in 100,000 BCE (any more than there are in recently observed hunter-gatherer cultures). Nevertheless,proto-money would have been useful in reducing the costs of less frequent transactions that were crucial tohunter-gatherer cultures, especially bride purchase, splitting property upon death, tribute, and inter-tribal trade inhunting ground rights ("starvation insurance") and implements.In the absence of a medium of exchange, non-monetary societies operated largely along the principles of gifteconomics.
When barter did in fact occur, it was usually between either complete strangers or would-beenemies.