A brief critical review of an article: “Cowries and Conquest: Towards

a Subalternate Quality Theory of Money” by C. A. GREGORY.

(By: Bruk Mesfin. Submitted to: Dr. Samuel Jilo)

Brainstorming Questions:

 What is money?
 What is the difference between ancient gold money and modern paper money?
 What is the relationship between state and money?
 How do anthropologists view money?

Critical review
There are theories of money that attempt to explain the question of what money is. Two of these are the quality
theory and the quantity theory. The main objective of this article is to raise doubts about the objectivity and
explanatory adequacy of the well-known and respected theory of money, the quantity theory of money, and to
produce an argument that can stand beside it by exploring the case of West African cowrie shell trade.

Cowrie shell is shell of any of various marine gastropods that are widely distributed in warm seas and have
brightly colored shells. The cowrie shell has many uses and meanings. It has been used as money in many
cultures. The author starts his article by telling us the economic history of the shell money of the West African
slave trade. The shell money trade began in the fourteenth century and ended in the 1880s. There are several
kinds of shells. These shells were harvested and traded to every corner of the globe. West Africa was the
ultimate destination for many of the shells. European slave traders purchased shells from merchants and carried
them to West Africa as capital to buy slaves. The nineteenth century was a period of great expansion and
decline for the international cowrie trade. Between 1851 and 1869, five private German and French companies
shipped over 35,000 tons (14 billion shells) of variety of shells directly to West Africa. This frenzied trade
exploded the cowrie bubble, dropping the price of shells dramatically, making trade unprofitable, and stopping
shipments.

The problem that needs to be addressed here is that what is the relationship between the massive import of
shells into Africa and the subsequent hyper-inflation and demonetization of the cowrie?
Quantity theory provides its answer to this question. The author of this article reanalyzes the case of east
African cowrie trade and criticizes the answer given by quantity theory and thus questions the objectivity and
explanatory adequacy of quantity theory. The quantity theory of money states that the general price level of
goods and services is directly proportional to the amount of money in circulation, or money supply. For
example, if the amount of money in an economy doubles, the price levels will also double. There for, quantity
theory of money contends that the explanation for the hyper-inflation and demonetization of cowrie money in
West Africa is the prior massive importation of cowrie shell into West Africa.

As long as the small shells from Maldives were the only ones imported to West Africa, the value of the cowrie
remained relatively stable. But when the East African variety of the cowrie suddenly imported into West Africa
by European traders, it generated hyperinflation that ultimately destroyed the usefulness of the shell money.

But Gregory, the author of this article, argues that not only quantity theory, but quality theory -"bad money
drives out the good"- is also fully at work in the case of West Africa. The East African shells were much
cheaper than the smaller variety produced in the Maldives; wherever they proved acceptable, they drive other
moneys out of the market. After European traders brought massive amount of cheaper east African shells to
West Africa, the value of cowrie started to fall.

Gregory has also another argument to support his attempt of questioning the explanatory adequacy of quantity
theory of money. The economic history of West Africa suggests that there was commodity to commodity
exchange there before the king brings cowrie money, fixing its value, as a medium of exchange. The king
brutally forced the people to make them use cowrie shell as a medium of exchange. Gregory argues that cowrie
as a Standards is the sign that money is an instrument of state power because they provide a fixed standard for
measuring the value of all commodities and a means of levying taxes. In this way, Gregory tries to challenge the
objectivity and explanatory adequacy of quantity theory of money. However, it should not be taken as Gregory
is providing another theory of money that replaces quantity theory of money which has an overwhelming
academic prestige and huge amount of supportive historical evidence.

Strength weakness

1. It is a comparative study. 1. Difficult to understand

2. It has strong evidential support. 2. Assumes some basic controversies in economics.
3. The central theme is convincing. 3. Random audience inappropriate.
 Synthesis - big picture
 Gregory attempts to provide his explanation, which differs slightly from the explanation of quality
theory, about the hyper-inflation and the subsequent demonetization of cowrie money in West Africa
that followed the massive importation of shells to the place.
 Quantity theory of money explains the situation as follow: since it is the amount of money in the market
that determines the price commodity, it is the massive importation of cowry shell to West Africa that
caused the hyper – inflation and then the demonetization.
 Gregory does not totally discredit the explanation of quality theory. In addition to the massive
importation of shells to West Africa, Gregory argues, there are other factors that need to be considered
when we explain the case of West African cowrie trade slump.
 Quality theory of money- “bad money drives out the good”- was equally at work when the cowrie trade
slump happens in West Africa. Because the cheaper money of east Africa that imported to West Africa
has also played role in driving out the cowries of West Africa from market and thus in resulting the
hipper-inflation.
 The other argument Gregory presents to support his explanation is that money is an instrument of state
to maintain its power since it is the state that determines the value of cowrie money and that state gets
tax payment from its people from trade.
 The main points readers need to get from this article is that: (1) understanding what quantity theory of
money is. (2) Understanding Gregory’s objection against the objectivity and explanatory adequacy of
quantity theory.
 Anthropology emphasizes on cultural relativity. Economic anthropology also criticizes the explanatory
adequacy of the objective principles in economics. Economic anthropologists argue that before we can
draw conclusions about the economic affairs of societies based solely on the objective principles of
economics, it is necessary to consider the particular economic context of the society. It can be said this
article is the manifestation of the main argument of economic anthropologists. Therefore it is highly
relevant to this course.
 Discussion questions
1. What is money?
2. What is quantity theory of money?
3. What is the difference between cowrie money and the modern money?
4. What is your take on the explanatory adequacy of quantity theory of money?
5. Is the argument of Gregory convincing?