Sunday, 24 April 2011
Precursor to the Euro in the Bronze age: bronze axe heads!
I’ve always had doubts about the idea that all forms of money throughout history have been state money. No doubt the large majority of money, volume wise, has been organised and imposed by states or governments. But there are examples of money arising spontaneously, and simply because of the useful function that money serves and hence the desire for it.
An example of the latter was the bronze axe heads that were used for international or inter tribal trade in the bronze age in and around Europe.
But bronze axe heads had a problem around 500 B.C., namely the introduction of iron. Seems this might have caused a “bronze age recession”.
For an hour long BBC program covering this period, see here.
This is not to say that the value of axe heads had a close relationship to the metal content. The value of metal tokens used as money has always had a tenuous relationship to the value of the actual metal content. In other words what people are looking for, absent any form of money, is a formal and widely accepted system of CREDIT. The actual tokens used to represent units of that credit don’t matter too much, though obviously it helps a bit in primitive societies if the tokens have some inherent value.
There is a good article on this in the Banking Law Journal published in 1913. The article is also available on Warren Mosler’s site, where I first saw it.