Money May Have Originated Through Long Distance Trade, New Theory Suggests
taylorvich writes:
https://phys.org/news/2025-02-money-distance-theory.html
Two of the most commonly accepted theories for the origin of money are the commodity theory and the chartalist theory. Both have drawbacks, but in recent years, the chartalist theory has gained much traction.
A recent study by archaeologist Dr. Mikael Fauvelle, published in the Journal of Archaeological Method and Theory, proposes that a third theory, examining external factors, may better explain the origin of money in pre-state societies.
Traditionally, two theories on the origin of money exist. The first is the commodity theory, which proposes that money was developed to facilitate internal barter between community members. The premise is that trading one good for another good that you desire is inefficient and unreliable, as you cannot guarantee that the trading partner has the goods you want or that they want the goods you are offering. However, money mitigates this problem.
This theory has recently come under scrutiny as ethnographic and historical studies show that pure barter systems are rare and that most traditional societies use exchange networks based on trust and delayed reciprocity.
Meanwhile, chartalist theory focuses on the role of money as a unit of account, arguing that money was imposed by the state to facilitate taxation, tribute collection, and financing of wars. However, this theory falls flat when looking at pre-state societies that did not tax or had no tribute to collect.
These two theories are often presented as opposing each other. However, not only need they not be mutually exclusive, but they tend to view money as having the same definition in ancient societies as it has today, namely as a medium of exchange, a unit of account, a standard of value, and a store of value.
Dr. Fauvelle provides evidence that supports a third theory, the so-called "Trade Money Theory." The theory proposes that it was not internal barter problems that money was used to solve but rather long-distance external exchange networks that could not rely on familiar, trust-based relationships of delayed reciprocity.
To support this theory, Dr. Fauvelle examines the money systems of two pre-state societies. "I focused on shell beads in Western North America and Bronze Money in Europe as these are two well-documented case studies with considerable evidence for widespread trade and monetary economies predating the development of ancient states."
Journal Reference: Mikael Fauvelle, The Trade Theory of Money: External Exchange and the Origins of Money, Journal of Archaeological Method and Theory (2025). DOI: 10.1007/s10816-025-09694-9
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