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Comment by rjknight | Hacker News Reader

Yes, incidents of barter will pre-date incidents of spending money. That part is obvious.

But this does not imply that there was a widespread "barter system" as the primary means of trade and cooperation, which was then replaced by a superior "money system". Instead, there would have been systems of credit, where you give me chickens now and I give you apples in six months. No money changes hands, but it's possible to keep track of who deserves to have some apples, and complex social institutions can be constructed on this basis, that would never be possible if society relied entirely on a "barter system". The "money system" is not an alternative to a "barter system" but is an alternative to a "credit system". Societies have gone back and forth between them many times throughout history - arguably we switched from a money system to a credit system when we abandoned the gold standard, and Bitcoin advocates want us to switch back again.

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This, a hundred billion times this. It’s been a nagging, cavernous hole in the explanation every time I hear the overly simplistic “barter system was replaced with the eventual invention of money”. It not only denies the existence of more sophisticated systems of barter that include any sort of “futures” being bartered, “pigs now for part of my apple harvest in a couple months”…

It also denies the existence of any systems where “money” is simply just the “most convenient commodity to barter with”. If everyone has these handy similarly sized hunks of gold and trade them cause it’s more convenient than carrying a chicken, that doesn’t mean “your using money”. If I’m happy not having gold and can simultaneously function in the “local economy” entirely with my chickens, I may use “gold”/“money” purely as a temporary item of escrow. I give gold to a shepherd to deliver sheep to my barn but he gives back the gold and takes some of my chickens when he leaves after the delivery… basically the “obviously money replaced barter cause it’s better” is a bullshit story that no one seems to give a shit trying to find evidence and I’m kind of sick of it.

/rant over

So where are the serious historical, evidence based research economists to be found? Id love a well researched history that had some evidence of past social behaviour with respect to barter/money.

Nonetheless, we do see evolutionary examples in-between pure barter and government-standardized metal coinage in the historical record.

The Aztecs had a complex system involving cacao seeds, strips of cloth, and "hoe money" for larger values. But while all three of these were used as a unit of account, they were also consumed directly as commodities.

Prior to the technological migration of metal coinage, ancient East Asia used shell money. These were almost exclusively used as a medium of exchange, and were not directly consumed as a commodity.

Standardized metal coinage was almost certainly invented only once by the ancient Mediterranean culture. Part of why the story "money replaces barter" is told is because this invention disrupts and rapidly replaces every other system that it touches for the next several hundred years, until the entire Old World is using metal coinage of some sort.

> These were almost exclusively used as a medium of exchange, and were not directly consumed as a commodity.

See also cigarettes in prisons (more recently ramen).

> Instead, there would have been systems of credit, where you give me chickens now and I give you apples in six months. No money changes hands, but it's possible to keep track of who deserves to have some apples.

That is called "barter".

Unless all the transfers/debts/values are being tracked in terms of apple's, then apples are fulfilling at least one aspect of money: unit of account.

> That is called "barter".

From the Wikiepdia page on "Barter"[1]:

> In trade, barter (derived from baretor) is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists distinguish barter from gift economies in many ways; barter, for example, features immediate reciprocal exchange, not one delayed in time.

The "immediate reciprocal exchange" criterion means that exchanging chickens now for apples later is not barter. When we talk about money replacing barter, we are talking specifically about the ability to immediately exchange physical tokens for goods or services. This refers very specifically to money as the medium of exchange, not as the medium of account.

In the traditional story, money was needed because Farmer A wants to exchange chickens for apples with Farmer B, but Farmer B doesn't have any apples right now. Money is useful because they can exchange that instead. But this story loses a lot of its force when you understand that they could have simply exchanged credit, without any need for money at all. The systemic change is not barter -> money, but credit -> money, which has very different implications for how society is organised. And, as I mentioned, we can see transitions from credit -> money and back again occur many times in history, whereas we see barter occur only in extremely rare circumstances.

[1] https://en.wikipedia.org/wiki/Barter

Thanks for the clarification!

I was not aware of the "immediate" condition for barter.

Reading from your link, there seems to be a gap in terminology for a situation separate from bartering, gift giving, and money based exchanges. Specifically, delayed exchanges where an account is informally kept but based on what was taken, not any unit/money.

The wikipedia entry for "Gift economy" rules out "explicit agreement for immediate or future rewards". [1]

So what to call the situation implied by "delayed barter", or "gifting with explicitly expected reciprocity"?

That situation can still happen without money. (Not claiming it was the basis for any particular economy, as it wouldn't scale well past trusted or enforcable relationships.)

[1] https://en.wikipedia.org/wiki/Gift_economy

What you are describing is still a bartering system - just with delayed payments.

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