Ole Bjerg (Making Money) doesn’t believe the classic “commodity” accounts of the rise of money, found in both Adam Smith and Marx. Both posit an original barter economy that is made more efficient by the introduction of a commodity that is used as a medium of exchange.
Bjerg has several problems with this. There’s the “aporetic” character of the theory: Suppose gold is the chosen standard of value; how is gold’s value measured? It cannot be by the value of gold. Most have suggested some inherent value in gold (Marx argued for an aesthetic value), which leads to other oddities: The medium of exchange by which the economy runs must stand outside the economy to make it run.
He also argues that the classical account doesn’t fit the historical facts. Anthropologists have yet to find a pure barter economy. Media of exchange seem always to be already there.
And, there’s the fact that the standard account minimizes the role of the state in creating money. He refers to the “chatalist” theory of money by which “Money is a creature of law” and thus “the soul of currency is not in the material of the pieces, but in the legal ordinances which regulate their use” (101). By this theory, money “does not have to rely on a general desire for the real qualities of the money object. Even in a state where gold coins are proclaimed to be legal tender, the value of these coins does not necessarily depend on whether people are generally interested in gold as such. It is enough that they are generally interested in not being thrown into prison for failing to pay their taxes” (102-3).
This has further implications: The demand for money is not generated by the value of the community that serves as money, but by the state determination of the medium of exchange. Desire for money follows rather than leads the establishment of the institution of money. And, since money and markets arise together, the chartalist theory suggests that markets, like money, depends on the state (103).
Money, he argues, depends on trust, or at least imputed trust: “Even if the Federal Reserve did have enough gold reserves on hand to back every dollar in circulation (which it does not), the decisive point is still not the actual conversion of US dollars into gold, but the general belief that everyone else believes in the value of the US dollar and thus accepts it as a means of exchange, a means of debt payment and a store of value” (156). Money is an act of faith.
Bjerg’s book is thick with Heidegger and Zizek, but in its best moments it’s a stimulating exploration of a neglected area, the “philosophy of money.”