New Light on the Origin of Money

Abstract

MATERIAL produced by recent ethnological research calls for a revision of the hitherto generally accepted 'classical' conception of the origin and early evolution of money. That conception may be briefly summarized as follows : Barter developed as and when original communism (tribal ownership of the means of production) gave way to private property, and self-sufficiency of economic units gave way to division of labour. Money developed after the progress of division of labour and the growing complexity of the economic system had reduced barter to absurdity. The primitive forms of money originally adopted were gradually replaced by more advanced forms. Eventually, the functioning of advanced money economy led to the development of credit economy.