chapter  1
34 Pages


An overview The concept of the origin of money has been fraught with perpetual misunderstanding among all shades of economic thought. The exposition found in economic textbooks is drawn from one tradition, and with some slight variation of expression, has been recurring in numerous subsequent texts. Consequently, the formulation of the idea is uninformative, obscure and wrapped up in a great deal of mysticism. In spite of minor differences of interpretation, both the views expressed by either erudite economists or economics textbooks share an underlying core principle about the rise and origin of money. Of all apodictic arguments in relation to the origin of money, the one with widest appeal is the barter exchange argument. Implicit in this idea is the central belief that barter exchange preceded the money economy. This argument marks the real inception of money into the cumbersome and laborious nature of the barter exchange economic model. This belief has its primary roots in the writings of ancient Greek philosophy. The argument at first sight appears to be a common sense self-explanatory cliché, a kind of flawless truism. On closer inspection we can discover that it is contrary, in essence, to what it appears to be. It turns out to be no more than a piece of sophistry with an irremovable flawed process of reasoning. This fallacy is essentially due to and grounded in the construction of the argument itself. The pseudo-rational inference that money originated as a solution to the cumbersome constituents of the barter exchange rests on nothing but false deductive reasoning and unreliable historical evidence. As an explanation this theory is virtually barren. The precepts and prescriptions offered by the theory lack the certainty or authority that is expected of a scientific doctrine. It is only by removing this abyss, which has impaired the orthodox theory for so long, that we will be in the position to accurately trace the roots of money. Otherwise, there is no way out of this impasse. Unless we undo the central paralogism involved in the construction of this theory, we will not be able to disclose the real origin of money. Removing the sources of the most palpable contradictions in the theory would allow us to draw a conclusion that will have the character of true universality and strict inner necessity.