ABSTRACT

The “Metallist” origin of money, used as a medium of exchange, is based on the presumed low efficiency of barter. However, barter is usually ill-defined and archaeological evidence about it is inconclusive. Moreover, the transaction costs associated with barter seem to have been exaggerated by metallists. Indeed, the introduction of a unit of account reduces the complexity of allowing for the relative prices usually associated with barter. Similarly, in-kind transactions have timing constraints which are often labelled as “the double coincidence of wants”. However, with a system of debt and credit, delayed exchange (that is, lending) is possible. Such adaptability of barter is confirmed by the study of Mesopotamian and ancient Egyptian palatial economies. They provide evidence that non-monetary transactions have persisted for millennia, thereby challenging the metallist vision about the origin of money.