Moneylike

My Locus Magazine column about what makes money money.

My latest column for Locus Magazine is “Moneylike,” about the relationship between money, liabilities and coercion:

https://locusmag.com/2022/09/cory-doctorow-moneylike/

For years, economics textbooks have included a “money story”: once upon a time, we bartered, trading chickens for cows. This was hard. If the going rate is 8 chickens for a cow and you only need 6 chickens, how could the chicken farmer make change?

The answer was gold, variously said to have been chosen for its rarity, or its divisibility, or its shininess, or the ease of working such a soft metal. Whatever the reason, these anonymous prehistoric traders all agreed that gold would be our medium of exchange, our store of value and our unit of account.

This story was handed down to generations of economics students, despite the fact that there is no evidence for it. The basis for this story was pure reasoning: “What circumstances could have given us money?”

This kind of thought-experimental reasoning is endemic to neoclassical economics, as Ely Devons joked: “If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘what would I do if I were a horse?’”