Money and Material

Food and precious objects were used as a means of payment for many centuries before also being employed to make purchases. This use of money in today’s sense only took hold in the modern age. And from that moment on, money began to dematerialize, lately becoming mere bits of data.

Archaic means of payment

Money originally was not what we think of today as money. In archaic times payments were made to satisfy an obligation, whether a debt or a wrongdoing. Many things could be used for payments. Archaic payments are indeed the origin of our money but they are far from being the same as our money.

Coins and bank notes

Before coins were minted, lumps and bars of precious metals, among many other things, were used as objects of payment. With coins, all these objects of payment acquired a standard. Only then did they also become a medium of exchange.

Digital Money

From the moment a society bases its economy on money, the value of money no longer needs its substance. Money’s value comes from the fact that it can be exchanged to purchase goods of the same value. Monetary value consists solely in this function.

Money and Material I ARCHAIC MEANS OF PAYMENT

Money isn’t the same as money. Because money isn’t immediately and from its very beginning the money that today famously makes the world go ‘round. It certainly does not yet rule the world even if some things are rudimentarily used in ways that today we know of from money.

Contrary to what most presume, its origin doesn’t lie in barter or commerce. The usual assumption is that the people bought and traded like they do today, the only difference being that it was without money, instead it was by exchanging a good for a good. In that people later began using money in place of one of the exchanged goods, they quasi-invented money. But the fact that people sell each other what they need, whether for money or for another good, is historically a recent phenomenon. In all cultures things were only then also used for purchases if they had previously functioned in a certain context as value: in the context of an archaic payment.

Also payments long do not have the meaning we connect with the term, namely that money is there to pay for something. Payments are initially part of all archaic communities of people to settle specific reciprocal obligations. This “obligated-ness” must on the one side be reinforced through the exchange of gifts, but it especially demands that an obligation towards others be compensated. And this compensation is the archaic form of pay-

ment. The guilt to be compensated can derive from a misdeed: when a man is killed by another clan, compensation for that is blood revenge: payment in the archaic sense. The clan of the murdered man in turn kills a man from the offending clan and thus the guilt is cancelled and peace is restored. But compensation can also be made when the offending clan offers appropriate gifts to the injured clan. With this ritual gift-giving the guilt is just as fully compensated as it would be through revenge, so this is also archaic payment for this guilt.

The guilt is not necessarily as burdensome as in this case, much more usually involving the exchange of gifts for a positive obligation. The payment is then in consideration of actual or hoped for assistance, or in a marriage as compensation for the bride who comes from a different family. Depending on the occasion, the things that serve as payment may be very precisely defined. In each case, however, various things are – or were – possible and customary: the origin of our money but still a long way from our money.

Money and Material II COINS AND BANK NOTES

Coins are originally pieces of precious metal of a given weight. Before being cast or minted into coins they are used in simple lump or bar form. And how and why these metal pieces are used initially doesn’t change when they are hammered into coins: they’re used to pay a debt, atone for a wrong, for the bride price, for tribute – for paying in the archaic sense. And coins are merely as one means of payment among many others that continue to be used for paying.

With coins, however, all the many ways of paying now have a norm: what had been a payment to render is now standardized into a kind of thing – so many cowry shell necklaces, armbands, etc. And so it first begins that such things are used as well as a medium of exchange. Besides payments they are now, on occasion, also an appropriate compensation for a swap, or as one can call it, a purchase. The necessity to buy is initially quite limited: Soldiers are given coins during long campaigns in order to buy provisions they could not carry with them but let others carry. Here the need to purchase arises because the supplies carried from home simply run out. Normally, however, provisioning does not involve the buying and selling of food or goods.

The occasions expand where there is something to buy with coins but they basically remain limited: limited as to where and when something can be bought, limited to specific groups

of people and above all limited to specific goods that can be sold or that are at all available to buy.

Replacing coins with paper money also remains limited for a long time. Whether in China or in Europe, these pieces of paper initially state their owner’s title to coins deposited somewhere. They are coin-substitutes and coin-stand-ins; they themselves are not a freely traded medium of exchange. In China if any difficulties arise with this paper, the notes can be exchanged in full for coins.

It is fundamentally different only with a historic transformation: as securing supplies within a society actually begins being based on money, on the purchase and sale of goods. Only then do coins and banknotes come to be as we know them today: physical representatives of an exchangeable value that as such no longer physically exists and, chiefly, no longer circulates in this physical form.

Money and Material III DIGITAL MONEY

Coining had a standardizing tendency: all the various things that might serve as a payment could be measured as the quantity of precious metal in a certain number of these coins. Laws then prescribed as punishment and payment that someone who has broken another’s arm must suffer the same or offer compensation of so-and-so many coins. That didn’t mean he literally had to come up with this specific number of coins. He could still offer any other kind of thing to reach the payment of the value of the prescribed number of coins or metal. That is, all these things have been rated in terms of one uniform good – a certain number of coins representing their value. And coins did the same for purchasing, when they are used as money in the narrow sense.

This value – the exchange value it thus becomes – remains bound to the coins and other things for a very long time. But the moment a society’s economy is based primarily on money – so that life’s necessities are for sale – the value represented by the money must itself no longer inhere in its physical form, no longer in the form of coins or other things.

From then on, money detaches itself from form, and in general from its material existence. It exists only in that it each time functions as this money-value, that in a purchase it can be exchanged against the same value of goods. Monetary value exists only through this function alone.

So as not to dissolve into thin air, it is vital now that every purchase act it enters into as exchange value is followed by further purchase acts where it again, every time, can be adopted at the same value. For this ongoing value, however, money has to be vouched for.

That is provided by the new national states with their monopoly on violence: police, courts, administrative apparatus. They are the final guarantee for the money they issue as currency: today only the smallest portion of which is coins and bills, with the most as numbers in electronically managed accounts. There, money is seen as a pure number: it numbers a value that as such consists of nothing than to be numbered – to function as exchange value.

Thus the value that in the meantime the entire world relies on is supremely abstract: it is a pure sum, a numerically expressed function. Bitcoins do the same but in other ways: Their creation is decentralized, non-state but only through computing power and each one can be individually identified Their use as money, however, is also limited to a few businesses that accept Bitcoins, and their freely traded value in a state currency.