Money & Debt: Crash Course World History 202

Summary

In this *Crash Course World History* episode, John Green explores the history and evolution of money. He debunks the traditional view that money evolved from barter systems, referencing anthropologist David Graeber's argument that credit and debt preceded money. Green discusses the role of money in ancient societies, its link to the rise of state-based warfare, and the impact of coinage on slavery. While engaging with historical perspectives, Green challenges Adam Smith’s theories, arguing that money is not a natural human instinct but rather a product of human actions and social structures.

Takeaways

• 😀 Money is essential for the functioning of modern economies, acting as a medium of exchange, a unit of account, and a store of value.
• 😀 Barter systems were not as common as we think; in societies without money, people didn't rely on barter but instead used credit-based systems.
• 😀 Adam Smith's idea that money evolved from barter systems is challenged by anthropologists, who argue that money is more closely tied to debt and credit than to barter.
• 😀 Early forms of exchange often used credit in small communities, where people were willing to trade goods with the expectation of future repayment.
• 😀 Money as we know it (coins and bills) didn't always circulate freely. For example, in ancient Sumer, silver was used to calculate debts but not necessarily exchanged directly.
• 😀 The creation of money can be linked to state-building and warfare, as armies needed to be paid, which led to the invention of coinage.
• 😀 The development of coinage was especially significant during the rise of professional armies in India, China, and Lydia around 600 BCE, which needed a more efficient method of payment than plunder.
• 😀 Graeber's theory suggests that money's origins are tied to the military-industrial complex, where coinage was used to fund wars and control empires.
• 😀 Graeber also argues that the introduction of monetized trade in Africa by Europeans helped transform local economies and social structures, including the introduction of chattel slavery.
• 😀 The rise of money marked a shift from honor-based warfare to resource-based warfare, which required systems of credit and coinage to sustain.
• 😀 Despite Graeber's critique of Adam Smith's theories, it's acknowledged that money, in its modern form, is useful for states and large-scale economies, though it's not a natural human instinct.

Q & A

What are the three main functions of money mentioned in the script?

The three main functions of money are: medium of exchange, unit of account, and store of value.

How does the script challenge Adam Smith's idea of money evolving from barter systems?

The script challenges Adam Smith's idea by citing anthropologist David Graeber, who argues that there has never been a purely barter economy. Instead, societies without money relied on credit and trust-based systems for exchange.

What does David Graeber suggest about the role of credit in early human societies?

David Graeber suggests that in early societies, credit played a key role in exchanges, especially in small, localized communities where people were willing to trade based on future promises, rather than physical money.

What role did money play in the ancient civilizations of the Fertile Crescent?

In the ancient civilizations of the Fertile Crescent, money, represented by the shekel, was used by bureaucrats to track resources, and it wasn't necessarily circulated as physical coins but rather as a means of accounting for debts and exchanges.

How does the script explain the link between the rise of money and warfare?

The script explains that the need to pay professional armies during periods of warfare led to the creation of coins as a reliable form of payment. This shift from honor-based to state-based warfare also helped drive the demand for coinage.

What is the 'military-coinage-slavery complex' mentioned in the script?

The 'military-coinage-slavery complex' refers to the interconnectedness of coinage, state-building, and the use of slavery, as armies needed to be paid, which led to the widespread use of coins, often supported by enslaved labor.

How does Graeber's theory link money to the rise of coinage in ancient India, China, and Lydia?

Graeber's theory suggests that the creation of coinage in India, China, and Lydia around 600 BCE was driven by the need to pay professional armies in these regions, as armies needed a reliable medium of exchange for resources and services.

How does the script describe the decline of coinage after the fall of the Western Roman Empire?

After the fall of the Western Roman Empire, coinage largely disappeared in Europe, and people reverted to credit-based systems of exchange, relying more on personal connections rather than state-enforced money systems.

What point does the script make about the evolution of money and its necessity in modern society?

The script argues that while money, in the form of coins or bills, may not be necessary for all forms of exchange, it is crucial for the functioning of states and markets, as it allows for the quantification and transferability of obligations.

What is the significance of the open letter to honor-based warfare in the script?

The open letter to honor-based warfare highlights the script's critique of Graeber's view that coinage was linked directly to slavery and war. John Green challenges Graeber’s argument by asserting that honor, not resources, often drives war, similar to ancient storytelling in the Iliad.