Sitta von Reden - Money in Classical Antiquity

 Sitta von Reden - Money in Classical Antiquity (Cambridge University Press, 2010)

Introduction

One of the surprising phenomena in world history is the success of money. Money is more easily lost than gained; it requires a host of laws, regulations and controls to work and have value; in the form of coinage it costs something to be produced; and – above all! – it makes people dependent on anonymous authorities such as governments, federal institutions and central banks. Money destabilizes wealth and social relationships, and transforms tangible, useful property into mere options for the future. While it has created immense riches for some, and reasonable well-being for many, it has also created more extreme forms of poverty and the most spectacular economic crises the world has ever seen. Rather less surprisingly, there has been much resistance to monetization, and many political thinkers whose views were influential in other respects had serious objections to the use of money. 1

There is the other side of the coin. As Aristotle in his imagined history of the origins of coinage writes:

When mutual help grew stronger and people imported what they needed and exported what they had too much of, coinage came necessarily into use. For the things that people need by nature are not easily carried about, and hence men agreed to employ in their dealings with each other something which was intrinsically useful and easily applicable to the purposes of life, for example, iron, silver and the like. Of this the value was at first measured simply by size and weight, but in the process of time they put a stamp upon it to save the trouble of weighing to mark the value (Pol. 1257a 31–8).

The thoughts of Aristotle still resound in a famous passage by John Stuart Mill (1806–73) defining the advantages of gold and silver coinage:

By a tacit concurrence, almost all nations, at a very early period, fixed upon certain metals, and especially gold and silver, to serve this purpose [of purchase]. No other substances unite the necessary qualities in so great a degree, with so many subordinate advantages… They were the most imperishable of all substances. They were also  portable, and containing great value in small bulk, were easily hid; a consideration of much importance in an age of insecurity. Jewels are inferior to gold and silver in the quality of divisibility; and are of very various qualities, not to be accurately discriminated without great trouble. Gold and silver are eminently divisible, and when pure, always of the same quality; and their purity may be tested by a public authority…To the qualities which originally recommended them, another came to be added, the importance of which only unfolded itself by degrees. Of all commodities, they are the least influenced by any of the causes which produce fluctuations in value. 2

Money in the form of gold and silver coinage was so successful, according to Mill, because it is portable, imperishable, divisible, stable in value and easily hidden. It made value measurable and comparable and thereby allowed more complex transactions to take place over time and distance. It facilitated exchange and reduced the costs of transactions. 3 Socially, it created greater trust in the justice of transactions as it provided a means of recompense for the supply of goods and services as well as compensation for injuries and injustice. 4 It transformed simple markets into powerful distribution mechanisms. In its early history in Greece it liberalized labour relationships, warfare and politics as well as having made possible the first Western democracy. 5 Its anonymity and exchangeability at the same time increased the freedom of individuals, and choice.

And yet, the counter-intuitive assumption that the success of money was not quite as predictable as the story of its success suggests helps us to focus on the conditions of its becoming one of the most powerful instruments of human intercourse. If we assume that people sacrifice many valuable objectives in order to integrate money into their everyday lives, and that governments have to invent many regulations in order to keep the value of their currencies stable and functioning, we can begin to think about the stories behind the history of money. In whose interest was it to use and improve the use of money? What kind of transactions benefited from money, and why? What kind of incentives, or incentive structures, supported the use of money? What rules of behaviour made monetary payment, monetary exchange and monetary wealth accepted forms of social interaction and status signification? Most of all, what political, social and cultural systems made certain forms of money acceptable and other monetary systems collapse? It soon turns out that in contrast to common perception money does not ‘do’ anything by itself. Through money the complexity of relationships, exchange and wealth increases as it links an ever increasing amount of transactions that without money are separate and distinct. But money is not a phenomenon unchanging over time. It develops as individuals, social groups and governments allow it to perform certain functions. Put more technically, money is ruled by human institutions, norms and social as well as political forms of organization. In order to understand the history of it, one has to understand the dependence of money on these institutions, norms and socio-political contexts.

Money and coinage

Some important distinctions need to be introduced before we explore the development of money. Money, in contrast to coinage, has never been deliberately invented (either by traders, citizens or states), but comes into being as regular transactions are made by means of the same medium. When rents are regularly paid in grain, or bride prices customarily rendered in gold and silver, these media become forms of money. When different kinds of payments are regularly made with the same medium, and this medium itself becomes a desirable object for the purpose of exchange, the medium takes over additional monetary functions. If an obligation is not discharged, but remains pending as a debt expressed in terms of one particular medium, this medium also takes on a monetary function. When a payment or exchange is made, a common standard by which different items are compared in value helps to assess the equivalence of the payment or exchange. When any of these forms of payment become institutionalized, that is, many people make them in the same way, money comes into being. For convenience, therefore, money can be defined by four basic, but interdependent, functions. 6 It is a means of exchange if people make payments for goods and services; it is a means of payment, if people pay taxes, rents and penalties; it is a store of value, if people keep it in a treasure box, display it at home, or put it in a bank account; and it is a unit of account, if people compare the value of different goods on the basis of that medium, or account for debts, future payments, and so on. Yet still today new functions of money arise. For example, when investment companies began to provide loans based on the virtual money of investors speculating on the profits of tax relief or changing interest rates, they introduced a new function of money (let's call it money as a means of virtual payment). 7 As institutionalized transactions change over time (bride price is no longer paid, transactions with virtual money become more popular), concepts of money fluctuate alongside changing forms of collective behaviour.

In the past, people often used different media for different monetary purposes. Gold and silver, for example, were used as stores of value, together with salt as a medium of small exchanges and animal hides for larger transactions. Grain was used for the payment of rents and taxes, while at the same time other objects were used as accounting units or for the comparison of value. 8 Such forms of money are sometimes called limited-purpose money as they lack the complexity of functions all-purpose money fulfils. Such moneys also lack the capacity to be transformed into other monetary functions (so-called fungibility) which some monetary theorists regard as the essence of money. 9 Yet once again, the fungibility of money is never total, nor has there ever been any evolution from limited to all-purpose money. For example, in antiquity human beings (such as slaves) could be bought with money, but education, political service and warfare only gradually became paid jobs – much to the regret of conservatives like Plato and Isocrates. For a time within the medieval period, sins could be absolved with money, whereas sacred relics were regarded as impossible to be traded commercially. In more recent years, it has been debated whether the conditions of human life, such as health, blood or fresh air should have monetary value and thereby become subject to some supply-and-demand mechanism. Human labour can be purchased like sex and pleasure, but we resent the idea that human

emotions can be obtained commercially. 10 Therefore, money is never used for

‘all purposes’ nor is it fully ‘fungible’. It is more helpful to consider money
within social and normative contexts that bestow upon it, and prohibit, particular
usages.

Moving on from the shifting sands of money, we find that there are special forms of money which are more readily defined. An exceptionally important one in Western history has been gold and silver minted into coinage. The first coins in ancient Greece were made of precious metal and carried an authoritative stamp which, as Aristotle accurately described, certified its weight and value. In principle, coinage can be issued by any authority, such as temples, individuals, states or firms, but in antiquity there was not much debate over who should have the right to coin. In ancient China, by contrast, it was an important issue whether governments or private entrepreneurs should have the right to issue coins. 11 Another issue not known from classical antiquity, but seriously considered in ancient China, was whether coins should be replaced by some other object or commodity. The fact that certain questions arose in one rather than another monetary culture shows that precious metal coinage, too, is not a natural consequence of monetary evolution, but a specific historical development.

There were also other forms of money than coinage in antiquity. In archaic Greece, for example, coinage was a departure from the use of silver and gold units of weight used as means of payment and exchange in many public and

private transactions. 13 In the fifth century BC, bronze and copper coins were a
departure from the exclusive use of precious metal as money. The shift from
precious to (some) base-metal coins was a conceptual challenge as the latter
destabilized the value of money that so far had been linked to what was assumed
to have universal value. In late-fifth-century Athens the emergency issue of
(silver-plated) copper coins provoked an outcry like a moral disaster. 14 It was
the practical solution to a pressing scarcity of silver, yet at that time raised the
question of the value of money. How far should the state (or citizens) have the
power to issue valid coins the value of which depended on political decision
rather than intrinsic value? Given that the debased coinage did circulate, there
must have been a new consensus, not acceptable to all, but generally promoted
by the collective citizen body, that monetary value could be based on political
decision rather than universal, or super-natural, qualities such as those residing
in gold and silver. The introduction of bank notes later in Western history
represents a similar transformation promoted by the combined power of state
authority and central banks. By this time, however, users had long become
accustomed to promissory notes on paper as forms of money beyond coins.
Cash-less forms of money such as transferable credit notes, cheques, or bonds,
which make possible storage and transfer of money by means of written or
electronic notification, have once again transformed notions of money, and
shifted trust in the stability of precious-metal value (e.g. Mill, above) to a rather
precarious trust in the stability of law and monetary regulation. 15

Money: terminology and culture

Given the historical embeddedness of money, it is unsurprising that neither the
Greeks nor the Romans had a term that precisely matches our word ‘money’.
Both languages had words for coins (nomisma/nummus), or cash
(argurion/argentum: ‘silver’), but the general terms chremata (resources) in
Greek and pecunia (‘cattle money’) in Latin differed from our word ‘money’
(deriving rather arbitrarily from moneta, a cognomen of the goddess Juno in
whose temple coins were sometimes minted). The Roman jurist Iulius Paulus
(early third century AD), who for legal purposes attempted to define money,
suggests that pecunia included not just coins but omnes res, all things. Thus he writes:

The designation pecunia does not only include coinage but absolutely
every kind of pecunia, that is, every substance (omnia corpora); for
there is no one who doubts that substances are also included in the
designation of pecunia
(Dig. 50.16.178). 

The fact that a lawyer felt the need to define pecunia beyond coinage shows that
commonly pecunia was associated with coinage as much as money is associated
with physical currency today. Similarly, when Aristotle discusses the art of
money-making (chrematistike) he distinguishes it from another kind of
chrematistike, the art of increasing the wealth of a household (Pol. 1257b40 ff).
For clarification he calls the latter ktetike (the art of managing property) but the
two were very close. This was so because chremata did not refer just to coins,
but to all movable objects a household contained. In the Nicomachean Ethics
Aristotle describes chremata as ‘everything the value of which can be measured
in terms of coinage’ (EN 1119b26). Beyond the superficial identification of
money with coins, both chremata and pecunia were broader categories, just as
nowadays money comprises more than coins, notes and plastic cards.

In antiquity, however, the concept of money was closely linked to valuable

objects (chremata/res). And so monetary value, too, was considered to be the price (time/pretium) of objects that were purchasable. Since both Aristotle and the Roman jurists were well acquainted with price variation, monetary value was clearly perceived as a social rather than intrinsic factor of objects. 16 Moreover, as in both Greece (by the fourth century) and Rome base-metal coins were minted, it was the stamp of the coin rather than the intrinsic value of precious metal that was regarded as constituting the value of money. Paulus, once again, argued that monetary value was created by the public stamp (forma publica) rather than the fact that coins had a substance (substantia). 17 Rather more provocatively, Pliny the Elder called money rerum pretia, the price of things (Plin NH 33.1). 18 Rerum pretium was the value bestowed upon gold and silver

in the first instance, but even in the case of precious metal was not beyond social

influence. Debates over monetary value took place within the contested
opposition between value by convention and represented by the power of
governments on the one hand, and universal, sometimes supernaturally defined,
value represented by the substance of metals and useful objects on the other. As
stamped coins were money only within the boundaries of one political system,
but monetary exchange took place across such boundaries, other valuable objects
– chremata, res, merces (commodities) – had to be conceptually included into the category of money.

The value of modern money is based on central banks, international civil and
banking law as well as technical conditions such as widespread literacy, the print
industry, and electronic data transmission. This has created greater reliability of
monetary transactions beyond national and political boundaries and thus brought
about a notion of money that is less dependent on the intrinsic value of objects as
opposed to state authority. Instead, concepts of money depend on the market, an
(almost) global monetary network of transactions, an equally global economic
culture, and central banks that fix exchange rates of national or local currencies.
In antiquity international capital markets and international laws did not exist,
while banks were run by private entrepreneurs whose international relationships
depended on their own business contacts. State and social power over the value
and supply of money were felt more strongly, while highly exchangeable objects
were readily included into the category of money. This does not mean that Greek
and Roman money had not fully matured. Rather, different forms of economic
and political organization, conditions of transaction, monetary institutions and
forms of law suggested a narrower and at the same time broader notion of money
than is current today.

Money in the ancient economy

While functions and meanings of money are dependent on a wide range of social
and cultural conditions, it is most strongly associated with markets and the
economy. An economy may be defined as the production, distribution and
consumption of things, each involving exchange, payment and storage of
valuable objects as well as relationships and institutions which organize these
activities. Indeed, as money has become the major means of interaction and
communication in the economy, it has also become its major signifier: any
relationship in which money is used is part of the economy, while monetary
relationships are regarded above all as economic ones.

Notas