On the other hand, if one simply hands out coins to the soldiers and then demands that every family in the kingdom was obliged to pay one of those coins back to you, one would, in one blow, turn one’s entire national economy into a vast machine for the provisioning of soldiers, since now every family, in order to get their hands on the coins, must find some way to contribute to the general effort to provide soldiers with things they want. Such a force would likely consume anything edible within ten miles of their camp in as many days unless they were on the march, one would need to employ almost as many men and animals just to locate, acquire, and transport the necessary provisions. Under ancient or medieval conditions, feeding such a force was an enormous problem. Say a king wishes to support a standing army of fifty thousand men. Primordial DebtsĬoinage is the catalyst of markets controlling the money supply compels the rest of society to create supply for the people who receive the newly minted money.
Later, to trade debts to other parties, it is the state that introduces coinage to formalize these debts, so that bearer tokens could be traded to outsiders (who are not part of the in-group society, and so to whom credit could not be extended). Jared Diamond also points this out in The World Until Yesterday.Īs societies grow, keeping track of who owns whom is easier to do in written ledgers (e.g. In other words, money first started as debt, not as coinage or barter. Money started as “I owe you one” of reciprocal aid between neighbours. Fulfilling one’s obligations to others, just as one would expect them to fulfill their obligations to you. After all, isn’t paying one’s debts what morality is supposed to be all about? Giving people what is due them. The reason it’s so powerful is that it’s not actually an economic statement: it’s a moral statement. A lender is supposed to accept a certain degree of risk.
The remarkable thing about the statement “one has to pay one’s debts” is that even according to standard economic theory, it isn’t true. Elite power structures are surprisingly resilient to catastrophic collapse, and the historical norm is they tend to continue even under apocalyptic conditions. Palladium Magazine: Collapse Won’t Reset Society. “Debt” is both a moral concept as well as a financial concept. This book is a first-principles account of how monetary systems function.
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