The Social Origins of Money: The Case of Egypt

Abstract

There are several ways to classify theories of money. For the purpose of this argument, the most telling distinction is between those theories that see money as a technical development, and those proposing that money is a social relationship. The former, generally following the thesis of Karl Menger (1892), promote the view that money is a thing, arising as a medium of exchange to reduce the transactions costs associated with inefficient barter arrangements. Such theories usually are associated with the "metallists, " as it is normally some precious metal that arises to serve as the medium through which market exchange takes place (Goodhart, 1998). More important, this approach assumes an underlying equality among participants in the exchange relationship. As exchange must be voluntary in order for all parties to benefit, no coercive arrangements can exist that would negate freedom of choice. Those who see money as a social relationship stress the significance of money as a unit of account in which obligations are both created and extinguished. Money, then, represents a relation between those who claim these obligations and those who must service those claims. Exchange is, at best, of secondary importance in such accounts, as

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