Judge Andrew P. Napolitano on the history of money.

[PDS]

David,

I went to the site you linked and something looked awfully familiar. Then I saw the title. Of course. I have Christopher Vogler's book The Writers Journey: Mythic Structure for Writers.

I haven't read it yet because I have been going through Joseph Campbell's The Hero with a Thousand Faces first. I'm only in the first third and I find it pretty hard going so far. There is a lot I have to look up as I go along, especially the arcane references and words like autochthonous (fer Keriiiisakes!!! ).

But there's an interesting thing I noticed. Everybody talks about Campbell because of Star Wars. Well, if you go to the Amazon link I provided and look at the Table of Contents, you can almost see the first movie laid out, step-by-step. When I first saw that, I wondered if George Lucas actually read the book, or if he just copied the TOC (just Part 1) and used each item as a story beat.

The Hiltunen book I mentioned above is highly interesting, albeit a slog of a read. This is because Hiltunen is a Finn and he makes some irritating errors in English, especially when he constantly writes "the audience are." For some reason, that kind of error throws my concentration off and I start daydreaming. So I had to police myself as I read the book and it made my brain hurt. But Hiltunen's approach is one of the most useful I have found in explaining what universal story pleasure is (he calls it the "proper pleasure" and derives it from Aristotle's Poetics).

He also talks about Vladimir Propp's fairy-tale structure (see here and here), which, I was surprised to learn, is just as important to the mythic tradition as the Hero's Journey. Think Cinderella. Propp's typical cast of characters (given in the Wikipedia link) is also just as useful as Campbell's Jungian-based archetypes. And he lays all this down with references to Hollywood movies, TV series, fiction books on the bestseller list, video games, etc.

The reason Hiltunen wrote Aristotle in Hollywood is that he is friends with Christopher Volger. They have had many long discussions over meals during seminars and Volger encouraged him to write it. Frankly, the only reason I read it was because I came across this story. I'm really, really glad I did. And, if Campbell keeps irritating me with all the slogging I have to do just to keep up, I might set him aside, go through Volger's book first, then pick him back up. That'll teach him!

Incidentally, Hiltunen's "proper pleasure," which is basically a 4-pronged pressure build-up--intellectual, emotional, moral and symbolic--that resolves through release in catharsis (or climax), is being borne out by neuroscience. You can get a great layman's guide to what is going on in a recent book, Wired for Story: The Writer's Guide to Using Brain Science to Hook Readers from the Very First Sentence by Lisa Cron. It's an easy and fun read.

I have also read twice (so far) Winning the Story Wars: Why Those Who Tell (and Live) the Best Stories Will Rule the Future by Jonah Sachs. I highly recommend this one, even for trial lawyering. At least, I can easily imagine where Sachs's approach would be effective. The only thing is he's a flaming progressive and you have to stomach his gushes about combating global warming and other items from the progressive menu as if they were absolute fact. But it's well worth it. Besides, Sachs seems more like a craftsman than an ideologue.

Incidentally, once I get to a point in reading this stuff where the ideas start repeating and I judge myself to be competent enough (which I feel I am getting close), I intend to take Rand's The Romantic Manifesto and The Art of Fiction and run them through the mill. Not to bash them, but to make them more useful for writing students. There are some hidden traps in those books that will paralyze your writing for years, but there is a lot of good stuff, too. At least, I believe showing where there are widely used different approaches on a confusing point, how to sidestep a creativity-throttling trap, or where an idea is universal, but couched in her sui generis jargon, and things like that would be very useful to a budding writer who wants to follow in her footsteps, but gets stuck and isolated and almost afraid to speak up.

Michael

You might also try this.

I have found Great Courses lectures to be invaluable in at least three areas, and this series on myths looks like a good substitute for the hard slog that is Joseph Campbell...

[BaalChatzaf]

el

You might also try this.

I have found Great Courses lectures to be invaluable in at least three areas, and this series on myths looks like a good substitute for the hard slog that is Joseph Campbell...

Don't be too hard on Joseph Campbell. He was just trying to find his Bliss. And besides it was Campbell that inspired George Lucas to make Star Wars.

Ba'al Chatzaf

[Michael Stuart Kelly]

My problem with just about everything I have ever read about the nature of money is that it is drenched in ideology. I don't mind principles, if fact, I am seeking them, but I don't like the distortions that always come from the framing, especially the selective omissions.

If anyone is interested, I partially found what I was looking for, and it was in the oddest place, a computer security guy named Bruce Schneier. See this book: Liars and Outliers: Enabling the Trust that Society Needs to Thrive.

Schneier explores societal trust as opposed to personal trust. What this means is that we trust perfect strangers to behave in certain manners in groups, like the person who serves us food, or the person sitting next to us in a movie theater, or a person who delivers a product after receiving payment, but we have no guarantee they will. Any one of those people could attack us out of the blue. Or start shouting and melt down. Or steal from us. Or any number of alternative behaviors. But we trust they will not and we don't even think about it most of the time.

Schneier thinks the human race is to be congratulated on how well all this works, given the massive amount of opportunities to violate that trust.

So he explores how people act based on what is good for the group as opposed to what is good for the individual, and the balance between the two. He does this from various perspectives, including the moral one (but not limited to that).

He has found that utility is not the only factor, nor is enforcement or preventive security measures. There is a composite of reasons and the most effective (and economical) ones reside in the individual, like personal morality and concern with reputation.

But even these have contexts where they actually change roles. For example, the Underground Railroad was considered by society as immoral when it started and promoted stealing slaves from their masters. These people were criminals. But nowadays, they are considered as people who followed much better moral values than society did at the time.

So defectors have an ambiguous role from Schneier's security professional viewpoint. They are necessary, but only when they stay in the minority. Otherwise, the defectors destroy the groups they oppose.

And, if there are no defectors, people become very vulnerable from letting their guard down. So he believes even the bad apples are beneficial to the group, albeit they are not beneficial at all to their individual victims.

As I listened to him talk in several online videos and skimmed through the book, I became aware of how much his observations apply to money, including the history of it. And his ideas apply directly to what I have been seeking in my earlier post.

Schneier's approach, should he ever cover the history of money, would not be concerned with any theory on what should be money (which I call ideology-laden). He would examine what is (and has been) used as money and why it works and/or fails--mostly looking at institutional trust as the fundamental condition.

The bottom line is money works only if people trust it to produce certain results when they use it. When they stop trusting it to produce consistent results, they stop using it. Then the currency fails and is abandoned.

I believe Schneier's breakdown of societal trust applies to money. In other words, it is made up of several components (mostly morality, reputation, enforcement and prevention). Maybe throw in long-term education and habit.

And, from my initial viewpoint on mulling over this new approach, I believe the issues surrounding trust in group settings are more fundamental than whether money should be a commodity or fiat and things like that. For example, if people ever lose trust in gold as a medium of exchange, it would not matter if it backed a currency. And there are any number of ways for that to happen.

I won't go into this right now because of lack of time, but I wanted to make this post to point to an intriguing direction, and as a placeholder for me for future probing.

Michael

[BaalChatzaf]

My problem with just about everything I have ever read about the nature of money is that it is drenched in ideology. I don't mind principles, if fact, I am seeking them, but I don't like the distortions that always come from the framing, especially the selective omissions.

If anyone is interested, I partially found what I was looking for, and it was in the oddest place, a computer security guy named Bruce Schneier. See this book: Liars and Outliers: Enabling the Trust that Society Needs to Thrive.

Schneier is a super guru on codes and ciphers. He has written several important books on that subject.

Ba'al Chatzaf

[syrakusos]

Colin Gullberg’s book, Chopmarked Coins: A History; the silver coins used in China 1600-1935, provides an overview of interesting artifacts often seen but little understood in numismatics. In China, trust was low; the solution was chopmarks. Specially trained clerks, called shroffs, tested and counter-struck coins to validate them.

In American history, they are unknown, even as the same Spanish and Mexican coins supported trade commerce here as in East Asia. In China, chopmarks were profuse.

Frontier America 1600-1935 and China of the same period shared much: the same global commerce carried by the same forms of money; a rough-and-tumble laissez faire business environment; benign neglect by the central authorities; even periodic booms and busts that could have been linked to each other. Yet, we never chopmarked our coins.

Perhaps the most curious fact about Chinese chopmarks is that they did not actually identify anyone. According to Gullberg, only the British tea trading firm, Tait & Co., used an identified mark, two characters giving its name. While the myriad others must have been recognized in their times and places, no table was ever constructed, even though Canton (Guangdong), Shanghai, Hong Kong, Taipei, and other centers all had schools for training shroffs.

(More about Chopmarks on NecessaryFacts here.)

(More about Shroffs on NecessaryFacts here.)

[GALTGULCH8]

Carl Menger, in his book,Principles of Economics and in a monograph on Money, he explains the origin of a medium of exchange.

I found that in a book entitled Champion of Freedom, Human Action A 50 Year Tribute. Its first article by Richard M. Ebeling, The Austrian Economists and the Keynesian Revolution: The Great Depression and the Economics of the Short Run, states that one must begin with the thought of Carl Menger, founder of the Austrian School of Economics, in his Principles of Economics.

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I don't have the time to copy it here now.

The gist of it is that in a barter situation one might be willing to accept a good A one does not really want but may realize it can be traded for the desired good B. That good A serves as the medium of exchange. It is an indirect way of obtaining a desired good. Over time certain commodities become recognized to possess qualities which make it more useful as the medium of exchange. Money begins in this way as another commodity on the market.

Makes sense to me.

Question now is how much counterfeiting is possible by all central banks without causing a loss of confidence in the currencies and a resultant collapse?According to Jim Rickards, author of The Death of Money, we stand on the verge of that abyss as he predicts we have reached a point within six months of such a devastating conclusion with a worldwide twenty year Depression to follow, with perhaps a hyperinflation preceding a deflation and Depression.

gg

[Wolf DeVoon]

Maybe this is a good place to talk about paper money.

Chapter 11 - Inflation from Peak Prosperity on Vimeo.

[syrakusos]

Carl Menger, in his book,Principles of Economics and in a monograph on Money, he explains the origin of a medium of exchange.

... Over time certain commodities become recognized to possess qualities which make it more useful as the medium of exchange. Money begins in this way as another commodity on the market.

Makes sense to me.

The Austrian theory is the same as the Marxist theory and it is absolutely not true. It makes sense to you because you were born into a monetized society. If the Marxist-Austrian theory were correct, then

(1) coins would have been invented before fiduciary instruments. In fact, futures contracts and promissory notes antedate coins by about 3500 years; formal social trust agreements (see MSK above) go back maybe 6500 years before coins.

(2) coins would have been invented at a center of trade, likely independently invented in several. In fact, coins most likely were invented in Lydia (or Ionia), at the edge of the civilized world. They were used first by Greeks and/or Lydians - and were not used at first in trade, but only as bonus payments to mercenary soldiers, like military medals today.

(3) The oldest and largest hoards of coins would be known in those trade centers. They are not.

(4) The greatest traders of the times, the Phoenicians, were among the last ancient Mediterranean/Levant people to strike coins. Traders have no need of coins, oddly enough, if you stop to think about it.

I could go on all day... The American Numismatic Association granted me a literary award for this research; that nomination came from a Smithsonian curator. I know more about this than any libertarian you can name. And I am not certain now of all that I wrote then. My continued research over the past 20 years finds evermore new empirical evidence and new theories to explain it all. I point you to Debt: the Seed of Civilization on my blog. The work of David Rolfe Graeber and Denise Schmandt-Besserat brings us closer to the truth. The Marxist-Austrian theory is just baloney.

All the claims about gold and silver and commodity money are true. They are true for us. We learned to use money over time. Different forms came with different learning curves. The first forms required social trust (see MSK above). Two thousand years later, literacy allowed promissory notes. Money required literacy and numeracy. Before then, Fred Flintstone could not count past three. Five was "two-two-one" until about 5000 BCE maybe later.

Even into the 1800s, German coins were based on twelves, i.e., on 3rds and 4ths. Although the Romans had the "denarius" of 10, decimal coinage as we know it was a theory from a 17th century mathematician Simon Stevin Wikipedia here. Even though Hamilton and Jefferson agreed on decimal coinage, the USA produced the quarter dollar, not the fifth. My point is that what we accept as common sense now about money evolved over time, and much of it very recently.

Last point: the gold standard was not invented by agoric bankers making praxeological calculations. It was the work of the German Empire; America and France and the rest just goosestepped along behind. (The UK Bank of England went to a gold standard much earlier (1817, iirc) but for over 50 years the greatest commercial empire in history was pretty much on their own.)

[GALTGULCH8]

MM,

I appreciate the history lesson but not the ad hominem attack on the Austrian school of economics nor likening it to Marxism.

I am sure that all your historical references are valid but despite your wisdom you have not done more than make an assertion that Austrian Economics is "baloney."

As a child in Flatbush, which I considered to be the center of modern civilization, complete with typewriters, radio and the start of television, not to mention a freight train pulled noisily along a track a couple of tree lined blocks from home by a real steam engine, I had the opportunity to taste real baloney from the delicatessen on the corner and so I know baloney when I see it. The Austrian School of Economics is definitely not baloney.

What beef do you have with von Mises, Rothbard, Reisman, Hazlitt and the rest?

gg

[JamesAldridge]

MM

As I recall Austrian theory, money (medium of exchange) developed over time. Depending on circumstances, any number of items might be used for the purpose. Utlimately, and over time, this usually tended to be whittled down to one of the precious metals. I do not recall any mention in the theory that a medium of exchange was first manifest in the form of coin. Your expertise in numismatics notwithstanding, I do not see how you have in any way whatsoever refuted Austrian monetary theory. I don't say that it cannot be refuted, only that you have not done it.

JRA

[syrakusos]

According to Karl Marx:

But a particular commodity cannot become the universal equivalent except by a social act. The social action therefore of all other commodities, sets apart the particular commodity in which they all represent their values. Thereby the bodily form of this commodity becomes the form of the socially recognised universal equivalent. To be the universal equivalent, becomes, by this social process, the specific function of the commodity thus excluded by the rest. Thus it becomes – money.

Capital Volume One; Chapter Two: Exchange.

Throughout this work, I assume, for the sake of simplicity, gold as the money-commodity. The first chief function of money is to supply commodities with the material for the expression of their values, or to represent their values as magnitudes of the same denomination, qualitatively equal, and quantitatively comparable. It thus serves as a universal measure of value. And only by virtue of this function does gold, the equivalent commodity par excellence, become money.

Capital Volume One Chapter Three: Money, or the Circulation of Commodities.

According to Ludwig von Mises:

A medium of exchange is a good which people acquire neither for their own consumption nor for employment in their own production activities, but with the intention of exchanging it at a later date against those goods which they want to use either for consumption or for production.

Money is a medium of exchange. It is the most marketable good which people acquire because they want to offer it in later acts of interpersonal exchange. Money is the thing which serves as the generally accepted and commonly used medium of exchange. This is its only function. All the other functions which people ascribe to money are merely particular aspects of its primary and sole function, that of a medium of exchange.

Media of exchange are economic goods. They are scarce; there is a demand for them. There are on the market people who desire to acquire them and are ready to exchange goods and services against them. Media of exchange have value in exchange. People make sacrifices for their acquisition; they pay "prices" for them. The peculiarity of these prices lies merely in the fact that they cannot be expressed in terms of money. In reference to the vendible goods and services we speak of prices or of money prices. In reference to money we speak of its purchasing power with regard to various vendible goods.

(Human Action, Chapter XVII “Indirect Exchange”

[syrakusos]

What beef do you have with von Mises, Rothbard, Reisman, Hazlitt and the rest?

gg

I have no "beef" with the Austrians; and I own a "scholar's edition" of Human Action. Rothbard was a faker who substituted anti-government rants for actual historical fact. See "Rothbard: Fraud or Faker" on my blog here.

I am most interested in truth, of course; and, yes, largely, the Austrians are lightyears ahead of everyone else. That does not grant a blank check to everyone who claimed to be within that school of thought on everything they wrote.

[syrakusos]

As I recall Austrian theory, money (medium of exchange) developed over time. Depending on circumstances, any number of items might be used for the purpose. Utlimately, and over time, this usually tended to be whittled down to one of the precious metals. I do not recall any mention in the theory that a medium of exchange was first manifest in the form of coin. Your expertise in numismatics notwithstanding, I do not see how you have in any way whatsoever refuted Austrian monetary theory. I don't say that it cannot be refuted, only that you have not done it.

Sorry to have skipped a step... If you read actual contracts and actual promises from 7000 BCE forward, you will see that metal is just one thing. Rams, ewes, lambs; billies, nannies, kids; bottles of beer; lengths of cloth;.... and yes, metal, mostly silver, not gold.

The theory was (was) that rather than re-weigh bullion bars over and over, merchants hallmarked them to signify their weight and fineness. That theory came from Charles Seltman, who wrote it into the Encyclopedia Britannica.

In fact, silver was a primary commodity, but not the supreme medium of exchange. The first coins were electrum, a naturally-occuring alloy of gold and silver considered to be an element in its own right. Mises and Marx said nothing of electrum.

[JamesAldridge]

MM,

Is it your position that "The Austrian theory is the same as the Marxist theory and it is absolutely not true" because Menger, Mises, et al, failed to provide an exhaustive list of various items utilized as media of exchange, such as electrum? Or, is there some more substantive argument against the theory?

JRA

[syrakusos]

Jim, my problem is not with the Austrian theory of economics, but with the Austrian story for the invention of precious metal money.

Precious metal money was commanded from the top down by kings. It was not invented by traders. Independently in time and space, the Chinese, the Minoans, and the Romans all developed metal as a trade good and did so with bronze. Bronze is useful. Silver and gold are useless. Copper is also not so useful: it does not hold an edge; it must be alloyed with tin to make bronze. Bronze, wheat, beer, cloth, goats,... they are all just things that could be promised in writing, once writing was invented to keep track of them. It was writing that enabled "money" as we know it. But it was kings who commanded precious metals.

It took as much effort (more or less) to exact gold and silver as copper and tin, but the effort had to go to the king's glory, not to anything productive.

With democracy among the Greeks, the electrum and gold and silver of the city was the money of the city. From a folkway, it became law.

Again, the greatest traders of the ancient world, the Phoenicians, were perhaps the last civilized people to make their own coins. They did so to trade with the Greeks, not to carry precious metals around the coast of Africa in exchange for whatever was offered.

Moreover, trade did not begin with calculation for profit. It began with ritual gift exchange.

The Austrians eschewed empirical evidence and built a rational (analytical; logical) model. Among the many facts not of interest to the Austrians was the Code of Hammurabi which was only excavated and translated circa 1900.

• Text of the Code of Hammurabi, King of Babylon (About 2250 B. C.) Author(s): Robert Francis Harper and A. H. Godbey Source: The American Journal of Semitic Languages and Literatures, Vol. 20, No. 1 (Oct., 1903), pp. 1-84
• The Recently Discovered Civil Code of Hammurabi Author(s): Charles Foster Kent Source: The Biblical World, Vol. 21, No. 3 (Mar., 1903), pp. 175-190
• Notes on the Code of Ḫammurabi Author(s): C. H. W. Johns Source: The American Journal of Semitic Languages and Literatures, Vol. 19, No. 2 (Jan., 1903), pp. 96-107

http://realhistoryww.com/world_history/ancient/Misc/Sumer/ur_nammu_law.htm

The Ur-Nammu law code

The Ur-Nammu law code is the oldest known, written about 300 years before Hammurabi's law code. When first found in 1901, the laws of Hammurabi (1792-1750 BC) were heralded as the earliest known laws. Now older collections are known: They are laws of the town Eshnunna (ca. 1800 BC), the laws of King Lipit-Ishtar of Isin (ca. 1930 BC), and Old Babylonian copies (ca. 1900-1700 BC) of the Ur-Nammu law code , with 26 laws of the 57. This cylinder is the first copy found that originally had the whole text of the code, and it is the world's oldest law code. Further it actually mentions the name of Ur-Nammu for the first time.