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Author Topic: On the Origin of Money- C. Menger  (Read 2988 times)

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Offline JBF

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On the Origin of Money- C. Menger
« on: May 26, 2018, 03:27:51 pm »
Anyone interested in the origin of coins may find Carl Menger's 1892 essay, "On the Origin of Money" quite interesting. 

Menger is the founder of the Austrian School of Economics, better known through Ludwig Von Mises, and Frederick Hayek (The Road to Serfdom- the classic critique of totalitarianism both left and right).  Menger has some technical jargon, but is free from mathematics and charts.  He is what Heilbroner called, "The Worldly Philosophers," a writer on economics.  Article is about 20 pages in a trade paperback.

Basically he talks about saleable goods in an exchange, and how permanent, transportable, scarce or rare goods, etc. become the medium for exchange, so that instead of having to find someone with a spare wagon, who is also interested in my chickens, one can exchange chickens (or wagons) for a mediate good, namely precious metals, which become coinage.  If you are interested in the origin of coinage, and how coinage came to be, I would suggest Menger's essay.  He has a very plausible theory, very attractive if you wonder how the heck something like coinage could have gotten started.

Carl Menger, with a "C," "Karl Menger" was his son and also wrote on economics.

JBF

Offline Joe Sermarini

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Re: On the Origin of Money- C. Menger
« Reply #1 on: May 26, 2018, 05:02:03 pm »
It is a theory in the same way the evolution is a theory.  Some details may be refined, but the overall it is a certainty.
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Offline Brennos

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Re: On the Origin of Money- C. Menger
« Reply #2 on: June 08, 2018, 10:56:57 am »
this article is a modernist view of ancient economy that, since the 70's and the Finley's works, is almost completely obsolete.

Offline Joe Sermarini

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Re: On the Origin of Money- C. Menger
« Reply #3 on: June 08, 2018, 02:08:32 pm »
Completely obsolete?  I don't think so.  

Finely's ideas are interesting and important, but limited and flawed. Finely discusses only the classical economies of Greece and Rome. The origins of money, the use of metal and rare objects as money, is older than the classical Greek city states and developed across the world in many different cultures.  My undergraduate degree was economics, so I understandably would have disagreements with a sociologist who wrote about economics but did not consult with economists. I am not alone in my opinion...

http://eh.net/book_reviews/the-ancient-economy/

I believe the origin of money is fairy clear from the archeological record, and it has little to do with the eccentricities of Greeks and Romans.


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Offline Molinari

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Re: On the Origin of Money- C. Menger
« Reply #4 on: June 08, 2018, 06:35:30 pm »
Didn’t Herodotus and later Aristotle say virtually the same thing as Finley (edit: I meant Menger)?  I guess I don’t see how his theory is modern or revolutionary.

Personally, I think Richard Seaford gives the best account of the origin of coinage to date, in Money and the Early Greek Mind. I’m eagerly awaiting the publication of White Gold.

Offline n.igma

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Re: On the Origin of Money- C. Menger
« Reply #5 on: June 08, 2018, 09:12:01 pm »
....  I’m eagerly awaiting the publication of White Gold.
Available here https://www.academia.edu/36574644/K._Konuk_and_C._Lorber_White_Gold_Revealing_the_Worlds_Earliest_Coins_edited_by_H._Gitler_Jerusalem_2012_

A couple of earlier previews/summaries  ...

https://www.academia.edu/5060548/White_gold_Greek_coins._An_enigmatic_start_that_shaped_the_world_Powerpoint_

https://www.academia.edu/3740426/White_Gold_An_Enigmatic_Start_to_Greek_Coinage

These contain many references to the most recent scholarly works on the origin of money. Certainly they mark an advance on 1892 thinking, although some aspects are still contentious.
All historical inquiry is contingent and provisional, and our own prejudices will in due course come under scrutiny by our successors.

Offline Altamura

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Re: On the Origin of Money- C. Menger
« Reply #6 on: June 09, 2018, 03:43:36 am »
....  I’m eagerly awaiting the publication of White Gold.
Available here https://www.academia.edu/36574644/K._Konuk_and_C._Lorber_White_Gold_Revealing_the_Worlds_Earliest_Coins_edited_by_H._Gitler_Jerusalem_2012_ ...
Probably Molinari is awaiting the proceedings of the conference (like I do :-\), not the catalog of the exhibition.

But I am wondering why Menger seems to be missing in the bibliographies of the more recent papers about this topic. Perhaps this is meaning something  :).

Regards

Altamura

Offline Joe Sermarini

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Re: On the Origin of Money- C. Menger
« Reply #7 on: June 09, 2018, 05:34:01 am »
The origins of money and the origins of coinage are not the same topic. 
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Offline n.igma

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Re: On the Origin of Money- C. Menger
« Reply #8 on: June 09, 2018, 06:19:13 am »
Anyone interested in the origin of coins may find Carl Menger's 1892 essay, "On the Origin of Money" quite interesting.  

I'm posting with respect to JBF's original theme ..."the origin of coins" as reflected on in Menger's essay on money.

For the latest on money I suggest "Money in Classical Antiquity" by Setta von Reden published in 2010.
All historical inquiry is contingent and provisional, and our own prejudices will in due course come under scrutiny by our successors.

Offline Molinari

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Re: On the Origin of Money- C. Menger
« Reply #9 on: June 09, 2018, 06:39:07 am »
Thanks for the links.  I was indeed referring to the conference proceedings but it was nice looking through the catalog again.  They really did a great job.

My question about Finley was actually meant to concern Menger.  I guess I was half asleep when I was writing!  How is Menger’s ultimate thesis anything modern or new?

Offline Joe Sermarini

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Re: On the Origin of Money- C. Menger
« Reply #10 on: June 09, 2018, 07:55:21 am »
...How is Menger’s ultimate thesis anything modern or new?

It isn't. I don't think anyone said it is. 
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Offline Molinari

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Re: On the Origin of Money- C. Menger
« Reply #11 on: June 09, 2018, 09:17:55 am »
JBF implied it by saying it was Menger’s theory, and Brennos labeled it as such.  But maybe I am missing something- it has been one of those weeks!

Offline n.igma

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Re: On the Origin of Money- C. Menger
« Reply #12 on: June 09, 2018, 06:59:18 pm »
....  How is Menger’s ultimate thesis anything modern or new?

Nothing new in it as far as I understand it.  In a translation of Menger's own words ....
"Treated originally by weight, like other commodities, the precious metals have by degrees attained as coins a shape by which their intrinsically high saleableness [acceptability as a medium of exchange] has experienced a material increase. The fixing of a coinage so as to include all grades of value (Wertstufen), and the establishment and maintenance of coined pieces so as to win public confidence and, as far as is possible, to forestall risk concerning their genuineness, weight, and fineness, and above all the ensuring their circulation in general, have been everywhere recognised as important functions of state administration. "

To which Hayek's observation is most germane to the reasons why coinage was rapidly adopted as a medium of exchange ...
"It is evident that, as coinage spread, governments everywhere soon discovered that the exclusive right of coinage was a most important instrument of power as well as an attractive source of gain. From the beginning the prerogative was neither claimed nor conceded on the ground that it was for the general good but simply as an essential element of governmental power." (Hayek [1978] 1999: 138).

Hayek, F. ([1978] 1999). Denationalisation of Money, 2nd edition. London: The Institute of Economic Affairs. [Reprinted in Kresge, S. (1999). Good Money, The Collected Works of F.A. Hayek, Vol. 6, part II. London: Routledge.]
.
All historical inquiry is contingent and provisional, and our own prejudices will in due course come under scrutiny by our successors.

Offline n.igma

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Re: On the Origin of Money- C. Menger
« Reply #13 on: June 09, 2018, 07:04:25 pm »
Thanks for the links.  I was indeed referring to the conference proceedings but it was nice looking through the catalog again.  They really did a great job.

I'd overlooked (in fact forgotten) the fact that it was the intention to publish the proceedings of the associated  conference in the six years since the exhibition. At this stage, I wouldn't want to hold my breath on the publication ever emerging.
All historical inquiry is contingent and provisional, and our own prejudices will in due course come under scrutiny by our successors.

Offline Molinari

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Re: On the Origin of Money- C. Menger
« Reply #14 on: June 09, 2018, 07:46:41 pm »
I think Ross said in another thread it was due this summer.

Offline Altamura

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Re: On the Origin of Money- C. Menger
« Reply #15 on: June 10, 2018, 01:56:31 am »
Amazon shows currently a delivery on 8th of July. I will see what happens  ;).

Regards

Altamura

Offline Molinari

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Re: On the Origin of Money- C. Menger
« Reply #16 on: June 10, 2018, 06:50:32 am »
Huh.  My amazon search says it will be published in December 2018 and released in January.  You ordered the proceedings, correct?

Offline Altamura

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Re: On the Origin of Money- C. Menger
« Reply #17 on: June 10, 2018, 08:37:34 am »
You are right, on amazon.com it is end of december: https://www.amazon.com/White-Gold-Studies-Electrum-Coinage/dp/0897223497/ref=sr_1_1_twi_har_1?s=books&ie=UTF8&qid=1528633809&sr=1-1&keywords=white+gold+alfen
On amazon.de it is June: https://www.amazon.de/gp/product/0897223497/ref=oh_aui_detailpage_o02_s00?ie=UTF8&psc=1

But they already postponed it several times, so we have to be prepared   :(.

Regards

Altamura

Offline JBF

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Re: On the Origin of Money- C. Menger
« Reply #18 on: June 10, 2018, 05:24:17 pm »
I have read Moses Finley and his 'Ancient Economy' (and World of Odysseus), and found it very interesting at the time, but I am not really sure what I brought away from it.  It has been awhile. I have looked at Seaford but not gotten into him in depth.  Carl Menger is the first "Austrian economist," better known in Austrian economics is Hayek, "Road to Serfdom," (critique of socialism), and Ludwig Von Mises.  I mention Carl Menger here because he is relevant (Origin of Money), but also he is probably neglected.  He is from a time when 'real' money was coinage.  The Austrian Economists are also very conservative, and whereas economists and political theorists may look at him, the university in general, and humanities in particular are liberal, if not radical in their bent, and would tend to overlook someone like Carl Menger.  I do not think that Menger is new, but he is overlooked and neglected and may be new to you, so I bring him up.  I do not particularly think that he is "right" (absolutely correct), rather I think him as food for thought, and pragmatically, he may be useful to others.  [He is not "right," but neither is anyone else, if someone was philosophically 'right,' we would have the absolute answer, and philosophy would stop, nothing more would need to be written.  ok it is a weird view, but I think you might see what I am saying.]

As I believe it was Joe who pointed out, the article is about money, not necessarily coinage, although I think that the article presents a nice base upon which someone could construct the next step, and go into coinage.  Of course, the "precious" metal is electrum, a mixture of gold and silver that is not necessarily standardized.  Menger's analysis of the use of precious metals is more appropriate for 'pure' silver or gold.

I am glad my reference to Carl Menger has sparked such discussion, I have not read anything else by him, but I do want to read the 'Diamond/Water paradox.'  I think it probably says that diamonds are rare and not good for much, but hence very valuable, whereas what is common and good for lots of things, but not that valuable.  The same logic explains why you can have a diamond cartel left alone by national powers, but an oil cartel is always susceptible to countries acting to undermine it.  (OPEC).

Offline JBF

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Re: On the Origin of Money- C. Menger
« Reply #19 on: June 24, 2018, 10:30:23 pm »
Looking at the Austrian Economists some more, one thing they get into is "the subjective theory of value," which is a concept that I think that maybe (as far as I understand it), collectors naturally understand.  "The subjective theory of value" is what is it worth to you?  To put it simply, what, who, where, why, when and how all play a role in that.

But, I originally brought Menger up, because of his essay, _On the Origin of Money_, what I thought was insightful, was:
"Money has note been generated by law.  In its origin it is a social not a state institution.  Section by the authority is a notion alien to it.  On the other hand, however, by state recognition and state regulation, this social institution of money [based on precious metals] has been perfected and adjusted to the manifold and varying needs of an evolving commerce, just as customary rights have been perfected and adjusted by statute law."

Isidore of Seville said that a coin was, metal, design and weight.

Of course, with Menger, we are talking about "money," and only secondarily of coinage.  Although I think that others might agree with me that coinage is the most perfect form of money (and Greek the most perfect form of coinage??), from an artistic point at least.  Coinage, of course, goes through a tremendous change after the early electrum period.  Most people would not recognize an early electrum coin as a coin.  And all those beautiful Sicilian tetradrachms and dekadrachms lie in the future of the electrum.

Offline JBF

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Re: On the Origin of Money- C. Menger
« Reply #20 on: July 14, 2018, 09:27:34 pm »
I like Menger's On the Origin of Money, but there is one thing that doesn't work for coins. With its money-as-precious-metals, it makes sense that money would be something like gold or silver, but not both mixed.  Early coinage is electrum, and the value of electrum is not obvious, because the mixture and thus weight of each metal is not obvious.  It is nice to say that money is precious metals, and that does work after Kroisos (Croesus) minted gold coinage, _and_ silver coins, and in general later Greek coinage.


 

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