How 'sexy', 'dangerous' money reveals our history

Since the first primitive examples of systems of exchange emerged 18,000 years ago, money has shaped human history, David McWilliams says.

Economists, he says in trying to explain it, take the “fun out of this most extraordinary substance called money, which is sexy, it is dangerous, it is mendacious, it causes us to do all sorts of positive and negative things, it animates the human spirit.”

His new book, Money - A story of Humanity, explores the impacts, both good and bad that came from the invention of this “social technology.” 

A social technology is a one that humans use to make living together "much easier," the Irish economist told RNZ’s Nine to Noon.

The legal system is another example, he says, of a set of rules we accept.

“And money is in the same area. It's a technology that allowed us to make sense of the world.”

Writer and podcaster McWilliams, who has worked for the Irish Central Bank and UBS, and is adjunct professor in economics at Trinity College Dublin, went back to the source of the Nile in the Congo for the first human examples of money.

There, in the 1950s, archaeologists found the Ishango bone, he says.

“It's a shrunken femur of what they think is a baboon, or some form of baboon type creature. But on the bone are these tiny little indentations, like little notches.

“And it's thought that this is the very first evidence of what you would call a tally stick.”

It kept a record of who owed what to whom and at the end of a certain period the debts were settled and the notch cleared, he says.

This upends the idea that bartering was a common form of exchange, he says.

“Barter never existed. There's no historical evidence for it. There's no folkloric evidence for it. There's no economic evidence for it. Because what humans didn't do well was say I wouldn't mind those two sheep, but I don't have a cow, so we can't trade. That's not the way the world worked.”

Rather people traded and then settled up later, he says.

“At the end of the month, or the year, or whatever period, we would have what they called the day of reckoning. And you would give me what I want. I'd give you what you want. We'd put a notch in the bone, and away we'd go.”

Later, in the Sumerian society in Mesopotamia (what is now modern-day Iraq and Kuwait), we see the first examples of coins, he says.

“They used a grain-based currency, simply because everyone could understand grain.”

These coins represent an “amazing intellectual leap”, because the Sumerians accepted the idea that “a little piece of copper, or a little piece of gold, represented something completely different.”

“There you have this extraordinary intellectual move, where humans were prepared to accept something to represent something else.”

Ancient Greece was the first society to truly embrace money in a sophisticated way, McWilliams says. He believes that is what drove their inventiveness in other domains.

“Why was it the Greeks that broke through the sort of intellectual ceiling? Why was it the Greeks that came up with theatre, with philosophy, with rationality, with logic, with democracy, with republicanism? These are amazingly radical ideas. Why did they do that and nobody else? What were they doing that no other previous civilization was doing?

“They were using money; Greece was the first monetarised society.”

He believes it is no coincidence that the Greeks were the first society to create “the panoply of human civilization or the basis of it”.

“Subsequently other societies added to that and added to that and added to that. And so, what I see is that money affects the way we think, more than we imagine.”

Christianity emerged as money was becoming established in society, and he believes it was a response to this disruptive innovation.

“The losers in the monetary game needed to come up with a countervailing story to reassure themselves. And this is why Jesus comes up with these things like 'the rich man will not get to heaven'.

“The meek will inherit the earth…these are really radical ideas, and they could only have germinated and become fertile, become accepted if it was a counterbalance to another idea.”

There has since been a “constant battle” between the liberating and impoverishing power of money, he says.

“And that I think is the moral see-saw that we've been dealing with as societies for thousands of years.”

David McWilliams is appearing at the The Piano, 156 Armagh St Christchurch on Tuesday, 14 October as part of literary festival WORD.