Saturday, 28 February 2015

Money as a result of lack of trust

The normal convention is to see money as being based on trust in the sense that we trust that others will accept money as part of transactions for goods and services. In this article, I want to turn this premise around and argue that money has its origins in a lack of trust and that it is about being able to enforce obligations and possibly slavery.

Why do I think that I can challenge the dominant theory of the origins of money and replace it with an alternative theory? The standard theory of the development of money is that it developed as a result of the division of labour and as a way to get around the difficulties of a barter system (Smith, 1776). However, this has been challenged by Graeber (2011) who contends that it developed as a way of accounting for debt obligations. What Graeber is contending is that early communities freely gave in order to satisfy need but there was an understanding that there would be a reciprocal gift when the giver had a need. In his study, Graeber contends that token began to be given as a way of reminding recipients of the debt obligation.

I want to pursue this idea further and argue that these token were given not as a sign of trust but rather as a sign of lack of trust. What I am arguing is that the giver was not convinced that the receiver would return the obligation so sought a means of accounting for the obligation. By creating some token that symbolised the obligation and the size of the obligation, the giver now had a claim over the receiver. When these claims begin to be enforceable within the community then these tokens begin to take on value. If these tokens of obligation begin to be traded as a way of passing the obligation to another party then we have the making of money. Some would argue that this trading of tokens of obligation is when trust comes into the system since the secondary recipient is now trusted to fulfil the original obligation. If instead of the token being given as a reminder of an obligation but rather as a reminder of a claim then we have the making of a modern money system and of the desire to have these tokens backed by some tangible value.

So much of our monetary assumptions are based on the idea that money is a form of trust that these tokens of money will retain their value and be accepted as payment for goods and services. With currency that was backed by a precious metal (i.e. gold or silver) or some other resource, then the recipient of the currency has the expectation that the original issuer will redeem the currency tokens for that resource on demand. However, when the amount of currency in circulation exceeds the backing resources then it is no longer possible for the claim to be honoured. Now most currencies are not backed by tangible resources and are instead honoured by a countries central bank as the issuer of the currency. However, this is beginning to be eroded with the development of complementary currencies and digital currencies.

My contention is that even now, a person holding money is more about a claim that the person has to resources or services offered by a community because of resources and services that they have made avail;able to the community in the past. It is a symbol of a lack of trust in the community to provide such resources or services and in a person being willing to offer their resources and services to the community when a need is identified. The offer of a debt token for resources and services is a way of enticing a member of society to participate in the sharing to meet the needs of the community.

Because we have turned it around from an obligation to return the favour to a payment for resources and services rendered, the system has removed the obligation to meet need and a greater mistrust of those who find themselves unable to compete or without access to resources or services to trade in the community. Further I would contend that the emphasis on having to offer a resource or service that others are prepared to pay for enslaves people into a system of work dependency and removes the freedom to explore their use of talents in other areas that may not have the same financial return.

Returning to a currency backed by a resource may reduce the trust that is required in a system where the token of exchange is based on a willingness to accept it as a token of exchange. However, the underlying need for the tokens in the first place is based on a mistrust of others and their willingness to meet needs that they have the resources to satisfy.


Graeber, D. (2011) Debt: The first 5,000 years. New York: Melville House Publishing

Smith, A. (2005 [1776]) An inquiry into the nature and causes of the wealth of nations. Electronic Classics Series, Pennsylvania Stats University. Available from: or

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