Chapter 5 Debt and the origin of money
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Carl Menger is an economist best known for being one of the three pioneers of marginalism in economics. Among the many economic problems, he analyzed, Menger developed Adam Smith's theory of the origin of money. Menger argued, as did Adam Smith, that money emerged through trade from barter. Menger's theory has been attacked by anthropologists and many heterodox economists. These critics believe that the empirical evidence proves that money emerged from debt, not barter, which they define as spot transactions without the use of money. According to the empirical material, there has never been a large economy using barter, and the use of accounting records thousands of years ago suggests that money emerged from debt. In the chapter, I show that the empirical evidence in no way contradicts Menger's theory because it relies on defining barter as a spot transaction. Meanwhile, debt can also be barter because it can be a staggered exchange of directly useful goods. However, the use of debt does not completely resolve the problem of double coincidence of needs, thus people still might want to repay the debt in the goods that mediate the exchange. Therefore, taking into account the fact that people commonly used debt in the past does not change anything in Menger's theory of the emergence of money - the essence of Menger's theory is: (1) to describe the process of emergence of a universally accepted medium of exchange from among heterogeneous goods; (2) to present the rationale and actions that led to the spontaneous emergence of money.

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