Small change with a universal impact

This is an extract from Money: The Unauthorised Biography by Felix Martin, published next week by Random House.

This is an extract from Money: The Unauthorised Biography by Felix Martin, published next week by Random House.

With the invention of coinage, a dream technology for recording and transferring monetary obligations from one person to another was born. The earliest-known coins were minted in Lydia and Ionia, in present-day Turkey, in the 6th century BC. But it was the city states of the Greek Aegean that seized upon coinage as the ideal means of representing the new concept of economic value, starting in the late 6th century BC.

Its spread throughout the Greek world was rapid and pervasive: by about 480BC, nearly 100 mints were operating in the Greek world.

The result was a further acceleration in the pace of monetisation. Everywhere, traditional social obligations were transformed into financial relationships. In Athens, traditional agricultural sharecroppers were converted into contractual tenants paying money rents. The so-called "liturgies" - the ancient civic obligations of the 1000 wealthiest inhabitants of the city to provide public services ranging from choruses for the theatre to ships for the navy - became assessed in financial terms. By the last quarter of the 5th century BC, the city states of classical Greece had become the first monetary societies.

It is difficult to overstate the social and cultural impact of this first, revolutionary experience of monetisation. Under the old regime, social position had been absolute: born a peasant, died a peasant; born a chieftain, died a chieftain. In the new world, everything was relative. The only real measure of a man's worth was money - and the accumulation of money has no intrinsic limits. "Money! Money is the man!" was the famous aphorism of the Argive aristocrat Aristodemus, exclaimed with undying disgust at the degenerate new order of things when "he lost his wealth - and with it his friends". Now that money determined social standing, birth, honour, and tradition counted for nothing. Lose your wealth, and you were nobody.

Complaints from those with vested interests in traditional society were to be expected. Yet the genius of money was that it did not just appeal to an alternative set of vested interests - those of the lumpen peasantry who had drawn the short straw under the old regime. The great fear associated with the transgression of customary rules of conduct had always been that the result would be anarchy: the traditional social order claimed to represent the sole bulwark against civil breakdown and a war of all against all. The monetary enlightenment argued otherwise. On the political and economic level, money promised something unprecedented: that it would combine social mobility with political stability. With money, society could have its cake and eat it, too. The sterile constraints of an immutable and absolute social system could be jettisoned in favour of ambition, entrepreneurship, and social mobility: money would be the universal solvent that could dissolve all traditional obligations.

Crucially, though, the society that resulted would not collapse into chaos. Because money, the concept of universal value and the idea of an objective economic space were founded upon the ancient institution of communal sacrifice: and as such upon the invisible but irresistible communality of mankind.

Courtesy of Random House.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles