by Michael V. Szpindor Watson
Did credit precede money? Maybe. Does it matter? Nope.
One hundred years ago A. Mitchell Innes rejected the standard story on the origins of money, whereby money spontaneously emerged as barter became progressively costly with the increasing division of labor and greater abundance of goods on the market. Money was the solution to the costliness of barter: a common medium of exchange was used, rather than searching for another person with the thing you wanted who also wanted the thing you wanted to trade. Today Innes’ argument is most popularly championed in David Graeber’s book Debt: The First 5,000 Years. The debate between Mengerians and Innesians has resulted in several published books and exploded onto the blogosphere where Bob Murphy (here, here, here), George Selgin (here, here), David Henderson (here), and Brad DeLong (here) attack David Graeber’s book, with responses from the proponents of Innes.