Coin Reconsidered: The Political Alchemy of Commodity Money

Medieval coin plays an essential role in the imagined history of money: it figures as the primal "commodity money" — a natural medium, spontaneously adopted by parties in exchange who converge upon a metal like silver to represent the value of other goods. As a natural medium with a price objectively established through trade, commodity money appears to offer an independent means of measure in the market. But as the history offered here reveals, medieval money was nothing like its imagined alternative. England’s early coin became a medium when the government began to spend and tax in that unit of account, took coin as a mode of payment, and allowed it to be transferred between people in the meantime. Individuals participated in the arrangement, paying for coin in exchange for the unique quality — liquidity — that set money apart from a commodity. That quality was orchestrated by the very channels that brought public and private together in the project of making a medium. In fact, insofar as the English equated money with the commodity it contained, they engineered instability into the heart of their medium. Depreciating coin — diluting its commodity content — offered a cure. It also confirmed that coin had never been the "commodity money" imagined in later accounts. Coin was, instead, a constitutional medium, one that related the government to its participants and thus helped to configure the world it appeared merely to measure

Creation Stories: Myths about the Origin of Money

A myth about the origins of money has long organized modern approaches to the medium. According to that creation story, money is the natural product of human exchange. It can be analogized to a commodity like silver that comes to hand out of the decentralized activity of trading or a convention like language that arises out of a consensus about the value of an item. But if we consider clues about money’s origins and extrapolate from its continuing practice, another story comes into focus. It suggests that money is a constitutional project, a mode of governance for a material world. Money is a means of mobilizing resources across a collective, one created when people advance in-kind value to a stakeholder in return for a unit that represents that advance. The process both entails material value – the advance to the stakeholder is real – and converts it into a form that everyone else recognizes – the advance holds independent value because it offers a countable measure that can be transferred to make final payments. Money creation tied to a fiscal backbone can be expanded in response to the demand for cash: that practice accords both with modern economic theory and the English medieval history that furnishes the setting here. In contrast to the dominating myths about money, the “stakeholder” creation story explains how each of money’s functions is institutionalized and how that activity shapes “the market” that is made by money