Ancient Tally Sticks Explain the Nature of Modern Government Money

Abstract: Money is fundamental in the functioning of many ancient and all modern economies. Orthodox economists argue that money is primarily a medium of exchange to facilitate trade, whereas chartalists counter that it is, above all else, a unit of account used to administer debits and credits such as taxation. Recently, social positioning theory has proposed that we understand money as a community-wide relationship based on social trust, and that money functions ontologically as a means of payment. Tally sticks used as monetary devices among English, Chinese, and Mayan governments are evaluated in relation to these three proposals. Results are shown to be consistent with the chartalist position for the use of financial money by governments in the three unrelated cases. However, social positioning theory highlights the fact that chartalists have not sufficiently elaborated the different ontological forms of money. Money records debt, but not all debts are financial. As the anthropological literature shows, many early monetary objects accounted for social rather than financial relationships. To claim the status of an empirical science, orthodox economists must demonstrate that government financial money is primarily a medium of exchange or alter models that assume so and revise policy prescriptions built upon such assumptions.